2017
ANNUAL REPORT
2017 ANNUAL REPORT | 1
For personal use only 2017 ANNUAL REPORT | 2
For personal use only CONTENTS
1. Co-operative Profile ......................................................................................................................... 3
The 2017 Financial Year in Review ................................................................................................... 4
2.
3. Chairman & Chief Executive Officer Report .................................................................................... 6
4. Board of Directors .......................................................................................................................... 10
5. Executive Management Team ........................................................................................................ 11
6.
Financial Report ............................................................................................................................. 12
7. Corporate Governance Statement ................................................................................................. 90
8. ASX Additional Information ...........................................................................................................100
9. ASX Announcements .....................................................................................................................102
10. Directory ........................................................................................................................................103
2017 ANNUAL REPORT | 1
For personal use only 2017 ANNUAL REPORT | 2
For personal use only CO- OPE RATIVE PRO FILE
Namoi Cotton was established in 1962 and today is Australia’s leading cotton processing and marketing organisation.
Namoi Cotton has an extensive network of origination, ginning, marketing and logistics operations throughout the cotton
growing regions of New South Wales and southern Queensland. As part of its business operations Namoi Cotton is a
participant in the Namoi Cotton Alliance joint venture, which owns and operates warehouse and commodity packing
facilities in Wee Waa, Warren and Goondiwindi.
CO -OP ERATIVE O BJE CTIV ES
Our Vision – To be the leading processor, marketer and service provider to cotton farmers and customers of the Australian
cotton industry.
Our Mission – To deliver quality products and services to our customers and members.
OU R VALUES
Shareholder Value – To deliver superior financial results and build wealth for stakeholders.
Quality – Continuously improve the reliability and consistency of our processes, products and services.
People – Create an environment where people are satisfied and motivated to achieve high levels of performance.
Safety – Working safely is more important than time, production and costs.
Customer Service – Deliver products and services that meet and exceed customer expectations.
Environment – Ensure we respect and protect the environment.
2017 ANNUAL REPORT | 3
For personal use only THE 2017 FINANCIAL YEAR IN R EV IEW
F Y 2 0 1 7 S U M M A R Y
Financial Summary
Revenue from continuing operations
EBITDA1
EBIT2
Income Tax Benefit/(Expense)
Net profit/(loss) after tax
Earnings per Namoi Capital Stock
Distribution per Namoi Capital Stock (unfranked)
Rebate payable to Grower Members
Total assets
Interest bearing debt
Term (core) debt
Stakeholders equity
Net tangible assets per Namoi Capital Stock
Capital expenditure3
FY2017
($,000)
355,344
8,855
2,649
245
283
FY2016
($,000)
279,713
(1,877)
(8,048)
3,140
(7,558)
0.3 cents
(6.9) cents
Nil
Nil
210,713
59,920
47,481
123,828
113 cents
5,267
Nil
Nil
199,852
60,679
47,481
123,545
112 cents
6,093
1EBITDA defined as earnings before interest, tax, depreciation and amortisation.
2EBIT defined as earnings before interest and tax.
Both of the above terms are non IFRS financial information.
3Includes $821k (FY2017) and $418k (FY2016) acquisitions by means of finance leases.
2017 ANNUAL REPORT | 4
For personal use only C O T T O N P R O D U C T I O N
Region
NSW
Upper Namoi
Lower Namoi
Gwydir
Mungindi
Walgett
Macquarie
Bourke
Lachlan
Tandou
Murrumbidge
TOTAL NSW
QLD
MacIntyre Valley
Central Queensland
Dawson-Callide
Darling Downs
St George
Dirranbandi
TOTAL QLD
2017 Season
Forecast(1) Production
Bales
2016 Season
Actual(2) Production
Bales
233,500
429,000
580,000
86,000
163,500
254,000
90,000
124,000
-
425,500
2,385,500
504,000
162,500
42,000
490,000
177,000
139,250
1,514,750
239,030
238,375
327,120
94,050
37,970
146,505
32,003
118,020
-
513,172
1,746,245
232,358
132,561
33,005
407,380
126,000
35,000
966,304
GRAND TOTAL
3,900,250
2,712,548
(1) Namoi Cotton’s estimate of the total Australian production for 2017 as at 1st
June 2017
(2) 2016 Adjusted Figures from The Australian Cotton Grower, Cotton Yearbook 2016
2017 ANNUAL REPORT | 5
For personal use only CHAIRMAN & CHIEF EXECUTIVE
OFFICER REPORT
RESULT IN RE VIEW
FO R 2 0 16/17
SEASON OPERATIONS IN
REV IEW
Namoi Cotton recorded a consolidated net profit after tax
and rebate from continuing operations of $0.3 million for
the full year ended 28 February 2017, compared to a net
loss of $7.6 million for the year ending 29 February 2016.
Positive cash flows from operating activities were recorded
at $5.5 million.
Overall financial performance has improved substantially
year on year. Cotton ginning and seed volumes improved as
a function of the national crop size increase to 2.7m bales
and targeted market share strategies. This delivered an
improvement in net contribution for the ginning segment
despite facing heavy competition for bales in central
growing regions. Consistent ginning throughput rates and
scaled work systems ensured effective management of
ginning variable costs. Seed trading margins were again
strong supported by domestic feed demand and Chinese
imports. The challenging market conditions facing Namoi
Cotton Alliance’s (NCA’s) lint marketing business for the
prior 2015 crop eased slightly through the year generating
improved margins on a greater volume of bales marketed
from the 2016 crop. NCA’s commodity packing operations
benefitted from increased volumes associated with a
large chick pea harvest associated with record prices.
Finance costs have remained constant year on year, with
the continuing low interest rate environment prevailing
throughout the period.
During the year Namoi Cotton’s term debt facilities with
CBA were extended until 2020 with amortisations to
recommence in FY2018.
2016 AUSTRALIAN COTTON PRODUCTION
The 2016 Australian cotton crop had overall production
recorded at 2.7 million bales up 17% from the 2.3 million
bales produced in 2015. The volume of planted crop was
again impacted by a general lack of available irrigation
water in public dams and on farm water storages. The crop
benefited from excellent pre-planting and in crop growing
conditions resulting in historically high yields for both
irrigated and dryland crops.
2017 ANNUAL REPORT | 6
2016 Ginning Season
Namoi Cotton ginned 689,000 bales including 100% of joint
venture bales of the 2016 crop compared to 535,000 bales of
the 2015 crop. The 29% increase in volumes demonstrated
the impact of a considered market share campaign for
irrigated cotton and increased dryland volumes in core
areas, underpinned by consistent throughput rates and
scaled works systems allowing effective management
of ginning variable costs. Overall ginning contribution
improved by 27% year-on-year on the back of improved
volumes. Key ginning achievements for 2016 included:
•
•
•
•
•
•
•
•
maintenance of comprehensive occupational health,
safety and environmental standards;
improved capture of important safety related
statistics;
Boggabri gin recording its second highest ginning
volume in the past 15 years;
several gins bettered their previously achieved
record daily ginning throughputs;
successful commissioning of a $1 million press
upgrade at the Mungindi gin;
installation of Uster Intellegin units at Wathagar and
MacIntyre II gins;
Australian industry first successful installation and
operation of an automated bale bagging system at
Wathagar gin; and
extensive offseason maintenance and downtime
reduction projects.
These achievements are a credit to our ginning and
operations employee teams and our continued investment
in the ginning network to deliver industry leading services.
Market Performance
The cotton market opened the financial year with the spot
May 2016 cotton futures contract trading above 56 US cents
per pound. These were the lowest levels cotton futures
had posted since July 2009 and when combined with the
Australian dollar, grower harvest prices were around $430
per bale. This compares to the previous year when growers
achieved $500 per bale at the start of harvest. Growers on
average achieved pricing for the 2016 season between $420
and $525 per bale.
Cotton posted its lows in the first quarter as a risk off
sentiment saw commodities including cotton move lower. By
the start of the second quarter cotton had started its move
higher. Cotton futures found support from the speculative
buying in the commodities complex generally. This move
provided Australian cotton growers the opportunity to
market their crop at $450+ per bale by mid harvest. This
was a welcome relief as growers marketed their excess
bales from the record yielding season. By the end of the
second quarter cotton futures had steadily gained 10 US
cents per pound.
For personal use only The start of the third quarter saw cotton futures appreciate
another 10 US cents per pound in the 1st month. The
Dec’16 contract fell just short of 78 US cents per pound as
it posted its calendar year high. The market found support
from the uptake of cotton offered under the Chinese
reserve selling program and the continuing increase
in open interest supported by speculator buying. The
sustained break higher saw the last of the Australian old
crop and a proportion of new crop transfer to merchants
as prices reached the low AUD$500 per bale in both crop
years. Cotton futures finished the year at the mid seventy
US cents per pound levels.
reduction of 10% in trade cotton seed volume offset by
increased grower cotton seed procurement, up 31% on
the prior year. Prices have remained higher than historical
levels supported by local feed demand associated with the
dry conditions and import demand from China. The latter
resulting from a reduction in China’s own cotton seed
production creating demand from the dairy sector, turning
to Australia for imports to meet the demand requirement.
This import demand has ultimately led to margins widening
despite high prices and again resulted in cotton seed
trading being a strong contributor to the overall financial
result.
As the fourth quarter commenced grower’s attention
moved to the new crop being planted. Grower pricing
steadily rose over this period in line with cotton futures and
by the end of the quarter, grower pricing was again above
$500 for the current and new crops. The trend higher was
continued in the first quarter and by mid-February, the
May17 cotton futures contract pushed through 78 US cents
and finished February some 20 US cents per pound higher
than 12 months earlier. This rally higher was credited to
an increase in global demand, the speculators large long
position and US sales pace, which was reducing the US
carry out even with a better than expected US crop.
The Australian dollar (AUD) spent the end of the first
quarter and the start of the second quarter moving
higher and posted its highs for the year above 78 cents.
The AUD was supported by a dovish tone from the US
Federal reserve and the market adjusting for the 1st rate
rise in the US. Australia was also supported with firmer
commodity prices, which included iron ore and coal. The
Australian dollar then moved into a sideways pattern for
the third quarter. As momentum for the first US rate raise
built, the Australian economy continued to perform above
expectations with support from firmer commodity prices.
The fourth quarter saw the US elections concluded, which
was the catalyst for a US dollar (USD) rally as Trumps pro-
growth campaign was priced into the market. The start of
the first quarter saw the AUD drift back to pre-election
levels as the administration’s inability to follow through
on its campaign promises saw the USD par back its gains.
The AUD finished the year 4 cents higher and 2 cents off
its high.
Cotton Seed Business and Cargill Oilseeds
Australia Partnership
Our cotton seed business traded 172,000mt compared
with 158,000mt the previous year. This incorporated a
Namoi Cotton’s 15% interest in the Cargill Oilseeds Australia
contributed a loss of $0.8 million compared to a loss of $0.3
million in the previous year. This was primarily a function of
lower cotton seed crush volumes and competing demand
for whole cotton seed exports. The continuing higher
domestic cotton seed prices has challenged operating
margins with pressure also evident from declining meal
demand within the dairy and beef sectors.
Namoi Cotton Alliance (NCA)
NCA’s total cotton lint marketing volumes procured for the
2016 season reflected 507,000 bales compared with 378,000
bales for the 2015 season reflecting a 2.3% improvement in
market share.
The improvement in market share was achieved through
effective basis position management despite a competitive
origination environment with the lower than optimum
volume Australian crop. The challenging cotton marketing
conditions impacting NCA in the prior year arising from the
eroding basis for Australian cotton whilst persisting into
FY2017 subsided during the year with improved trading
results leading to widening margins. This resulted in a $3.5
million improvement in Namoi Cotton’s share of NCA’s lint
marketing business over the prior year.
The NCA commodity packing business delivered a
significant contribution from record packing volumes of
226,000mt compared with 150,000mt in the preceding
year. Commodities packed included cotton seed, coarse
grain and pulses, principally chick peas. The prevailing
environment of high prices encouraged growers into large
plantings of chick peas, a crop also presenting agronomic
and crop rotational benefits. Prior year investments in
storage and intake capability have been instrumental in
ensuring record volumes, efficient operations and a sound
financial result.
2017 ANNUAL REPORT | 7
For personal use only LOOK ING FO RWARD
2017 Season
The widespread rainfall throughout the 2016 winter and
spring filled many cotton area public dams and majority
of on farm storages in addition to providing excellent soil
moisture profiles. These events supported an increased
planted area to 472,000 hectares nationally. Post planting
however, there were patchy rainfall events along with
exceptionally hot and dry conditions in January and
February 2017. These post planting conditions have
significantly impacted dryland cotton crops and reduced
yields of irrigated crops. Despite these factors, Namoi
Cotton currently estimates the 2017 Australian cotton crop
will produce 3.9 million bales.
Namoi Cotton presently anticipates that it will gin between
1.05 million and 1.1 million bales of the 2017 crop, including
100% of joint venture gins. This represents an improvement
of between 52% and 60% from the previous year. In advance
of the commencement of operations for the 2017 season,
Namoi Cotton intends to deliver on the following projects in
its ginning business:
•
•
•
•
•
a yard upgrade at the Merah North gin doubling
seed cotton intake storage capacity;
completion of a major press upgrade at Merah
North gin delivering improved operating and utility
efficiencies;
installation of a third gin stand and associated line
of processing and cleaning equipment at the North
Bourke gin;
installation of a fourth gin stand and associated
line of processing and cleaning equipment and
significant press upgrade at the Boggabri gin
providing greater capacity for the expansion of
production in the upper Namoi valley, particularly to
the south; and
installation of a new gin stand and associated
Australian industry first cleaning equipment at the
Ashley gin.
It is expected that our cotton seed business will trade more
than 290,000mt in the coming financial year, up 69% from
the prior year. Cotton seed trading margins continue to
be supported by local demand and trading opportunities
with China, albeit early yield indications reflect production
decreases which are expected to pressure cotton seed
contributions over the course of the year.
NCA’s lint marketing volumes are now estimated to be
between 600,000 and 650,000 bales from the 2017 crop,
representing an increase of between 18% and 28% from
the prior crop. Lint marketing margins are anticipated to
be supported by strong demand from the sub-continent
markets of Bangladesh and India, whilst China will
continue to be the major importer of Australian cotton.
NCA’s containerised commodity packing volumes are again
anticipated to be underpinned by a solid chickpea plant.
Namoi Cotton’s operations in 2017 are predicted to deliver
improved financial result predominantly flowing
an
from volume
increases. Production efficiencies from
commissioning key gin upgrades, undertaken post the
2016 season, are expected to assist in the efficient and cost
effective processing of the increased volumes ahead.
2018 Season and Beyond
The excessive hot conditions that occurred in the first two
months of 2017 resulted in irrigated cotton growers utilising
significantly more on farm water than planned. In the
southern valleys, public water storages remain reasonably
close to full, however in the central and northern valleys
dam and river systems have been drawn down through
utilisation of allocations. Coming out of the summer
cropping season all public dams servicing cotton growing
regions remain at percentage full levels greater than this
time in 2016 which is positive for 2018 crop plantings. The
current industry outlook for the 2018 Australian cotton
crop reflects approximately 4 million to 4.5 million bales
of production.
Namoi Cotton is targeting maximising market share in both
ginning and cotton seed trading volumes. NCA is focused
on increasing its lint cotton marketing volumes from the
current year through effective basis position management
and strong export market access. The commodity packing
business will be looking to increase volumes and broader
commodity exposure. A strong focus will be on improving
financial performance in the 2018 season.
Board and Strategy
During the year, the Board advised of the key elements of
Namoi Cotton’s strategic plan and that a single ASX listed
class of share structure which recognizes growers is the
most suitable future corporate structure for the Namoi
Cotton business to facilitate the outcomes contemplated
by the strategic plan. The Board worked through a
consultative process via stakeholder briefing meetings
with Grower Members and CCU holders to discuss the
proposed restructure in more detail. Based on generally
supportive feedback Namoi Cotton has moved to the next
phase in its journey towards a single ASX listed ordinary
share structure which recognizes growers. Detailed
documentation drafting has commenced and is required
before regulatory approvals can be sought. Namoi Cotton
is targeting Grower Member and CCU holder meetings
around the middle of this financial year to approve the
restructure. The restructure remains at this stage subject
to stakeholder and regulatory approval.
2017 ANNUAL REPORT | 8
For personal use only 2016 ANNUAL REPORT | 9
For personal use only BOARD OF DIRECTORS
Stuart Boydell – Chairman, Non-
Executive Director – 70
joined the Board as a
Mr Boydell
Grower Director in June 1994 and has
been Chairman since December 1995.
He was most recently re-elected at the
2014 general meeting. He has grown
cotton on “Cooma” near Moree, NSW
for over 20 years and is Chairman of the Remuneration
Committee, and a member of the Audit and Compliance
Committee and MFRM Committee.
Michael Boyce – Non-Executive Director – 74
FCA, FAICD, B Com, HDA
Mr Boyce joined the Board as a Non-
Grower Director
in October 2002.
He was most recently re-elected at
the 2015 general meeting. He was
founding partner of BOYCE
the
Chartered Accountants. He is currently
a director of Monbeef Pty Ltd, Birdnest
Pty Ltd, Hazeldean Pty Ltd and Fugen
Hardware Group. Mr Boyce is a member of the Audit and
Compliance Committee and Remuneration Committee.
Richard Anderson – Non-Executive Director – 71
OAM, B.Com, FCA, FCPA
Mr. Anderson joined the Board as a
Non-Grower Director in July 2001. He
was most recently re-elected at the
2016 general meeting. Mr Anderson
previously held the position of managing
partner of PricewaterhouseCoopers in
QLD. Mr Anderson is the Chairman of
the Audit and Compliance Committee
and the MFRM Committee and he is a member of the
Remuneration Committee. During the past three years
Mr Anderson has held ASX listed company directorships
at Data#3 Limited (current – appointed 27 October 1997),
Lindsay Australia Ltd (current – appointed 16 December
2002). He is also currently president of the Guide Dogs for
the Blind Association of QLD.
Ben Coulton – Non-Executive
Director – 62
Mr Coulton joined the Board in July
2006 as a Grower Director. He was most
recently re-elected at the 2015 general
meeting. Mr Coulton has been growing
cotton in the MacIntyre region since
1976. He brings with him extensive
industry and commercial expertise.
2017 ANNUAL REPORT | 10
Namoi has seven Directors, comprising four
Grower Directors and three non Grower Directors,
in accordance with the Rules and the Co-operatives
Act. All Directors are Non-Executive Directors with
appropriate experience, skills and qualifications. A
brief profile of each Director is included below.
Robert Green – Non-Executive
Director – 60
B Bus (QAC), MAICD
Mr Green was appointed to the Board
as a Non-Grower Director on 27 May
2013. He was most recently re-elected
to the board at the 2016 general
meeting. Mr Green has considerable
board relevant experience working as
a Senior Executive and General Manager in the Australian
and International agricultural industry for more than 28
years. Key areas of experience include trading, marketing,
operations management and business development,
including his current role as Chief Executive Officer of
Louis Dreyfus Company Australia Pty Ltd. Mr Green is
a member of the Audit and Compliance Committee and
MFRM Committee and the Remuneration Committee.
He has been past President of the Australian Oilseeds
Federation and Australian Grain Exporters Association.
Glen Price – Non-Executive
Director – 61
B Rural Science (Hons), GAICD
Mr Price joined the Board in July 2009 as
a Grower Director. He was most recently
re-elected at the 2015 general meeting.
Mr Price grows cotton
in both the
Mungindi and St George regions and has
been involved in the cotton industry since 1978. He brings
with him extensive industry and commercial expertise. Mr
Price is a member of the MFRM committee.
Tim Watson – Non-Executive
Director – 55
GAICD
Mr. Watson joined the Board in December
2014 as a Grower Director. He was most
recently re-elected at the 2015 general
meeting. He grows cotton in the Hillston
Region and has been involved in the cotton
industry since 2000 and is a member of the Hillston District
Irrigators Association and the Lachlan River Customer
Service Committee. Currently he is also a representative
of the Lachlan Valley Water Users Association. He brings
with him extensive industry and commercial expertise for
the cotton and general agricultural industry. He was also
recognised by the cotton industry by being the recipient of
the 2014 Australian Cotton Grower of the Year Award.
For personal use only EXECUTIVE MANAGEMENT TEAM
Bailey Garcha - Company
Secretary / General Counsel
BLLB, BFA, GAICD, ACIS, FACIS
Sparke
Bailey joined Namoi Cotton in 2003. He
has previously held legal and corporate
positions with
Helmore
Lawyers, Minter Ellison Lawyers and
the NSW Treasury. His duties include
major contract negotiations, management of litigation,
ASIC and ASX compliance, insurance, superannuation,
employment law management, joint venture, board and
investor relations, corporate governance, internal legal
advice, commercial law and management of transactions
for Namoi Cotton. Bailey is involved in the implementation
of commercial, corporate and operational projects for
Namoi. Bailey brings over 20 years of legal, corporate and
commercial experience to the senior management team.
David Lindsay - General Manager
Grower Services and Marketing
BAppSci, Dip Exp Man, MBA
in
David joined Namoi Cotton in 1991. David
has previously held a number of positions
with Namoi Cotton
the Grower
Services and Trading departments.
Prior to joining Namoi Cotton David held
an agricultural management position with National Mutual
Rural Enterprises. David is responsible for domestic
marketing, grower finance, risk management with growers,
pool management, joint venture management and trading.
David brings over 25 years of specialised cotton industry
experience to the senior management team.
Shane McGregor - Chief
Operations Officer
MBA - Master Business Admin, MPM -
Masters of Project Management, USDA
Accredited Cotton Classifier
Shane joined Namoi Cotton in 1999.
Shane has previously held cotton and
cottonseed management positions with
Cotton Trading Corporation Pty Ltd and has been involved
in the cotton industry in various management capacities
since 1991. He has significant management experience in
domestic marketing, commodities exports, logistics, cotton
classing and commodities packing operations and brings
over 20 years of specialised cotton industry experience
to the senior management team. Shane was previously
the General Manager Commodities for Namoi Cotton and
in November 2013 became the Chief Operations Officer
with responsibility for the performance of the ginning,
ginning technical support services, cotton seed trading,
commodities packing services, occupational health and
safety, human resources and environmental business
functions.
2017 ANNUAL REPORT | 11
Jeremy Callachor – Chief
Executive Officer
BFA (Hons), CA, MAICD
Appointed Chief Executive Officer
in
November 2010 and responsible for all
of Namoi Cotton’s business operations.
Between January 2008 and November
2010, Jeremy held the role of General
Manager – Operations & Human Resources and was
responsible for all Namoi Cotton’s ginning operations,
occupational health & safety and human resources
management. Jeremy also holds the role of CEO for the
Namoi Cotton Alliance Joint Venture. Between June 2003
and January 2008 Jeremy was Namoi Cotton’s Chief
Financial Officer managing all financial, taxation, treasury
and statutory reporting activities. Jeremy has had previous
financial management experience with Harvest Haul
Australia and Rolls Royce Marine in Scotland, UK. Jeremy
has been involved with Namoi Cotton for more than 20 years
and brings a strong knowledge of Namoi Cotton’s various
business operations and strategic capability to the Co-
operative. Jeremy is also on the board of Cotton Australia.
Stuart Greenwood – Chief
Financial Officer
B.FIN. Admin, CA
Stuart joined Namoi Cotton in 2001. He
was appointed Chief Financial Officer
in January 2008, following four years as
Financial Controller, prior to this holding
various senior accounting positions
within Namoi Cotton. Stuart has previously held financial
management positions within the cotton industry for CSD
and Pursehouse Rural. Stuart oversees and manages
all financial, taxation, treasury and statutory reporting
activities for Namoi Cotton. Stuart brings over 25 years of
agricultural financial and management experience to the
senior management team.
For personal use only NAMO I COTTON CO-O PE RATIVE LT D
ABN 76 010 485 588
FIN ANCIAL REP ORT – YEAR E NDE D 28 FEB RU A RY 2 01 7
2017 ANNUAL REPORT | 12
For personal use only FINAN CIAL REPORT – CONTENT S
Appendix 4E .......................................................................................................................... 14
Directors’ Report .................................................................................................................. 15
Auditor’s Independence Declaration .................................................................................... 28
Independent Auditor’s Report .............................................................................................. 29
Directors’ Declaration .......................................................................................................... 35
Statement of Profit and Loss and Other Comprehensive Income ......................................... 36
Balance Sheet ....................................................................................................................... 37
Statement of Cash Flows ...................................................................................................... 38
Statement of Changes in Equity ............................................................................................ 39
Notes to the Financial Statements ....................................................................................... 40
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27.
Summary of Significant Accounting Policies ............................................................. 40
Revenue and Expenses.............................................................................................. 51
Income Tax ................................................................................................................ 52
Earnings per Unit ...................................................................................................... 54
Distributions Paid or Provided on Co-operative Capital Units .................................. 55
Cash and Cash Equivalents ....................................................................................... 56
Trade and Other Receivables..................................................................................... 57
Inventories ................................................................................................................ 59
Derivative Financial Instruments .............................................................................. 59
Investments in Associates and Joint Ventures using the equity method .................. 60
Interest in Joint Operations ....................................................................................... 63
Interest in Jointly Controlled Assets ......................................................................... 63
Property, Plant and Equipment ................................................................................. 64
Trade and Other Payables ......................................................................................... 66
Interest Bearing Liabilities ........................................................................................ 67
Provisions .................................................................................................................. 69
Co-operative Grower Member Shares ...................................................................... 69
Contributed Equity .................................................................................................... 70
Nature and Purpose of Reserves .............................................................................. 71
Segment Information ................................................................................................ 72
Commitments and Contingencies ............................................................................. 75
Significant Events after Balance Date ....................................................................... 76
Related Party Disclosures ......................................................................................... 77
Directors’ and Executive Disclosure .......................................................................... 78
Remuneration of Auditors ......................................................................................... 79
Financial Risk Management Objectives and Policies ................................................ 79
Other Non-Financial Information .............................................................................. 89
2017 ANNUAL REPORT | 13
For personal use only Namoi Cotton Co-operative Limited
APPENDIX 4E
The information contained in this report is for the full-year ended 28 February 2017 and the previous
corresponding period, 29 February 2016.
RESULTS FOR ANNOUNCEMENT TO MARKET
Revenues from ordinary activities
Profit/(Loss) from ordinary activities after tax attributable to members
Net profit/(loss) for the period attributable to members
Dividends (distributions)
Final distribution - (Refer Note 5)
Interim distribution
% Change
$'000
Up 27%
to
355,344
n/c
n/c
283
283
Amount
per Security
Unfranked Amount
per Security
Nil
-
-
-
Record date for determining entitlements to the final dividend
N/A
Brief explanation of any of the figures reported above and short details of any bonus or cash issue or
other item(s) of importance not previously released to the market:
Overall financial performance has improved substantially year on year. Cotton ginning and seed volumes have
improved through the crop size increase to 2.7m bales and targeted market share strategies delivering an
improvement in a net contribution for the ginning segment despite facing heavy competition for bales in central
growing regions. Consistent ginning throughput rates and scaled work systems ensured effective management of
ginning variable costs. Seed trading margins again were strong supported by domestic feed demand and Chinese
imports. The challenging market conditions facing Namoi Cotton Alliance’s (NCA’s) lint marketing business for
the prior 2015 crop eased slightly through the year generating improved margins on the greater volume of bales
marketed from the 2016 crop. NCA’s commodity packing operations benefitted from increased volumes
associated with a large chick pea harvest associated with record prices.
For further explanation of the annual financial results please refer to the Review of Operations
shown in Page 4 of this report.
Earnings per share
28 February 2017
29 February 2016
Basic earnings per ordinary security
0.3 cents
(6.9 cents)
Net tangible assets per security
Net tangible asset backing per ordinary security
113 cents
112 cents
28 February 2017
29 February 2016
The above specific requirements of Appendix 4E should be read in conjunction with the complete
final report. This financial report has been audited.
Namoi Cotton Co-operative Limited
DIRECTORS’ REPORT
Financial report for the year ended 28 February 2017
Your directors present their report on the consolidated entity consisting of Namoi Cotton Co-operative Limited
and the entities it controlled at the end of or during the year ended 28 February 2017.
Principal activities
marketing cotton.
Namoi Cotton is a co-operative listed on the Australian Stock Exchange Ltd that is domiciled in Australia. The
principal activities of the entities in the economic entity during the course of the year were ginning and
2016-2017 full year financial results
Namoi Cotton recorded a consolidated net profit after tax and rebate from continuing operations of $0.3 million
for the full year ended 28 February 2017 (2016: a net loss of $7.6 million). Positive cash flows from operating
activities were recorded at $5.5 million.
Overall financial performance has improved substantially year on year. Cotton ginning and seed volumes have
improved through the crop size increase to 2.7m bales and targeted market share strategies delivering an
improvement in a net contribution for the ginning segment despite facing heavy competition for bales in central
growing regions. Consistent ginning throughput rates and scaled work systems ensured effective management
of ginning variable costs. Seed trading margins again were strong supported by domestic feed demand and
Chinese imports. The challenging market conditions facing Namoi Cotton Alliance’s (NCA’s) lint marketing
business for the prior 2015 crop eased slightly through the year generating improved margins on the greater
volume of bales marketed from the 2016 crop. NCA’s commodity packing operations benefitted from increased
volumes associated with a large chick pea harvest associated with record prices.
Net assets during the period have increased by $0.3 million (2016: decreased by $1.1 million) representing a net
tangible asset backing of $1.13 per unit of Namoi Capital Stock (2016: $1.12).
Dividends and rebates
The directors have announced that Namoi Cotton will not pay a final distribution per unit of Namoi Capital Stock,
nor was an interim distribution declared in respect of the year (2016: nil cents) per unit of Namoi Capital Stock
amounting to $nil (2016: $nil million). The Directors have determined not to pay a rebate to grower members in
respect to the period (2016: $nil).
Review of operations
The 2016 Australian cotton crop had overall production recorded at 2.7 million bales (2015 crop: 2.3 million
bales) an increase of 17%. The volume of planted crop was again impacted by a general lack of available irrigation
water in public dams and on farm water storages. The crop benefited from excellent pre-planting and in crop
growing conditions resulting in historically high yields for both irrigated and dryland crops.
Namoi Cotton ginned 689,000 bales (including 100% of joint venture bales) of the 2016 crop (2015 crop: 535,000
bales). The 29% increase in volumes demonstrated the impact of a considered market share campaign for
irrigated cotton and increased dryland volumes in core areas which has been underpinned by consistent
throughput rates and scaled works systems allowing effective management of ginning variable costs. Overall
ginning contribution improved by 27% on the back of improved volumes. The Boggabri facility increased ginning
volumes by 33% from the 2015 crop due to the increased dryland crops in the Upper Namoi valley and recorded
its second highest annual production year in the last 15 years.
Namoi Cotton has continued to invest in its core infrastructure introducing the latest technology to provide
improved services to growers. The Mungindi gin successfully commissioned a $1m upgrade to its press delivering
greater reliability to ginning operations whilst Uster Intellegin units were installed at Wathagar and Macintyre II
along with an automated bagging system also at Wathagar. Post season investment in our ginning network has
continued with the more significant undertakings including a yard upgrade at Merah North doubling existing
capacity along with a further major press upgrade at that site, the installation of a third gin stand and associated
line of processing equipment at North Bourke, the installation of a fourth gin stand and associated line of
processing equipment and press upgrade at Boggabri along with installation of an upgraded gin stand and
Year Ended 28 February 2017
Appendix 4E
2017 ANNUAL REPORT | 14
Page 3
Year Ended 28 February 2017
Directors’ Report
Page 4
For personal use only Namoi Cotton Co-operative Limited
APPENDIX 4E
The information contained in this report is for the full-year ended 28 February 2017 and the previous
corresponding period, 29 February 2016.
RESULTS FOR ANNOUNCEMENT TO MARKET
Revenues from ordinary activities
Profit/(Loss) from ordinary activities after tax attributable to members
Net profit/(loss) for the period attributable to members
Dividends (distributions)
Final distribution - (Refer Note 5)
Interim distribution
% Change
$'000
Up 27%
to
355,344
n/c
n/c
283
283
Amount
Unfranked Amount
per Security
per Security
Nil
-
-
-
Record date for determining entitlements to the final dividend
N/A
Brief explanation of any of the figures reported above and short details of any bonus or cash issue or
other item(s) of importance not previously released to the market:
Overall financial performance has improved substantially year on year. Cotton ginning and seed volumes have
improved through the crop size increase to 2.7m bales and targeted market share strategies delivering an
improvement in a net contribution for the ginning segment despite facing heavy competition for bales in central
growing regions. Consistent ginning throughput rates and scaled work systems ensured effective management of
ginning variable costs. Seed trading margins again were strong supported by domestic feed demand and Chinese
imports. The challenging market conditions facing Namoi Cotton Alliance’s (NCA’s) lint marketing business for
the prior 2015 crop eased slightly through the year generating improved margins on the greater volume of bales
marketed from the 2016 crop. NCA’s commodity packing operations benefitted from increased volumes
associated with a large chick pea harvest associated with record prices.
For further explanation of the annual financial results please refer to the Review of Operations
shown in Page 4 of this report.
Earnings per share
Net tangible assets per security
Basic earnings per ordinary security
0.3 cents
(6.9 cents)
28 February 2017
29 February 2016
Net tangible asset backing per ordinary security
113 cents
112 cents
28 February 2017
29 February 2016
The above specific requirements of Appendix 4E should be read in conjunction with the complete
final report. This financial report has been audited.
Namoi Cotton Co-operative Limited
DIRECTORS’ REPORT
Financial report for the year ended 28 February 2017
Your directors present their report on the consolidated entity consisting of Namoi Cotton Co-operative Limited
and the entities it controlled at the end of or during the year ended 28 February 2017.
Principal activities
Namoi Cotton is a co-operative listed on the Australian Stock Exchange Ltd that is domiciled in Australia. The
principal activities of the entities in the economic entity during the course of the year were ginning and
marketing cotton.
2016-2017 full year financial results
Namoi Cotton recorded a consolidated net profit after tax and rebate from continuing operations of $0.3 million
for the full year ended 28 February 2017 (2016: a net loss of $7.6 million). Positive cash flows from operating
activities were recorded at $5.5 million.
Overall financial performance has improved substantially year on year. Cotton ginning and seed volumes have
improved through the crop size increase to 2.7m bales and targeted market share strategies delivering an
improvement in a net contribution for the ginning segment despite facing heavy competition for bales in central
growing regions. Consistent ginning throughput rates and scaled work systems ensured effective management
of ginning variable costs. Seed trading margins again were strong supported by domestic feed demand and
Chinese imports. The challenging market conditions facing Namoi Cotton Alliance’s (NCA’s) lint marketing
business for the prior 2015 crop eased slightly through the year generating improved margins on the greater
volume of bales marketed from the 2016 crop. NCA’s commodity packing operations benefitted from increased
volumes associated with a large chick pea harvest associated with record prices.
Net assets during the period have increased by $0.3 million (2016: decreased by $1.1 million) representing a net
tangible asset backing of $1.13 per unit of Namoi Capital Stock (2016: $1.12).
Dividends and rebates
The directors have announced that Namoi Cotton will not pay a final distribution per unit of Namoi Capital Stock,
nor was an interim distribution declared in respect of the year (2016: nil cents) per unit of Namoi Capital Stock
amounting to $nil (2016: $nil million). The Directors have determined not to pay a rebate to grower members in
respect to the period (2016: $nil).
Review of operations
The 2016 Australian cotton crop had overall production recorded at 2.7 million bales (2015 crop: 2.3 million
bales) an increase of 17%. The volume of planted crop was again impacted by a general lack of available irrigation
water in public dams and on farm water storages. The crop benefited from excellent pre-planting and in crop
growing conditions resulting in historically high yields for both irrigated and dryland crops.
Namoi Cotton ginned 689,000 bales (including 100% of joint venture bales) of the 2016 crop (2015 crop: 535,000
bales). The 29% increase in volumes demonstrated the impact of a considered market share campaign for
irrigated cotton and increased dryland volumes in core areas which has been underpinned by consistent
throughput rates and scaled works systems allowing effective management of ginning variable costs. Overall
ginning contribution improved by 27% on the back of improved volumes. The Boggabri facility increased ginning
volumes by 33% from the 2015 crop due to the increased dryland crops in the Upper Namoi valley and recorded
its second highest annual production year in the last 15 years.
Namoi Cotton has continued to invest in its core infrastructure introducing the latest technology to provide
improved services to growers. The Mungindi gin successfully commissioned a $1m upgrade to its press delivering
greater reliability to ginning operations whilst Uster Intellegin units were installed at Wathagar and Macintyre II
along with an automated bagging system also at Wathagar. Post season investment in our ginning network has
continued with the more significant undertakings including a yard upgrade at Merah North doubling existing
capacity along with a further major press upgrade at that site, the installation of a third gin stand and associated
line of processing equipment at North Bourke, the installation of a fourth gin stand and associated line of
processing equipment and press upgrade at Boggabri along with installation of an upgraded gin stand and
Year Ended 28 February 2017
Appendix 4E
Page 3
Year Ended 28 February 2017
Directors’ Report
Page 4
2017 ANNUAL REPORT | 15
For personal use only It is expected that our cotton seed business will trade more than 260,000mt in the coming financial year, up 31%
from the prior year. Cotton seed trading margins continue to be supported by local and export demand
particularly from China, albeit early yield indications reflect production decreases which are expected to
pressure cotton seed contributions over the course of the year.
NCA’s lint marketing volumes are estimated to be between 600,000 and 700,000 bales from the 2017 crop,
representing an increase of between 18% and 38% from the prior crop. Lint marketing margins are anticipated
to be supported by strong demand from the sub-continent markets of Bangladesh and India, whilst China will
continue to be the major importer of Australian cotton. The containerised commodity packing volumes are
forecast to be consistent with the current record year, again underpinned by a large chickpea plant.
Namoi Cotton’s operations in 2017 are predicted to deliver an improved financial result from the foregoing
volume increases. Production efficiencies from commissioning key gin upgrades, undertaken post the 2016
season, are expected to assist in the efficient and cost effective processing of volumes ahead.
2018 Season
The excessive hot conditions that occurred in the first two months of this year resulted in irrigated cotton
growers utilising significantly more on farm water than planned. In the southern valleys, public water storages
remain reasonably close to full, however in the central and northern valleys dam and river systems have been
drawn down through utilisation of allocations. Despite this the current industry outlook for the 2018 Australian
cotton crop reflects approximately 4.5 million bales of production.
Namoi Cotton is targeting maximising market share in both ginning and cotton seed trading volumes. NCA is
focused on increasing its lint cotton marketing volumes from the current year through effective basis position
management and strong export market access. The commodity packing business will be looking to increase
volumes and broader commodity exposure. A strong focus will be on improving financial performance in the
2018 season.
Rebate
Namoi Cotton will not pay a rebate to active grower members for the 2016 crop (2015 crop: $0.0m).
Significant events after balance date
There have been no significant events after balance date other than as disclosed in Note 22 in this report.
There has been no significant change in the state of affairs of the consolidated entity during the year other than
Significant changes in the state of affairs
as disclosed elsewhere in this report.
Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
associated lint cleaning equipment at Ashley. These projects are all destined to deliver improved services for
growers and variable cost savings for the business.
Our cotton seed trading business shipped and handled 172,000mt (2015 crop: 158,000mt) incorporating a
reduction of 10% in trade seed volume and increased grower seed procurement, up 31% on the prior year. Prices
have remained higher than historical levels supported by local feed demand associated with the dry conditions
and import demand from China. The latter resulting from a reduction in China’s own cotton production in turn
creating a shortfall in available cotton seed volumes and the dairy sector turning to Australia for imports to meet
the demand requirement. This import demand has ultimately led to margins widening despite high prices and
again resulted in cotton seed trading being a strong contributor to the overall financial result.
Namoi Cotton’s 15% interest in the Cargill Oilseeds Australia business contributed a loss of $0.8million (2016:
loss of $0.3 million). This was primarily a function of lower cotton seed crush volumes and competing demand
for whole cotton seed exports. The continuing higher domestic cotton seed prices has challenged operating
margins with pressure also evident from declining meal demand within the dairy and beef sectors.
NCA’s total cotton lint marketing volumes procured for the 2016 season reflected 507,000 bales (2015 season:
378,000 bales). This reflects a 2.3% improvement in market share, achieved through effective basis offerings
and management, despite a competitive environment through the continuing lower overall available Australian
crop volumes. The challenging cotton marketing conditions impacting NCA in 2015 arising from the eroding basis
for Australian cotton whilst persisting into FY2017 have subsided with improved trading results now leading to
widening margins. This resulted in a $3.5m improvement in Namoi Cotton’s share of NCA’s lint business in the
financial results over the prior year.
During the year, the NCA commodity packing business delivered a significant contribution from a record packing
volume of 225,856mt (2015 crop: 150,000mt) including coarse grain and pulses principally chick peas. The
prevailing environment of high prices encouraged growers into large plantings of chick peas, a crop also
presenting agronomic and crop rotational benefits. Prior year investments in storage and intake capability have
been instrumental in ensuring efficient operations and a sound financial result.
Finance costs have remained constant year on year, with the continuing low interest rate environment prevailing
throughout the period. Namoi Cotton was not required to complete any term debt amortisation during the
financial year. Term debt facilities were extended until 2020 during the year with amortisations to recommence
in FY2018.
During the year, the Board advised of the key elements of Namoi Cotton’s strategic plan and that a single ASX
listed class of share structure which recognizes growers is the most suitable future corporate structure for the
Namoi Cotton business to facilitate the outcomes contemplated by the strategic plan. The Board worked through
a consultative process via stakeholder briefing meetings with Grower Members and CCU holders to discuss the
proposed restructure in more detail. Based on generally supportive feedback Namoi Cotton has moved to the
next phase in its journey towards a single ASX listed ordinary share structure which recognizes growers. Detailed
documentation drafting has commenced and is required before regulatory approvals can be sought. Namoi
Cotton is targeting Grower Member and CCU holder meetings around the middle of this financial year to approve
the restructure. The restructure remains at this stage subject to stakeholder and regulatory approval.
Likely developments
2017 Season
The widespread rainfall throughout the 2016 winter and spring filled many cotton area public dams and majority
of on farm storages in addition to providing excellent soil moisture profiles. These events supported an increased
planted area to 472,000 hectares nationally. Since planting however, there have been patchy rainfall events
along with exceptionally hot and dry conditions in January and February. These post planting conditions have
significantly impacted dryland cotton crops and tempered yield expectations of irrigated crops. Despite these
factors, Namoi Cotton estimates the 2017 Australian cotton crop will at this stage still produce a little over 4.0
million bales.
Namoi Cotton anticipates that it will gin between 1.05 million and 1.15 million bales from the 2017 crop,
including 100% of joint venture gins. This represents an improvement of between 52% and 67% from the
previous year.
Year Ended 28 February 2017
Directors’ Report
2017 ANNUAL REPORT | 16
Page 5
Year Ended 28 February 2017
Directors’ Report
Page 6
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
associated lint cleaning equipment at Ashley. These projects are all destined to deliver improved services for
growers and variable cost savings for the business.
Our cotton seed trading business shipped and handled 172,000mt (2015 crop: 158,000mt) incorporating a
reduction of 10% in trade seed volume and increased grower seed procurement, up 31% on the prior year. Prices
have remained higher than historical levels supported by local feed demand associated with the dry conditions
and import demand from China. The latter resulting from a reduction in China’s own cotton production in turn
creating a shortfall in available cotton seed volumes and the dairy sector turning to Australia for imports to meet
the demand requirement. This import demand has ultimately led to margins widening despite high prices and
again resulted in cotton seed trading being a strong contributor to the overall financial result.
Namoi Cotton’s 15% interest in the Cargill Oilseeds Australia business contributed a loss of $0.8million (2016:
loss of $0.3 million). This was primarily a function of lower cotton seed crush volumes and competing demand
for whole cotton seed exports. The continuing higher domestic cotton seed prices has challenged operating
margins with pressure also evident from declining meal demand within the dairy and beef sectors.
NCA’s total cotton lint marketing volumes procured for the 2016 season reflected 507,000 bales (2015 season:
378,000 bales). This reflects a 2.3% improvement in market share, achieved through effective basis offerings
and management, despite a competitive environment through the continuing lower overall available Australian
crop volumes. The challenging cotton marketing conditions impacting NCA in 2015 arising from the eroding basis
for Australian cotton whilst persisting into FY2017 have subsided with improved trading results now leading to
widening margins. This resulted in a $3.5m improvement in Namoi Cotton’s share of NCA’s lint business in the
financial results over the prior year.
During the year, the NCA commodity packing business delivered a significant contribution from a record packing
volume of 225,856mt (2015 crop: 150,000mt) including coarse grain and pulses principally chick peas. The
prevailing environment of high prices encouraged growers into large plantings of chick peas, a crop also
presenting agronomic and crop rotational benefits. Prior year investments in storage and intake capability have
been instrumental in ensuring efficient operations and a sound financial result.
Finance costs have remained constant year on year, with the continuing low interest rate environment prevailing
throughout the period. Namoi Cotton was not required to complete any term debt amortisation during the
financial year. Term debt facilities were extended until 2020 during the year with amortisations to recommence
in FY2018.
During the year, the Board advised of the key elements of Namoi Cotton’s strategic plan and that a single ASX
listed class of share structure which recognizes growers is the most suitable future corporate structure for the
Namoi Cotton business to facilitate the outcomes contemplated by the strategic plan. The Board worked through
a consultative process via stakeholder briefing meetings with Grower Members and CCU holders to discuss the
proposed restructure in more detail. Based on generally supportive feedback Namoi Cotton has moved to the
next phase in its journey towards a single ASX listed ordinary share structure which recognizes growers. Detailed
documentation drafting has commenced and is required before regulatory approvals can be sought. Namoi
Cotton is targeting Grower Member and CCU holder meetings around the middle of this financial year to approve
the restructure. The restructure remains at this stage subject to stakeholder and regulatory approval.
Likely developments
2017 Season
The widespread rainfall throughout the 2016 winter and spring filled many cotton area public dams and majority
of on farm storages in addition to providing excellent soil moisture profiles. These events supported an increased
planted area to 472,000 hectares nationally. Since planting however, there have been patchy rainfall events
along with exceptionally hot and dry conditions in January and February. These post planting conditions have
significantly impacted dryland cotton crops and tempered yield expectations of irrigated crops. Despite these
factors, Namoi Cotton estimates the 2017 Australian cotton crop will at this stage still produce a little over 4.0
million bales.
Namoi Cotton anticipates that it will gin between 1.05 million and 1.15 million bales from the 2017 crop,
including 100% of joint venture gins. This represents an improvement of between 52% and 67% from the
previous year.
Year Ended 28 February 2017
Directors’ Report
It is expected that our cotton seed business will trade more than 260,000mt in the coming financial year, up 31%
from the prior year. Cotton seed trading margins continue to be supported by local and export demand
particularly from China, albeit early yield indications reflect production decreases which are expected to
pressure cotton seed contributions over the course of the year.
NCA’s lint marketing volumes are estimated to be between 600,000 and 700,000 bales from the 2017 crop,
representing an increase of between 18% and 38% from the prior crop. Lint marketing margins are anticipated
to be supported by strong demand from the sub-continent markets of Bangladesh and India, whilst China will
continue to be the major importer of Australian cotton. The containerised commodity packing volumes are
forecast to be consistent with the current record year, again underpinned by a large chickpea plant.
Namoi Cotton’s operations in 2017 are predicted to deliver an improved financial result from the foregoing
volume increases. Production efficiencies from commissioning key gin upgrades, undertaken post the 2016
season, are expected to assist in the efficient and cost effective processing of volumes ahead.
2018 Season
The excessive hot conditions that occurred in the first two months of this year resulted in irrigated cotton
growers utilising significantly more on farm water than planned. In the southern valleys, public water storages
remain reasonably close to full, however in the central and northern valleys dam and river systems have been
drawn down through utilisation of allocations. Despite this the current industry outlook for the 2018 Australian
cotton crop reflects approximately 4.5 million bales of production.
Namoi Cotton is targeting maximising market share in both ginning and cotton seed trading volumes. NCA is
focused on increasing its lint cotton marketing volumes from the current year through effective basis position
management and strong export market access. The commodity packing business will be looking to increase
volumes and broader commodity exposure. A strong focus will be on improving financial performance in the
2018 season.
Rebate
Namoi Cotton will not pay a rebate to active grower members for the 2016 crop (2015 crop: $0.0m).
Significant events after balance date
There have been no significant events after balance date other than as disclosed in Note 22 in this report.
Significant changes in the state of affairs
There has been no significant change in the state of affairs of the consolidated entity during the year other than
as disclosed elsewhere in this report.
Page 5
Year Ended 28 February 2017
Directors’ Report
Page 6
2017 ANNUAL REPORT | 17
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
Directors
Directors
The names, qualifications and experience of the co-operative’s directors that held office throughout the financial
The names, qualifications and experience of the co-operative’s directors that held office throughout the financial
year and up to the date of this report, unless otherwise indicated, are as follows.
year and up to the date of this report, unless otherwise indicated, are as follows.
Stuart C Boydell, Chairman, Non-executive Director, 70
Stuart C Boydell, Chairman, Non-executive Director, 70
Mr. Boydell joined the board of directors as a grower director in June 1994 and has been chairman since
Mr. Boydell joined the board of directors as a grower director in June 1994 and has been chairman since
December 1995. He was most recently re-elected at the 2014 general meetings. He has grown cotton on
December 1995. He was most recently re-elected at the 2014 general meetings. He has grown cotton on
“Cooma” near Moree, NSW for over 20 years and is chairman of the remuneration committee and a member of
“Cooma” near Moree, NSW for over 20 years and is chairman of the remuneration committee and a member of
the audit and compliance committee and marketing and financial risk management committee.
the audit and compliance committee and marketing and financial risk management committee.
Richard Anderson, Non-executive Director, 71, OAM, B.Com, FCA, FCPA
Richard Anderson, Non-executive Director, 71, OAM, B.Com, FCA, FCPA
Mr. Anderson joined the board as a non-grower director in July 2001. He was most recently re-elected at the
Mr. Anderson joined the Board as a Non-Grower Director in July 2001. He was most recently re-elected at the 2016
Mr. Anderson joined the board as a non-grower director in July 2001. He was most recently re-elected at the
the position of managing partner of
2013 general meeting. Mr Anderson previously held
general meeting. Mr Anderson previously held the position of managing partner of PricewaterhouseCoopers in
2013 general meeting. Mr Anderson previously held
the position of managing partner of
PricewaterhouseCoopers in Queensland. He is the chairman of both the audit and compliance committee and
QLD. Mr Anderson is the Chairman of the Audit and Compliance Committee and the MFRM Committee and he is a
PricewaterhouseCoopers in Queensland. He is the chairman of both the audit and compliance committee and
the marketing and financial risk management committee and is a member of the remuneration committee.
member of the Remuneration Committee. During the past three years Mr Anderson has held ASX listed company
the marketing and financial risk management committee and is a member of the remuneration committee.
During the past three years Mr Anderson has held ASX listed company directorships at Data#3 Limited (current
directorships at Data#3 Limited (current – appointed 27 October 1997), Lindsay Australia Ltd (current – appointed
During the past three years Mr Anderson has held ASX listed company directorships at Data#3 Limited (current
– appointed 27 October 1997) and Lindsay Australia Ltd (current – appointed 16 December 2002). He is also
16 December 2002). He is also currently president of the Guide Dogs for the Blind Association of QLD.
– appointed 27 October 1997) and Lindsay Australia Ltd (current – appointed 16 December 2002). He is also
currently president of the Guide Dogs for the Blind Association of Queensland.
currently president of the Guide Dogs for the Blind Association of Queensland.
Michael Boyce, Non-executive Director, 74, FCA, FAICD, B Com, HDA
Michael Boyce, Non-executive Director, 74, FCA, FAICD, B Com, HDA
Mr. Boyce joined the board as a non-grower director in October 2002. He was most recently re-elected at the
Mr. Boyce joined the board as a non-grower director in October 2002. He was most recently re-elected at the
2015 general meeting. He was the founding partner of BOYCE Chartered Accountants. He is currently a director
2015 general meeting. He was the founding partner of BOYCE Chartered Accountants. He is currently a director
of Monbeef Pty Ltd, Hazeldean Pty Ltd, Fugen Hardware Group and Birdnest Pty Ltd. Mr. Boyce is a member of
of Monbeef Pty Ltd, Hazeldean Pty Ltd, Fugen Hardware Group and Birdnest Pty Ltd. Mr. Boyce is a member of
the audit and compliance committee and the remuneration committee.
the audit and compliance committee and the remuneration committee.
Ben Coulton, Non-executive Director, 62
Ben Coulton, Non-executive Director, 62
Mr Coulton joined the board of directors in July 2006 as a grower director. He was most recently re-elected at
Mr Coulton joined the board of directors in July 2006 as a grower director. He was most recently re-elected at
the 2015 general meeting. Mr Coulton has been growing cotton in the MacIntyre region since 1976. He brings
the 2015 general meeting. Mr Coulton has been growing cotton in the MacIntyre region since 1976. He brings
with him extensive industry and commercial expertise.
with him extensive industry and commercial expertise.
Glen Price, Non-executive Director, 61, B Rural Science (Hons), GAICD
Glen Price, Non-executive Director, 61, B Rural Science (Hons), GAICD
Mr Price joined the board of directors in July 2009 as a grower director. He was most recently re-elected at the
Mr Price joined the board of directors in July 2009 as a grower director. He was most recently re-elected at the
2015 general meeting. Mr Price grows cotton in both the Mungindi and St George regions and has been involved
2015 general meeting. Mr Price grows cotton in both the Mungindi and St George regions and has been involved
in the cotton industry since 1978. He brings with him extensive industry and commercial expertise. Mr. Price is
in the cotton industry since 1978. He brings with him extensive industry and commercial expertise. Mr. Price is
a member of the marketing and financial risk management committee.
a member of the marketing and financial risk management committee.
Robert L Green, Non-executive Director, 60, B Bus (QAC) MAICD
Robert L Green, Non-executive Director, 60, B Bus (QAC) MAICD
Mr Green was appointed to the Board as a Non-Grower Director on 27 May 2013. He was elected to the Board
Mr Green was appointed to the Board as a Non-Grower Director on 27 May 2013. He was most recently
Mr Green was appointed to the Board as a Non-Grower Director on 27 May 2013. He was elected to the Board
at the 2013 general meeting. Mr Green has considerable board relevant experience working as a Senior
re-elected to the board at the 2016 general meeting. Mr Green has considerable board relevant experience
at the 2013 general meeting. Mr Green has considerable board relevant experience working as a Senior
Executive and General Manager in the Australian and International agricultural industry for more than 28 years.
working as a Senior Executive and General Manager in the Australian and International agricultural industry for
Executive and General Manager in the Australian and International agricultural industry for more than 28 years.
Key areas of experience include trading, marketing, operations management and business development,
more than 28 years. Key areas of experience include trading, marketing, operations management and business
Key areas of experience include trading, marketing, operations management and business development,
development, including his current role as Chief Executive Officer of Louis Dreyfus Company Australia Pty Ltd.
including his current role as Chief Executive Officer of Louis Dreyfus Commodities Australia Pty Ltd. Mr Green is
including his current role as Chief Executive Officer of Louis Dreyfus Commodities Australia Pty Ltd. Mr Green is
Mr Green is a member of the Audit and Compliance Committee and MFRM Committee and the Remuneration
a member of the audit and compliance committee and the remuneration committee. He has been past President
a member of the audit and compliance committee and the remuneration committee. He has been past President
Committee. He has been past President of the Australian Oilseeds Federation and Australian Grain Exporters
of the Australian Oilseeds Federation and Australian Grain Exporters Association.
Association.
of the Australian Oilseeds Federation and Australian Grain Exporters Association.
Tim Watson, Non-executive Director, 55
Tim Watson, Non-executive Director, 55
Mr Watson joined the Board in December 2014 as a Grower Director. He was elected to the Board at the 2015
Mr Watson joined the Board in December 2014 as a Grower Director. He was elected to the Board at the 2015
general meeting. He grows cotton in the Hillston Region and has been involved in the cotton industry since 2000
general meeting. He grows cotton in the Hillston Region and has been involved in the cotton industry since 2000
and is a member of the Hillston District Irrigators Association and the Lachlan River Customer Service Committee.
and is a member of the Hillston District Irrigators Association and the Lachlan River Customer Service Committee.
Currently he is also a representative of the Lachlan Valley Water Users Association. He brings with him extensive
Currently he is also a representative of the Lachlan Valley Water Users Association. He brings with him extensive
industry and commercial expertise for the cotton and general agricultural industry. He was also recognised by
industry and commercial expertise for the cotton and general agricultural industry. He was also recognised by
the cotton industry by being the recipient of the 2014 Australian Cotton Grower of the Year Award.
the cotton industry by being the recipient of the 2014 Australian Cotton Grower of the Year Award.
Namoi Cotton Co-operative Limited
Company secretary
Bailey Garcha, 43, BLLB, BFA, Dip Legal Studies, Dip Legal Practice, ACIS, GAICD
Mr Garcha joined Namoi Cotton in July 2003 and has previously held legal and commercial positions with Minter
Ellison Lawyers, Sparke Helmore Lawyers and NSW Treasury.
Board & committee meeting attendance
Meetings held and attended by each of the directors during the financial year were as follows:
Committee Meetings1
Marketing
and
Directors'
Meetings1
Audit and
Financial Risk
Compliance
Management Remuneration
15
15
16
15
15
16
16
4
4
4
-
-
4
-
3
3
3
-
-
-
-
1
1
1
-
-
1
-
SC Boydell (Chairman)
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
1 All board members were available to attend directors’ meetings and relevant committee meetings.
Committee membership
As at the date of this report, the co-operative had an audit and compliance committee, a marketing and financial
risk management committee and a remuneration committee.
Members acting on the committees of the Board during the year were:
Audit and Compliance
Marketing and Financial Risk
Remuneration
RA Anderson (Chairman)
RA Anderson (Chairman)
SC Boydell (Chairman)
Management
SC Boydell
G Price
RA Anderson
R Green
M Boyce
M Boyce
SC Boydell
R Green
There have been no changes to the CEO or other KMP in the period after the reporting date and prior to the
date when this financial report was authorised for issue.
Remuneration report (audited)
This remuneration report outlines the director and executive remuneration arrangements of the co-operative
and the consolidated entity in accordance with the requirements of the Corporations Act 2001 and its
Regulations. For the purposes of this report Key Management Personnel (KMP) of the group are defined as those
having the authority and responsibility either directly or indirectly for planning, directing and controlling the
major activities of the co-operative and the group, including any director of the co-operative.
Year Ended 28 February 2017
Year Ended 28 February 2017
Directors’ Report
Directors’ Report
2017 ANNUAL REPORT | 18
Page 7
Page 7
Year Ended 28 February 2017
Directors’ Report
Page 8
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
Directors
Directors
The names, qualifications and experience of the co-operative’s directors that held office throughout the financial
The names, qualifications and experience of the co-operative’s directors that held office throughout the financial
year and up to the date of this report, unless otherwise indicated, are as follows.
year and up to the date of this report, unless otherwise indicated, are as follows.
Stuart C Boydell, Chairman, Non-executive Director, 70
Stuart C Boydell, Chairman, Non-executive Director, 70
Mr. Boydell joined the board of directors as a grower director in June 1994 and has been chairman since
Mr. Boydell joined the board of directors as a grower director in June 1994 and has been chairman since
December 1995. He was most recently re-elected at the 2014 general meetings. He has grown cotton on
December 1995. He was most recently re-elected at the 2014 general meetings. He has grown cotton on
“Cooma” near Moree, NSW for over 20 years and is chairman of the remuneration committee and a member of
“Cooma” near Moree, NSW for over 20 years and is chairman of the remuneration committee and a member of
the audit and compliance committee and marketing and financial risk management committee.
the audit and compliance committee and marketing and financial risk management committee.
Richard Anderson, Non-executive Director, 71, OAM, B.Com, FCA, FCPA
Richard Anderson, Non-executive Director, 71, OAM, B.Com, FCA, FCPA
Mr. Anderson joined the board as a non-grower director in July 2001. He was most recently re-elected at the
Mr. Anderson joined the board as a non-grower director in July 2001. He was most recently re-elected at the
2013 general meeting. Mr Anderson previously held
the position of managing partner of
2013 general meeting. Mr Anderson previously held
PricewaterhouseCoopers in Queensland. He is the chairman of both the audit and compliance committee and
the position of managing partner of
PricewaterhouseCoopers in Queensland. He is the chairman of both the audit and compliance committee and
the marketing and financial risk management committee and is a member of the remuneration committee.
the marketing and financial risk management committee and is a member of the remuneration committee.
During the past three years Mr Anderson has held ASX listed company directorships at Data#3 Limited (current
During the past three years Mr Anderson has held ASX listed company directorships at Data#3 Limited (current
– appointed 27 October 1997) and Lindsay Australia Ltd (current – appointed 16 December 2002). He is also
– appointed 27 October 1997) and Lindsay Australia Ltd (current – appointed 16 December 2002). He is also
currently president of the Guide Dogs for the Blind Association of Queensland.
currently president of the Guide Dogs for the Blind Association of Queensland.
Michael Boyce, Non-executive Director, 74, FCA, FAICD, B Com, HDA
Michael Boyce, Non-executive Director, 74, FCA, FAICD, B Com, HDA
Mr. Boyce joined the board as a non-grower director in October 2002. He was most recently re-elected at the
Mr. Boyce joined the board as a non-grower director in October 2002. He was most recently re-elected at the
2015 general meeting. He was the founding partner of BOYCE Chartered Accountants. He is currently a director
2015 general meeting. He was the founding partner of BOYCE Chartered Accountants. He is currently a director
of Monbeef Pty Ltd, Hazeldean Pty Ltd, Fugen Hardware Group and Birdnest Pty Ltd. Mr. Boyce is a member of
of Monbeef Pty Ltd, Hazeldean Pty Ltd, Fugen Hardware Group and Birdnest Pty Ltd. Mr. Boyce is a member of
the audit and compliance committee and the remuneration committee.
the audit and compliance committee and the remuneration committee.
Ben Coulton, Non-executive Director, 62
Ben Coulton, Non-executive Director, 62
Mr Coulton joined the board of directors in July 2006 as a grower director. He was most recently re-elected at
Mr Coulton joined the board of directors in July 2006 as a grower director. He was most recently re-elected at
the 2015 general meeting. Mr Coulton has been growing cotton in the MacIntyre region since 1976. He brings
the 2015 general meeting. Mr Coulton has been growing cotton in the MacIntyre region since 1976. He brings
with him extensive industry and commercial expertise.
with him extensive industry and commercial expertise.
Glen Price, Non-executive Director, 61, B Rural Science (Hons), GAICD
Glen Price, Non-executive Director, 61, B Rural Science (Hons), GAICD
Mr Price joined the board of directors in July 2009 as a grower director. He was most recently re-elected at the
Mr Price joined the board of directors in July 2009 as a grower director. He was most recently re-elected at the
2015 general meeting. Mr Price grows cotton in both the Mungindi and St George regions and has been involved
2015 general meeting. Mr Price grows cotton in both the Mungindi and St George regions and has been involved
in the cotton industry since 1978. He brings with him extensive industry and commercial expertise. Mr. Price is
in the cotton industry since 1978. He brings with him extensive industry and commercial expertise. Mr. Price is
a member of the marketing and financial risk management committee.
a member of the marketing and financial risk management committee.
Robert L Green, Non-executive Director, 60, B Bus (QAC) MAICD
Robert L Green, Non-executive Director, 60, B Bus (QAC) MAICD
Mr Green was appointed to the Board as a Non-Grower Director on 27 May 2013. He was elected to the Board
Mr Green was appointed to the Board as a Non-Grower Director on 27 May 2013. He was elected to the Board
at the 2013 general meeting. Mr Green has considerable board relevant experience working as a Senior
at the 2013 general meeting. Mr Green has considerable board relevant experience working as a Senior
Executive and General Manager in the Australian and International agricultural industry for more than 28 years.
Executive and General Manager in the Australian and International agricultural industry for more than 28 years.
Key areas of experience include trading, marketing, operations management and business development,
Key areas of experience include trading, marketing, operations management and business development,
including his current role as Chief Executive Officer of Louis Dreyfus Commodities Australia Pty Ltd. Mr Green is
including his current role as Chief Executive Officer of Louis Dreyfus Commodities Australia Pty Ltd. Mr Green is
a member of the audit and compliance committee and the remuneration committee. He has been past President
a member of the audit and compliance committee and the remuneration committee. He has been past President
of the Australian Oilseeds Federation and Australian Grain Exporters Association.
of the Australian Oilseeds Federation and Australian Grain Exporters Association.
Tim Watson, Non-executive Director, 55
Tim Watson, Non-executive Director, 55
Mr Watson joined the Board in December 2014 as a Grower Director. He was elected to the Board at the 2015
Mr Watson joined the Board in December 2014 as a Grower Director. He was elected to the Board at the 2015
general meeting. He grows cotton in the Hillston Region and has been involved in the cotton industry since 2000
general meeting. He grows cotton in the Hillston Region and has been involved in the cotton industry since 2000
and is a member of the Hillston District Irrigators Association and the Lachlan River Customer Service Committee.
and is a member of the Hillston District Irrigators Association and the Lachlan River Customer Service Committee.
Currently he is also a representative of the Lachlan Valley Water Users Association. He brings with him extensive
Currently he is also a representative of the Lachlan Valley Water Users Association. He brings with him extensive
industry and commercial expertise for the cotton and general agricultural industry. He was also recognised by
industry and commercial expertise for the cotton and general agricultural industry. He was also recognised by
the cotton industry by being the recipient of the 2014 Australian Cotton Grower of the Year Award.
the cotton industry by being the recipient of the 2014 Australian Cotton Grower of the Year Award.
Namoi Cotton Co-operative Limited
Company secretary
Bailey Garcha, 43, BLLB, BFA, Dip Legal Studies, Dip Legal Practice, ACIS, GAICD
Mr Garcha joined Namoi Cotton in July 2003 and has previously held legal and commercial positions with Minter
Ellison Lawyers, Sparke Helmore Lawyers and NSW Treasury.
Board & committee meeting attendance
Meetings held and attended by each of the directors during the financial year were as follows:
Committee Meetings1
Marketing
and
Financial Risk
Management Remuneration
Audit and
Compliance
Directors'
Meetings1
15
15
16
15
15
16
16
4
4
4
-
-
4
-
3
3
-
-
3
-
-
1
1
1
-
-
1
-
SC Boydell (Chairman)
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
1 All board members were available to attend directors’ meetings and relevant committee meetings.
Committee membership
As at the date of this report, the co-operative had an audit and compliance committee, a marketing and financial
risk management committee and a remuneration committee.
Members acting on the committees of the Board during the year were:
Audit and Compliance
RA Anderson (Chairman)
M Boyce
SC Boydell
R Green
Marketing and Financial Risk
Management
RA Anderson (Chairman)
SC Boydell
G Price
Remuneration
SC Boydell (Chairman)
RA Anderson
R Green
M Boyce
There have been no changes to the CEO or other KMP in the period after the reporting date and prior to the
date when this financial report was authorised for issue.
Remuneration report (audited)
This remuneration report outlines the director and executive remuneration arrangements of the co-operative
and the consolidated entity in accordance with the requirements of the Corporations Act 2001 and its
Regulations. For the purposes of this report Key Management Personnel (KMP) of the group are defined as those
having the authority and responsibility either directly or indirectly for planning, directing and controlling the
major activities of the co-operative and the group, including any director of the co-operative.
Year Ended 28 February 2017
Year Ended 28 February 2017
Directors’ Report
Directors’ Report
Page 7
Page 7
Year Ended 28 February 2017
Directors’ Report
Page 8
2017 ANNUAL REPORT | 19
For personal use only Namoi Cotton Co-operative Limited
a)
Details of Directors and Executives
Directors
Mr S C Boydell
Mr R A Anderson
Mr M Boyce
Mr B Coulton
Mr G Price
Mr R Green
Mr T J Watson
Executives
Chairman, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Chief Executive Officer (CEO)
Mr J Callachor
Mr S Greenwood Chief Financial Officer (CFO)
Mr D Lindsay
Mr B Garcha
Mr S McGregor
General Manager – Grower Services and Marketing
General Counsel and Company Secretary
Chief Operations Officer
b)
Compensation of KMP
Non-executive directors have been encouraged by the board to hold shares in the company purchased by the
Compensation Policy
The performance of Namoi Cotton depends upon the quality of its directors and executives. To prosper and
deliver maximised stakeholder returns, Namoi Cotton must attract, motivate and retain highly skilled and
qualified directors and executives.
A non-executive director who has served at least two full terms in office is entitled to a retirement benefit equal
to twice the director’s fees in their last year of service.
The compensation of non-executive directors for the period ending 28 February 2017 is detailed on page 14 of
To this end, Namoi Cotton embodies the following principles in its compensation framework:
�
•
�
•
�
•
Provide competitive rewards to attract high calibre executives;
Link executive rewards to company performance and shareholder value;
A portion of executive compensation is ‘at risk’, dependent upon the company and individual executive
meeting pre-determined performance benchmarks; and
Establish performance hurdles in relation to variable executive compensation.
�
•
Remuneration Committee
The remuneration committee of the board of directors of Namoi Cotton is responsible for determining and
reviewing compensation arrangements for all KMP, including the directors, the CEO and other members of the
senior executive team.
The remuneration committee assesses compensation arrangements of KMP annually, by reference to relevant
employment market conditions and available independent external remuneration data. The overall objective of
this assessment is to ensure maximisation of stakeholder returns from the retention of a high quality board and
executive team employees.
The Remuneration Committee engaged Mercer Consulting to provide recommendations relating to the renewal
of the CEO’s contract during the year. Those charged with governance are satisfied that the advice received was
free from undue influence from the KMP to whom the remuneration recommendations applied, as Mercer
Consulting reported directly to the Remuneration Committee.
The recommendations along with other factors were considered in the negotiation of the contract renewal. The
fees paid to Mercer consulting totalled $8,000.
Compensation Structure
In accordance with best practice corporate governance, the structure of non-executive director and executive
compensation is separate and distinct.
Year Ended 28 February 2017
Directors’ Report
2017 ANNUAL REPORT | 20
Page 9
Year Ended 28 February 2017
Directors’ Report
Page 10
Namoi Cotton Co-operative Limited
i) Non-executive Director Compensation
Objective
Structure
The board seeks to set aggregate compensation at a level that provides the company with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
The co-operative rules specify that the Members at each general meeting shall determine compensation of non-
executive directors. The latest amendment was at the general meeting held on 27 July 2005 when the Members
approved an aggregate compensation of $310,000 per year plus applicable committee fees.
The amount of compensation sought to be approved by Members and the manner in which it is apportioned
amongst directors is reviewed annually. The board may consider advice from external consultants as well as the
fees paid to non-executive directors of comparable companies when undertaking the annual review process.
Each director receives a fee for being a director of the company. An additional fee ($2,500 per committee, $7,500
to chair a committee) is also paid for each board committee on which a director sits. The payment of additional
fees for serving on a committee recognises the additional time commitment required by directors who serve on
one or more sub-committees.
director on market.
ii)
Executive Compensation
this report.
Objective
The co-operative aims to reward executives with a level and mix of compensation commensurate with their
position and responsibilities within the co-operative so as to:
reward executives for performance against targets set by reference to appropriate benchmarks;
align the interest of executives with those of shareholders;
link rewards with the strategic goals and performance of the co-operative; and
ensure total compensation is competitive by market standards.
Employment agreements have been negotiated with the CEO and other KMP. Details of these contracts are
provided on pages 12 and 13 of this report.
Each KMP agreement includes compensation which consists of the following key elements:
Fixed Compensation;
Variable Compensation comprising Short Term Incentives (STI)
The remuneration committee establishes the proportion of fixed and variable (potential STI) compensation for
Structure
�
�
�
�
�
�
KMP.
Objective
iii) Fixed Compensation
The remuneration committee reviews fixed compensation annually. The process consists of a review of
companywide, business unit and
individual performance, relevant
internal and market comparative
compensation and, where appropriate, independent external remuneration data of equivalent industry sectors.
For personal use only Namoi Cotton Co-operative Limited
i) Non-executive Director Compensation
Objective
The board seeks to set aggregate compensation at a level that provides the company with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The co-operative rules specify that the Members at each general meeting shall determine compensation of non-
executive directors. The latest amendment was at the general meeting held on 27 July 2005 when the Members
approved an aggregate compensation of $310,000 per year plus applicable committee fees.
The amount of compensation sought to be approved by Members and the manner in which it is apportioned
amongst directors is reviewed annually. The board may consider advice from external consultants as well as the
fees paid to non-executive directors of comparable companies when undertaking the annual review process.
Each director receives a fee for being a director of the company. An additional fee ($2,500 per committee, $7,500
to chair a committee) is also paid for each board committee on which a director sits. The payment of additional
fees for serving on a committee recognises the additional time commitment required by directors who serve on
one or more sub-committees.
Non-executive directors have been encouraged by the board to hold shares in the company purchased by the
director on market.
The performance of Namoi Cotton depends upon the quality of its directors and executives. To prosper and
deliver maximised stakeholder returns, Namoi Cotton must attract, motivate and retain highly skilled and
A non-executive director who has served at least two full terms in office is entitled to a retirement benefit equal
to twice the director’s fees in their last year of service.
The compensation of non-executive directors for the period ending 28 February 2017 is detailed on page 14 of
this report.
23
ii)
Executive Compensation
Objective
The co-operative aims to reward executives with a level and mix of compensation commensurate with their
position and responsibilities within the co-operative so as to:
�
•
�
•
�
•
�
•
reward executives for performance against targets set by reference to appropriate benchmarks;
align the interest of executives with those of shareholders;
link rewards with the strategic goals and performance of the co-operative; and
ensure total compensation is competitive by market standards.
Namoi Cotton Co-operative Limited
a)
Details of Directors and Executives
Directors
Mr S C Boydell
Mr R A Anderson
Mr M Boyce
Mr B Coulton
Mr G Price
Mr R Green
Mr T J Watson
Executives
Chairman, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Mr J Callachor
Chief Executive Officer (CEO)
Mr S Greenwood Chief Financial Officer (CFO)
Mr D Lindsay
Mr B Garcha
Mr S McGregor
General Manager – Grower Services and Marketing
General Counsel and Company Secretary
Chief Operations Officer
b)
Compensation of KMP
Compensation Policy
qualified directors and executives.
To this end, Namoi Cotton embodies the following principles in its compensation framework:
Provide competitive rewards to attract high calibre executives;
Link executive rewards to company performance and shareholder value;
A portion of executive compensation is ‘at risk’, dependent upon the company and individual executive
meeting pre-determined performance benchmarks; and
Establish performance hurdles in relation to variable executive compensation.
�
�
�
�
Remuneration Committee
senior executive team.
The remuneration committee of the board of directors of Namoi Cotton is responsible for determining and
reviewing compensation arrangements for all KMP, including the directors, the CEO and other members of the
The remuneration committee assesses compensation arrangements of KMP annually, by reference to relevant
employment market conditions and available independent external remuneration data. The overall objective of
this assessment is to ensure maximisation of stakeholder returns from the retention of a high quality board and
executive team employees.
The Remuneration Committee engaged Mercer Consulting to provide recommendations relating to the renewal
of the CEO’s contract during the year. Those charged with governance are satisfied that the advice received was
free from undue influence from the KMP to whom the remuneration recommendations applied, as Mercer
Consulting reported directly to the Remuneration Committee.
Each KMP agreement includes compensation which consists of the following key elements:
�
•
�
•
Fixed Compensation;
Variable Compensation comprising Short Term Incentives (STI)
The remuneration committee establishes the proportion of fixed and variable (potential STI) compensation for
KMP.
The recommendations along with other factors were considered in the negotiation of the contract renewal. The
fees paid to Mercer consulting totalled $8,000.
iii) Fixed Compensation
Compensation Structure
In accordance with best practice corporate governance, the structure of non-executive director and executive
compensation is separate and distinct.
Objective
The remuneration committee reviews fixed compensation annually. The process consists of a review of
internal and market comparative
individual performance, relevant
companywide, business unit and
compensation and, where appropriate, independent external remuneration data of equivalent industry sectors.
Year Ended 28 February 2017
Directors’ Report
Page 9
Year Ended 28 February 2017
Directors’ Report
Page 10
2017 ANNUAL REPORT | 21
Structure
Employment agreements have been negotiated with the CEO and other KMP. Details of these contracts are
provided on pages 12 and 13 of this report.
22
23
For personal use only Namoi Cotton Co-operative Limited
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash,
superannuation, remote rent, motor vehicles, housing, income protection insurance and any associated fringe
benefits. The form chosen will be optimal for the recipient without creating undue cost for the co-operative.
iv) Variable Compensation – STI
Objective
The objective of the STI program is to link the achievement of the co-operative’s operational and financial targets
with the compensation received by the executives charged with meeting those targets.
Structure
Actual STI payments depend on the achievement of specific operating targets set at the beginning of the financial
year. The operational targets consist of a number of Key Performance Indicators (KPI’s) covering both financial
and non-financial measures of performance.
STI compensation includes an ‘at risk’ element which constitutes fifty percent of the executives’ overall available
STI compensation. This element is wholly dependent on Namoi Cotton achieving a pre-determined level of
financial performance, is discretionary, is additional to the fixed compensation noted below and is not subject
to any predefined KPI’s.
The remaining fifty percent of each executive’s STI compensation was dependent upon the achievement of
financial and non-financial KPI’s in the prior year. The review of individual performance usually occurs within
two months of the balance date. The financial and non-financial KPI’s include but are not limited to critical
operational, profit, safety and developmental targets.
KMP STI payments are ultimately subject to the discretion of the remuneration committee.
For the 2017 financial year, 0% (2016: 0% amounting to $nil) of the STI compensation (both components) was
accrued in the financial statements.
v) Contract for Services
Major provisions of KMP employment agreements are set out below.
Mr Jeremy Callachor, Chief Executive Officer
�
•
�
•
Term of agreement - open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $450,000 (29
February 2016: $450,000)
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 50% of annual
commencing fixed compensation
Payment of a termination benefit on termination equal to 50% of annual commencing fixed compensation
Period of notice to be given by employee or employer - 12 weeks
Mr Stuart Greenwood, Chief Financial Officer
�
•
�
•
Term of agreement – open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $260,595 (29
February 2016: $260,595)
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
fixed compensation
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
�
•
�
•
�
•
�
•
�
•
�
•
�
•
�
•
Namoi Cotton Co-operative Limited
Mr Bailey Garcha, General Counsel and Company Secretary
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Term of agreement – open
February 2016: $265,423)
fixed compensation
Term of agreement – open
February 2016: $286,307)
fixed compensation
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $265,423 (29
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
Payment of a termination benefit on termination equal to 50% annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
Mr David Lindsay, General Manager - Grower Services and Marketing
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $286,307 (29
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
Mr Shane McGregor, Chief Operations Officer
Term of Agreement - open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $293,839 (29
February 2016: $293,725)
fixed compensation
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
Details of the nature and amount of each element of the emoluments of each director and each of the executive
officers of Namoi Cotton and the consolidated entity for the financial year are as follows:
vi) Compensation of Key Management Personnel for the Year Ended 28 February 2017
Short-term Employee benefits
Post-employment Benefits
Salary & Fees
Cash Bonus
Benefits
Superannuation
Non-
Monetary
Long-term
Benefits
Employee
Leave
Benefits
Retirement
Benefits 1
Termination
Benefits
Total
%
Performance
Related
Directors
SC Boydell
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor 2
D Lindsay 2
B Garcha
S Greenwood
S McGregor
75,288
60,231
47,683
35,135
37,644
47,683
35,135
432,803
257,863
249,482
223,874
270,305
1,773,126
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,044)
14,884
816
17,763
4,047
35,466
7,152
5,722
4,530
3,338
3,576
4,530
3,338
17,974
24,176
16,599
14,825
25,283
14,250
7,000
-
-
-
-
-
-
-
-
-
-
131,043
21,250
-
-
-
-
-
-
-
(12,312)
(1,730)
7,522
4,515
4,960
2,955
-
-
-
-
-
-
-
-
-
-
-
-
-
82,440
65,953
52,213
38,473
41,220
66,463
45,473
436,421
295,193
274,419
260,977
304,595
1,963,840
-
-
-
-
-
-
-
-
-
-
-
-
1. Movement in accrued retirement benefits for the year ended 28 February 2017.
2. Negatives relate to the taking of accumulated leave greater than one year's entitlement.
Year Ended 28 February 2017
Directors’ Report
2017 ANNUAL REPORT | 22
Page 11
Year Ended 28 February 2017
Directors’ Report
Page 12
For personal use only Namoi Cotton Co-operative Limited
Structure
iv) Variable Compensation – STI
Objective
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash,
superannuation, remote rent, motor vehicles, housing, income protection insurance and any associated fringe
benefits. The form chosen will be optimal for the recipient without creating undue cost for the co-operative.
The objective of the STI program is to link the achievement of the co-operative’s operational and financial targets
with the compensation received by the executives charged with meeting those targets.
Actual STI payments depend on the achievement of specific operating targets set at the beginning of the financial
year. The operational targets consist of a number of Key Performance Indicators (KPI’s) covering both financial
and non-financial measures of performance.
STI compensation includes an ‘at risk’ element which constitutes fifty percent of the executives’ overall available
STI compensation. This element is wholly dependent on Namoi Cotton achieving a pre-determined level of
financial performance, is discretionary, is additional to the fixed compensation noted below and is not subject
to any predefined KPI’s.
The remaining fifty percent of each executive’s STI compensation was dependent upon the achievement of
financial and non-financial KPI’s in the prior year. The review of individual performance usually occurs within
two months of the balance date. The financial and non-financial KPI’s include but are not limited to critical
operational, profit, safety and developmental targets.
KMP STI payments are ultimately subject to the discretion of the remuneration committee.
For the 2017 financial year, 0% (2016: 0% amounting to $nil) of the STI compensation (both components) was
accrued in the financial statements.
v) Contract for Services
Major provisions of KMP employment agreements are set out below.
Mr Jeremy Callachor, Chief Executive Officer
Term of agreement - open
February 2016: $450,000)
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $450,000 (29
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 50% of annual
commencing fixed compensation
Payment of a termination benefit on termination equal to 50% of annual commencing fixed compensation
Period of notice to be given by employee or employer - 12 weeks
Mr Stuart Greenwood, Chief Financial Officer
Term of agreement – open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $260,595 (29
February 2016: $260,595)
fixed compensation
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
�
�
�
�
�
�
�
�
�
�
�
�
Namoi Cotton Co-operative Limited
Mr Bailey Garcha, General Counsel and Company Secretary
�
•
�
•
Term of agreement – open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $265,423 (29
February 2016: $265,423)
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
fixed compensation
Payment of a termination benefit on termination equal to 50% annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
�
•
�
•
�
•
�
•
Mr David Lindsay, General Manager - Grower Services and Marketing
�
•
�
•
Term of agreement – open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $286,307 (29
February 2016: $286,307)
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
fixed compensation
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
�
•
�
•
�
•
�
•
Mr Shane McGregor, Chief Operations Officer
�
•
�
•
Term of Agreement - open
Fixed compensation, inclusive of superannuation, for the year ended 28 February 2017 of $293,839 (29
February 2016: $293,725)
Variable compensation, for the year ended 28 February 2017 of $nil (29 February 2016: $nil)
Payment of a retention benefit in the event of takeover, acquisition or merger, equal to 1.1 times annual
fixed compensation
Payment of a termination benefit on termination equal to 50% of annual fixed compensation
Period of notice to be given by employee or employer – 4 weeks
�
•
�
•
�
•
�
•
Details of the nature and amount of each element of the emoluments of each director and each of the executive
officers of Namoi Cotton and the consolidated entity for the financial year are as follows:
vi) Compensation of Key Management Personnel for the Year Ended 28 February 2017
Short-term Employee benefits
Post-employment Benefits
Salary & Fees
Cash Bonus
Non-
Monetary
Benefits
Superannuation
Retirement
Benefits 1
Long-term
Benefits
Employee
Leave
Benefits
Termination
Benefits
Total
%
Performance
Related
Directors
SC Boydell
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor 2
D Lindsay 2
B Garcha
S Greenwood
S McGregor
75,288
60,231
47,683
35,135
37,644
47,683
35,135
432,803
257,863
249,482
223,874
270,305
1,773,126
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,044)
14,884
816
17,763
4,047
35,466
7,152
5,722
4,530
3,338
3,576
4,530
3,338
17,974
24,176
16,599
14,825
25,283
-
-
-
-
-
14,250
7,000
-
-
-
-
-
-
-
-
-
-
-
-
(12,312)
(1,730)
7,522
4,515
4,960
131,043
21,250
2,955
-
-
-
-
-
-
-
-
-
-
-
-
-
82,440
65,953
52,213
38,473
41,220
66,463
45,473
436,421
295,193
274,419
260,977
304,595
1,963,840
-
-
-
-
-
-
-
-
-
-
-
-
1. Movement in accrued retirement benefits for the year ended 28 February 2017.
2. Negatives relate to the taking of accumulated leave greater than one year's entitlement.
Year Ended 28 February 2017
Directors’ Report
Page 11
Year Ended 28 February 2017
Directors’ Report
Page 12
2017 ANNUAL REPORT | 23
For personal use only Namoi Cotton Co-operative Limited
vii) Compensation of Key Management Personnel for the Year Ended 29 February 2016
Namoi Cotton Co-operative Limited
d)
Loans to KMP
Short-term Employee benefits
Post-employment Benefits
Salary & Fees Cash Bonus
Non-
Monetary
Benefits
Superannuation
Retirement
Benefits 1
Long-term
Benefits
Employee
Leave
Benefits
Termination
Benefits
Total
%
Performance
Related
Directors
SC Boydell
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor
D Lindsay 2
B Garcha
S Greenwood 2
S McGregor 2
75,288
60,231
47,683
35,135
37,644
47,683
35,135
416,516
265,195
249,510
234,413
270,596
1,775,029
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,108
215
705
7,451
(12,002)
7,152
5,722
4,530
3,338
3,576
4,530
3,338
36,005
21,322
16,142
15,742
24,415
5,000
-
-
-
-
9,500
14,000
-
-
-
-
-
-
-
-
-
-
-
-
5,838
(5,377)
(34)
(23,997)
408
(523)
145,812
28,500
(23,162)
-
-
-
-
-
-
-
-
-
-
-
-
-
87,440
65,953
52,213
38,473
41,220
61,713
52,473
461,467
281,355
266,323
233,609
283,417
1,925,656
-
-
-
-
-
-
-
-
-
-
-
-
1. Movement in accrued retirement benefits for the year ended 29 February 2016.
2. Negatives relate to the taking of accumulated leave greater than one year's entitlement.
c)
Shareholdings of KMP1
Balance held
1 March 2016
Granted as
Remuneration
Year ended 28 February 2017
CCU's
Grower
Member
Shares
Grower
Member
Shares
CCU's
On Exercise
of Option
Grower
Member
Shares
CCU's
Net Change
Other
Balance held
28 February 2017
Grower
Member
Shares
CCU's
Grower
Member
Shares
CCU's
Directors
SC Boydell (Chairman)
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor
D Lindsay
B Garcha
S Greenwood
S McGregor
555,883
-
775,272
-
373,292
-
320,000
4,000
25,000
-
6,000
2,000
800
-
-
800
1,600
-
800
-
-
-
-
-
2,061,447
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87,720
-
-
-
-
-
87,720
-
-
-
-
-
-
-
-
-
-
-
-
-
555,883
-
775,272
-
373,292
-
407,720
4,000
25,000
-
6,000
2,000
800
-
-
800
1,600
-
800
-
-
-
-
-
2,149,167
4,000
of retaining their seed for a handling fee.
f)
Other transactions with KMP
1Includes CCU/shares that are held directly, indirectly and beneficially by KMP.
All shares above are held in the disclosing parent entity Namoi Cotton Co-operative Limited.
All Co-operative Capital Unit (CCU) transactions by the co-operative with KMP are made through the ASX on
normal commercial terms other than those issued to executives through participation in the distribution
reinvestment plan and to directors through participation in the distribution reinvestment plans.
The following loans remain outstanding from KMP as part of the Employee Incentive Scheme that was suspended
in August 2004 (refer to note 18 to the financials). The amounts owed by KMP at year end were D. Lindsay
$2,630 (2016: $2,630) and S. McGregor $30 (2016: $30).
e) Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the rules of the co-operative, under
terms and conditions applicable to all members. Under the rules of the co-operative, grower directors are
required to conduct a minimum of 20% of their total cotton business with Namoi Cotton. In accordance with
that rule, directors entered into marketing contracts and ginning contracts with Namoi Cotton. Amounts
paid/received or payable/receivable from/to directors and their respective related parties were as follows:
Name
Mr SC Boydell
Mr B Coulton
Mr G Price
Mr T Watson
Consolidated and Parent entity
Cotton Purchases
Ginning Charges Levied
Grain & Seed Purchases
28 Feb
2017
308,479
3,489,599
2,120,215
752,413
29 Feb
2016
-
2,504,480
1,867,212
852,807
28 Feb
2017
38,633
569,508
267,297
543,066
29 Feb
2016
-
501,343
259,795
793,748
28 Feb
2017
64,388
899,036
395,138
455,345
29 Feb
2016
-
698,271
373,761
409,546
6,670,706
5,224,499
1,418,504
1,554,886
1,813,907
1,481,578
The nature of the terms and conditions of the above other transactions with directors and director related
entities are consistent with the terms of Namoi Cotton’s standard products, and are as follows:
� Marketing contracts require delivery of a quantity of lint cotton. The contract price per bale may be fixed
in Australian or United States dollars, determined under a pool arrangement, set as a guaranteed minimum
price or by way of basis fixations, cotton futures and foreign currency hedging. Price is adjusted for grade.
Payment may be made by Namoi Cotton either within 14 days of ginning, or on a deferred schedule. The
actual sales to spinning mills are made by the NCA joint venture.
� Ginning contracts require the delivery of a quantity or acreage of seed cotton gin landed. The price is a fixed
amount per bale. Payment is either effected by the grower as an offset against marketing proceeds, or
collected from the marketing merchant in the case of contract ginning with Namoi Cotton.
�
Seed contracts require the delivery of a quantity or acreage of seed gin landed. The price is a fixed amount
per bale. Payment is either made by Namoi Cotton in conjunction with marketing proceeds, or in
conjunction with ginning costs in the case of contract ginning with Namoi Cotton. Growers have the option
Directors and director related entities also entered into transactions with the economic entity which occurred
within a normal customer or supplier relationship on terms and conditions no more favourable than those which
it is reasonable to expect the entity would have adopted if dealing with the director or director-related entity at
arm's length in the same circumstances, which do not have the potential to adversely affect decisions about the
allocation of scarce resources made by users of the financial report, or the discharge of accountability by the
directors. These transactions include:
Buybacks of marketing contracts as a result of production shortfalls;
Currency, cotton futures, options and brokerage costs, losses and profits charged or credited directly to the
�
�
�
�
account of the director;
Purchase of grower supplies;
� Marketing and ginning rebate;
Costs associated with the provision of crop finance; and
� Grower member share fixed capital entitlement in aggregate $10,800 (2016: $10,800).
Year Ended 28 February 2017
Directors’ Report
2017 ANNUAL REPORT | 24
Page 13
Year Ended 28 February 2017
Directors’ Report
Page 14
For personal use only Namoi Cotton Co-operative Limited
vii) Compensation of Key Management Personnel for the Year Ended 29 February 2016
Namoi Cotton Co-operative Limited
d)
Loans to KMP
The following loans remain outstanding from KMP as part of the Employee Incentive Scheme that was suspended
in August 2004 (refer to note 18 to the financials). The amounts owed by KMP at year end were D. Lindsay
$2,630 (2016: $2,630) and S. McGregor $30 (2016: $30).
e) Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the rules of the co-operative, under
terms and conditions applicable to all members. Under the rules of the co-operative, grower directors are
required to conduct a minimum of 20% of their total cotton business with Namoi Cotton. In accordance with
that rule, directors entered into marketing contracts and ginning contracts with Namoi Cotton. Amounts
paid/received or payable/receivable from/to directors and their respective related parties were as follows:
Name
Mr SC Boydell
Mr B Coulton
Mr G Price
Mr T Watson
Cotton Purchases
Consolidated and Parent entity
Ginning Charges Levied
28 Feb
2017
308,479
3,489,599
2,120,215
752,413
6,670,706
29 Feb
2016
-
2,504,480
1,867,212
852,807
5,224,499
28 Feb
2017
38,633
569,508
267,297
543,066
1,418,504
29 Feb
2016
-
501,343
259,795
793,748
1,554,886
Grain & Seed Purchases
28 Feb
2017
29 Feb
2016
64,388
899,036
395,138
455,345
1,813,907
-
698,271
373,761
409,546
1,481,578
The nature of the terms and conditions of the above other transactions with directors and director related
entities are consistent with the terms of Namoi Cotton’s standard products, and are as follows:
� Marketing contracts require delivery of a quantity of lint cotton. The contract price per bale may be fixed
•
in Australian or United States dollars, determined under a pool arrangement, set as a guaranteed minimum
price or by way of basis fixations, cotton futures and foreign currency hedging. Price is adjusted for grade.
Payment may be made by Namoi Cotton either within 14 days of ginning, or on a deferred schedule. The
actual sales to spinning mills are made by the NCA joint venture.
� Ginning contracts require the delivery of a quantity or acreage of seed cotton gin landed. The price is a fixed
•
amount per bale. Payment is either effected by the grower as an offset against marketing proceeds, or
collected from the marketing merchant in the case of contract ginning with Namoi Cotton.
Seed contracts require the delivery of a quantity or acreage of seed gin landed. The price is a fixed amount
per bale. Payment is either made by Namoi Cotton in conjunction with marketing proceeds, or in
conjunction with ginning costs in the case of contract ginning with Namoi Cotton. Growers have the option
of retaining their seed for a handling fee.
�
•
f)
Other transactions with KMP
Short-term Employee benefits
Post-employment Benefits
Salary & Fees Cash Bonus
Superannuation
Non-
Monetary
Benefits
Retirement
Benefits 1
Termination
Benefits
Total
%
Performance
Related
Directors
SC Boydell
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor
D Lindsay 2
B Garcha
S Greenwood 2
S McGregor 2
75,288
60,231
47,683
35,135
37,644
47,683
35,135
416,516
265,195
249,510
234,413
270,596
-
-
-
-
-
-
-
3,108
215
705
7,451
(12,002)
-
-
-
-
-
-
-
-
-
-
-
-
-
7,152
5,722
4,530
3,338
3,576
4,530
3,338
36,005
21,322
16,142
15,742
24,415
5,000
9,500
14,000
-
-
-
-
-
-
-
-
-
Long-term
Benefits
Employee
Leave
Benefits
-
-
-
-
-
-
-
5,838
(5,377)
(34)
(23,997)
408
87,440
65,953
52,213
38,473
41,220
61,713
52,473
461,467
281,355
266,323
233,609
283,417
-
-
-
-
-
-
-
-
-
-
-
-
1,775,029
(523)
145,812
28,500
(23,162)
1,925,656
1. Movement in accrued retirement benefits for the year ended 29 February 2016.
2. Negatives relate to the taking of accumulated leave greater than one year's entitlement.
c)
Shareholdings of KMP1
Balance held
1 March 2016
Granted as
Remuneration
On Exercise
of Option
Net Change
Other
Balance held
28 February 2017
Year ended 28 February 2017
CCU's
CCU's
CCU's
CCU's
CCU's
Grower
Member
Shares
Grower
Member
Shares
Grower
Member
Shares
Grower
Member
Shares
Grower
Member
Shares
Directors
SC Boydell (Chairman)
RA Anderson
M Boyce
B Coulton
G Price
R Green
T Watson
Executives
J Callachor
D Lindsay
B Garcha
S Greenwood
S McGregor
555,883
800
775,272
373,292
800
1,600
320,000
800
-
-
-
-
4,000
25,000
6,000
2,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
555,883
800
775,272
373,292
800
1,600
-
-
-
-
4,000
25,000
6,000
2,000
-
-
-
-
-
-
-
-
2,061,447
4,000
87,720
2,149,167
4,000
87,720
407,720
800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1Includes CCU/shares that are held directly, indirectly and beneficially by KMP.
All shares above are held in the disclosing parent entity Namoi Cotton Co-operative Limited.
All Co-operative Capital Unit (CCU) transactions by the co-operative with KMP are made through the ASX on
normal commercial terms other than those issued to executives through participation in the distribution
reinvestment plan and to directors through participation in the distribution reinvestment plans.
Directors and director related entities also entered into transactions with the economic entity which occurred
within a normal customer or supplier relationship on terms and conditions no more favourable than those which
it is reasonable to expect the entity would have adopted if dealing with the director or director-related entity at
arm's length in the same circumstances, which do not have the potential to adversely affect decisions about the
allocation of scarce resources made by users of the financial report, or the discharge of accountability by the
directors. These transactions include:
�
•
�
•
Buybacks of marketing contracts as a result of production shortfalls;
Currency, cotton futures, options and brokerage costs, losses and profits charged or credited directly to the
account of the director;
Purchase of grower supplies;
�
•
� Marketing and ginning rebate;
•
�
•
� Grower member share fixed capital entitlement in aggregate $10,800 (2016: $10,800).
•
Costs associated with the provision of crop finance; and
Year Ended 28 February 2017
Directors’ Report
Page 13
Year Ended 28 February 2017
Directors’ Report
Page 14
2017 ANNUAL REPORT | 25
For personal use only Namoi Cotton Co-operative Limited
g)
Compensation Options
Namoi Cotton does not currently and has not historically offered any options over its shares. As such, no options
have either been granted or exercised during the period or are on offer at the end of the period.
Group financial performance and position
The following table highlights key components of the group’s financial performance for the last 5 years.
Earnings per CCU (cents)
Distribution per CCU (cents)
CCU price at year end (cents)
CCU buyback average (cents)
Net assets ($m)
Net assets per share (cents)
2017
2016
2015
2014
2013
0.3
-
49.0
N/a
123.8
112.7
(6.9)
-
34.0
N/a
123.5
112.5
5.7
0.5
31.0
N/a
124.6
113.4
(0.1)
-
29.0
N/a
118.8
110.4
(70.7)
-
35.5
N/a
109.9
115.0
Directors’ interests in the grower member shares and capital stock of the co-operative
As at the date of this report, the interest of the directors and their related parties in the grower member shares
and capital stock of the co-operative were as set out on page 15.
Environmental performance & regulation
The directors regularly review the business activities of the co-operative to ensure it operates within the
environmental laws established by regulatory authorities.
Indemnification and insurance of directors and officers
Under the Rules of Namoi Cotton, every person who is or has been a director of the co-operative is indemnified,
to the maximum extent permitted by law, out of the property of the co-operative against any liability to another
person (other than the co-operative) as such a director unless the liability arises out of conduct involving any
negligence, default, breach of duty or breach of trust of which that person may be guilty in relation to the co-
operative.
During the financial year, Namoi Cotton has paid a premium in respect of a contract providing insurance for
every person who is or has been a director or officer against losses arising from any actual or alleged breach of
duty, breach of trust, neglect, error, misstatement, misleading statement, omission, breach of warranty of
authority, or other act done or wrongfully attempted, or any liability asserted against them solely because of
their status as directors or officers of the economic entity. Disclosure of the premium paid is not permitted under
the terms of the insurance contract.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
Risk management
The board includes a marketing and financial risk management committee (MFRMC), which identifies and
monitors the co-operative’s risk profile on a timely basis in addition to reviewing management of portfolio
exposures. The MFRMC ensures Namoi Cotton’s financial and risk management policies are aligned to its
corporate philosophies and principles. The MFRMC regularly reports to the full board.
Given the nature of our business, Namoi Cotton has a potential exposure to a number of business risks, including
movements in commodity and currency markets. To prudently manage these exposures, the MFRMC has
developed comprehensive policies and procedures to monitor, assess and manage all our major business risks.
Namoi Cotton Co-operative Limited
Key responsibilities of the MFRMC include:
� Monitoring and reviewing the policies and limits in the Risk Management Policy;
� Monitoring and reviewing the performance of management’s marketing committee;
� Monitoring and reviewing procedures for treasury and hedging functions;
� Monitoring and reviewing marketing products;
� Monitoring and reviewing hedging strategies;
� Monitoring and reviewing co-operative wide value at risk results;
�
Receiving external reports relative to risk management activities;
� Monitoring and reviewing funding and liquidity structure and management; and
� Monitoring the development of long-term strategic initiatives for marketing and risk management.
Corporate governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Namoi Cotton support and have complied with the principles of corporate governance. The company’s corporate
governance statement is to be published in the 2017 Annual Report due in June 2017 and is also available on
Namoi Cotton’s public website at www.namoicotton.com.au
Non-audit services
Non-audit services were provided by the entity’s auditor, Ernst & Young, as described in Note 25 of the financial
report. The directors are 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 nature and scope of each
type of non-audit service provided means that auditor independence was not compromised.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 19 of the financial report.
Rounding
The amounts contained in this report and in the financial statements have been rounded to the nearest thousand
dollars (where rounding is applicable) in accordance with clause 10(6) of the Co-operatives (Accounts and Audit)
Regulations and ASIC Corporations (Rounding in Financial Directors Reports) Instrument 2016/191. The co-
operative is an entity to which this legislative instrument applies.
Signed in accordance with a resolution of the directors on behalf of the board.
On behalf of the board
S C BOYDELL
Director
Toowoomba
27 April 2017
Year Ended 28 February 2017
Directors’ Report
2017 ANNUAL REPORT | 26
Page 15
Year Ended 28 February 2017
Directors’ Report
Page 16
For personal use only Namoi Cotton Co-operative Limited
g)
Compensation Options
Namoi Cotton does not currently and has not historically offered any options over its shares. As such, no options
have either been granted or exercised during the period or are on offer at the end of the period.
Group financial performance and position
The following table highlights key components of the group’s financial performance for the last 5 years.
Earnings per CCU (cents)
Distribution per CCU (cents)
CCU price at year end (cents)
CCU buyback average (cents)
Net assets ($m)
Net assets per share (cents)
2017
2016
2015
2014
2013
0.3
-
49.0
N/a
123.8
112.7
(6.9)
-
34.0
N/a
123.5
112.5
5.7
0.5
31.0
N/a
124.6
113.4
(0.1)
(70.7)
-
29.0
N/a
118.8
110.4
-
35.5
N/a
109.9
115.0
Directors’ interests in the grower member shares and capital stock of the co-operative
As at the date of this report, the interest of the directors and their related parties in the grower member shares
and capital stock of the co-operative were as set out on page 15.
Environmental performance & regulation
The directors regularly review the business activities of the co-operative to ensure it operates within the
environmental laws established by regulatory authorities.
Indemnification and insurance of directors and officers
Under the Rules of Namoi Cotton, every person who is or has been a director of the co-operative is indemnified,
to the maximum extent permitted by law, out of the property of the co-operative against any liability to another
person (other than the co-operative) as such a director unless the liability arises out of conduct involving any
negligence, default, breach of duty or breach of trust of which that person may be guilty in relation to the co-
operative.
During the financial year, Namoi Cotton has paid a premium in respect of a contract providing insurance for
every person who is or has been a director or officer against losses arising from any actual or alleged breach of
duty, breach of trust, neglect, error, misstatement, misleading statement, omission, breach of warranty of
authority, or other act done or wrongfully attempted, or any liability asserted against them solely because of
their status as directors or officers of the economic entity. Disclosure of the premium paid is not permitted under
the terms of the insurance contract.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
Risk management
The board includes a marketing and financial risk management committee (MFRMC), which identifies and
monitors the co-operative’s risk profile on a timely basis in addition to reviewing management of portfolio
exposures. The MFRMC ensures Namoi Cotton’s financial and risk management policies are aligned to its
corporate philosophies and principles. The MFRMC regularly reports to the full board.
Given the nature of our business, Namoi Cotton has a potential exposure to a number of business risks, including
movements in commodity and currency markets. To prudently manage these exposures, the MFRMC has
developed comprehensive policies and procedures to monitor, assess and manage all our major business risks.
Namoi Cotton Co-operative Limited
Key responsibilities of the MFRMC include:
� Monitoring and reviewing the policies and limits in the Risk Management Policy;
•
� Monitoring and reviewing the performance of management’s marketing committee;
•
� Monitoring and reviewing procedures for treasury and hedging functions;
•
� Monitoring and reviewing marketing products;
•
� Monitoring and reviewing hedging strategies;
•
� Monitoring and reviewing co-operative wide value at risk results;
•
•
�
Receiving external reports relative to risk management activities;
•
•
� Monitoring and reviewing funding and liquidity structure and management; and
•
� Monitoring the development of long-term strategic initiatives for marketing and risk management.
•
Corporate governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Namoi Cotton support and have complied with the principles of corporate governance. The company’s corporate
governance statement is to be published in the 2017 Annual Report due in June 2017 and is also available on
Namoi Cotton’s public website at www.namoicotton.com.au
Non-audit services
Non-audit services were provided by the entity’s auditor, Ernst & Young, as described in Note 25 of the financial
report. The directors are 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 nature and scope of each
type of non-audit service provided means that auditor independence was not compromised.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 19 of the financial report.
28
Rounding
The amounts contained in this report and in the financial statements have been rounded to the nearest thousand
dollars (where rounding is applicable) in accordance with clause 10(6) of the Co-operatives (Accounts and Audit)
Regulations and ASIC Corporations (Rounding in Financial Directors Reports) Instrument 2016/191. The co-
operative is an entity to which this legislative instrument applies.
Signed in accordance with a resolution of the directors on behalf of the board.
On behalf of the board
S C BOYDELL
Director
Toowoomba
27 April 2017
Year Ended 28 February 2017
Directors’ Report
Page 15
Year Ended 28 February 2017
Directors’ Report
Page 16
2017 ANNUAL REPORT | 27
For personal use only Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor’s Report to the members of Namoi Cotton Co-operative Ltd
Report on the Audit of the Financial Report
Independent Auditor’s Report to the members of Namoi Cotton Co-operative Ltd
Report on the Audit of the Financial Report
We have audited the financial report of Namoi Cotton Co-operative Ltd (the company), including its subsidiaries (the Group),
Opinion
which comprises:
Opinion
the Group consolidated and Company balance sheets as at 28 February 2017,
We have audited the financial report of Namoi Cotton Co-operative Ltd (the company), including its subsidiaries (the Group),
the Group consolidated and Company statements of comprehensive income, statements of changes in equity and
•
which comprises:
statements of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies; and
the Group consolidated and Company balance sheets as at 28 February 2017,
the directors’ declaration.
the Group consolidated and Company statements of comprehensive income, statements of changes in equity and
In our opinion, the accompanying financial report is in accordance with the Co-operatives National Law (NSW) and the
statements of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies; and
Corporations Act 2001, including:
the directors’ declaration.
•
•
•
•
•
•
•
giving a true and fair view of the Company’s and the Group’s financial position as at 28 February 2017 and of their
In our opinion, the accompanying financial report is in accordance with the Co-operatives National Law (NSW) and the
financial performance for the year ended on that date; and
Corporations Act 2001, including:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Company’s and the Group’s financial position as at 28 February 2017 and of their
financial performance for the year ended on that date; and
Basis for opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
Basis for opinion
independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
to our audit of the financial report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
(i)
(ii)
(i)
(ii)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s independence declaration to the directors of Namoi Cotton Co-Operative Ltd
As lead auditor for the audit of Namoi Cotton Co-operative Ltd for the financial year ended 28 February 2017, I declare to the
Auditor’s independence declaration to the directors of Namoi Cotton Co-Operative Ltd
best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
As lead auditor for the audit of Namoi Cotton Co-operative Ltd for the financial year ended 28 February 2017, I declare to the
best of my knowledge and belief, there have been:
b) no contraventions of any applicable code of professional conduct in relation to the audit.
and
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
This declaration is in respect of Namoi Cotton Co-Operative Ltd and the entities it controlled during the financial year.
and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Namoi Cotton Co-Operative Ltd and the entities it controlled during the financial year.
Ernst & Young
Ernst & Young
Paula McLuskie
Partner
27 April 2017
Paula McLuskie
Partner
27 April 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2017 ANNUAL REPORT | 28
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor’s Report to the members of Namoi Cotton Co-operative Ltd
Report on the Audit of the Financial Report
Independent Auditor’s Report to the members of Namoi Cotton Co-operative Ltd
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Namoi Cotton Co-operative Ltd (the company), including its subsidiaries (the Group),
which comprises:
Opinion
•
•
the Group consolidated and Company balance sheets as at 28 February 2017,
We have audited the financial report of Namoi Cotton Co-operative Ltd (the company), including its subsidiaries (the Group),
the Group consolidated and Company statements of comprehensive income, statements of changes in equity and
which comprises:
statements of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies; and
the Group consolidated and Company balance sheets as at 28 February 2017,
the directors’ declaration.
the Group consolidated and Company statements of comprehensive income, statements of changes in equity and
statements of cash flows for the year then ended,
In our opinion, the accompanying financial report is in accordance with the Co-operatives National Law (NSW) and the
notes to the financial statements, including a summary of significant accounting policies; and
Corporations Act 2001, including:
the directors’ declaration.
giving a true and fair view of the Company’s and the Group’s financial position as at 28 February 2017 and of their
financial performance for the year ended on that date; and
(i)
In our opinion, the accompanying financial report is in accordance with the Co-operatives National Law (NSW) and the
Corporations Act 2001, including:
(ii)
(i)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Company’s and the Group’s financial position as at 28 February 2017 and of their
financial performance for the year ended on that date; and
•
•
•
•
•
•
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
(ii)
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
Basis for opinion
independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
to our audit of the financial report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2017 ANNUAL REPORT | 29
For personal use only
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description
of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Fair value of ginning assets
Why significant
How our audit addressed the key audit matter
We evaluated the input assumptions and estimates made by the
Group in the valuation methodology including sustainable bales
and earnings against average production and earnings over the
previous six years (covering a broad spread of high and low
production seasons) to take into account the seasonal variations.
We compared the assumptions to those used in prior year.
We involved our valuation specialists to assist in assessing the
modelling used by the Group to support the valuation, by
evaluating the model calculation methodology and discount rates
used.
In the prior year we involved our valuation specialists to assess the
independence and competencies of the external valuers and the
prior year external valuation report’s methodology and content.
We also assessed the adequacy of the disclosures relating to the
assumptions utilised and related sensitivity disclosures.
The Company and the Group have adopted a fair value policy
in measuring ginning infrastructure assets (“ginning assets”)
as disclosed in Note 1(m) to the financial statements. The
Group’s ginning assets represents a significant portion of the
total assets (60.4% of Group and 59.0% of the Company)
and are valued at an amount of $127.3million ($127.3
million for the Company).
The Group uses management’s discounted cash flow model
to determine the fair value of the ginning assets supported by
an external valuation performed every three years. The latest
external valuation was performed as at 29 February 2016.
The valuation of the ginning assets at fair value is highly
dependent on estimates and assumptions, such as
sustainable bales, discount rates, market knowledge, bale
contributions and revenue growth rates.
The assumptions relating to the valuations are disclosed in
note 13 and policy note 1(m), given the estimation
uncertainty and sensitivity of the valuations. Given the
quantum and complexity of the valuation of ginning assets
and the level of the disclosures relating to the assumptions
used in the valuation, this was determined to be a key audit
matter.
2.
Investment in Namoi Cotton Alliance Joint Venture
Why significant
How our audit addressed the key audit matter
At 28 February 2017 the Group held a 51% stake in the Namoi
Cotton Alliance (“NCA)” joint venture.
As explained in Note 1 to the financial report, this investment
was accounted for under the equity method in accordance with
Australian Accounting Standards. An equity accounted
In order to obtain sufficient audit evidence over the carrying value
of Namoi’s investment in NCA and the equity accounted result,
we:
►
Assessed the audited financial statements of NCA for the
year ended 28 February 2017;
2017 ANNUAL REPORT | 30
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For personal use only
investment of $40.01m was recorded on the Group’s
consolidated balance sheet and an equity accounted profit of
$0.06m contributed to the overall result of the Group.
We performed the audit of the financial statements of NCA.
This is a key audit matter due to the financial significance of
the investment and its contribution to Group profit, and its
significance to the valuation of assets. Details of the Group’s
investment in this joint venture are outlined in note 10 to the
financial report.
►
►
►
►
Evaluated scoping of key audit areas, planning and
execution of audit procedures, significant areas of
estimation and judgement, and audit findings for the year
ended 28 February 2017;
Enquired of NCA management in relation to updates on key
accounting issues and areas of judgements and movements
in the balance sheet and income statement at year-end and
subsequently up to the date of the auditor’s report of Namoi;
Assessed monthly management reporting during the year;
and
Recalculated Namoi’s share of the equity-accounted result
and dividends for the year ended 28 February 2017.
Why significant
How our audit addressed the key audit matter
3.
Reassessment of depreciation useful life of Ginning Infrastructure assets
Why significant
How our audit addressed the key audit matter
The change in estimate has been disclosed in Note 13 to the
financial report.
In performing audit procedures over the useful life estimation of
Ginning Infrastructure assets, we:
The estimation of the useful life of ginning infrastructure assets
requires significant estimation. The useful life estimate is a key
input into the calculation of depreciation expense. Ginning
infrastructure assets are depreciated on a units of production
basis over their rolling estimated remaining useful lives of 20
years (previously 16 years). The ginning infrastructure assets
represent a significant portion of the Group’s total assets.
• Reviewed the Group’s accounting paper on the re-estimate
and assessed their assumptions;
• Assessed whether any change should be classified as a
change in accounting estimate;
•
Tested the calculation with the re-estimate in the fixed asset
register; and
• Assessed the adequacy of the disclosures relating to the
change in estimate in the financial report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description
of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Fair value of ginning assets
The Company and the Group have adopted a fair value policy
We evaluated the input assumptions and estimates made by the
in measuring ginning infrastructure assets (“ginning assets”)
Group in the valuation methodology including sustainable bales
as disclosed in Note 1(m) to the financial statements. The
and earnings against average production and earnings over the
Group’s ginning assets represents a significant portion of the
previous six years (covering a broad spread of high and low
total assets (60.4% of Group and 59.0% of the Company)
production seasons) to take into account the seasonal variations.
and are valued at an amount of $127.3million ($127.3
We compared the assumptions to those used in prior year.
million for the Company).
We involved our valuation specialists to assist in assessing the
The Group uses management’s discounted cash flow model
modelling used by the Group to support the valuation, by
to determine the fair value of the ginning assets supported by
evaluating the model calculation methodology and discount rates
an external valuation performed every three years. The latest
used.
In the prior year we involved our valuation specialists to assess the
independence and competencies of the external valuers and the
prior year external valuation report’s methodology and content.
We also assessed the adequacy of the disclosures relating to the
assumptions utilised and related sensitivity disclosures.
external valuation was performed as at 29 February 2016.
The valuation of the ginning assets at fair value is highly
dependent on estimates and assumptions, such as
sustainable bales, discount rates, market knowledge, bale
contributions and revenue growth rates.
The assumptions relating to the valuations are disclosed in
note 13 and policy note 1(m), given the estimation
uncertainty and sensitivity of the valuations. Given the
quantum and complexity of the valuation of ginning assets
and the level of the disclosures relating to the assumptions
used in the valuation, this was determined to be a key audit
matter.
2.
Investment in Namoi Cotton Alliance Joint Venture
Why significant
How our audit addressed the key audit matter
At 28 February 2017 the Group held a 51% stake in the Namoi
Cotton Alliance (“NCA)” joint venture.
In order to obtain sufficient audit evidence over the carrying value
of Namoi’s investment in NCA and the equity accounted result,
As explained in Note 1 to the financial report, this investment
we:
was accounted for under the equity method in accordance with
►
Assessed the audited financial statements of NCA for the
Australian Accounting Standards. An equity accounted
year ended 28 February 2017;
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2017 ANNUAL REPORT | 31
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Information Other than the Financial Statements and Auditor’s Report
The directors are responsible for the other information. The other information comprises the information in the Company’s
2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is
Information Other than the Financial Statements and Auditor’s Report
to be included in the Annual Report prior to the date of this auditor’s report and we expect to obtain the remaining sections of
the Annual Report after the date of this auditor’s report.
The directors are responsible for the other information. The other information comprises the information in the Company’s
2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
to be included in the Annual Report prior to the date of this auditor’s report and we expect to obtain the remaining sections of
conclusion thereon.
the Annual Report after the date of this auditor’s report.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
conclusion thereon.
otherwise appears to be materially misstated.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
If, based upon the work we have performed on the other information obtained prior to the date of this auditor’s report, we
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to
otherwise appears to be materially misstated.
report in this regard.
If, based upon the work we have performed on the other information obtained prior to the date of this auditor’s report, we
Directors’ responsibilities for the financial report
conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to
report in this regard.
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, the Co-operatives National Law (NSW) and the Corporations Act 2001 and
Directors’ responsibilities for the financial report
for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error.
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, the Co-operatives National Law (NSW) and the Corporations Act 2001 and
In preparing the financial report, the directors are responsible for assessing the Company’s and Group’s ability to continue as a
for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
true and fair view and is free from material misstatement, whether due to fraud or error.
unless the directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so.
In preparing the financial report, the directors are responsible for assessing the Company’s and Group’s ability to continue as a
Auditor’s responsibilities for the audit of the financial report
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
Auditor’s responsibilities for the audit of the financial report
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
taken on the basis of this financial report.
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
professional scepticism throughout the audit. We also:
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
professional scepticism throughout the audit. We also:
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
override of internal control.
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
override of internal control.
Company’s or the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
disclosures made by the directors.
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s or the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
•
•
•
•
•
•
•
•
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Company’s or Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
date of our auditor’s report. However, future events or conditions may cause the Company or the Group to cease to
on the Company’s or Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
continue as a going concern.
are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
date of our auditor’s report. However, future events or conditions may cause the Company or the Group to cease to
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
continue as a going concern.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
performance of the Group audit. We remain solely responsible for our audit opinion.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
audit findings, including any significant deficiencies in internal control that we identify during our audit.
performance of the Group audit. We remain solely responsible for our audit opinion.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
audit findings, including any significant deficiencies in internal control that we identify during our audit.
our independence, and where applicable, related safeguards.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report
our independence, and where applicable, related safeguards.
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
expected to outweigh the public interest benefits of such communication.
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
Report on the remuneration report
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Opinion on the remuneration report
Report on the remuneration report
We have audited the remuneration report included in pages 19 to 26 of the directors' report for the year ended 28 February
Opinion on the remuneration report
2017.
2017.
In our opinion, the remuneration report of Namoi Cotton Co-operative Ltd for the year ended 28 February 2017, complies with
We have audited the remuneration report included in pages 19 to 26 of the directors' report for the year ended 28 February
section 300A of the Corporations Act 2001.
In our opinion, the remuneration report of Namoi Cotton Co-operative Ltd for the year ended 28 February 2017, complies with
section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
2017 ANNUAL REPORT | 32
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Information Other than the Financial Statements and Auditor’s Report
The directors are responsible for the other information. The other information comprises the information in the Company’s
2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is
Information Other than the Financial Statements and Auditor’s Report
to be included in the Annual Report prior to the date of this auditor’s report and we expect to obtain the remaining sections of
the Annual Report after the date of this auditor’s report.
The directors are responsible for the other information. The other information comprises the information in the Company’s
2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
to be included in the Annual Report prior to the date of this auditor’s report and we expect to obtain the remaining sections of
conclusion thereon.
the Annual Report after the date of this auditor’s report.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
conclusion thereon.
otherwise appears to be materially misstated.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
If, based upon the work we have performed on the other information obtained prior to the date of this auditor’s report, we
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to
otherwise appears to be materially misstated.
report in this regard.
If, based upon the work we have performed on the other information obtained prior to the date of this auditor’s report, we
Directors’ responsibilities for the financial report
conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to
report in this regard.
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, the Co-operatives National Law (NSW) and the Corporations Act 2001 and
Directors’ responsibilities for the financial report
for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error.
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, the Co-operatives National Law (NSW) and the Corporations Act 2001 and
In preparing the financial report, the directors are responsible for assessing the Company’s and Group’s ability to continue as a
for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
true and fair view and is free from material misstatement, whether due to fraud or error.
unless the directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so.
In preparing the financial report, the directors are responsible for assessing the Company’s and Group’s ability to continue as a
Auditor’s responsibilities for the audit of the financial report
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
Auditor’s responsibilities for the audit of the financial report
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
taken on the basis of this financial report.
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
professional scepticism throughout the audit. We also:
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
professional scepticism throughout the audit. We also:
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
override of internal control.
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
override of internal control.
Company’s or the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
disclosures made by the directors.
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s or the Group’s internal control.
disclosures made by the directors.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
•
•
•
•
•
•
•
•
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Company’s or Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
date of our auditor’s report. However, future events or conditions may cause the Company or the Group to cease to
on the Company’s or Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
continue as a going concern.
are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
date of our auditor’s report. However, future events or conditions may cause the Company or the Group to cease to
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
continue as a going concern.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
performance of the Group audit. We remain solely responsible for our audit opinion.
•
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
audit findings, including any significant deficiencies in internal control that we identify during our audit.
our independence, and where applicable, related safeguards.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report
our independence, and where applicable, related safeguards.
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
expected to outweigh the public interest benefits of such communication.
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
Report on the remuneration report
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Opinion on the remuneration report
Report on the remuneration report
We have audited the remuneration report included in pages 19 to 26 of the directors' report for the year ended 28 February
2017.
Opinion on the remuneration report
In our opinion, the remuneration report of Namoi Cotton Co-operative Ltd for the year ended 28 February 2017, complies with
We have audited the remuneration report included in pages 19 to 26 of the directors' report for the year ended 28 February
section 300A of the Corporations Act 2001.
2017.
In our opinion, the remuneration report of Namoi Cotton Co-operative Ltd for the year ended 28 February 2017, complies with
section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
2017 ANNUAL REPORT | 33
For personal use only
Responsibilities
The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
Responsibilities
on our audit conducted in accordance with Australian Auditing Standards.
The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Ernst & Young
Ernst & Young
Paula McLuskie
Partner
Brisbane
27 April 2017
Paula McLuskie
Partner
Brisbane
27 April 2017
Namoi Cotton Co-operative Limited
DIRECTORS’ DECLARATION
In the opinion of the directors:
In accordance with a resolution of the directors of Namoi Cotton Co-operative Limited, I state that:
a)
the financial statement, notes and the additional disclosures included in the directors’ report
designated as audited, of the co-operative and of the consolidated entity are in accordance with the
Co-operatives National Law (NSW) and the Corporations Act 2001, including:
i)
giving a true and fair view of the co-operative’s and consolidated entity’s financial position as at 28
February 2017 and of their performance for the year ended on that date; and
ii)
complying with Accounting Standards and Corporations Regulations 2001;
b)
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in note 1(a);
they become due and payable.
c)
there are reasonable grounds to believe that the co-operative will be able to pay its debts as and when
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 28 February 2017.
On behalf of the board
S C BOYDELL
Director
Toowoomba
27 April 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2017 ANNUAL REPORT | 34
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Year Ended 28 February 2017
Directors’ Declaration
Page 24
For personal use only
The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
Responsibilities
on our audit conducted in accordance with Australian Auditing Standards.
The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Responsibilities
Ernst & Young
Ernst & Young
Paula McLuskie
Partner
Brisbane
27 April 2017
Paula McLuskie
Partner
Brisbane
27 April 2017
Namoi Cotton Co-operative Limited
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Namoi Cotton Co-operative Limited, I state that:
In the opinion of the directors:
a)
the financial statement, notes and the additional disclosures included in the directors’ report
designated as audited, of the co-operative and of the consolidated entity are in accordance with the
Co-operatives National Law (NSW) and the Corporations Act 2001, including:
i)
giving a true and fair view of the co-operative’s and consolidated entity’s financial position as at 28
February 2017 and of their performance for the year ended on that date; and
ii)
complying with Accounting Standards and Corporations Regulations 2001;
b)
c)
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in note 1(a);
there are reasonable grounds to believe that the co-operative will be able to pay its debts as and when
they become due and payable.
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 28 February 2017.
On behalf of the board
S C BOYDELL
Director
Toowoomba
27 April 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Year Ended 28 February 2017
Directors’ Declaration
Page 24
2017 ANNUAL REPORT | 35
For personal use only
Namoi Cotton Co-operative Limited
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 28 February 2017
Namoi Cotton Co-operative Limited
BALANCE SHEET
as at 28 February 2017
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Revenue
2a
355,344
279,713
355,043
279,476
Financial instrument gains/(losses)
Currency derivatives
Cottonseed purchase contracts
Cottonseed sales contracts
Net financial instrument gains/(losses)
Other income
Share of profit/(loss) of associates
and joint ventures
Changes in inventories of finished goods
Raw materials and consumables used
Employee benefits expense
Depreciation
Finance costs
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to the members
of Namoi Cotton Co-operative Ltd.
557
19,400
(18,471)
1,486
(121)
(5,218)
5,027
(312)
557
19,400
(18,471)
1,486
60
26
(90)
(4,139)
60
56
(121)
(5,218)
5,027
(312)
26
(78)
993
(320,203)
(18,309)
(6,206)
(2,611)
(10,426)
38
(2,771)
(249,855)
(15,712)
(6,171)
(2,650)
(8,827)
(10,698)
1,011
(320,169)
(18,309)
(6,206)
(2,639)
(10,424)
(91)
(2,771)
(249,767)
(15,712)
(6,171)
(2,671)
(8,826)
(6,806)
245
3,140
26
2,024
283
(7,558)
(65)
(4,782)
2b
10
2c
2d
2e
3
Other comprehensive income items that will not
be reclassified subsequently to profit and loss:
Increment/(decrement) to asset revaluation
reserve (net of tax)
Profit/(loss) and total comprehensive income
attributable to the members of
Namoi Cotton Co-operative Ltd
-
6,504
-
6,504
283
(1,054)
(65)
1,722
The above statement of profit and loss and other comprehensive income should be read
in conjunction with the accompanying notes.
Year Ended 28 February 2017
Statement of Profit and Loss and Other Comprehensive Income
Page 25
Year Ended 28 February 2017
Balance Sheet
Page 26
2017 ANNUAL REPORT | 36
The above balance sheet should be read in conjunction with the accompanying notes.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Derivative financial instruments
Total current assets
Non-current assets
Trade and other receivables
Investments in associates and joint ventures
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Deferred tax liabilities (net)
Co-operative grower member shares
Total non-current liabilities
Total liabilities
NET ASSETS
Equity
Parent entity interest
Contributed equity
Reserves
Retained earnings
Total parent entity interest in equity
TOTAL EQUITY
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
6
7
8
9
7
10
13
14
15
16
9
15
16
3
17
18
19
2,256
5,288
7,614
541
14,665
30,364
1,790
4,561
5,901
372
4,352
16,976
2,135
10,540
7,614
541
14,665
35,495
1,785
9,992
5,882
372
4,352
22,383
-
41,876
138,473
180,349
-
41,966
140,910
182,876
41,820
155
138,473
180,448
41,820
99
140,910
182,829
210,713
199,852
215,943
205,212
8,401
16,590
1,979
14,141
41,111
-
43,330
863
1,134
447
45,774
5,022
59,270
2,062
5,463
71,817
456
1,409
799
1,379
447
4,490
26,131
16,590
1,979
14,141
58,841
-
45,379
863
394
447
22,753
59,270
2,062
5,463
89,548
456
3,458
799
420
447
47,083
5,580
86,885
76,307
105,924
95,128
123,828
123,545
110,019
110,084
1,098
101,845
20,885
123,828
1,098
101,845
20,602
123,545
1,098
101,845
7,076
110,019
1,098
101,845
7,141
110,084
123,828
123,545
110,019
110,084
For personal use only Namoi Cotton Co-operative Limited
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 28 February 2017
Namoi Cotton Co-operative Limited
BALANCE SHEET
as at 28 February 2017
Revenue
2a
355,344
279,713
355,043
279,476
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
557
19,400
(18,471)
1,486
(121)
(5,218)
5,027
(312)
557
19,400
(18,471)
1,486
60
26
(90)
(4,139)
60
56
(121)
(5,218)
5,027
(312)
26
(78)
993
(2,771)
1,011
(2,771)
(320,203)
(249,855)
(320,169)
(249,767)
(18,309)
(15,712)
(18,309)
(15,712)
(6,206)
(2,611)
(10,426)
(6,171)
(2,650)
(8,827)
(6,206)
(2,639)
(10,424)
38
(10,698)
245
3,140
(91)
26
(6,171)
(2,671)
(8,826)
(6,806)
2,024
283
(7,558)
(65)
(4,782)
2b
10
2c
2d
2e
3
Financial instrument gains/(losses)
Currency derivatives
Cottonseed purchase contracts
Cottonseed sales contracts
Net financial instrument gains/(losses)
Other income
Share of profit/(loss) of associates
and joint ventures
Changes in inventories of finished goods
Raw materials and consumables used
Employee benefits expense
Depreciation
Finance costs
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to the members
of Namoi Cotton Co-operative Ltd.
Other comprehensive income items that will not
be reclassified subsequently to profit and loss:
Increment/(decrement) to asset revaluation
Profit/(loss) and total comprehensive income
attributable to the members of
Namoi Cotton Co-operative Ltd
reserve (net of tax)
-
6,504
-
6,504
283
(1,054)
(65)
1,722
The above statement of profit and loss and other comprehensive income should be read
in conjunction with the accompanying notes.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Derivative financial instruments
Total current assets
Non-current assets
Trade and other receivables
Investments in associates and joint ventures
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Deferred tax liabilities (net)
Co-operative grower member shares
Total non-current liabilities
Total liabilities
NET ASSETS
Equity
Parent entity interest
Contributed equity
Reserves
Retained earnings
Total parent entity interest in equity
TOTAL EQUITY
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
6
7
8
9
7
10
13
14
15
16
9
15
16
3
17
18
19
2,256
5,288
7,614
541
14,665
30,364
1,790
4,561
5,901
372
4,352
16,976
2,135
10,540
7,614
541
14,665
35,495
1,785
9,992
5,882
372
4,352
22,383
-
41,876
138,473
180,349
-
41,966
140,910
182,876
41,820
155
138,473
180,448
41,820
99
140,910
182,829
210,713
199,852
215,943
205,212
8,401
16,590
1,979
14,141
41,111
-
43,330
863
1,134
447
45,774
5,022
59,270
2,062
5,463
71,817
456
1,409
799
1,379
447
4,490
26,131
16,590
1,979
14,141
58,841
-
45,379
863
394
447
47,083
22,753
59,270
2,062
5,463
89,548
456
3,458
799
420
447
5,580
86,885
76,307
105,924
95,128
123,828
123,545
110,019
110,084
1,098
101,845
20,885
123,828
1,098
101,845
20,602
123,545
1,098
101,845
7,076
110,019
1,098
101,845
7,141
110,084
123,828
123,545
110,019
110,084
Year Ended 28 February 2017
Statement of Profit and Loss and Other Comprehensive Income
Page 25
Year Ended 28 February 2017
Balance Sheet
Page 26
2017 ANNUAL REPORT | 37
The above balance sheet should be read in conjunction with the accompanying notes.
For personal use only Namoi Cotton Co-operative Limited
STATEMENT OF CASH FLOWS
for the year ended 28 February 2017
Cash flows from operating activities
Receipts from customers
Currency derivative flows
Payments to suppliers and employees
Payments to growers
Interest received
Borrowing costs
Rebates paid to grower members
Net cash inflow from operating
activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of
property, plant and equipment
Loans advanced
Proceeds from loans receivable
Distributions received (partnership and JV)
Net cash outflow from investing
activities
Cash flows from financing activities
Proceeds from issue of grower member shares
Payments for repurchases of grower member
shares
Proceeds from borrowings
Repayment of borrowings
Loans advanced to growers
Proceeds from repayment of grower loans
Repayment of finance lease and hire purchase
Net cash inflow from financing
activities
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
391,605
165
(66,742)
(316,437)
1
(3,114)
-
306,374
(365)
(62,924)
(238,027)
6
(2,741)
(502)
391,300
165
(66,507)
(316,455)
1
(3,142)
-
306,128
(365)
(62,652)
(238,028)
1
(2,762)
(502)
6b
5,478
1,821
5,362
1,820
(4,446)
(5,675)
(4,446)
(5,675)
195
(23)
16
-
165
(4)
33
3,570
195
(23)
16
-
165
(4)
33
3,570
(4,258)
(1,911)
(4,258)
(1,911)
-
9
-
9
-
28,530
(28,027)
(2,287)
2,287
(4)
(9)
9,555
(8,059)
(5,360)
5,360
(201)
-
28,530
(28,026)
(2,287)
2,287
(5)
(9)
9,555
(8,059)
(5,360)
5,360
(201)
499
1,295
499
1,295
Net increase in cash
Add cash at the beginning of the financial year
Cash at end of the financial year
6a
1,719
(282)
1,437
1,205
(1,487)
(282)
1,603
(287)
1,316
1,204
(1,491)
(287)
Namoi Cotton Co-operative Limited
STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2017
Consolidated $'000
Total equity at 1 March 2016
Net profit for the period
Total equity at 28 February 2017
Parent $'000
Total equity at 1 March 2016
Net profit for the period
Total equity at 28 February 2017
Consolidated $'000
CCU
Asset
Premium Revaluation
Issued
Capital
Reserve
(Note 19)
Reserve
(Note 19)
Retained
Earnings
Total
Equity
35,382
66,463
20,602
123,545
35,382
66,463
283
20,885
283
123,828
CCU
Asset
Premium Revaluation
Issued
Capital
Reserve
(Note 19)
Reserve
(Note 19)
Retained
Earnings
Total
Equity
35,382
66,463
7,141
110,084
35,382
66,463
(65)
7,076
(65)
110,019
CCU
Asset
Premium Revaluation
Issued
Capital
Reserve
(Note 19)
Reserve
(Note 19)
Retained
Earnings
Total
Equity
-
-
1,098
-
1,098
1,098
-
1,098
-
-
-
-
-
-
-
-
-
-
Total equity at 1 March 2015
1,098
35,382
59,959
28,160
124,599
Net loss for the period
Asset Revaluation (net of tax)
Total equity at 29 February 2016
1,098
35,382
20,602
123,545
-
(7,558)
(7,558)
6,504
6,504
66,463
CCU
Asset
Premium Revaluation
Issued
Capital
Reserve
(Note 19)
Reserve
(Note 19)
Retained
Earnings
Total
Equity
Parent $'000
Total equity at 1 March 2015
1,098
35,382
59,959
11,923
108,362
Net loss for the period
Asset Revaluation (net of tax)
Total equity at 29 February 2016
1,098
35,382
7,141
110,084
-
(4,782)
(4,782)
6,504
6,504
66,463
-
-
The above statement of cash flows should be read in conjunction with the accompanying notes.
Year Ended 28 February 2017
Statement of Cash Flows
2017 ANNUAL REPORT | 38
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Page 27
Year Ended 28 February 2017
Statement of Changes in Equity
Page 28
For personal use only Namoi Cotton Co-operative Limited
STATEMENT OF CASH FLOWS
for the year ended 28 February 2017
Cash flows from operating activities
Receipts from customers
Currency derivative flows
Payments to suppliers and employees
Payments to growers
Interest received
Borrowing costs
Rebates paid to grower members
Net cash inflow from operating
activities
Cash flows from investing activities
Consolidated
$'000
Parent
$'000
Note
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
391,605
306,374
391,300
306,128
165
(365)
165
(365)
(66,742)
(62,924)
(66,507)
(62,652)
(316,437)
(238,027)
(316,455)
(238,028)
(3,114)
1
-
6
(2,741)
(502)
(3,142)
1
-
1
(2,762)
(502)
6b
5,478
1,821
5,362
1,820
Payments for property, plant and equipment
(4,446)
(5,675)
(4,446)
(5,675)
Proceeds from sale of
property, plant and equipment
Loans advanced
Proceeds from loans receivable
Distributions received (partnership and JV)
Net cash outflow from investing
activities
Cash flows from financing activities
Proceeds from issue of grower member shares
Payments for repurchases of grower member
shares
Proceeds from borrowings
Repayment of borrowings
Loans advanced to growers
Proceeds from repayment of grower loans
Repayment of finance lease and hire purchase
Net cash inflow from financing
activities
Net increase in cash
Add cash at the beginning of the financial year
Cash at end of the financial year
6a
195
(23)
16
-
165
(4)
33
3,570
195
(23)
16
-
165
(4)
33
3,570
(4,258)
(1,911)
(4,258)
(1,911)
-
-
28,530
(28,027)
(2,287)
2,287
(4)
9
(9)
9,555
(8,059)
(5,360)
5,360
(201)
-
-
28,530
(28,026)
(2,287)
2,287
(5)
9
(9)
9,555
(8,059)
(5,360)
5,360
(201)
499
1,295
499
1,295
1,719
(282)
1,437
1,205
(1,487)
(282)
1,603
(287)
1,316
1,204
(1,491)
(287)
Namoi Cotton Co-operative Limited
STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2017
Consolidated $'000
Total equity at 1 March 2016
Net profit for the period
Total equity at 28 February 2017
Parent $'000
Total equity at 1 March 2016
Net profit for the period
Total equity at 28 February 2017
Consolidated $'000
Total equity at 1 March 2015
Net loss for the period
Asset Revaluation (net of tax)
Total equity at 29 February 2016
Parent $'000
Total equity at 1 March 2015
Net loss for the period
Asset Revaluation (net of tax)
Total equity at 29 February 2016
Issued
Capital
1,098
-
1,098
Issued
Capital
1,098
-
1,098
Issued
Capital
1,098
-
-
1,098
Issued
Capital
1,098
-
-
1,098
CCU
Asset
Premium Revaluation
Reserve
(Note 19)
Reserve
(Note 19)
Retained
Earnings
Total
Equity
35,382
-
35,382
66,463
-
66,463
20,602
123,545
283
20,885
283
123,828
CCU
Asset
Premium Revaluation
Reserve
(Note 19)
Reserve
(Note 19)
35,382
-
35,382
66,463
-
66,463
CCU
Asset
Premium Revaluation
Reserve
(Note 19)
Reserve
(Note 19)
35,382
-
-
35,382
59,959
-
6,504
66,463
CCU
Asset
Premium Revaluation
Reserve
(Note 19)
Reserve
(Note 19)
35,382
-
-
35,382
59,959
-
6,504
66,463
Retained
Earnings
Total
Equity
7,141
110,084
(65)
7,076
(65)
110,019
Retained
Earnings
Total
Equity
28,160
124,599
(7,558)
-
20,602
(7,558)
6,504
123,545
Retained
Earnings
Total
Equity
11,923
108,362
(4,782)
-
7,141
(4,782)
6,504
110,084
The above statement of cash flows should be read in conjunction with the accompanying notes.
Year Ended 28 February 2017
Statement of Cash Flows
Page 27
Year Ended 28 February 2017
Statement of Changes in Equity
Page 28
2017 ANNUAL REPORT | 39
The above statement of changes in equity should be read in conjunction with the accompanying notes.
For personal use only Namoi Cotton Co-operative Limited
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial report
includes separate financial statements for Namoi Cotton Co-operative Limited as an individual entity (under CO
10/654) and the consolidated entity consisting of Namoi Cotton Co-operative Limited and its subsidiaries.
For the purposes of disclosure of events occurring after balance date the Directors have authorised this financial
report for issue on 27 April 2017 in accordance with a resolution of the Board of Directors.
The nature of the operations and principal activities of the group are described in the Directors’ Report.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between
a)
Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with standards,
other authoritative pronouncements of the Australian Accounting Standards Board, the Co-operatives National
Law (NSW) and Corporations Act 2001.
The financial statements have been prepared under the historical cost convention, except for ginning assets,
derivative financial instruments, and cotton seed inventory which are measured at fair value.
A workshop has been undertaken in relation to AASB 9 and 15 as part of commencing a project to assess the
impacts of these new standards, however, the actual impacts and the quantum of any impacts has yet to be
Deficiency of Current Assets to Current Liabilities
The Group’s current liabilities exceed current assets. The net current liability position is mainly caused by the
classification of the working capital facility as current. This facility is renewed each year for seasonal reasons and
is not expected to be repaid in the next 12 months.
•
Prior to balance date Namoi Cotton completed execution of its 2017 finance facility renewal. The renewal
included the extension of term debt maturity dates from February 2018 to February 2020, the extension of the
•
working capital facility from March 2017 to March 2018 and other minor reporting obligations (refer to note 15).
•
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards as issued by the International Accounting Standards Board.
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Namoi Cotton Co-operative Limited
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial
Statements effective 1 March 2016;
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle [AASB 5, AASB 7, AASB 119, AASB 134] effective 1 March 2016;
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
101 effective 1 March 2016;
Certain new accounting standards and interpretations have been published that are not mandatory for 28
February 2017 reporting periods and have not yet been applied in the consolidated Financial statements. These
are:
AASB 9 Financial Instruments effective 1 March 2018;
AASB 15 Revenue from Contracts with Customers effective 1 March 2018;
an Investor and its Associate or Joint Venture effective 1 March 2018;
AASB 16 Leases effective 1 March 2019.
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses [AASB 112] effective 1 March 2017;
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
107 Statement of Cash Flows effective 1 March 2017;
finalised.
b)
Seasonality of operations
Cotton Ginning, one of Namoi Cottons business segments, operates on a seasonal basis whereby ginning
normally occurs between March to July each year. Accordingly, that segment traditionally generates profits in
the first half year and incurs losses in the second half year during the ensuing maintenance period.
Namoi Cotton’s marketing segment, represented by sales to NCA and its residual 51% share in the joint venture,
generally takes delivery of lint cotton from growers in the first half of the year predominately from March to
August. Under NCA’s accounting policies, profits on lint marketing occur when the joint venture takes delivery
of the lint cotton from the grower.
c)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Namoi and its subsidiaries as at 28
February 2017. Control is achieved when Namoi is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, Namoi controls an investee if and only if the group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
When Namoi has less than a majority of the voting or similar rights of an investee, Namoi considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Namoi’s voting rights and potential voting rights.
Namoi re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when Namoi
obtains control over the subsidiary and ceases when Namoi loses control of the subsidiary. Assets, liabilities,
Determination of fair value on cotton seed inventory (refer to Note 1) and derivative financial instruments
(refer to Note 1);
Impairment testing of property plant and equipment (refer to Note 1m);
Fair value of ginning assets (refer Note 1m);
Classification of associates (refer to Note 1c);
Treatment of deferred tax balances including tax loss recognition (refer to Note 1f); and
Assessment of the useful lives of assets (refer to Note 1m)
New accounting standards and interpretations
New standards and amendments to standards that are mandatory for the first time for the financial year
beginning 1 March 2016 have been adopted by the Group. The adoption of these standards had no material
financial impact on the current period or any prior period and is not likely to affect future periods.
�
•
Significant accounting judgments, estimates and assumptions
The preparation of the financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts in the financial statements over the following primary areas:
�
•
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality effective 1 March 2016;
AASB 2014-4 Amendments to Clarification of Acceptable Methods of Depreciation and Amortisation
(Amendments to AASB 116 & AASB 138) effective 1 March 2016;
AASB 1057 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-14 Cycle effective 1 March 2016;
�
•
�
•
�
•
�
•
�
•
�
•
�
•
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 40
Page 29
Year Ended 28 February 2017
Notes to the Financial Statements
Page 30
For personal use only Namoi Cotton Co-operative Limited
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial report
includes separate financial statements for Namoi Cotton Co-operative Limited as an individual entity (under CO
10/654) and the consolidated entity consisting of Namoi Cotton Co-operative Limited and its subsidiaries.
For the purposes of disclosure of events occurring after balance date the Directors have authorised this financial
report for issue on 27 April 2017 in accordance with a resolution of the Board of Directors.
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, which has been prepared in accordance with standards,
other authoritative pronouncements of the Australian Accounting Standards Board, the Co-operatives National
Law (NSW) and Corporations Act 2001.
The financial statements have been prepared under the historical cost convention, except for ginning assets,
derivative financial instruments, and cotton seed inventory which are measured at fair value.
Deficiency of Current Assets to Current Liabilities
The Group’s current liabilities exceed current assets. The net current liability position is mainly caused by the
classification of the working capital facility as current. This facility is renewed each year for seasonal reasons and
is not expected to be repaid in the next 12 months.
Prior to balance date Namoi Cotton completed execution of its 2017 finance facility renewal. The renewal
included the extension of term debt maturity dates from February 2018 to February 2020, the extension of the
working capital facility from March 2017 to March 2018 and other minor reporting obligations (refer to note 15).
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards as issued by the International Accounting Standards Board.
Significant accounting judgments, estimates and assumptions
The preparation of the financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts in the financial statements over the following primary areas:
Determination of fair value on cotton seed inventory (refer to Note 1) and derivative financial instruments
(refer to Note 1);
Impairment testing of property plant and equipment (refer to Note 1m);
Fair value of ginning assets (refer Note 1m);
Classification of associates (refer to Note 1c);
Treatment of deferred tax balances including tax loss recognition (refer to Note 1f); and
Assessment of the useful lives of assets (refer to Note 1m)
New accounting standards and interpretations
New standards and amendments to standards that are mandatory for the first time for the financial year
beginning 1 March 2016 have been adopted by the Group. The adoption of these standards had no material
financial impact on the current period or any prior period and is not likely to affect future periods.
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality effective 1 March 2016;
AASB 2014-4 Amendments to Clarification of Acceptable Methods of Depreciation and Amortisation
(Amendments to AASB 116 & AASB 138) effective 1 March 2016;
AASB 1057 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-14 Cycle effective 1 March 2016;
�
�
�
�
�
�
�
�
�
Namoi Cotton Co-operative Limited
�
•
�
•
�
•
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial
Statements effective 1 March 2016;
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle [AASB 5, AASB 7, AASB 119, AASB 134] effective 1 March 2016;
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
101 effective 1 March 2016;
Certain new accounting standards and interpretations have been published that are not mandatory for 28
February 2017 reporting periods and have not yet been applied in the consolidated Financial statements. These
are:
�
•
�
•
�
•
AASB 9 Financial Instruments effective 1 March 2018;
AASB 15 Revenue from Contracts with Customers effective 1 March 2018;
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture effective 1 March 2018;
AASB 16 Leases effective 1 March 2019.
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses [AASB 112] effective 1 March 2017;
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
107 Statement of Cash Flows effective 1 March 2017;
�
•
�
•
�
•
A workshop has been undertaken in relation to AASB 9 and 15 as part of commencing a project to assess the
impacts of these new standards, however, the actual impacts and the quantum of any impacts has yet to be
finalised.
b)
Seasonality of operations
Cotton Ginning, one of Namoi Cottons business segments, operates on a seasonal basis whereby ginning
normally occurs between March to July each year. Accordingly, that segment traditionally generates profits in
the first half year and incurs losses in the second half year during the ensuing maintenance period.
Namoi Cotton’s marketing segment, represented by sales to NCA and its residual 51% share in the joint venture,
generally takes delivery of lint cotton from growers in the first half of the year predominately from March to
August. Under NCA’s accounting policies, profits on lint marketing occur when the joint venture takes delivery
of the lint cotton from the grower.
c)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Namoi and its subsidiaries as at 28
February 2017. Control is achieved when Namoi is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, Namoi controls an investee if and only if the group has:
�
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
�
•
�
•
When Namoi has less than a majority of the voting or similar rights of an investee, Namoi considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
�
•
�
•
�
•
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Namoi’s voting rights and potential voting rights.
Namoi re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when Namoi
obtains control over the subsidiary and ceases when Namoi loses control of the subsidiary. Assets, liabilities,
Year Ended 28 February 2017
Notes to the Financial Statements
Page 29
Year Ended 28 February 2017
Notes to the Financial Statements
Page 30
2017 ANNUAL REPORT | 41
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date Namoi gains control until the date Namoi ceases to control the subsidiary.
Namoi calculates the amount of impairment as the difference between the recoverable amount of the associate
or joint venture and its carrying value, then recognises the loss as ‘Share of profit of an associate and a joint
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of
the parent of Namoi and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with Namoi’s accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of Namoi are eliminated in
full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If Namoi loses control over a subsidiary, it:
�
•
�
•
�
•
�
•
�
•
�
•
�
•
De-recognises the assets (including goodwill) and liabilities of the subsidiary;
De-recognises the carrying amount of any non-controlling interests;
De-recognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if Namoi had directly disposed of the related assets or
liabilities.
Investment in associates and joint ventures
An associate is an entity over which Namoi has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary to
determine control over subsidiaries. Namoi’s investments in its associate and joint venture are accounted for
using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The
carrying amount of the investment is adjusted to recognise changes in Namoi’s share of net assets of the
associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is
included in the carrying amount of the investment and is neither amortised nor individually tested for
impairment.
The statement of profit or loss reflects Namoi’s share of the results of operations of the associate or joint
venture. Any change in OCI of those investees is presented as part of the Namoi’s OCI. In addition, when there
has been a change recognised directly in the equity of the associate or joint venture, Namoi recognises its share
of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting
from transactions between Namoi and the associate or joint venture are eliminated to the extent of the interest
in the associate or joint venture.
The aggregate of Namoi’s share of profit or loss of an associate and a joint venture is shown on the face of the
statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling
interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as Namoi.
When necessary, adjustments are made to bring the accounting policies in line with those of Namoi.
After application of the equity method, Namoi determines whether it is necessary to recognise an impairment
loss on its investment in its associate or joint venture. At each reporting date, Namoi determines whether there
is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence,
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 42
Page 31
Page 32
venture’ in the statement of profit or loss.
Upon loss of significant influence over the associate or joint control over the joint venture, Namoi measures and
recognises any retained investment at its fair value. Any difference between the carrying amount of the
associate or joint venture upon loss of significant influence or joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
Joint operations
Namoi determines its interest in the assets and liabilities relating to each joint operation on the basis of its rights
and obligations in a specified proportion in accordance with the contractual arrangement.
Namoi recognises the following at its share:
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly.
�
�
�
�
�
Interests in jointly controlled assets have been incorporated in the financial statements under the appropriate
Jointly controlled assets
headings.
d)
Foreign currency translation
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 Namoi Cotton Co-operative Limited’s functional
and presentation currency.
Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange
rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation of foreign currency denominated monetary assets and liabilities
using rates of exchange applicable at balance date are recognised in the statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the
revenue can be reliably measured. The following specific recognition criteria must also be met before revenue
Sale of lint cotton, cotton seed and grain commodities
Sales revenue is brought to account when the terms of delivery under the sales contract have been satisfied.
Fair value of forward cotton seed commodity sale contracts is determined with reference to prevailing prices at
e)
Revenue recognition
is recognised.
reporting date.
Derivatives
statement of comprehensive income.
Year Ended 28 February 2017
Notes to the Financial Statements
Derivatives including forward cotton seed commodity purchase and sale contracts and forward exchange
contracts are stated at fair value with any gains or losses arising from changes in fair value taken directly to the
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date Namoi gains control until the date Namoi ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of
the parent of Namoi and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with Namoi’s accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of Namoi are eliminated in
full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If Namoi loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary;
De-recognises the carrying amount of any non-controlling interests;
De-recognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
�
�
�
�
�
�
�
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if Namoi had directly disposed of the related assets or
liabilities.
Investment in associates and joint ventures
An associate is an entity over which Namoi has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary to
determine control over subsidiaries. Namoi’s investments in its associate and joint venture are accounted for
using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The
carrying amount of the investment is adjusted to recognise changes in Namoi’s share of net assets of the
associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is
included in the carrying amount of the investment and is neither amortised nor individually tested for
impairment.
The statement of profit or loss reflects Namoi’s share of the results of operations of the associate or joint
venture. Any change in OCI of those investees is presented as part of the Namoi’s OCI. In addition, when there
has been a change recognised directly in the equity of the associate or joint venture, Namoi recognises its share
of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting
from transactions between Namoi and the associate or joint venture are eliminated to the extent of the interest
in the associate or joint venture.
The aggregate of Namoi’s share of profit or loss of an associate and a joint venture is shown on the face of the
statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling
interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as Namoi.
When necessary, adjustments are made to bring the accounting policies in line with those of Namoi.
After application of the equity method, Namoi determines whether it is necessary to recognise an impairment
loss on its investment in its associate or joint venture. At each reporting date, Namoi determines whether there
is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence,
Namoi calculates the amount of impairment as the difference between the recoverable amount of the associate
or joint venture and its carrying value, then recognises the loss as ‘Share of profit of an associate and a joint
venture’ in the statement of profit or loss.
Upon loss of significant influence over the associate or joint control over the joint venture, Namoi measures and
recognises any retained investment at its fair value. Any difference between the carrying amount of the
associate or joint venture upon loss of significant influence or joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
Joint operations
Namoi determines its interest in the assets and liabilities relating to each joint operation on the basis of its rights
and obligations in a specified proportion in accordance with the contractual arrangement.
Namoi recognises the following at its share:
�
•
�
•
�
•
�
•
�
•
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly.
Jointly controlled assets
Interests in jointly controlled assets have been incorporated in the financial statements under the appropriate
headings.
d)
Foreign currency translation
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 Namoi Cotton Co-operative Limited’s functional
and presentation currency.
Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange
rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation of foreign currency denominated monetary assets and liabilities
using rates of exchange applicable at balance date are recognised in the statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
e)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the
revenue can be reliably measured. The following specific recognition criteria must also be met before revenue
is recognised.
Sale of lint cotton, cotton seed and grain commodities
Sales revenue is brought to account when the terms of delivery under the sales contract have been satisfied.
Fair value of forward cotton seed commodity sale contracts is determined with reference to prevailing prices at
reporting date.
Derivatives
Derivatives including forward cotton seed commodity purchase and sale contracts and forward exchange
contracts are stated at fair value with any gains or losses arising from changes in fair value taken directly to the
statement of comprehensive income.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 31
Year Ended 28 February 2017
Notes to the Financial Statements
Page 32
2017 ANNUAL REPORT | 43
For personal use only Namoi Cotton Co-operative Limited
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
contracts with similar maturity profiles.
Ginning revenue
Ginning charges are invoiced to growers for services connected with the processing of seed cotton to lint cotton.
Revenue is brought to account on all production performed during the period.
Interest revenue
Interest revenue is brought to account when entitlement to interest occurs using the effective interest method.
Dividend revenue
Dividend revenue is brought to account when the group’s right to receive is established.
Rental revenue
Rental income is brought to account when received.
f)
Taxes
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based upon the prevailing income tax rate adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the
financial statements, and as to available carried forward taxation losses.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the
extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at balance date.
Deferred tax assets and deferred tax liabilities are offset only where such offset is enforceable and where the
asset and liability relate to the same taxpaying entity and the same taxation authority.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of
comprehensive income.
Cotton seed inventory is carried at fair value less costs to sell.
Tax consolidation legislation
Namoi Cotton Co-operative Limited is the head entity of the tax consolidated group comprising all wholly owned
controlled entities. The group has applied the group allocation method in determining the appropriate amount
of current and deferred taxes to allocate to the members of the tax consolidated group.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
� where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
•
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
receivables and payables are stated with the amount of GST included.
�
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a
gross basis and the GST component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 44
Page 33
Year Ended 28 February 2017
Notes to the Financial Statements
Page 34
Namoi Cotton Co-operative Limited
g)
Leases
Leases are classified at their inception as either operating or finance leases based on the economic substance of
the agreement so as to reflect the risks and benefits incidental to ownership.
Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated in accordance with the depreciation methodology applicable for the
type of asset subject to the lease. However, if no reasonable certainty exists to indicate the asset will be acquired
at the end of the lease term the asset is depreciated over the shorter of the estimated useful life of the asset or
the lease term.
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the
risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis over the
period of the operating lease.
h)
Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in
money market instruments readily convertible to cash within two working days, net of outstanding bank
overdrafts. Bank overdrafts are carried at the principal amount. Interest is recognised as an expense as it accrues.
i)
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment for any uncollectible debts. 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 the reporting date. The recoverability of trade and grower loans is
reviewed on an ongoing basis. An estimate for doubtful debts is made when collection of the full nominal
amount is no longer probable. Bad debts are written off as incurred.
j)
Inventories
Cotton seed
Fair value reflects the price at which an orderly transaction to settle same inventory in the principle (or most
advantageous) market for that inventory would take place between market participants at the measurement
date. Costs to sell incorporate anticipated future delivery costs, commissions and brokerage.
Fair value less costs to sell may be higher or lower than cost with any differences taken to the statement of
comprehensive income.
Grain commodities and consumables
and net realisable value.
Grain commodities and consumables (operating supplies and spares) are carried at the lower of average cost
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
For personal use only The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
g)
Leases
Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
contracts with similar maturity profiles.
Ginning charges are invoiced to growers for services connected with the processing of seed cotton to lint cotton.
Revenue is brought to account on all production performed during the period.
Interest revenue is brought to account when entitlement to interest occurs using the effective interest method.
Dividend revenue is brought to account when the group’s right to receive is established.
Rental revenue
Rental income is brought to account when received.
Ginning revenue
Interest revenue
Dividend revenue
f)
Taxes
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based upon the prevailing income tax rate adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the
financial statements, and as to available carried forward taxation losses.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the
extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at balance date.
comprehensive income.
Tax consolidation legislation
Namoi Cotton Co-operative Limited is the head entity of the tax consolidated group comprising all wholly owned
controlled entities. The group has applied the group allocation method in determining the appropriate amount
of current and deferred taxes to allocate to the members of the tax consolidated group.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
� where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
�
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a
gross basis and the GST component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Leases are classified at their inception as either operating or finance leases based on the economic substance of
the agreement so as to reflect the risks and benefits incidental to ownership.
Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated in accordance with the depreciation methodology applicable for the
type of asset subject to the lease. However, if no reasonable certainty exists to indicate the asset will be acquired
at the end of the lease term the asset is depreciated over the shorter of the estimated useful life of the asset or
the lease term.
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the
risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis over the
period of the operating lease.
h)
Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in
money market instruments readily convertible to cash within two working days, net of outstanding bank
overdrafts. Bank overdrafts are carried at the principal amount. Interest is recognised as an expense as it accrues.
i)
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment for any uncollectible debts. 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 the reporting date. The recoverability of trade and grower loans is
reviewed on an ongoing basis. An estimate for doubtful debts is made when collection of the full nominal
amount is no longer probable. Bad debts are written off as incurred.
Deferred tax assets and deferred tax liabilities are offset only where such offset is enforceable and where the
asset and liability relate to the same taxpaying entity and the same taxation authority.
j)
Inventories
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of
Cotton seed
Cotton seed inventory is carried at fair value less costs to sell.
Fair value reflects the price at which an orderly transaction to settle same inventory in the principle (or most
advantageous) market for that inventory would take place between market participants at the measurement
date. Costs to sell incorporate anticipated future delivery costs, commissions and brokerage.
Fair value less costs to sell may be higher or lower than cost with any differences taken to the statement of
comprehensive income.
Grain commodities and consumables
Grain commodities and consumables (operating supplies and spares) are carried at the lower of average cost
and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 33
Year Ended 28 February 2017
Notes to the Financial Statements
Page 34
2017 ANNUAL REPORT | 45
For personal use only Namoi Cotton Co-operative Limited
k)
Derivative financial instruments
The group uses derivative financial instruments such as foreign exchange contracts to manage the risks
associated with foreign currency contracts to manage the risks associated with foreign currency. Such derivative
financial instruments are stated at fair value with any gains or losses arising from changes in fair value taken
directly to the statement of comprehensive income.
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
contracts with similar maturity profiles. The fair value of cotton futures and options contracts is determined by
reference to commodity prices with similar maturity profiles.
Forward commodity purchase and sale contracts are classified as derivatives measured at fair value. Fair value
is determined with reference to prevailing prices at reporting date.
Major depreciation rates are:
The group uses interest rate derivatives to manage its risks associated with interest rate fluctuations. These
derivatives have not been designated as hedging instruments and are accordingly initially recognised at fair value
on the date on which the contract is entered into and are subsequently remeasured to fair value. Changes in fair
value are recognised directly in the statement of comprehensive income as finance costs. Fair value is
determined by reference to market values for similar instruments.
l)
Recoverable amounts of assets
At each reporting date, the group assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the group makes a formal estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell
and it does not generate cash inflows that are largely independent of those from other assets or groups of assets,
in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
m) Property, plant and equipment
Cost and valuation
Gin, warehouse, other infrastructure and major equipment assets are measured at fair value (refer to Note 1x)
less accumulated depreciation and any impairments recognised after the date of revaluation. Valuations are
performed frequently to ensure that the fair value of revalued assets does not differ materially from its carrying
value.
Any revaluation surplus is recorded in other comprehensive income and hence, credited to the asset revaluation
reserve in equity (less the income tax effect), except to the extent that it reverses a revaluation decrease of the
same asset previously recognized in the income statement, in which case, the increase is recognized in the
income statement. A revaluation deficit is recognized in the income statement, except to the extent that it
offsets an existing surplus on the same asset recognized in the asset revaluation reserve. Upon disposal or
derecognition, any revaluation reserve relating to the particular asset being sold is transferred to retained
earnings.
Other assets are carried at cost less accumulated depreciation and any accumulated impairments in value.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 46
Page 35
Page 36
Namoi Cotton Co-operative Limited
Depreciation
A change in the assessment of the remaining useful life of ginning assets (which is a change in estimate) was
made at the start of the 2017 financial year. The change has increased the remaining useful life of the ginning
assets with the effect of reducing depreciation for the year from $7.3m to $6.2m. Any impact in the next financial
year will be dependent upon actual ginning volumes at the time.
Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
remaining useful lives of 20 years (2016: 10 to 20 years). All other property, plant and equipment, other than
freehold land, is depreciated on a straight-line basis at rates calculated to allocate the cost less estimated
residual value at the end of the useful lives of the assets against revenue over their estimated useful lives.
20 years (2016: 10 to 20 years)
3 to 44 years
Ginning assets
Other assets
Impairment
events.
asset.
The recoverable amounts of plant and equipment are compared to carrying values when indicators of potential
impairment exist. These indicators include but are not limited to significant industry, economic and agronomic
The recoverable amounts of plant and equipment are the greater of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
Where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the
written down to their recoverable amount.
Disposal
are expected from its use or disposal.
year the asset is derecognised.
n)
Trade and other payables
Liabilities for trade creditors and accruals are carried at cost, which is the fair value of the consideration to be
paid in the future for goods and services received, whether or not billed to the entity.
o)
Interest-bearing loans and borrowings
All interest-bearing liabilities are initially measured at fair value of the consideration received less attributable
transaction costs and subsequently at amortised cost using the effective interest method. Interest is charged on
non-related party borrowings as an expense as it accrues.
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a
future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is
probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the
p)
Provisions
amount of the obligation.
Year Ended 28 February 2017
Notes to the Financial Statements
For personal use only Namoi Cotton Co-operative Limited
k)
Derivative financial instruments
The group uses derivative financial instruments such as foreign exchange contracts to manage the risks
associated with foreign currency contracts to manage the risks associated with foreign currency. Such derivative
financial instruments are stated at fair value with any gains or losses arising from changes in fair value taken
directly to the statement of comprehensive income.
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
contracts with similar maturity profiles. The fair value of cotton futures and options contracts is determined by
reference to commodity prices with similar maturity profiles.
Namoi Cotton Co-operative Limited
Depreciation
A change in the assessment of the remaining useful life of ginning assets (which is a change in estimate) was
made at the start of the 2017 financial year. The change has increased the remaining useful life of the ginning
assets with the effect of reducing depreciation for the year from $7.3m to $6.2m. Any impact in the next financial
year will be dependent upon actual ginning volumes at the time.
Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
remaining useful lives of 20 years (2016: 10 to 20 years). All other property, plant and equipment, other than
freehold land, is depreciated on a straight-line basis at rates calculated to allocate the cost less estimated
residual value at the end of the useful lives of the assets against revenue over their estimated useful lives.
Forward commodity purchase and sale contracts are classified as derivatives measured at fair value. Fair value
Major depreciation rates are:
is determined with reference to prevailing prices at reporting date.
Ginning assets
Other assets
20 years (2016: 10 to 20 years)
3 to 44 years
Impairment
The recoverable amounts of plant and equipment are compared to carrying values when indicators of potential
impairment exist. These indicators include but are not limited to significant industry, economic and agronomic
events.
The recoverable amounts of plant and equipment are the greater of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
Where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are
written down to their recoverable amount.
Disposal
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the
year the asset is derecognised.
Gin, warehouse, other infrastructure and major equipment assets are measured at fair value (refer to Note 1x)
less accumulated depreciation and any impairments recognised after the date of revaluation. Valuations are
performed frequently to ensure that the fair value of revalued assets does not differ materially from its carrying
n)
Trade and other payables
Any revaluation surplus is recorded in other comprehensive income and hence, credited to the asset revaluation
reserve in equity (less the income tax effect), except to the extent that it reverses a revaluation decrease of the
same asset previously recognized in the income statement, in which case, the increase is recognized in the
income statement. A revaluation deficit is recognized in the income statement, except to the extent that it
offsets an existing surplus on the same asset recognized in the asset revaluation reserve. Upon disposal or
derecognition, any revaluation reserve relating to the particular asset being sold is transferred to retained
Liabilities for trade creditors and accruals are carried at cost, which is the fair value of the consideration to be
paid in the future for goods and services received, whether or not billed to the entity.
o)
Interest-bearing loans and borrowings
All interest-bearing liabilities are initially measured at fair value of the consideration received less attributable
transaction costs and subsequently at amortised cost using the effective interest method. Interest is charged on
non-related party borrowings as an expense as it accrues.
Other assets are carried at cost less accumulated depreciation and any accumulated impairments in value.
p)
Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a
future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is
probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the
amount of the obligation.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 35
Year Ended 28 February 2017
Notes to the Financial Statements
Page 36
2017 ANNUAL REPORT | 47
The group uses interest rate derivatives to manage its risks associated with interest rate fluctuations. These
derivatives have not been designated as hedging instruments and are accordingly initially recognised at fair value
on the date on which the contract is entered into and are subsequently remeasured to fair value. Changes in fair
value are recognised directly in the statement of comprehensive income as finance costs. Fair value is
determined by reference to market values for similar instruments.
l)
Recoverable amounts of assets
At each reporting date, the group assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the group makes a formal estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell
and it does not generate cash inflows that are largely independent of those from other assets or groups of assets,
in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
m) Property, plant and equipment
Cost and valuation
asset.
value.
earnings.
For personal use only Namoi Cotton Co-operative Limited
A provision for distribution is recognised as a liability when the dividends are declared, determined or publicly
recommended on or before the reporting date.
q)
Capital stock
Capital stock is recognised at the fair value of the consideration received. Any transaction costs arising on
transactions relating to the issue or redemption of capital stock are recognised directly in equity as a reduction
of the consideration received or as an increase to the consideration paid.
r)
Grower member share capital
Grower member share (co-operative grower member share) capital is recognised as a liability in the balance
sheet due to their fixed entitlement to the return of capital in the amount of $2.70 per grower member share
per the co-operative rules.
The classification as debt is in strict compliance with AASB 132 Financial Instruments: Presentation. The
equitable rights attached to the grower member shares regarding voting capital entitlements and rebate
eligibility has not changed as a result of this reclassification.
Rebates payable to active grower member shareholders are recorded in the statement of comprehensive
income as other expenses.
s)
Share-based payment transactions
The group has provided benefits to permanent employees (not including directors) in the form of participation
in the employee share plan after a qualifying period. Shares are issued under the plan at a 5% discount to the
average market price of the five days preceding the offer. The plan was suspended in August 2004.
t)
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be
settled within twelve months of the reporting date are measured at their nominal amounts based on
remuneration rates which are expected to be paid when the liability is settled. All other employee benefit
liabilities are measured at the present value of the estimated future cash outflow to be made in respect of
services provided by employees up to the reporting date. In determining the present value of future cash
outflows, the interest rates attaching to high quality corporate bonds that have terms to maturity approximating
the terms of the related liability are used.
Employee benefits are recognised against profits when they are respectively paid or payable.
u)
Finance costs
Finance costs are recognised as expenses in the periods in which they are incurred with the exception of interest
rate derivatives recognised at fair value and the amortisation of ancillary costs incurred with the arrangement
of borrowings, which are amortised over the period of the facility. Finance costs include:
�
•
interest on bank overdrafts and short term and long term borrowings using the effective interest method;
and
fair value movements in interest rate derivatives.
�
•
v)
Earnings per unit
Basic earnings per unit is determined by dividing the profit attributable to members, adjusted to exclude costs
of servicing equity (other than distributions) by the weighted average number of units.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 48
Page 37
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
A provision for distribution is recognised as a liability when the dividends are declared, determined or publicly
recommended on or before the reporting date.
q)
Capital stock
Capital stock is recognised at the fair value of the consideration received. Any transaction costs arising on
transactions relating to the issue or redemption of capital stock are recognised directly in equity as a reduction
of the consideration received or as an increase to the consideration paid.
r)
Grower member share capital
Grower member share (co-operative grower member share) capital is recognised as a liability in the balance
sheet due to their fixed entitlement to the return of capital in the amount of $2.70 per grower member share
per the co-operative rules.
The classification as debt is in strict compliance with AASB 132 Financial Instruments: Presentation. The
equitable rights attached to the grower member shares regarding voting capital entitlements and rebate
eligibility has not changed as a result of this reclassification.
Rebates payable to active grower member shareholders are recorded in the statement of comprehensive
income as other expenses.
s)
Share-based payment transactions
The group has provided benefits to permanent employees (not including directors) in the form of participation
in the employee share plan after a qualifying period. Shares are issued under the plan at a 5% discount to the
average market price of the five days preceding the offer. The plan was suspended in August 2004.
t)
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be
settled within twelve months of the reporting date are measured at their nominal amounts based on
remuneration rates which are expected to be paid when the liability is settled. All other employee benefit
liabilities are measured at the present value of the estimated future cash outflow to be made in respect of
services provided by employees up to the reporting date. In determining the present value of future cash
outflows, the interest rates attaching to high quality corporate bonds that have terms to maturity approximating
the terms of the related liability are used.
Employee benefits are recognised against profits when they are respectively paid or payable.
u)
Finance costs
Finance costs are recognised as expenses in the periods in which they are incurred with the exception of interest
rate derivatives recognised at fair value and the amortisation of ancillary costs incurred with the arrangement
of borrowings, which are amortised over the period of the facility. Finance costs include:
interest on bank overdrafts and short term and long term borrowings using the effective interest method;
�
�
and
fair value movements in interest rate derivatives.
v)
Earnings per unit
Basic earnings per unit is determined by dividing the profit attributable to members, adjusted to exclude costs
of servicing equity (other than distributions) by the weighted average number of units.
Diluted earnings per unit is determined by dividing the profit attributable to members, adjusted to exclude costs
of servicing equity (other than distributions) by the weighted average number of units and potential dilutive
shares.
w)
Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components
of the same entity), whose operating results are regularly reviewed by the CEO as the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment and assess its performance
and for which discrete financial information is available. This includes start up operations which are yet to earn
revenues. Management considered other factors in determining operating segments such as the existence of a
line manager and the level of segment information presented to the board of directors.
The group aggregates two or more operating segments when they have similar economic characteristics, and
the segments are similar in each of the following respects:
� Nature of the products and services;
•
� Nature of the production processes;
•
�
•
� Methods used to distribute the products or provide the services; and if applicable
•
� Nature of the regulatory environment.
•
Type or class of customer for the products and services;
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately where
information about the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category “unallocated segment”.
x)
Fair value measurement
Namoi measures financial instruments, such as, derivatives, and non-financial assets, at fair value at each
balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the liability takes place either:
�
•
�
•
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to Namoi.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
Namoi uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
�
•
�
•
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; and
Year Ended 28 February 2017
Notes to the Financial Statements
Page 37
Year Ended 28 February 2017
Notes to the Financial Statements
Page 38
2017 ANNUAL REPORT | 49
For personal use only Namoi Cotton Co-operative Limited
�
•
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, Namoi determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
Namoi’s Directors determine the policies and procedures for both recurring fair value measurement, such as
property, plant and equipment and derivatives, and for non-recurring measurement. External valuers are
involved for valuation of significant assets, such as ginning assets and derivatives, and significant liabilities, such
as derivatives. Involvement of external valuers is decided upon annually by the Directors after discussions with
and approval by the Company’s Audit and Compliance Committee. Selection criteria include market knowledge,
reputation, independence and whether professional standards are maintained. The committee decides, after
discussions with the Group’s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Directors analyse the movements in the values of assets and liabilities which are
required to be re-measured or re-assessed as per Namoi’s accounting policies.
For this analysis, the Directors verify the major inputs applied in the latest valuation by agreeing the information
in the valuation computation to contracts and other relevant documents.
The Directors, in conjunction with reports from external valuers, also compares changes in the fair value of each
asset and liability with relevant external sources to determine whether the change is reasonable.
The Directors present the valuation results to the Audit and Compliance Committee and Namoi’s independent
auditors. This includes a discussion of the major assumptions used in the valuations.
For the purpose of fair value disclosures, Namoi has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.
y)
Rounding of amounts
This financial report is presented in Australian dollars and all values have been rounded to the nearest thousand
dollars (where rounding is applicable) in accordance with clause 10(6) of the Co-operatives (Accounts and Audit)
Regulations and ASIC Corporations (Rounding in Financial Directors Reports) Instrument 2016/191. The co-
operative is an entity to which this legislative instrument applies.
Namoi Cotton Co-operative Limited
2. Revenue and Expenses
a) Revenue from continuing operations
Sale of goods at fair value
Rendering of services
Rental revenue
Financial service provider revenue
Finance revenue
Breakdown of finance revenue:
Interest revenue from grower finance
Interest revenue from non-related entities
b) Other income
and equipment
Net gain on disposal of property, plant
c) Employee benefits expense
Salaries, wages, on-costs and other
employee benefits
Defined contribution benefits expense
d) Finance costs
Interest on bank loans and overdrafts
Interest expense - interest rate derivatives
e) Other expenses
Maintenance
Insurance
Motor vehicle
Consulting
Rent
Safety
Travel
Other
Minimum operating lease payments
Strategic restructuring-consulting1
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
315,310
248,770
315,009
248,533
39,620
30,500
39,620
30,500
355,344
279,713
355,043
279,476
213
200
1
(2)
3
1
60
60
725
964
368
554
447
403
518
620
200
242
1
-
1
1
26
26
874
862
728
539
314
471
503
119
213
200
1
(2)
3
1
60
60
725
964
368
554
447
403
518
620
200
242
1
-
1
1
26
26
874
862
728
539
314
471
503
119
17,116
1,193
18,309
14,670
1,042
15,712
17,116
1,193
18,309
14,670
1,042
15,712
2,596
15
2,611
2,657
(7)
2,650
2,624
15
2,639
2,678
(7)
2,671
3,681
2,926
3,681
2,926
1 Includes the engagement of external corporate, legal and
taxation advisors in relation to the corporate restructure proposal.
2,146
10,426
1,491
8,827
2,144
10,424
1,490
8,826
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 50
Page 39
Year Ended 28 February 2017
Notes to the Financial Statements
Page 40
For personal use only Namoi Cotton Co-operative Limited
measurement is unobservable.
�
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
For assets and liabilities that are recognised in the financial statements on a recurring basis, Namoi determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
Namoi’s Directors determine the policies and procedures for both recurring fair value measurement, such as
property, plant and equipment and derivatives, and for non-recurring measurement. External valuers are
involved for valuation of significant assets, such as ginning assets and derivatives, and significant liabilities, such
as derivatives. Involvement of external valuers is decided upon annually by the Directors after discussions with
and approval by the Company’s Audit and Compliance Committee. Selection criteria include market knowledge,
reputation, independence and whether professional standards are maintained. The committee decides, after
discussions with the Group’s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Directors analyse the movements in the values of assets and liabilities which are
required to be re-measured or re-assessed as per Namoi’s accounting policies.
For this analysis, the Directors verify the major inputs applied in the latest valuation by agreeing the information
in the valuation computation to contracts and other relevant documents.
The Directors, in conjunction with reports from external valuers, also compares changes in the fair value of each
asset and liability with relevant external sources to determine whether the change is reasonable.
The Directors present the valuation results to the Audit and Compliance Committee and Namoi’s independent
auditors. This includes a discussion of the major assumptions used in the valuations.
For the purpose of fair value disclosures, Namoi has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.
y)
Rounding of amounts
This financial report is presented in Australian dollars and all values have been rounded to the nearest thousand
dollars (where rounding is applicable) in accordance with clause 10(6) of the Co-operatives (Accounts and Audit)
Regulations and ASIC Corporations (Rounding in Financial Directors Reports) Instrument 2016/191. The co-
operative is an entity to which this legislative instrument applies.
Namoi Cotton Co-operative Limited
2. Revenue and Expenses
a) Revenue from continuing operations
Sale of goods at fair value
Rendering of services
Rental revenue
Financial service provider revenue
Finance revenue
Breakdown of finance revenue:
Interest revenue from grower finance
Interest revenue from non-related entities
b) Other income
Net gain on disposal of property, plant
and equipment
c) Employee benefits expense
Salaries, wages, on-costs and other
employee benefits
Defined contribution benefits expense
d) Finance costs
Interest on bank loans and overdrafts
Interest expense - interest rate derivatives
e) Other expenses
Maintenance
Insurance
Motor vehicle
Consulting
Rent
Safety
Travel
Minimum operating lease payments
Strategic restructuring-consulting1
Other
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
315,310
39,620
213
200
1
355,344
248,770
30,500
200
242
1
279,713
315,009
39,620
213
200
1
355,043
248,533
30,500
200
242
1
279,476
(2)
3
1
60
60
-
1
1
26
26
(2)
3
1
60
60
-
1
1
26
26
17,116
1,193
18,309
14,670
1,042
15,712
17,116
1,193
18,309
14,670
1,042
15,712
2,596
15
2,611
3,681
725
964
368
554
447
403
518
620
2,146
10,426
2,657
(7)
2,650
2,926
874
862
728
539
314
471
503
119
1,491
8,827
2,624
15
2,639
3,681
725
964
368
554
447
403
518
620
2,144
10,424
2,678
(7)
2,671
2,926
874
862
728
539
314
471
503
119
1,490
8,826
1 Includes the engagement of external corporate, legal and
taxation advisors in relation to the corporate restructure proposal.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 39
Year Ended 28 February 2017
Notes to the Financial Statements
Page 40
2017 ANNUAL REPORT | 51
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
3.
Income Tax
Namoi Cotton Co-operative Limited
3.
Income Tax
Statement of Changes in Equity
Income tax expense items debited/(credited)
directly to equity:
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Net gain on revaluation of assets
-
(2,787)
-
(2,787)
Deferred Tax Assets
Net gain on revaluation of assets
-
(2,787)
(2,787)
Statement of Comprehensive Income
Accounting profit from continuing operations
before income tax expense
At the Group's statutory income tax rate of 30%
(2015: 30%)
Non-assessable income
Non-allowable expenditure
Tax loss incurred - not recognised
Filing differences
Tax losses previously not recognised 1
Income tax expense/(benefit) recorded in the
statement of comprehensive income
1 Tax l osses previ ously unrecognised for individual entities outsi de the tax consolidated group.
38
(10,698)
(91)
(6,806)
before income tax expense
38
(10,698)
(91)
(6,806)
11
(20)
52
-
(8)
(280)
(3,210)
(1)
18
120
-
(67)
(245)
(3,140)
(27)
-
28
-
(8)
(19)
(26)
(2,042)
-
18
-
-
-
(2,024)
Net deferred tax assets/(liabilities)
At the Group's statutory income tax rate of 30%
(1,134)
(1,379)
(394)
(420)
(3,210)
(669)
(353)
(27)
457
(2,042)
763
Deferred tax expense/(income)
(2015: 30%)
Unrecognised deferred tax assets
Non-assessable income
Unrecognised deferred tax liabilities
Non-allowable expenditure
Unrecognised tax losses
Tax loss incurred - not recognised
Unrecognised net deferred tax assets
Filing differences
Tax losses previously not recognised 1
Income tax expense/(benefit) recorded in the
statement of comprehensive income
18
(76)
1,182
1,124
16
(45)
1,435
1,406
11
(20)
52
-
(8)
-
-
-
-
(280)
-
-
-
-
(1)
18
120
-
(67)
(245)
(3,140)
28
-
-
(8)
(19)
Deferred Tax Liabilities
Statement of Changes in Equity
Accelerated depreciation for tax purposes and revaluations
Income tax expense items debited/(credited)
Timing of Joint Venture and Investments Income recognition
directly to equity:
Deferred costs
Provisions and accruals
Recognised losses available for offsetting against future taxable income 1, 2
Statement of Comprehensive Income
Accounting profit from continuing operations
Balance Sheet
Consolidated
$'000
Consolidated
$'000
28 Feb
2017
29 Feb
2016
Parent
28 Feb
$'000
2017
28 Feb
2017
Statement of Profit and Loss
and Other Comprehensive Income
Parent
$'000
29 Feb
2016
Consolidated
28 Feb
$'000
28 Feb
2017
2017
29 Feb
2016
29 Feb
Parent
$'000
2016
28 Feb
2017
(28,532)
(897)
(29,429)
(28,719)
(148)
(28,867)
419
1,658
26,218
28,295
550
1,129
25,809
27,488
(28,532)
(352)
(28,884)
419
1,658
26,413
28,490
29 Feb
2016
(28,720)
(418)
(29,138)
550
1,129
27,039
28,718
187
(756)
(569)
(130)
529
(499)
(100)
2,690
(483)
2,207
-
155
451
(3,166)
(2,560)
187
66
253
(130)
529
(195)
204
18
-
-
-
-
29 Feb
2016
2,690
(102)
2,588
155
451
(2,431)
(1,825)
29 Feb
2016
343
2,024
(2,787)
(420)
Consolidated
$'000
Parent
$'000
(26)
29 Feb
2016
(2,024)
28 Feb
2017
28 Feb
2017
(1,379)
245
-
(1,134)
(1,732)
3,140
(2,787)
(1,379)
(420)
26
-
(394)
Page 42
Reconciliation of net deferred tax assets/(liabilities)
1 Tax l osses previ ously unrecognised for individual entities outsi de the tax consolidated group.
Opening balance as of 1 March
Tax income/(expense) during the period recognised in profit or loss
Tax income/(expense) during the period recognised in other comprehensive income
Closing balance as at 28 February
Year Ended 28 February 2017
Notes to the Financial Statements
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 52
Page 41
Year Ended 28 February 2017
Notes to the Financial Statements
Page 41
For personal use only Net gain on revaluation of assets
-
(2,787)
-
(2,787)
Statement of Changes in Equity
Income tax expense items debited/(credited)
directly to equity:
Statement of Comprehensive Income
Accounting profit from continuing operations
before income tax expense
At the Group's statutory income tax rate of 30%
(2015: 30%)
Non-assessable income
Non-allowable expenditure
Tax loss incurred - not recognised
Filing differences
Tax losses previously not recognised 1
Income tax expense/(benefit) recorded in the
statement of comprehensive income
1 Tax l osses previ ously unrecognised for individual entities outsi de the tax consolidated group.
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
38
(10,698)
(91)
(6,806)
11
(20)
52
-
(8)
(280)
(3,210)
(1)
18
120
-
(67)
(2,042)
18
-
-
-
-
(27)
28
-
-
(8)
(19)
(26)
(245)
(3,140)
(2,024)
Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
3.
Income Tax
Namoi Cotton Co-operative Limited
3.
Income Tax
Balance Sheet
Consolidated
$'000
28 Feb
2017
29 Feb
2016
Consolidated
$'000
Parent
28 Feb
$'000
2017
28 Feb
2017
29 Feb
2016
29 Feb
2016
Parent
$'000
Statement of Profit and Loss
and Other Comprehensive Income
Parent
$'000
Consolidated
$'000
28 Feb
2017
29 Feb
2016
29 Feb
2016
28 Feb
2017
Deferred Tax Liabilities
Accelerated depreciation for tax purposes and revaluations
Timing of Joint Venture and Investments Income recognition
Statement of Changes in Equity
Income tax expense items debited/(credited)
directly to equity:
(28,532)
(897)
(29,429)
(28,719)
(148)
(28,867)
(28,532)
(352)
(28,884)
(28,720)
(418)
(29,138)
Net gain on revaluation of assets
Deferred Tax Assets
Deferred costs
Provisions and accruals
Recognised losses available for offsetting against future taxable income 1, 2
Statement of Comprehensive Income
Accounting profit from continuing operations
before income tax expense
419
1,658
26,218
28,295
550
1,129
25,809
27,488
419
1,658
26,413
28,490
-
38
550
1,129
27,039
28,718
(10,698)
(2,787)
(2,787)
Net deferred tax assets/(liabilities)
Deferred tax expense/(income)
Unrecognised deferred tax assets
Unrecognised deferred tax liabilities
Unrecognised tax losses
Unrecognised net deferred tax assets
At the Group's statutory income tax rate of 30%
(2015: 30%)
Non-assessable income
Non-allowable expenditure
Tax loss incurred - not recognised
Filing differences
Tax losses previously not recognised 1
Income tax expense/(benefit) recorded in the
statement of comprehensive income
(1,134)
(1,379)
(394)
(420)
18
(76)
1,182
1,124
16
(45)
1,435
1,406
11
(20)
-
52
-
-
-
-
(8)
(280)
(3,210)
(1)
18
120
-
(67)
-
-
-
-
(245)
(3,140)
Reconciliation of net deferred tax assets/(liabilities)
1 Tax l osses previ ously unrecognised for individual entities outsi de the tax consolidated group.
Opening balance as of 1 March
Tax income/(expense) during the period recognised in profit or loss
Tax income/(expense) during the period recognised in other comprehensive income
Closing balance as at 28 February
Year Ended 28 February 2017
Notes to the Financial Statements
29 Feb
2016
2,690
(102)
2,588
155
451
(2,431)
(1,825)
763
29 Feb
2016
343
2,024
(2,787)
(420)
28 Feb
2017
187
(756)
(569)
(130)
529
(499)
(100)
(669)
28 Feb
2017
(1,379)
245
-
(1,134)
2,690
(483)
2,207
-
155
451
(3,166)
(2,560)
(91)
(27)
-
28
-
(8)
(19)
187
66
253
(130)
529
(195)
204
(6,806)
(2,042)
-
18
-
-
-
(353)
457
Consolidated
$'000
Parent
$'000
(26)
29 Feb
2016
(2,024)
28 Feb
2017
(1,732)
3,140
(2,787)
(1,379)
(420)
26
-
(394)
Page 42
Year Ended 28 February 2017
Notes to the Financial Statements
Page 41
Year Ended 28 February 2017
Notes to the Financial Statements
Page 41
2017 ANNUAL REPORT | 53
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
1 Tax losses recognised for individual entities in the tax consolidated group
5. Distributions Paid or Provided on Co-operative Capital Units
2 The benefits in respect of tax losses will only be obtained if:
a)
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
b)
the conditions for deductibility imposed by tax legislation continue to be complied with; and
c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
Tax consolidated group and tax sharing arrangements
Namoi Cotton Co-operative Limited is the head entity of the tax consolidated group comprising all wholly owned
controlled entities. The group has applied the group allocation method in determining the appropriate amount
of current and deferred taxes to allocate to the members of the tax consolidated group. Members of the group
have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. No amounts have been recognised in
these financial statements in respect of this agreement on the basis that the possibility of default is remote.
4. Earnings per Unit
Basic earnings per unit amounts are calculated by dividing the net profit after rebate (if applicable) for the year
attributable to the unit holders of the parent divided by the weighted average number of co-operative capital
units outstanding during the year.
There were no potentially dilutive equity balances at 28 February 2017 and 29 February 2016.
The following reflects the income and equity data used in the basic and diluted earnings per unit computations:
Profit attributable to Co-operative capital stock holders of the parent
Weighted average number of Co-operative capital stock units
Consolidated
$'000
28 Feb
2017
283
29 Feb
2016
(7,558)
No.
109,843,279
No.
109,843,279
Distributions declared and paid during the year (unfranked)
Interim distribution for the year ended 28 February 2017 of 0.0 cents
per unit of Capital Stock (2016: 0.0 cents)
Final distribution for the year ended 29 February 2016 of 0.0 cents
per unit of Capital Stock (2015: 0.0 cents)
Net distributions during the year
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Franking credits available for subsequent financial
years based on a tax rate of 30% (2016: 30%)
-
-
No franking account debits or credits are expected to arise from either the payment of income tax, the payment
of distributions nor from the receipt of dividends.
Consolidated
$'000
28 Feb
2017
29 Feb
2016
-
-
-
-
-
-
-
-
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 54
Page 43
Year Ended 28 February 2017
Notes to the Financial Statements
Page 44
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
1 Tax losses recognised for individual entities in the tax consolidated group
5. Distributions Paid or Provided on Co-operative Capital Units
2 The benefits in respect of tax losses will only be obtained if:
a)
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
b)
the conditions for deductibility imposed by tax legislation continue to be complied with; and
c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
Tax consolidated group and tax sharing arrangements
Namoi Cotton Co-operative Limited is the head entity of the tax consolidated group comprising all wholly owned
controlled entities. The group has applied the group allocation method in determining the appropriate amount
of current and deferred taxes to allocate to the members of the tax consolidated group. Members of the group
have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. No amounts have been recognised in
these financial statements in respect of this agreement on the basis that the possibility of default is remote.
4. Earnings per Unit
Basic earnings per unit amounts are calculated by dividing the net profit after rebate (if applicable) for the year
attributable to the unit holders of the parent divided by the weighted average number of co-operative capital
units outstanding during the year.
There were no potentially dilutive equity balances at 28 February 2017 and 29 February 2016.
The following reflects the income and equity data used in the basic and diluted earnings per unit computations:
Profit attributable to Co-operative capital stock holders of the parent
Weighted average number of Co-operative capital stock units
109,843,279
109,843,279
Consolidated
$'000
28 Feb
2017
283
No.
29 Feb
2016
(7,558)
No.
Distributions declared and paid during the year (unfranked)
Interim distribution for the year ended 28 February 2017 of 0.0 cents
per unit of Capital Stock (2016: 0.0 cents)
Final distribution for the year ended 29 February 2016 of 0.0 cents
per unit of Capital Stock (2015: 0.0 cents)
Net distributions during the year
Consolidated
$'000
28 Feb
2017
29 Feb
2016
-
-
-
-
-
-
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Franking credits available for subsequent financial
years based on a tax rate of 30% (2016: 30%)
-
-
-
-
No franking account debits or credits are expected to arise from either the payment of income tax, the payment
of distributions nor from the receipt of dividends.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 43
Year Ended 28 February 2017
Notes to the Financial Statements
Page 44
2017 ANNUAL REPORT | 55
For personal use only Namoi Cotton Co-operative Limited
6. Cash and Cash Equivalents
(a) Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows,
cash comprises the following items:
Cash at bank and in hand
Bank Overdraft
(b) Reconciliation of net cash provided by operating
activities to operating profit after income tax.
Operating profit/(loss) after income tax
Adjustments for non-cash items:
Depreciation
(Gain)/loss on sale of property, plant and equipment
Provision for bad debts
Provision for employee benefits
Provision other
Share of associates (profits)/losses
Changes in operating assets and liabilities
(Increase)/decrease in accounts receivable
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Increase)/decrease in derivatives
Increase/(decrease) in creditors
Increase/(decrease) in other liabilities
Increase/(decrease) in deferred tax asset
Net cash inflow/(outflow) from operating activities
(c) Disclosure of financing activities
Refer to Note 15.
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
2,256
(819)
1,437
1,790
(2,072)
(282)
2,135
(819)
1,316
1,785
(2,072)
(287)
283
(7,558)
(65)
(4,782)
6,206
(60)
(449)
(19)
(200)
90
5,568
(272)
(1,513)
(169)
(1,635)
3,329
132
(245)
5,478
6,171
(26)
(50)
(925)
(502)
4,139
8,807
820
2,690
(36)
(280)
691
(173)
(3,140)
1,821
6,206
(60)
(449)
(20)
(200)
(56)
5,421
(92)
(1,532)
(169)
(1,635)
3,328
132
(26)
5,362
6,171
(26)
(50)
(925)
(502)
78
4,746
986
2,689
(36)
(280)
694
(173)
(2,024)
1,820
(d) Disclosure of non-cash financing and investing activities
Equipment Finance Transactions
During the financial year, the consolidated entity acquired plant and equipment with an aggregate
fair value of $821,261 (2016: $417,652) by means of finance leases.
(e) Fair Value
All cash balances are reflective of fair value based on observable market data.
Namoi Cotton Co-operative Limited
7. Trade and Other Receivables
Current
Trade debtors1
Less: allowance for impairment loss
Trade debtors from an associate
Loans to growers2
Less: allowance for impairment loss
Funds due from futures brokers3
Less: allowance for impairment loss
Loans to associates4
Loans to employees5
Loans to controlled entities6
Non-current
Loans to controlled entities6
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
4,955
(5)
4,950
302
302
-
-
-
-
-
-
-
3
33
-
4,901
(454)
29
4,476
5
-
5
1
-
1
-
-
53
26
-
4,955
4,955
302
302
-
-
-
-
-
-
3
33
5,247
10,540
4,901
(449)
29
4,481
5
-
5
1
-
1
53
26
5,426
9,992
41,820
41,820
41,820
41,820
5,288
4,561
1 Trade debtors arise from the following:
Domestic sales of white cotton seed, grain commodities and ginning by-products. These debtors are settled
under a range of agreed payment terms. These debtors are non-interest bearing.
The group maintains trade credit insurance over non-related party domestic debtors to minimise credit risk.
2 Grower loans represent interest bearing crop finance facilities offered to growers secured by crop mortgage.
Interest rate margins are determined based on the level of risk associated with the individual loan.
As at 28 February 2017 Namoi Cotton had committed $nil (2016: $nil) in credit term facilities to growers which
had not been drawn.
nominal rate of interest.
3 Funds due from futures brokers represent funds on deposit to offset unfavourable futures mark-to-market
values and futures contract maintenance margins. Funds are denominated in United States dollars and bear a
4 Loans to associates represent working capital financing provided to Australian Classing Services Pty Ltd. The
loan bears interest at a fixed rate of 7.0% (2016: 7.0%) and is repayable on demand.
5 Loans to employees represent non-interest bearing loans advanced under the Namoi Cotton employee
incentive share plan (refer note 18) and other staff advances.
6 Loans to controlled entities that are participants in joint ventures, are non-interest bearing and are repayable
from the proceeds generated by the joint venture. The loans are carried at amortised cost, however, have not
been discounted given that the loan has an undefined term.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 56
Page 45
Year Ended 28 February 2017
Notes to the Financial Statements
Page 46
For personal use only Namoi Cotton Co-operative Limited
6. Cash and Cash Equivalents
(a) Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows,
cash comprises the following items:
Cash at bank and in hand
Bank Overdraft
(b) Reconciliation of net cash provided by operating
activities to operating profit after income tax.
Operating profit/(loss) after income tax
Adjustments for non-cash items:
Depreciation
(Gain)/loss on sale of property, plant and equipment
Provision for bad debts
Provision for employee benefits
Provision other
Share of associates (profits)/losses
Changes in operating assets and liabilities
(Increase)/decrease in accounts receivable
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Increase)/decrease in derivatives
Increase/(decrease) in creditors
Increase/(decrease) in other liabilities
Increase/(decrease) in deferred tax asset
Net cash inflow/(outflow) from operating activities
(c) Disclosure of financing activities
Refer to Note 15.
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
2,256
(819)
1,437
1,790
(2,072)
(282)
2,135
(819)
1,316
1,785
(2,072)
(287)
283
(7,558)
(65)
(4,782)
6,206
6,171
6,206
6,171
(60)
(449)
(19)
(200)
90
5,568
(272)
(1,513)
(169)
(1,635)
3,329
132
(245)
5,478
(26)
(50)
(925)
(502)
4,139
8,807
820
2,690
(36)
(280)
691
(173)
(3,140)
1,821
5,421
4,746
(60)
(449)
(20)
(200)
(56)
(92)
(1,532)
(169)
(1,635)
3,328
132
(26)
5,362
(26)
(50)
(925)
(502)
78
986
2,689
(36)
(280)
694
(173)
(2,024)
1,820
(d) Disclosure of non-cash financing and investing activities
Equipment Finance Transactions
During the financial year, the consolidated entity acquired plant and equipment with an aggregate
fair value of $821,261 (2016: $417,652) by means of finance leases.
(e) Fair Value
All cash balances are reflective of fair value based on observable market data.
Namoi Cotton Co-operative Limited
7. Trade and Other Receivables
Current
Trade debtors1
Less: allowance for impairment loss
Trade debtors from an associate
Loans to growers2
Less: allowance for impairment loss
Funds due from futures brokers3
Less: allowance for impairment loss
Loans to associates4
Loans to employees5
Loans to controlled entities6
Non-current
Loans to controlled entities6
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
4,955
(5)
-
4,950
302
-
302
-
-
-
3
33
-
5,288
4,901
(454)
29
4,476
5
-
5
1
-
1
53
26
-
4,561
4,955
-
-
4,955
302
-
302
-
-
-
3
33
5,247
10,540
4,901
(449)
29
4,481
5
-
5
1
-
1
53
26
5,426
9,992
-
-
-
-
41,820
41,820
41,820
41,820
1 Trade debtors arise from the following:
Domestic sales of white cotton seed, grain commodities and ginning by-products. These debtors are settled
under a range of agreed payment terms. These debtors are non-interest bearing.
The group maintains trade credit insurance over non-related party domestic debtors to minimise credit risk.
2 Grower loans represent interest bearing crop finance facilities offered to growers secured by crop mortgage.
Interest rate margins are determined based on the level of risk associated with the individual loan.
As at 28 February 2017 Namoi Cotton had committed $nil (2016: $nil) in credit term facilities to growers which
had not been drawn.
3 Funds due from futures brokers represent funds on deposit to offset unfavourable futures mark-to-market
values and futures contract maintenance margins. Funds are denominated in United States dollars and bear a
nominal rate of interest.
4 Loans to associates represent working capital financing provided to Australian Classing Services Pty Ltd. The
loan bears interest at a fixed rate of 7.0% (2016: 7.0%) and is repayable on demand.
5 Loans to employees represent non-interest bearing loans advanced under the Namoi Cotton employee
incentive share plan (refer note 18) and other staff advances.
6 Loans to controlled entities that are participants in joint ventures, are non-interest bearing and are repayable
from the proceeds generated by the joint venture. The loans are carried at amortised cost, however, have not
been discounted given that the loan has an undefined term.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 45
Year Ended 28 February 2017
Notes to the Financial Statements
Page 46
2017 ANNUAL REPORT | 57
For personal use only Namoi Cotton Co-operative Limited
Allowance for impairment loss
An allowance for impairment loss is recorded where objective evidence exists that an individual receivable is
impaired taking into account the likelihood of recovery of any collateral and/or trade credit insurance. Individual
receivables are written off only upon exhaustion of all means of recovery and only with Board approval.
Impairment losses have been recognised by the group and the parent entity in the current year of $nil (2016:
$nil). This amount was included in the other expenses item in the statement of profit and loss and other
comprehensive income.
At 1 March 2016
Charge for the year
Foreign exchange translation
Amounts written off
Recoveries
At 28 February 2017
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
454
-
(22)
(427)
-
5
504
-
38
(88)
-
454
449
-
-
(449)
-
0
499
-
38
(88)
-
449
At balance date the ageing analysis of trade and other receivables is as follows:
Total outstanding
Unimpaired
Within terms
Past Due 1 - 30 days
Past Due 31 - 60 days
Past Due 60+ days
Impaired
Past Due 60+ days
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
5,000
5,015
52,067
52,262
4,525
355
5
110
4,535
7
-
19
51,592
355
5
115
51,780
7
-
24
5
454
0
451
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Interest rate swap contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Receivables past due but not considered impaired are: Group $470,115 (2016: $454,068); Parent $474,650
(2016: $449,533). Payment terms on these debts have not been renegotiated however discussions with the
counterparties and/or receipts subsequent to reporting date reflect that payment will be received in full.
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is
expected these other balances will be received when due.
entity.
Fair value, foreign exchange and credit risk
All receivables are carried at fair value based on observable market data. Details regarding foreign exchange and
interest rate risk are disclosed in Note 26. The maximum exposure to credit risk is the fair value of receivables
less insurance recoverables.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 58
Page 47
Page 48
Namoi Cotton Co-operative Limited
8.
Inventories
Cotton seed (at fair value less costs to sell)
Grain (at cost)
Operating supplies and spares (at cost)
Refer to Note 26 for further information relating to the valuation techniques for determining the fair value of
Cotton Seed.
9. Derivative Financial Instruments
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,792
-
5,822
7,614
781
19
5,101
5,901
1,792
-
5,822
7,614
781
-
5,101
5,882
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
444
-
14,221
14,665
-
-
14,141
14,141
22
4,330
-
4,352
284
-
5,179
5,463
444
-
14,221
14,665
-
-
14,141
14,141
22
4,330
-
4,352
284
-
5,179
5,463
Derivatives are used by the group to manage trading and financial risks as detailed in note 26.
Fair value of foreign exchange contracts are determined by comparing the contracted rate to the market rates
for contracts with the same term to maturity. All movements in fair value are recognised in the profit within the
statement of comprehensive income in the period they occur. The net fair value gain on foreign exchange
contracts at year end was $444,464 for the group (2016: $22,114) and $444,464 (2016: $22,114) for the parent
Cotton seed sales contracts are forward dated and deliverable contracts with customers. The fair value of cotton
seed commodity contracts is determined by reference to market prices and foreign exchange rates. The fair
value of the open cotton seed sale contracts at year end was a derivative liability (unrealised loss) of $14,141,183
for the group (2016: Gain $4,330,139) and $14,141,183 (2016: Gain $4,330,139) for the parent entity.
Cotton seed commodity purchase contracts are forward dated and deliverable contracts with cotton growers or
brokers. The fair value of cotton seed commodity contracts is determined by reference to market prices and
foreign exchange rates. The fair value of the open cotton seed purchase contracts at year end was a derivative
asset (unrealised gain) of $14,220,718 for the group (2016: Loss $5,179,076) and $14,220,718 (2016: Loss
$5,179,076) for the parent entity.
Year Ended 28 February 2017
Notes to the Financial Statements
For personal use only
Namoi Cotton Co-operative Limited
Allowance for impairment loss
An allowance for impairment loss is recorded where objective evidence exists that an individual receivable is
impaired taking into account the likelihood of recovery of any collateral and/or trade credit insurance. Individual
receivables are written off only upon exhaustion of all means of recovery and only with Board approval.
Impairment losses have been recognised by the group and the parent entity in the current year of $nil (2016:
$nil). This amount was included in the other expenses item in the statement of profit and loss and other
comprehensive income.
At balance date the ageing analysis of trade and other receivables is as follows:
At 1 March 2016
Charge for the year
Foreign exchange translation
Amounts written off
Recoveries
At 28 February 2017
Total outstanding
Unimpaired
Within terms
Past Due 1 - 30 days
Past Due 31 - 60 days
Past Due 60+ days
Impaired
Past Due 60+ days
Consolidated
$'000
28 Feb
2017
29 Feb
2016
454
-
(22)
(427)
-
5
504
38
(88)
-
-
454
Parent
$'000
28 Feb
2017
449
(449)
-
-
-
0
29 Feb
2016
499
38
(88)
-
-
449
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
5,000
5,015
52,067
52,262
4,525
355
5
110
4,535
51,592
51,780
7
-
19
355
5
115
7
-
24
5
454
0
451
Receivables past due but not considered impaired are: Group $470,115 (2016: $454,068); Parent $474,650
(2016: $449,533). Payment terms on these debts have not been renegotiated however discussions with the
counterparties and/or receipts subsequent to reporting date reflect that payment will be received in full.
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is
expected these other balances will be received when due.
Fair value, foreign exchange and credit risk
All receivables are carried at fair value based on observable market data. Details regarding foreign exchange and
interest rate risk are disclosed in Note 26. The maximum exposure to credit risk is the fair value of receivables
less insurance recoverables.
Namoi Cotton Co-operative Limited
8.
Inventories
Cotton seed (at fair value less costs to sell)
Grain (at cost)
Operating supplies and spares (at cost)
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,792
-
5,822
7,614
781
19
5,101
5,901
1,792
-
5,822
7,614
781
-
5,101
5,882
Refer to Note 26 for further information relating to the valuation techniques for determining the fair value of
Cotton Seed.
9. Derivative Financial Instruments
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Interest rate swap contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
444
-
14,221
14,665
-
14,141
-
14,141
22
4,330
-
4,352
284
-
5,179
5,463
444
-
14,221
14,665
-
14,141
-
14,141
22
4,330
-
4,352
284
-
5,179
5,463
Derivatives are used by the group to manage trading and financial risks as detailed in note 26.
Fair value of foreign exchange contracts are determined by comparing the contracted rate to the market rates
for contracts with the same term to maturity. All movements in fair value are recognised in the profit within the
statement of comprehensive income in the period they occur. The net fair value gain on foreign exchange
contracts at year end was $444,464 for the group (2016: $22,114) and $444,464 (2016: $22,114) for the parent
entity.
Cotton seed sales contracts are forward dated and deliverable contracts with customers. The fair value of cotton
seed commodity contracts is determined by reference to market prices and foreign exchange rates. The fair
value of the open cotton seed sale contracts at year end was a derivative liability (unrealised loss) of $14,141,183
for the group (2016: Gain $4,330,139) and $14,141,183 (2016: Gain $4,330,139) for the parent entity.
Cotton seed commodity purchase contracts are forward dated and deliverable contracts with cotton growers or
brokers. The fair value of cotton seed commodity contracts is determined by reference to market prices and
foreign exchange rates. The fair value of the open cotton seed purchase contracts at year end was a derivative
asset (unrealised gain) of $14,220,718 for the group (2016: Loss $5,179,076) and $14,220,718 (2016: Loss
$5,179,076) for the parent entity.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 47
Year Ended 28 February 2017
Notes to the Financial Statements
Page 48
2017 ANNUAL REPORT | 59
For personal use only
Namoi Cotton Co-operative Limited
Interest bearing loans of the group incurred an average variable interest rate of 3.1% (2016: 3.3%). Swaps in
place at the comparative reporting date accounted for approximately nil% (2016: 44.3%) of the principal
outstanding. The average fixed interest rates were nil% (2016: 3.0%) and the average variable rates were nil%
(2016: 2.59%) at balance date. The net fair value loss on interest rate swaps was $nil (2016: $283,605).
Namoi Cotton Co-operative Limited
(c) Significant influence
Significant influence exists over the Cargill associate’s, despite less than 20% ownership, due to the agreed one
third representation upon the Board of Directors and management committees. Namoi Cotton is also a
significant supplier of the primary input product for the Narrabri cotton seed crushing facility.
(d) Material Investments in Associates
(i) Associates results
Revenue
Profit/(Loss)
Group share of associates profit/(loss)
(ii) Associates assets and liabilities:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Associates net assets
Group share of associates net assets
(iii) Carrying amount of investments in associates:
Balance at the beginning of the financial year
Distribution paid out of retained earnings
Share of associates profits/(losses) for the financial year
Carrying amount of investment in associates at the
(iv) Share of contingent liabilities of associate:
(iv) Share of associates commitments:
Consolidated
$'000
28 Feb 2017
COA
CPL
29 Feb 2016
COA
CPL
250,872
23,417
249,277
21,569
(5,777)
(867)
670
101
(2,520)
(378)
413
62
52,731
56,112
5,640
19,152
(57,629)
(1,955)
(55,233)
(1,461)
(4,899)
22,837
(735)
3,426
879
132
117
-
(872)
3,355
-
70
495
-
(378)
3,293
-
62
6,460
17,369
-
22,368
3,355
-
-
-
-
-
-
-
-
-
-
-
-
-
end of the financial year
(755)
3,425
117
3,355
10. Investments in Associates and Joint Ventures using the equity method
Investment in associates (material)
Investment in joint ventures (material)
Investment in joint ventures (non material)
(a) Ownership interest
Consolidated
$'000
Parent
$'000
28 Feb
2017
2,671
40,010
(805)
41,876
29 Feb
2016
3,473
39,950
(1,457)
41,966
28 Feb
2017
29 Feb
2016
-
-
155
155
-
-
99
99
Name
Balance Date
% Ownership
interest held by
consolidated entity
28 Feb
2017
29 Feb
2016
Investments in Associates
Cargill Oilseeds Australia Partnership (COA)
Cargill Processing Ltd (CPL) 1
Investments in Joint Ventures
Australian Classing Services Pty Ltd (ACS) 1
Namoi Cotton Alliance (NCA)
NC Packing Services Pty Ltd (NCPS) 1
1 Incorporated in Australia
31 May
31 May
28 February
28 February
28 February
15%
15%
50%
51%
51%
15%
15%
50%
51%
51%
(b) The principal activities of the associates and joint ventures are:
COA processes and markets cotton seed, canola and other oilseeds.
CPL owns facilities used in the processing and marketing of cotton seed, canola and other oilseeds by COA.
ACS provides independent classing services to the Australian cotton industry.
�
•
�
•
�
•
� NCA markets Australian lint cotton and owns significant up-country warehousing and logistics facilities to
•
support the marketing operations
� NCPS operates containerised commodity packing facilities primarily packing cottonseed, coarse grains and
•
pulses.
NCA and NCPS are 51% owned, however, the two entities are jointly controlled due to the joint venture
agreement terms in relation to committee decision making etc.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 60
Page 49
Year Ended 28 February 2017
Notes to the Financial Statements
Page 50
For personal use only Namoi Cotton Co-operative Limited
Interest bearing loans of the group incurred an average variable interest rate of 3.1% (2016: 3.3%). Swaps in
place at the comparative reporting date accounted for approximately nil% (2016: 44.3%) of the principal
outstanding. The average fixed interest rates were nil% (2016: 3.0%) and the average variable rates were nil%
(2016: 2.59%) at balance date. The net fair value loss on interest rate swaps was $nil (2016: $283,605).
Namoi Cotton Co-operative Limited
(c) Significant influence
Significant influence exists over the Cargill associate’s, despite less than 20% ownership, due to the agreed one
third representation upon the Board of Directors and management committees. Namoi Cotton is also a
significant supplier of the primary input product for the Narrabri cotton seed crushing facility.
(d) Material Investments in Associates
(i) Associates results
Revenue
Profit/(Loss)
Consolidated
$'000
28 Feb 2017
COA
CPL
29 Feb 2016
COA
CPL
250,872
(5,777)
23,417
670
249,277
(2,520)
21,569
413
Group share of associates profit/(loss)
(867)
101
(378)
62
(ii) Associates assets and liabilities:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Associates net assets
52,731
-
(57,629)
-
(4,899)
5,640
19,152
(1,955)
-
22,837
56,112
-
(55,233)
-
879
6,460
17,369
(1,461)
-
22,368
Group share of associates net assets
(735)
3,426
132
3,355
(iii) Carrying amount of investments in associates:
Balance at the beginning of the financial year
Distribution paid out of retained earnings
Share of associates profits/(losses) for the financial year
117
-
(872)
3,355
-
70
495
-
(378)
3,293
-
62
Carrying amount of investment in associates at the
end of the financial year
(755)
3,425
117
3,355
(iv) Share of contingent liabilities of associate:
(iv) Share of associates commitments:
-
-
-
-
-
-
-
-
10. Investments in Associates and Joint Ventures using the equity method
Investment in associates (material)
Investment in joint ventures (material)
Investment in joint ventures (non material)
(a) Ownership interest
Investments in Associates
Cargill Oilseeds Australia Partnership (COA)
Cargill Processing Ltd (CPL) 1
Investments in Joint Ventures
Australian Classing Services Pty Ltd (ACS) 1
Namoi Cotton Alliance (NCA)
NC Packing Services Pty Ltd (NCPS) 1
1 Incorporated in Australia
Consolidated
$'000
Parent
$'000
28 Feb
2017
2,671
40,010
(805)
41,876
29 Feb
2016
3,473
39,950
(1,457)
41,966
28 Feb
2017
29 Feb
2016
-
-
155
155
-
-
99
99
% Ownership
interest held by
28 Feb
2017
29 Feb
2016
15%
15%
50%
51%
51%
15%
15%
50%
51%
51%
31 May
31 May
28 February
28 February
28 February
Name
Balance Date
consolidated entity
(b) The principal activities of the associates and joint ventures are:
�
�
�
COA processes and markets cotton seed, canola and other oilseeds.
CPL owns facilities used in the processing and marketing of cotton seed, canola and other oilseeds by COA.
ACS provides independent classing services to the Australian cotton industry.
� NCA markets Australian lint cotton and owns significant up-country warehousing and logistics facilities to
� NCPS operates containerised commodity packing facilities primarily packing cottonseed, coarse grains and
support the marketing operations
pulses.
NCA and NCPS are 51% owned, however, the two entities are jointly controlled due to the joint venture
agreement terms in relation to committee decision making etc.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 49
Year Ended 28 February 2017
Notes to the Financial Statements
Page 50
2017 ANNUAL REPORT | 61
For personal use only Namoi Cotton Co-operative Limited
(e) Material Investments in Joint Ventures: NCA
(i) Joint Venture results (for the period since inception)
Revenue
Depreciation and Amortisation
Interest Expense
Interest Income
Profit/(loss) before income tax expense
Income tax expense(a)
Joint Venture net profit/(loss)
(a) The Joint Venture is a partnership for tax puposes accordingly is not a taxable entity
Group share of joint venture net profit/(loss)
(ii) Joint venture assets and liabilities:
Current assets
Cash and cash equivalents
Other
Non-current assets
Current liabilities
Financial liabilities
Other
Non-current liabilities
Financial liabilities
Other
Joint Venture net assets
Group share of joint venture net assets
(iii) Carrying amount of investments in joint ventures:
Balance at the beginning of the financial year
Acquisition of joint venture
Contribution to working capital
Distribution paid out of retained earnings
Share of joint venture profits/(losses) for the financial year
Carrying amount of investments in joint ventures at the
end of the financial year
(iv) Share of contingent liabilities of joint venture:
(v) Share of joint venture commitments:
Consolidated
$'000
28 Feb
2017
29 Feb
2016
281,989
(2,315)
(995)
186
118
-
118
202,460
(2,077)
(759)
338
(6,707)
-
(6,707)
60
(3,421)
11,755
58,093
62,027
6,745
42,198
60,111
(47,028)
(4,276)
(18,710)
(9,659)
(2,027)
(92)
78,452
(2,275)
(76)
78,334
40,011
39,950
39,950
-
-
-
60
46,941
-
-
(3,570)
(3,421)
40,011
39,950
-
-
-
-
(f) Share of Non Material Investments in Joint Ventures: ACS and NCPS
(i) Non Material Joint Venture Results
Profits/(Losses) and total comprehensive income from continuing operations
652
(402)
Namoi Cotton Co-operative Limited
11. Interest in Joint Operations
(a) Ownership interest
% Ownership
interest held by
28 Feb
2017
50%
50%
29 Feb
2016
50%
50%
Name
Balance Date
consolidated entity
Wathagar Ginning Company (WGC)
Moomin Ginning Company (MGC)
28 February
28 February
The joint operations provide ginning services to cotton growers in the Gwydir valley located in NSW.
No assets employed in the jointly controlled operation were impaired during the year (2016: $nil).
(b) Principal activities
(c) Impairment
(d) Accounting for joint operations
method.
The joint operations have been accounted for using the share of rights to assets and obligations for liabilities
12. Interest in Jointly Controlled Assets
Namoi Cotton holds a 40% joint ownership interest in the white cotton seed handling and storage facilities at
Mungindi, with a book carrying value of $2.28m at 28 February 2017 (2016: $2.33m).
Namoi cotton pays for their proportion of the operating costs of the facility. There were no material contingent
liabilities or capital expenditure commitments in respect of jointly controlled assets at balance date.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 62
Page 51
Year Ended 28 February 2017
Notes to the Financial Statements
Page 52
For personal use only Namoi Cotton Co-operative Limited
(e) Material Investments in Joint Ventures: NCA
(i) Joint Venture results (for the period since inception)
Revenue
Depreciation and Amortisation
Interest Expense
Interest Income
Profit/(loss) before income tax expense
Income tax expense(a)
Joint Venture net profit/(loss)
(a) The Joint Venture is a partnership for tax puposes accordingly is not a taxable entity
Group share of joint venture net profit/(loss)
(ii) Joint venture assets and liabilities:
Current assets
Cash and cash equivalents
Other
Non-current assets
Current liabilities
Financial liabilities
Non-current liabilities
Financial liabilities
Other
Other
Joint Venture net assets
Group share of joint venture net assets
(iii) Carrying amount of investments in joint ventures:
Balance at the beginning of the financial year
Acquisition of joint venture
Contribution to working capital
Distribution paid out of retained earnings
Share of joint venture profits/(losses) for the financial year
Carrying amount of investments in joint ventures at the
end of the financial year
(iv) Share of contingent liabilities of joint venture:
(v) Share of joint venture commitments:
Consolidated
$'000
28 Feb
2017
29 Feb
2016
281,989
202,460
(2,315)
(995)
186
118
-
118
(2,077)
(759)
338
(6,707)
-
(6,707)
60
(3,421)
11,755
58,093
62,027
6,745
42,198
60,111
(47,028)
(18,710)
(4,276)
(9,659)
(2,027)
(2,275)
(92)
(76)
78,452
40,011
78,334
39,950
39,950
46,941
(3,570)
(3,421)
60
40,011
39,950
-
-
-
-
-
-
-
-
-
(f) Share of Non Material Investments in Joint Ventures: ACS and NCPS
(i) Non Material Joint Venture Results
Profits/(Losses) and total comprehensive income from continuing operations
652
(402)
Namoi Cotton Co-operative Limited
11. Interest in Joint Operations
(a) Ownership interest
Name
Wathagar Ginning Company (WGC)
Moomin Ginning Company (MGC)
% Ownership
interest held by
consolidated entity
28 Feb
2017
50%
50%
29 Feb
2016
50%
50%
Balance Date
28 February
28 February
(b) Principal activities
The joint operations provide ginning services to cotton growers in the Gwydir valley located in NSW.
(c) Impairment
No assets employed in the jointly controlled operation were impaired during the year (2016: $nil).
(d) Accounting for joint operations
The joint operations have been accounted for using the share of rights to assets and obligations for liabilities
method.
12. Interest in Jointly Controlled Assets
Namoi Cotton holds a 40% joint ownership interest in the white cotton seed handling and storage facilities at
Mungindi, with a book carrying value of $2.28m at 28 February 2017 (2016: $2.33m).
Namoi cotton pays for their proportion of the operating costs of the facility. There were no material contingent
liabilities or capital expenditure commitments in respect of jointly controlled assets at balance date.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 51
Year Ended 28 February 2017
Notes to the Financial Statements
Page 52
2017 ANNUAL REPORT | 63
For personal use only Namoi Cotton Co-operative Limited
13. Property, Plant and Equipment
Gin Assets
Ginning infrastucture and major equipment
at fair value
Provision for depreciation and impairment
Revaluation to fair value
Closing written down value at fair value
Other ginning equipment
Cost
Provision for depreciation and impairment
Closing written down value at cost
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
127,388
(4,694)
122,694
-
122,694
119,571
-
119,571
7,818
127,389
127,388
(4,694)
122,694
-
122,694
119,571
-
119,571
7,818
127,389
9,002
(4,430)
4,572
6,909
(3,641)
3,268
9,002
(4,430)
4,572
6,909
(3,641)
3,268
Net Gin Assets
127,266
130,657
127,266
130,657
Other Assets
Other infrastucture and major equipment
at fair value
Provision for depreciation and impairment
Revaluation to fair value
Closing written down value at fair value
Other equipment
Cost
Provision for depreciation and impairment
Closing written down value at cost
Net Other Assets
Capital work in progress ('CWIP') at cost
Total written down value at fair value
Total written down value at cost
Total written down value for property,
plant & equipment
6,353
(243)
6,110
-
6,110
10,183
(8,420)
1,763
7,873
3,334
4,880
-
4,880
1,473
6,353
10,366
(8,154)
2,212
8,565
1,688
6,353
(243)
6,110
-
6,110
10,183
(8,420)
1,763
7,873
3,334
4,880
-
4,880
1,473
6,353
10,366
(8,154)
2,212
8,565
1,688
128,804
9,669
133,742
7,168
128,804
9,669
133,742
7,168
138,473
140,910
138,473
140,910
Namoi Cotton Co-operative Limited
be as follows:
If the above categories of assets were still measured using the cost model, the carrying amount (WDV) would
Consolidated and Parent
$'000
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
59,891
3,422
63,313
60,633
4,314
64,947
59,891
3,422
63,313
60,633
4,314
64,947
Ginning infrastucture and major equipment
Other infrastucture and major equipment
Revaluation of Ginning Assets
deemed cost to fair value.
Effective 29 February 2012, the group changed its accounting policy for the measurement of ginning assets from
The methodology used in determining the fair value of the relevant properties and assets was the Discounted
Cash Flow (DCF) approach as the primary method and the Net Maintainable Earnings approach as the secondary
method. The DCF method provides a valuation based on the formulation of projected future cash flows over a
ten-year period (plus a terminal value), which was then discounted at an appropriate discount rate. The Net
Maintainable Earnings approach was used to support the DCF method results.
Effective 29 February 2016 an independent valuation of the ginning assets was commissioned by the Group to
provide external support for the Directors assessment of fair value for financial reporting purposes. Colliers
International (“Colliers”) were engaged for this purpose. The methodology applied by Colliers to value the
ginning assets was a net maintainable earnings approach. An assessed sustainable EBITDA was multiplied by an
appropriate earnings multiple derived from market sources. The external valuation obtained for the ginning
assets was then used to support the results of a DCF model for the prior year. The directors continue to utilise
this DCF method to determine the fair value of ginning assets. Management calculated the fair value as at 28
February 2017 and determined that the carrying value of the assets is in line with the fair value and, therefore,
no further revaluations were recorded.
The fair value measurement of ginning assets outlined above uses significant unobservable inputs and are
classified as level 3 in the financial reporting fair value measurement hierarchy. Significant unobservable
valuation inputs as at 28 February 2017 included:
�
Sustainable bales. The average annual sustainable ginning bales have been included following a grower by
grower assessment of production areas, seasonal rotation, estimated yields and reliability of contracting.
The measure is inclusive of Namoi’s respective shares of throughputs of the joint venture cotton gins. The
number being approximately a 28 % (2016: 28%) market share of an Australian sustainable crop size of 3.2
million bales (2016: 3.2 million bales) which also approximates the average number of bales achieved over
the last 7 years, noting that individual seasons can fluctuate significantly dependent upon water availability;
�
�
�
Growth rate - revenues 1.65% (2016 - 1.65%)
Growth rate - expenses 2.20% (2016 - 2.20%)
Pre-tax discount rate of 16% (2016 – 16.0 %)
significantly higher/(lower) fair value.
Impairment of Assets at Cost
Any significant increases/(decreases) in sustainable bales volumes, changes to EBITDA from ginning revenue per
bale, or throughput rate (production cost impact) or changes to the discount rate, in isolation, would result in a
Impairment losses are determined with reference to the items recoverable amount calculated as the greater of
fair value less costs to sell or its value in use. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where
the carrying values exceed the estimated recoverable amount (refer to Note 1), the assets or cash-generating
units are written down to their recoverable amount.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 64
Page 53
Year Ended 28 February 2017
Notes to the Financial Statements
Page 54
For personal use only Closing written down value at fair value
122,694
127,389
122,694
127,389
Namoi Cotton Co-operative Limited
13. Property, Plant and Equipment
Ginning infrastucture and major equipment
Gin Assets
at fair value
Provision for depreciation and impairment
Revaluation to fair value
Other ginning equipment
Cost
Provision for depreciation and impairment
Closing written down value at cost
Net Gin Assets
Other Assets
at fair value
Other infrastucture and major equipment
Provision for depreciation and impairment
Revaluation to fair value
Closing written down value at fair value
Other equipment
Cost
Provision for depreciation and impairment
Closing written down value at cost
Net Other Assets
Capital work in progress ('CWIP') at cost
Total written down value at fair value
Total written down value at cost
Total written down value for property,
plant & equipment
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
127,388
119,571
127,388
119,571
(4,694)
-
(4,694)
-
122,694
119,571
122,694
119,571
-
7,818
-
7,818
9,002
(4,430)
4,572
6,909
(3,641)
3,268
9,002
(4,430)
4,572
6,909
(3,641)
3,268
127,266
130,657
127,266
130,657
6,353
(243)
6,110
-
6,110
10,183
(8,420)
1,763
7,873
3,334
4,880
-
4,880
1,473
6,353
10,366
(8,154)
2,212
8,565
1,688
6,353
(243)
6,110
-
6,110
10,183
(8,420)
1,763
7,873
3,334
4,880
-
4,880
1,473
6,353
10,366
(8,154)
2,212
8,565
1,688
128,804
133,742
128,804
133,742
9,669
7,168
9,669
7,168
138,473
140,910
138,473
140,910
Namoi Cotton Co-operative Limited
If the above categories of assets were still measured using the cost model, the carrying amount (WDV) would
be as follows:
Ginning infrastucture and major equipment
Other infrastucture and major equipment
Consolidated and Parent
$'000
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
59,891
3,422
63,313
60,633
4,314
64,947
59,891
3,422
63,313
60,633
4,314
64,947
Revaluation of Ginning Assets
Effective 29 February 2012, the group changed its accounting policy for the measurement of ginning assets from
deemed cost to fair value.
The methodology used in determining the fair value of the relevant properties and assets was the Discounted
Cash Flow (DCF) approach as the primary method and the Net Maintainable Earnings approach as the secondary
method. The DCF method provides a valuation based on the formulation of projected future cash flows over a
ten-year period (plus a terminal value), which was then discounted at an appropriate discount rate. The Net
Maintainable Earnings approach was used to support the DCF method results.
Effective 29 February 2016 an independent valuation of the ginning assets was commissioned by the Group to
provide external support for the Directors assessment of fair value for financial reporting purposes. Colliers
International (“Colliers”) were engaged for this purpose. The methodology applied by Colliers to value the
ginning assets was a net maintainable earnings approach. An assessed sustainable EBITDA was multiplied by an
appropriate earnings multiple derived from market sources. The external valuation obtained for the ginning
assets was then used to support the results of a DCF model for the prior year. The directors continue to utilise
this DCF method to determine the fair value of ginning assets. Management calculated the fair value as at 28
February 2017 and determined that the carrying value of the assets is in line with the fair value and, therefore,
no further revaluations were recorded.
The fair value measurement of ginning assets outlined above uses significant unobservable inputs and are
classified as level 3 in the financial reporting fair value measurement hierarchy. Significant unobservable
valuation inputs as at 28 February 2017 included:
�
•
�
•
�
•
�
•
Sustainable bales. The average annual sustainable ginning bales have been included following a grower by
grower assessment of production areas, seasonal rotation, estimated yields and reliability of contracting.
The measure is inclusive of Namoi’s respective shares of throughputs of the joint venture cotton gins. The
number being approximately a 28 % (2016: 28%) market share of an Australian sustainable crop size of 3.2
million bales (2016: 3.2 million bales) which also approximates the average number of bales achieved over
the last 7 years, noting that individual seasons can fluctuate significantly dependent upon water availability;
Growth rate - revenues 1.65% (2016 - 1.65%)
Growth rate - expenses 2.20% (2016 - 2.20%)
Pre-tax discount rate of 16% (2016 – 16.0 %)
Any significant increases/(decreases) in sustainable bales volumes, changes to EBITDA from ginning revenue per
bale, or throughput rate (production cost impact) or changes to the discount rate, in isolation, would result in a
significantly higher/(lower) fair value.
Impairment of Assets at Cost
Impairment losses are determined with reference to the items recoverable amount calculated as the greater of
fair value less costs to sell or its value in use. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where
the carrying values exceed the estimated recoverable amount (refer to Note 1), the assets or cash-generating
units are written down to their recoverable amount.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 53
Year Ended 28 February 2017
Notes to the Financial Statements
Page 54
2017 ANNUAL REPORT | 65
For personal use only Namoi Cotton Co-operative Limited
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end
of the current financial year are set out below.
Namoi Cotton Co-operative Limited
15. Interest Bearing Liabilities
The extent to which the economic entity’s finance facilities provided by Commonwealth Bank of Australia (CBA)
were utilised at 28 February 2017 is listed below.
Year Ended 28 February 2017 ($'000)
Gins
Other
CWIP
Consolidated and parent entity
Written down value - 1 March 2016
Additions and Transfer to/(from) CWIP
Disposals
Depreciation1
Written down value - 28 February 2017
130,657
1,968
(39)
(5,320)
127,266
8,565
290
(96)
(886)
7,873
1,688
1,646
-
-
3,334
Year Ended 29 February 2016 ($'000)
Gins
Other
CWIP
Consolidated and parent entity
Written down value - 1 March 2015
Additions and Transfer to/(from) CWIP
Disposals
Depreciation
Revaluation increments/(decrements)
Written down value - 29 February 2016
122,805
5,394
(55)
(5,305)
7,818
130,657
6,953
1,111
(107)
(865)
1,473
8,565
1,496
192
-
-
-
1,688
1Change in Depreciation Policy
A change in the assessment of the remaining useful life of ginning assets (which is a change in estimate) was
made at the start of the 2017 financial year. The change has increased the remaining useful life of the ginning
assets with the effect of reducing depreciation for the year from $7.3m to $6.2m. Any impact in the next financial
year will be dependent upon actual ginning volumes at the time.
Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
remaining useful lives of 20 years.
Current
AUD Facility Use
Short term
Working capital finance 1
Term debt 2
Lease liability
Loans from controlled entities
Non Current
Term debt 2
Lease liability
business.
Other liabilities
Facility Use - AUD $'000
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
819
9,500
5,500
15,819
771
771
-
41,980
1,350
43,330
2,072
9,000
47,481
58,553
717
717
-
-
1,409
1,409
819
9,500
5,500
15,819
771
771
2,049
41,980
1,350
45,379
2,072
9,000
47,481
58,553
717
717
2,049
-
1,409
3,458
16,590
59,270
16,590
59,270
Total Current and Non-Current
59,920
60,679
61,969
62,728
1 Working capital lines are utilised to fund day to day expenses of the business including specific funding needs
for cotton seed inventory and debtors.
2 Term debt lines are utilised to fund capital projects relating to the plant, property and equipment of the
14. Trade and Other Payables
Interest bearing liabilities are carried at amortised cost.
Current
Trade creditors and accruals1
Grower deposits
Customer deposits
Trade creditors to an associate
Loans from controlled entities
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
7,938
38
132
293
-
8,401
4,988
34
-
-
-
5,022
7,936
38
132
293
17,732
26,131
4,988
34
-
-
17,731
22,753
Hire purchase contracts on equipment have an average term of 2.5 years with the average interest rate implicit
in the contracts of 4.9% (2016: 5.7%).
Details of interest rate risk, foreign exchange risk and liquidity risk are disclosed in Note 26.
Facility limits
The seasonal finance facilities limit, excluding term debt, at 28 February 2017 was $12.5 million (2016: $12.5
million) including operating overdrafts. A higher limit of $17.5 million applies from 1 March 2017 to 30 June 2017
At balance date CBA had provided Namoi Cotton with a secured $47.5 million (2016: $47.5 million) debt facility
with core components maturing on 28 February 2020. Security is provided by a fixed and floating charge over
the assets and undertakings of the group.
1 Trade and other payables are non-interest bearing and are settled under a variety of terms dependent upon
the transaction arrangements and the counterparty. The carrying amount of trade and other payables
approximates their fair value.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 66
Page 55
Year Ended 28 February 2017
Notes to the Financial Statements
Page 56
For personal use only Namoi Cotton Co-operative Limited
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end
of the current financial year are set out below.
Year Ended 28 February 2017 ($'000)
Gins
Other
CWIP
Year Ended 29 February 2016 ($'000)
Gins
Other
CWIP
A change in the assessment of the remaining useful life of ginning assets (which is a change in estimate) was
made at the start of the 2017 financial year. The change has increased the remaining useful life of the ginning
assets with the effect of reducing depreciation for the year from $7.3m to $6.2m. Any impact in the next financial
year will be dependent upon actual ginning volumes at the time.
Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
130,657
1,968
(39)
(5,320)
127,266
8,565
290
(96)
(886)
7,873
122,805
5,394
(55)
(5,305)
7,818
130,657
6,953
1,111
(107)
(865)
1,473
8,565
1,688
1,646
3,334
1,496
192
1,688
-
-
-
-
-
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
7,938
38
132
293
-
4,988
34
-
-
-
8,401
5,022
7,936
4,988
38
132
293
34
-
-
17,732
26,131
17,731
22,753
Consolidated and parent entity
Written down value - 1 March 2016
Additions and Transfer to/(from) CWIP
Disposals
Depreciation1
Written down value - 28 February 2017
Consolidated and parent entity
Written down value - 1 March 2015
Additions and Transfer to/(from) CWIP
Disposals
Depreciation
Revaluation increments/(decrements)
Written down value - 29 February 2016
1Change in Depreciation Policy
remaining useful lives of 20 years.
14. Trade and Other Payables
Current
Trade creditors and accruals1
Grower deposits
Customer deposits
Trade creditors to an associate
Loans from controlled entities
approximates their fair value.
Year Ended 28 February 2017
Notes to the Financial Statements
Namoi Cotton Co-operative Limited
15. Interest Bearing Liabilities
The extent to which the economic entity’s finance facilities provided by Commonwealth Bank of Australia (CBA)
were utilised at 28 February 2017 is listed below.
Current
AUD Facility Use
Short term
Working capital finance 1
Term debt 2
Lease liability
Non Current
Loans from controlled entities
Term debt 2
Lease liability
Facility Use - AUD $'000
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
819
9,500
5,500
15,819
771
771
16,590
-
41,980
1,350
43,330
2,072
9,000
47,481
58,553
717
717
59,270
-
-
1,409
1,409
819
9,500
5,500
15,819
771
771
16,590
2,049
41,980
1,350
45,379
2,072
9,000
47,481
58,553
717
717
59,270
2,049
-
1,409
3,458
Total Current and Non-Current
59,920
60,679
61,969
62,728
1 Working capital lines are utilised to fund day to day expenses of the business including specific funding needs
for cotton seed inventory and debtors.
2 Term debt lines are utilised to fund capital projects relating to the plant, property and equipment of the
business.
Other liabilities
Interest bearing liabilities are carried at amortised cost.
Hire purchase contracts on equipment have an average term of 2.5 years with the average interest rate implicit
in the contracts of 4.9% (2016: 5.7%).
Details of interest rate risk, foreign exchange risk and liquidity risk are disclosed in Note 26.
Facility limits
The seasonal finance facilities limit, excluding term debt, at 28 February 2017 was $12.5 million (2016: $12.5
million) including operating overdrafts. A higher limit of $17.5 million applies from 1 March 2017 to 30 June 2017
At balance date CBA had provided Namoi Cotton with a secured $47.5 million (2016: $47.5 million) debt facility
with core components maturing on 28 February 2020. Security is provided by a fixed and floating charge over
the assets and undertakings of the group.
1 Trade and other payables are non-interest bearing and are settled under a variety of terms dependent upon
the transaction arrangements and the counterparty. The carrying amount of trade and other payables
Page 55
Year Ended 28 February 2017
Notes to the Financial Statements
Page 56
2017 ANNUAL REPORT | 67
For personal use only Namoi Cotton Co-operative Limited
AUD Facility Limit
Short term
Working capital finance 4
Term debt - A 1
Term debt - B 2
Term debt - C 3
Facility Limit - AUD $'000
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
2,500
10,000
35,000
12,480
-
59,980
2,500
10,000
25,000
10,500
11,980
59,980
2,500
10,000
35,000
12,480
-
59,980
2,500
10,000
25,000
10,500
11,980
59,980
Financing arrangements
The Sixth Variation Deed was executed on 24 February 2017 consolidating the term debt C into term debts A
and B and increasing the seasonal finance facilities inner limit to $17.5 million from 1 March 2017 to 30 June
2017.
Finance renewal
Finance facility limits negotiated with CBA as per above:
1Committed term debt facility (non-amortising) - facility limit of AUD$35 million (2016: AUD$25 million) with a
facility end date of 28 February 2020;
2Committed term debt facility (amortising) - facility limit of AUD$12.5 million (2016: AUD$10.5 million) with a
facility end date of 28 February 2020;
3Committed term debt facility (non-amortising) - facility limit of AUD$nil as consolidated into term debt A and B
(2016: AUD$11.98 million); and
4Committed cotton seed, ginning consumables and general working capital needs under a multi option working
capital facility (non-amortising) - facility limit of AUD$10 million (2016: AUD$10 million) with a facility end date
of 17 March 2018.
With the exception of the maturity of the facilities, the terms and conditions are materially consistent with the
previous facilities.
The group has agreed to certain financial covenants with CBA under the new finance facilities at what are
considered appropriate levels to meet the needs of the business. Financial covenants under the previous
agreements were complied with during the year.
The Directors at the date of this report expect the working capital facility will be renewed thereafter and at
appropriate levels for FY 2019 operations.
Namoi Cotton Co-operative Limited
16. Provisions
Current
Employee leave entitlements
Employee variable compensation
Non-current
Employee leave entitlements
17. Co-operative Grower Member Shares
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,979
-
1,979
863
863
2,040
22
2,062
799
799
1,979
-
1,979
863
863
2,040
22
2,062
799
799
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
No.
No.
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Grower member shares - fixed capital entitlement
447
447
447
447
1 cent Grower member shares (fully paid)
Shares at the beginning of the financial year
165,600
165,600
165,600
165,600
Shares issued during the year
Shares repurchased/forfeited during the year
Shares at the end of the financial year
-
-
-
-
-
-
-
-
165,600
165,600
165,600
165,600
Terms and conditions
Grower shares may only be held by active members;
�
�
�
�
�
�
Grower shareholders have one vote at member meetings, regardless of the number of grower shares held;
Grower shares can be issued and are redeemable for a fixed amount of $2.70 per share, but have no
entitlement to surplus repayments;
Grower shares have no dividend entitlement;
up to three non-grower directors;
with Namoi Cotton.
Grower shareholders appoint the directors of Namoi Cotton, subject to the stockholders right to nominate
Grower shareholders are entitled to a rebate, if applicable, for each bale of cotton ginned and/or marketed
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 68
Page 57
Year Ended 28 February 2017
Notes to the Financial Statements
Page 58
For personal use only Namoi Cotton Co-operative Limited
AUD Facility Limit
Short term
Working capital finance 4
Term debt - A 1
Term debt - B 2
Term debt - C 3
Financing arrangements
2017.
Finance renewal
Facility Limit - AUD $'000
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
2,500
10,000
35,000
12,480
-
59,980
2,500
10,000
25,000
10,500
11,980
59,980
2,500
10,000
35,000
12,480
-
59,980
2,500
10,000
25,000
10,500
11,980
59,980
The Sixth Variation Deed was executed on 24 February 2017 consolidating the term debt C into term debts A
and B and increasing the seasonal finance facilities inner limit to $17.5 million from 1 March 2017 to 30 June
Finance facility limits negotiated with CBA as per above:
1Committed term debt facility (non-amortising) - facility limit of AUD$35 million (2016: AUD$25 million) with a
2Committed term debt facility (amortising) - facility limit of AUD$12.5 million (2016: AUD$10.5 million) with a
3Committed term debt facility (non-amortising) - facility limit of AUD$nil as consolidated into term debt A and B
facility end date of 28 February 2020;
facility end date of 28 February 2020;
(2016: AUD$11.98 million); and
4Committed cotton seed, ginning consumables and general working capital needs under a multi option working
capital facility (non-amortising) - facility limit of AUD$10 million (2016: AUD$10 million) with a facility end date
With the exception of the maturity of the facilities, the terms and conditions are materially consistent with the
of 17 March 2018.
previous facilities.
The group has agreed to certain financial covenants with CBA under the new finance facilities at what are
considered appropriate levels to meet the needs of the business. Financial covenants under the previous
agreements were complied with during the year.
The Directors at the date of this report expect the working capital facility will be renewed thereafter and at
appropriate levels for FY 2019 operations.
Namoi Cotton Co-operative Limited
16. Provisions
Current
Employee leave entitlements
Employee variable compensation
Non-current
Employee leave entitlements
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,979
-
1,979
863
863
2,040
22
2,062
799
799
1,979
-
1,979
863
863
2,040
22
2,062
799
799
17. Co-operative Grower Member Shares
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Grower member shares - fixed capital entitlement
447
447
447
447
1 cent Grower member shares (fully paid)
Shares at the beginning of the financial year
Shares issued during the year
Shares repurchased/forfeited during the year
Shares at the end of the financial year
No.
No.
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
165,600
-
-
165,600
165,600
-
-
165,600
165,600
-
-
165,600
165,600
-
-
165,600
Terms and conditions
�
•
�
•
�
•
Grower shares may only be held by active members;
Grower shareholders have one vote at member meetings, regardless of the number of grower shares held;
Grower shares can be issued and are redeemable for a fixed amount of $2.70 per share, but have no
entitlement to surplus repayments;
Grower shares have no dividend entitlement;
Grower shareholders appoint the directors of Namoi Cotton, subject to the stockholders right to nominate
up to three non-grower directors;
Grower shareholders are entitled to a rebate, if applicable, for each bale of cotton ginned and/or marketed
with Namoi Cotton.
�
•
�
•
�
•
Year Ended 28 February 2017
Notes to the Financial Statements
Page 57
Year Ended 28 February 2017
Notes to the Financial Statements
Page 58
2017 ANNUAL REPORT | 69
For personal use only There were no transactions under the rebate reinvestment plan during the year ended 28 February 2017 (2016:
Capital stock issued under the distribution reinvestment plan is issued at a discount of 5% to the weighted
average market price of Namoi capital stock sold on the ASX on the first day on which Namoi capital stock is
quoted ex distribution in relation to the distribution to which the allotment relates and the following four
Namoi Cotton Co-operative Limited
Rebate reinvestment plan
$nil).
Distribution reinvestment plan
business days.
Capital management
Namoi Cotton manages capital through the payment of dividends and participation in the on-market buy back
of its Namoi Capital Stock. Decisions on capital management are made having regard to compliance with
externally imposed capital requirements principally through maintaining a minimum level of net assets.
19. Nature and Purpose of Reserves
Capital stock (CCU) premium reserve
By virtue of rule 15.2 of the co-operative rules, the capital stock premium reserve is used to record amounts
received in respect of capital stock issued at a premium and are to be regarded as paid up capital of the co-
operative.
operative;
�
�
�
The balance standing to the credit of this account may be applied in any one or more of the following ways:
In the payment of dividends if those dividends are satisfied by the issue of shares to the members of the co-
In writing off the preliminary expenses of the co-operative; or
In providing for the premium payable on redemption of shares, debentures or co-operative capital units.
Asset revaluation reserve
The asset revaluation reserve is used to record increases in the fair value of ginning assets and decreases to the
extent that such decreases relates to an increase on the same asset previously recognised in equity. The reserve
can only be used to pay dividends in limited circumstances.
Namoi Cotton Co-operative Limited
Minimum holding and forfeiture rules
Rule 6 of the rules of the co-operative requires active members to hold 800 shares, produce cotton from a
minimum 40 hectares and conduct a minimum 20% of the member’s cotton business with the co-operative in
order to be eligible for a rebate of ginning and marketing charges levied by the co-operative. The board may
declare membership of a member cancelled where the grower is inactive for two years, whereby grower shares
are forfeited and the grower is repaid an amount equal to the initial issue price.
18. Contributed Equity
Capital Stock
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,098
1,098
1,098
1,098
Consolidated and Parent
No. '000
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1 cent Capital Stock (fully paid)
Capital stock at the beginning of the financial year
Issued during the year
Redeemed through on-market buy-back
Capital stock at the end of the financial year
109,843
-
-
109,843
109,843
-
-
109,843
1,098
-
-
1,098
1,098
-
-
1,098
Net tangible assets per co-operative capital unit
$ 1.13
$ 1.12
Terms and conditions
�
•
�
•
� Matters relating to the appointment of the non-grower directors must be approved by capital stock holders
•
Capital stock holders are entitled to distributions as declared by the directors;
Capital stock holders have no right to vote at any general meeting of Namoi Cotton;
prior to submission to a general meeting of Namoi Cotton for approval;
� On winding up, capital stock holders are entitled to the proceeds from surplus assets after payment of
•
grower paid up share capital.
Namoi Cotton Employee Incentive Share Plan
The Employee Incentive Share Plan was suspended in August 2004. All full time employees who were
continuously employed by Namoi Cotton for a period of one year were eligible to participate in the plan after
the finalisation of the full year results for the year ended 29 February 2004. The issue price was at a 5% discount
to the average market price of Namoi capital stock over the 5 trading days preceding the offer date.
Under the terms of the plan, employees are provided with an interest free loan to finance the issue price of the
units. A minimum of 75% of the amount of all distributions paid in relation to units issued under the plan must
be applied as a repayment of the loan. In any event, the loan must be repaid on the earlier to occur of
termination of employment and 10 years. At the end of the financial year employee loans totalled $24,441
(2016: $25,188).
Units issued under the plan are placed in escrow until the later to occur of three years from issue and when the
employee loan has been fully repaid. At the end of the financial year there were 141,000 units (2016: 141,000
units) under escrow.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 70
Page 59
Year Ended 28 February 2017
Notes to the Financial Statements
Page 60
For personal use only Namoi Cotton Co-operative Limited
Minimum holding and forfeiture rules
Rule 6 of the rules of the co-operative requires active members to hold 800 shares, produce cotton from a
minimum 40 hectares and conduct a minimum 20% of the member’s cotton business with the co-operative in
order to be eligible for a rebate of ginning and marketing charges levied by the co-operative. The board may
declare membership of a member cancelled where the grower is inactive for two years, whereby grower shares
are forfeited and the grower is repaid an amount equal to the initial issue price.
18. Contributed Equity
Capital Stock
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1,098
1,098
1,098
1,098
Consolidated and Parent
No. '000
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
1 cent Capital Stock (fully paid)
Capital stock at the beginning of the financial year
109,843
109,843
1,098
1,098
Issued during the year
Redeemed through on-market buy-back
-
-
-
-
-
-
-
-
Capital stock at the end of the financial year
109,843
109,843
1,098
1,098
Net tangible assets per co-operative capital unit
$ 1.13
$ 1.12
Terms and conditions
�
�
Capital stock holders are entitled to distributions as declared by the directors;
Capital stock holders have no right to vote at any general meeting of Namoi Cotton;
� Matters relating to the appointment of the non-grower directors must be approved by capital stock holders
prior to submission to a general meeting of Namoi Cotton for approval;
� On winding up, capital stock holders are entitled to the proceeds from surplus assets after payment of
grower paid up share capital.
Namoi Cotton Employee Incentive Share Plan
The Employee Incentive Share Plan was suspended in August 2004. All full time employees who were
continuously employed by Namoi Cotton for a period of one year were eligible to participate in the plan after
the finalisation of the full year results for the year ended 29 February 2004. The issue price was at a 5% discount
to the average market price of Namoi capital stock over the 5 trading days preceding the offer date.
Under the terms of the plan, employees are provided with an interest free loan to finance the issue price of the
units. A minimum of 75% of the amount of all distributions paid in relation to units issued under the plan must
be applied as a repayment of the loan. In any event, the loan must be repaid on the earlier to occur of
termination of employment and 10 years. At the end of the financial year employee loans totalled $24,441
(2016: $25,188).
units) under escrow.
Units issued under the plan are placed in escrow until the later to occur of three years from issue and when the
employee loan has been fully repaid. At the end of the financial year there were 141,000 units (2016: 141,000
Namoi Cotton Co-operative Limited
Rebate reinvestment plan
There were no transactions under the rebate reinvestment plan during the year ended 28 February 2017 (2016:
$nil).
Distribution reinvestment plan
Capital stock issued under the distribution reinvestment plan is issued at a discount of 5% to the weighted
average market price of Namoi capital stock sold on the ASX on the first day on which Namoi capital stock is
quoted ex distribution in relation to the distribution to which the allotment relates and the following four
business days.
Capital management
Namoi Cotton manages capital through the payment of dividends and participation in the on-market buy back
of its Namoi Capital Stock. Decisions on capital management are made having regard to compliance with
externally imposed capital requirements principally through maintaining a minimum level of net assets.
19. Nature and Purpose of Reserves
Capital stock (CCU) premium reserve
By virtue of rule 15.2 of the co-operative rules, the capital stock premium reserve is used to record amounts
received in respect of capital stock issued at a premium and are to be regarded as paid up capital of the co-
operative.
The balance standing to the credit of this account may be applied in any one or more of the following ways:
�
•
In the payment of dividends if those dividends are satisfied by the issue of shares to the members of the co-
operative;
In writing off the preliminary expenses of the co-operative; or
In providing for the premium payable on redemption of shares, debentures or co-operative capital units.
�
•
�
•
Asset revaluation reserve
The asset revaluation reserve is used to record increases in the fair value of ginning assets and decreases to the
extent that such decreases relates to an increase on the same asset previously recognised in equity. The reserve
can only be used to pay dividends in limited circumstances.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 59
Year Ended 28 February 2017
Notes to the Financial Statements
Page 60
2017 ANNUAL REPORT | 71
For personal use only Namoi Cotton Co-operative Limited
20. Segment Information
Identification of reportable segments
The group has identified its operating segments based on the internal reports that are reviewed and used by the
chief executive officer (the chief operating decision maker) with the executive management team in assessing
performance and in determining the allocation of resources.
The operating segments are identified by management based on the manner in which the product is sold,
whether retail or wholesale, and the nature of the services provided, the identity of service line manager and
country of origin. Discrete financial information about each of these operating businesses is reported to the
executive management team on at least a monthly basis.
The reportable segments are based on aggregated operating segments determined by the similarity of the
products and sold and/or the services provided, as these are the sources of the group’s major risks and have the
most effect on the rates of return.
Types of products and services
Ginning
The ginning business operates 12 cotton gins (incorporating 2 joint venture gins, referred to in note 11) located
in the key growing areas of NSW and Queensland. The ginning service provided to the growers during the
production process includes the separation of lint cotton from seed and other foreign matter and the conversion
of cotton in module form to bale form. Grower customers are also able to sell the white cotton seed by-product
to Namoi Cotton or elect to retain their white cotton seed.
Marketing
The marketing business involves the purchase of lint cotton from Australian growers using a variety of forward
contracts that offer differing combinations of price, delivery and risk characteristics. Subsequent to the
formation of NCA, bales procured by Namoi from growers are on-sold to NCA with approximately 99% of NCA
sales ultimately being to Asia. The NCA joint venture manages its marketing risks by utilising cotton futures and
options and foreign currency contracts under strict risk management policies.
Commodities
The controlled entity Namoi Cotton Commodities Pty Ltd procures various grain and pulse crops from Australian
growers and sells these into various domestic and international markets.
Accounting policies
The accounting policies used by the group in reporting segments internally are the same as those contained in
note 1 to the accounts and in the prior period.
The following items (or a portion thereof) of income and expenditure are not allocated to operating segments
as they are not considered part of the core operations of any segment:
Interest Revenue;
Rental Revenue;
Share of profit from associate (other than NCA and Cargill);
Finance costs;
Corporate employee benefits expense;
Corporate depreciation; and
�
•
�
•
�
•
�
•
�
•
�
•
� Other corporate administrative expenses.
•
A segment balance sheet and cashflow is not reported to the chief operating decision makers and are not
disclosed as part of this report.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 72
Page 61
Page 62
Business Segments
Year ended 28 February 2017
Ginning Marketing 1,2 Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
$'000
112,222
200
112,422
242,407
242,407
112,422
242,407
-
-
-
-
1,291
712
2,003
-
-
8,054
(2,556)
(802)
4,696
301
301
-
-
-
301
105
28
-
133
-
-
-
1
213
214
(6,710)
(84)
-
(6,794)
(5,684)
(35)
(142)
(345)
(6,206)
1 Marketing revenue remains inclusive of lint sales values upon transfer of bales from Namoi to NCA.
2 Marketing results include the net result for the NCA joint venture.
Business Segments
Year ended 29 February 2016
Ginning
$'000
Marketing Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
98,241
242
98,483
180,791
180,791
-
-
98,483
180,791
3,238
(2,616)
(316)
306
(909)
(3,823)
(4,732)
-
-
-
-
237
237
-
-
-
237
30
21
-
51
-
-
-
1
200
201
(6,269)
(55)
-
(6,324)
(i) Included in the unallocated results for the period are:
(5,648)
(34)
(117)
(371)
(6,170)
Namoi Cotton Co-operative Limited
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation
Included in the unallocated results for the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Share of profit/(loss) of other associates
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Share of profit/(loss) of associates
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
Year Ended 28 February 2017
Notes to the Financial Statements
354,930
200
355,130
1
213
355,344
2,740
(2,612)
(90)
38
1
213
214
-
(3,426)
(345)
(84)
(3,153)
(6,794)
279,269
242
279,511
1
200
279,712
(3,910)
(2,650)
(4,139)
(10,699)
1
200
201
-
(3,397)
(371)
(55)
(2,702)
(6,324)
For personal use only Namoi Cotton Co-operative Limited
20. Segment Information
Identification of reportable segments
The group has identified its operating segments based on the internal reports that are reviewed and used by the
chief executive officer (the chief operating decision maker) with the executive management team in assessing
performance and in determining the allocation of resources.
The operating segments are identified by management based on the manner in which the product is sold,
whether retail or wholesale, and the nature of the services provided, the identity of service line manager and
country of origin. Discrete financial information about each of these operating businesses is reported to the
executive management team on at least a monthly basis.
The reportable segments are based on aggregated operating segments determined by the similarity of the
products and sold and/or the services provided, as these are the sources of the group’s major risks and have the
most effect on the rates of return.
Types of products and services
Ginning
The ginning business operates 12 cotton gins (incorporating 2 joint venture gins, referred to in note 11) located
in the key growing areas of NSW and Queensland. The ginning service provided to the growers during the
production process includes the separation of lint cotton from seed and other foreign matter and the conversion
of cotton in module form to bale form. Grower customers are also able to sell the white cotton seed by-product
to Namoi Cotton or elect to retain their white cotton seed.
Marketing
The marketing business involves the purchase of lint cotton from Australian growers using a variety of forward
contracts that offer differing combinations of price, delivery and risk characteristics. Subsequent to the
formation of NCA, bales procured by Namoi from growers are on-sold to NCA with approximately 99% of NCA
sales ultimately being to Asia. The NCA joint venture manages its marketing risks by utilising cotton futures and
options and foreign currency contracts under strict risk management policies.
The controlled entity Namoi Cotton Commodities Pty Ltd procures various grain and pulse crops from Australian
growers and sells these into various domestic and international markets.
Commodities
Accounting policies
The accounting policies used by the group in reporting segments internally are the same as those contained in
note 1 to the accounts and in the prior period.
The following items (or a portion thereof) of income and expenditure are not allocated to operating segments
as they are not considered part of the core operations of any segment:
Share of profit from associate (other than NCA and Cargill);
Interest Revenue;
Rental Revenue;
Finance costs;
�
�
�
�
�
�
Corporate employee benefits expense;
Corporate depreciation; and
� Other corporate administrative expenses.
disclosed as part of this report.
Year Ended 28 February 2017
Notes to the Financial Statements
A segment balance sheet and cashflow is not reported to the chief operating decision makers and are not
Page 61
Namoi Cotton Co-operative Limited
Business Segments
Year ended 28 February 2017
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation
Ginning Marketing 1,2 Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
$'000
112,222
200
112,422
-
-
112,422
8,054
(2,556)
(802)
4,696
242,407
-
242,407
-
-
242,407
1,291
-
712
2,003
301
-
301
-
-
301
105
28
-
133
-
-
-
1
213
214
(6,710)
(84)
-
(6,794)
354,930
200
355,130
1
213
355,344
2,740
(2,612)
(90)
38
(5,684)
(35)
(142)
(345)
(6,206)
Included in the unallocated results for the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Share of profit/(loss) of other associates
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
1 Marketing revenue remains inclusive of lint sales values upon transfer of bales from Namoi to NCA.
2 Marketing results include the net result for the NCA joint venture.
1
213
214
-
(3,426)
(345)
(84)
(3,153)
(6,794)
Business Segments
Year ended 29 February 2016
Ginning
$'000
Marketing Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation
98,241
242
98,483
-
-
98,483
3,238
(2,616)
(316)
306
180,791
-
180,791
-
-
180,791
(909)
-
(3,823)
(4,732)
237
-
237
-
-
237
30
21
-
51
-
-
-
1
200
201
(6,269)
(55)
-
(6,324)
279,269
242
279,511
1
200
279,712
(3,910)
(2,650)
(4,139)
(10,699)
(5,648)
(34)
(117)
(371)
(6,170)
(i) Included in the unallocated results for the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Share of profit/(loss) of associates
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
Year Ended 28 February 2017
Notes to the Financial Statements
1
200
201
-
(3,397)
(371)
(55)
(2,702)
(6,324)
Page 62
2017 ANNUAL REPORT | 73
For personal use only Namoi Cotton Co-operative Limited
Geographic Area
The economic entity operates in two separate geographic areas.
Namoi Cotton procures lint cotton and white cotton seed and provides cotton ginning activities to and from
growers located solely within Australia. A portion of cotton seed sales are made to a variety of countries in Asia
with similar trading terms and conditions and risk profiles. As such for the purposes of this note Namoi Cotton’s
geographic areas are considered to be Australia and Asia with consolidated revenues as follows:
Geographic Areas
Year ended 28 February 2017
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Geographic Areas
Year ended 29 February 2016
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Australia
$'000
Asia
$'000
Consolidated
$'000
338,109
200
338,309
16,821
-
16,821
354,930
200
355,130
Australia
$'000
Asia
$'000
Consolidated
$'000
266,925
242
267,167
12,345
-
12,345
279,270
242
279,512
Namoi Cotton Co-operative Limited
21. Commitments and Contingencies
Commitments for capital expenditure
Property, plant and equipment
Estimated capital expenditure contracted for at
balance date but not provided for:
Payable within one year
Operating lease commitments – group as lessee
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
5,870
591
5,870
591
The group has entered into commercial leases in respect of land and buildings which have an average life of less
than 1 year. Options to renew are included in the contracts for commercial buildings only. There are no
restrictions placed upon the lessee by entering into these leases.
The future minimum rentals payable under the non-cancellable operating leases are as follows:
Operating lease commitments - Group as lessee
Not later than 1 year
Later than 1 year and not later than 5 years
Operating lease commitments receivable – group as lessor
307
-
307
656
289
945
307
-
307
656
289
945
The group has entered into non-cancellable commercial property leases on its surplus office building and into
cancellable residential accommodation leases for certain employees in remote areas. The commercial lease
allows for an annual increase in line with Consumer Price Index movements while residential leases are subject
to periodic market assessment.
Future minimum rentals receivable under non-cancellable operating leases as at 28 February 2017 are as
follows:
Operating lease commitments receivable - Group as lessor
Not later than 1 year
Later than 1 year and not later than 5 years
44
-
44
88
39
127
44
-
44
88
39
127
Finance lease and hire purchase commitments – group as lessee
The group has finance leases and hire purchase contracts for gin packaging and logistics supply chain equipment
with a carrying value of $2,701,735 (2016: $2,525,241) for both the group and the co-operative. The equipment
is mainly presented in Gin Assets in Note 13. Property, Plant and Equipment.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 74
Page 63
Year Ended 28 February 2017
Notes to the Financial Statements
Page 64
For personal use only Namoi Cotton Co-operative Limited
Geographic Area
Geographic Areas
Year ended 28 February 2017
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
Geographic Areas
Year ended 29 February 2016
Revenue
Sales to external customers
Other revenues from external customers
Total consolidated revenue
The economic entity operates in two separate geographic areas.
Namoi Cotton procures lint cotton and white cotton seed and provides cotton ginning activities to and from
growers located solely within Australia. A portion of cotton seed sales are made to a variety of countries in Asia
with similar trading terms and conditions and risk profiles. As such for the purposes of this note Namoi Cotton’s
geographic areas are considered to be Australia and Asia with consolidated revenues as follows:
Australia
$'000
Asia
$'000
Consolidated
$'000
338,109
200
338,309
16,821
16,821
354,930
200
355,130
Australia
$'000
Asia
$'000
Consolidated
$'000
266,925
242
267,167
12,345
12,345
279,270
242
279,512
-
-
Namoi Cotton Co-operative Limited
21. Commitments and Contingencies
Commitments for capital expenditure
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
Property, plant and equipment
Estimated capital expenditure contracted for at
balance date but not provided for:
Payable within one year
5,870
591
5,870
591
Operating lease commitments – group as lessee
The group has entered into commercial leases in respect of land and buildings which have an average life of less
than 1 year. Options to renew are included in the contracts for commercial buildings only. There are no
restrictions placed upon the lessee by entering into these leases.
The future minimum rentals payable under the non-cancellable operating leases are as follows:
Operating lease commitments - Group as lessee
Not later than 1 year
Later than 1 year and not later than 5 years
Operating lease commitments receivable – group as lessor
307
-
307
656
289
945
307
-
307
656
289
945
The group has entered into non-cancellable commercial property leases on its surplus office building and into
cancellable residential accommodation leases for certain employees in remote areas. The commercial lease
allows for an annual increase in line with Consumer Price Index movements while residential leases are subject
to periodic market assessment.
Future minimum rentals receivable under non-cancellable operating leases as at 28 February 2017 are as
follows:
Operating lease commitments receivable - Group as lessor
Not later than 1 year
Later than 1 year and not later than 5 years
44
-
44
88
39
127
44
-
44
88
39
127
Finance lease and hire purchase commitments – group as lessee
The group has finance leases and hire purchase contracts for gin packaging and logistics supply chain equipment
with a carrying value of $2,701,735 (2016: $2,525,241) for both the group and the co-operative. The equipment
is mainly presented in Gin Assets in Note 13. Property, Plant and Equipment.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 63
Year Ended 28 February 2017
Notes to the Financial Statements
Page 64
2017 ANNUAL REPORT | 75
For personal use only Namoi Cotton Co-operative Limited
Future minimum lease payments under finance leases and hire purchase contracts together with the present
value of the net minimum lease payments are as follows:
Namoi Cotton Co-operative Limited
23. Related Party Disclosures
Within one year
After one year but within five years
After five years
Total minimum lease payments
Unexpired finance charges
Present value of minimum lease payments
Consolidated
$'000
Parent
$'000
28 Feb
2017
844
1,379
44
2,267
(146)
2,121
29 Feb
2016
818
1,498
-
2,316
(191)
2,125
28 Feb
2017
844
1,379
44
2,267
(146)
2,121
29 Feb
2016
818
1,498
-
2,316
(191)
2,125
The weighted average interest rate implicit in the contracts for both the group and parent is 4.9% (2016: 5.7%).
Contingent liabilities
Namcott Investments Pty Ltd, a controlled entity of the co-operative, is a partner of the COA, Namcott
Investments Pty Ltd is jointly and severally liable for the COA liabilities. At 28 February 2017 the liabilities of
COA exceeded its assets. Refer to Note 10. Investments in Associates and Joint Ventures.
22. Significant Events after Balance Date
No events of a material nature have occurred between balance date and the date of this report, other than as
disclosed elsewhere in this report (refer to Note 15).
The consolidated financial statements include the financial statements of Namoi Cotton Co-operative Limited
and the subsidiaries listed in the following table. All subsidiaries were incorporated in Australia. Namoi Cotton
Co-operative Limited is the ultimate parent entity of the group.
Ownership and investment
Name of entity
Australian Raw Cotton Marketing Corp. Pty Ltd
Namcott Investments Pty Limited
Namoi Cotton Superannuation Pty Ltd
Namoi Cotton Pty Ltd
Namcott Marketing Pty Ltd
Namoi Cotton Commodities Pty Ltd
Namoi Cotton Finance Pty Ltd
Cotton Trading Corporation Pty Limited
Investments held in controlled entities
Equity Interest
%
Investment
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
100%
100%
100%
100%
100%
96%
100%
100%
100%
100%
100%
100%
100%
96%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,830
1,830
1,830
1,830
(1,830)
(1,830)
Principal activities
� Namcott Investments Pty Ltd, a subsidiary of Namoi Cotton, is the beneficial owner of the interests in CPL
and COA Partnership. Namoi Oilseeds Trust formerly held the interest in the partnership.
� Namoi Cotton Superannuation Pty Ltd is trustee of the co-operative’s former superannuation fund, which
was wound up in June 2000.
� Namoi Cotton Pty Ltd is a non-trading company.
shares and NCA Partnership.
� Namoi Cotton Finance Pty Ltd secures funding for the group.
� Namcott Marketing Pty Ltd, a subsidiary of Namoi Cotton, is the beneficial owner of the interests in NCPS
� Namoi Cotton Commodities Pty Ltd has main trading activities of sale and logistics of plastic waste from
ginning activities.
�
�
Cotton Trading Corporation Pty Limited is controlled by Namcott Investments Pty Ltd.
Australian Raw Cotton Marketing Corp Pty Ltd is a non-trading company.
Transactions with subsidiaries
Transactions between members of the wholly owned group were minimal. Amounts receivable by and payable
to the parent entity are included in the respective notes to this financial report.
Transactions with other related parties
ACS leased HVI machines from the parent during the period for $35,906 (2016: $89,978).
Sales of white cotton seed to the COA Partnership were $19,454,562 (2016: $18,473,678) and purchases of white
cotton seed from the COA Partnership were $nil (2016: $1,002,982).
Transactions with NCA
handling fees) (2016: $0.2m).
Management fees received by Namoi for services provided to Namoi Cotton Alliance $2.5m (inclusive of bale
Lint Cotton Sales from Namoi to Namoi Cotton Alliance $239.9m (2016: $187.2m).
Insurance on-charged by Namoi to Namoi Cotton Alliance $0.4m (2016: $0.4m).
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 76
Page 65
Year Ended 28 February 2017
Notes to the Financial Statements
Page 66
For personal use only Namoi Cotton Co-operative Limited
Future minimum lease payments under finance leases and hire purchase contracts together with the present
value of the net minimum lease payments are as follows:
Namoi Cotton Co-operative Limited
23. Related Party Disclosures
Within one year
After five years
After one year but within five years
Total minimum lease payments
Unexpired finance charges
Present value of minimum lease payments
Consolidated
$'000
Parent
$'000
28 Feb
2017
844
1,379
44
2,267
(146)
2,121
29 Feb
2016
818
1,498
-
2,316
(191)
2,125
28 Feb
2017
844
1,379
44
2,267
(146)
2,121
29 Feb
2016
818
1,498
-
2,316
(191)
2,125
The weighted average interest rate implicit in the contracts for both the group and parent is 4.9% (2016: 5.7%).
Contingent liabilities
Namcott Investments Pty Ltd, a controlled entity of the co-operative, is a partner of the COA, Namcott
Investments Pty Ltd is jointly and severally liable for the COA liabilities. At 28 February 2017 the liabilities of
COA exceeded its assets. Refer to Note 10. Investments in Associates and Joint Ventures.
22. Significant Events after Balance Date
No events of a material nature have occurred between balance date and the date of this report, other than as
disclosed elsewhere in this report (refer to Note 15).
The consolidated financial statements include the financial statements of Namoi Cotton Co-operative Limited
and the subsidiaries listed in the following table. All subsidiaries were incorporated in Australia. Namoi Cotton
Co-operative Limited is the ultimate parent entity of the group.
Ownership and investment
Name of entity
Australian Raw Cotton Marketing Corp. Pty Ltd
Namcott Investments Pty Limited
Namoi Cotton Superannuation Pty Ltd
Namoi Cotton Pty Ltd
Namcott Marketing Pty Ltd
Namoi Cotton Commodities Pty Ltd
Namoi Cotton Finance Pty Ltd
Cotton Trading Corporation Pty Limited
Investments held in controlled entities
Equity Interest
%
28 Feb
2017
29 Feb
2016
100%
100%
100%
100%
100%
96%
100%
100%
100%
100%
100%
100%
100%
96%
100%
100%
Investment
$'000
28 Feb
2017
-
-
-
-
-
-
-
1,830
1,830
(1,830)
-
29 Feb
2016
-
-
-
-
-
-
-
1,830
1,830
(1,830)
-
Principal activities
� Namcott Investments Pty Ltd, a subsidiary of Namoi Cotton, is the beneficial owner of the interests in CPL
•
and COA Partnership. Namoi Oilseeds Trust formerly held the interest in the partnership.
� Namoi Cotton Superannuation Pty Ltd is trustee of the co-operative’s former superannuation fund, which
•
was wound up in June 2000.
� Namoi Cotton Pty Ltd is a non-trading company.
•
� Namcott Marketing Pty Ltd, a subsidiary of Namoi Cotton, is the beneficial owner of the interests in NCPS
•
shares and NCA Partnership.
� Namoi Cotton Finance Pty Ltd secures funding for the group.
•
� Namoi Cotton Commodities Pty Ltd has main trading activities of sale and logistics of plastic waste from
•
ginning activities.
Cotton Trading Corporation Pty Limited is controlled by Namcott Investments Pty Ltd.
Australian Raw Cotton Marketing Corp Pty Ltd is a non-trading company.
�
•
�
•
Transactions with subsidiaries
Transactions between members of the wholly owned group were minimal. Amounts receivable by and payable
to the parent entity are included in the respective notes to this financial report.
Transactions with other related parties
ACS leased HVI machines from the parent during the period for $35,906 (2016: $89,978).
Sales of white cotton seed to the COA Partnership were $19,454,562 (2016: $18,473,678) and purchases of white
cotton seed from the COA Partnership were $nil (2016: $1,002,982).
Transactions with NCA
Management fees received by Namoi for services provided to Namoi Cotton Alliance $2.5m (inclusive of bale
handling fees) (2016: $0.2m).
Lint Cotton Sales from Namoi to Namoi Cotton Alliance $239.9m (2016: $187.2m).
Insurance on-charged by Namoi to Namoi Cotton Alliance $0.4m (2016: $0.4m).
Year Ended 28 February 2017
Notes to the Financial Statements
Page 65
Year Ended 28 February 2017
Notes to the Financial Statements
Page 66
2017 ANNUAL REPORT | 77
For personal use only 152,293
2,955
152,293
2,955
174,312
(23,162)
Namoi Cotton Co-operative Limited
Contingent liabilities
Namcott Investments Pty Ltd, a controlled entity of the co-operative, is a partner of the COA, Namcott
Investments Pty Ltd is jointly and severally liable for the COA liabilities. At 28 February 2017 the liabilities of
COA exceeded its assets and therefore has contributed to a negative investment in COA. Refer to Note 10.
Investments in Associates and Joint Ventures.
Namoi Cotton Co-operative Limited
25. Remuneration of Auditors
1,808,592 1,774,506 1,808,592 1,774,506
174,312
(23,162)
1,963,840 1,925,656 1,963,840 1,925,656
24. Directors’ and Executive Disclosure
Compensation by category of KMP
Short-term
Post Employment
Other Long-term
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
Remuneration for other services provided to the parent entity and
the consolidated entity:
- Other assurance services
Remuneration for the audit and review of the financial reports of the
parent entity and the consolidated entity
173,900
165,500
Consolidated and
Parent Entity
28 Feb
2017
29 Feb
2016
27,000
19,500
200,900
185,000
26. Financial Risk Management Objectives and Policies
The nature of Namoi Cotton’s business involves the potential exposure to a number of major financial and non-
financial risks. The major financial market business risks exposed to by Namoi or later by the NCA joint venture
Lint cotton, cotton seed and grains commodities price risk;
are:
�
�
�
�
�
�
�
Cotton basis risk;
Cotton spread risk;
Foreign exchange risk;
Interest rate risk;
Credit risk;
Funding and liquidity risk.
Accordingly, Namoi Cotton conducts its business with a focus on risk management in order to ensure the
alignment of returns achieved from its business activities for stakeholders with the risk capital applied to fund
these activities. The key elements of Namoi Cotton’s risk management policy that facilitate the management of
these risks include various derivative financial instruments, physical risk position limits and techniques and Value
at Risk modelling.
Namoi Cotton is exposed to price risks through entering commodity purchase and sale transactions. To limit
potential impacts upon the trading margin achieved on those transactions Namoi Cotton and later NCA enters
into derivative transactions, including principally cotton futures and options contracts and forward currency
contracts. Where derivatives instruments do not exist for a particular commodity the risk management policy
sets physical limits over trading positions.
Forward rate agreements and interest rate swaps are entered into to manage interest rate risks that exist in
Namoi Cotton’s financing activities.
The MFRMC ensures the effective management of each of these risks through the implementation and
adherence to a risk management policy. The risk management policy of Namoi Cotton requires all risk to be
managed at a crop (i.e. season) level. The key extracts from the risk management policy for managing Namoi
Cotton’s major financial market business risks are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each derivative
financial instrument are disclosed in note 1e to the financial statements.
Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the rules of the co-operative, under
terms and conditions applicable to all members. Under the rules of the co-operative, grower directors are
required to conduct a minimum of 20% of their total cotton business with Namoi Cotton. In accordance with
that rule, directors entered into marketing contracts and ginning contracts with Namoi Cotton. Amounts
paid/received or payable/receivable from/to directors and their respective related parties were as follows:
Cotton Purchases
28 Feb
2017
6,670,705
29 Feb
2016
5,224,500
Consolidated and Parent entity
Ginning Charges Levied
28 Feb
2017
1,418,504
29 Feb
2016
1,554,886
Grain & Seed Purchases
28 Feb
2017
1,813,908
29 Feb
2016
1,481,578
The nature of the terms and conditions of the above other transactions with directors and director related
entities are consistent with the terms of Namoi Cotton’s standard products.
Refer to the Remuneration Report within the Directors’ Report for more information.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 78
Page 67
Year Ended 28 February 2017
Notes to the Financial Statements
Page 68
For personal use only Namoi Cotton Co-operative Limited
Contingent liabilities
Namcott Investments Pty Ltd, a controlled entity of the co-operative, is a partner of the COA, Namcott
Investments Pty Ltd is jointly and severally liable for the COA liabilities. At 28 February 2017 the liabilities of
COA exceeded its assets and therefore has contributed to a negative investment in COA. Refer to Note 10.
Investments in Associates and Joint Ventures.
Namoi Cotton Co-operative Limited
25. Remuneration of Auditors
Consolidated and
Parent Entity
28 Feb
2017
29 Feb
2016
24. Directors’ and Executive Disclosure
Compensation by category of KMP
Short-term
Post Employment
Other Long-term
Consolidated
28 Feb
2017
29 Feb
2016
Parent
28 Feb
2017
29 Feb
2016
1,808,592 1,774,506 1,808,592 1,774,506
152,293
174,312
152,293
174,312
2,955
(23,162)
2,955
(23,162)
1,963,840 1,925,656 1,963,840 1,925,656
Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the rules of the co-operative, under
terms and conditions applicable to all members. Under the rules of the co-operative, grower directors are
required to conduct a minimum of 20% of their total cotton business with Namoi Cotton. In accordance with
that rule, directors entered into marketing contracts and ginning contracts with Namoi Cotton. Amounts
paid/received or payable/receivable from/to directors and their respective related parties were as follows:
Consolidated and Parent entity
Cotton Purchases
Ginning Charges Levied
Grain & Seed Purchases
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
6,670,705
5,224,500
1,418,504
1,554,886
1,813,908
1,481,578
The nature of the terms and conditions of the above other transactions with directors and director related
entities are consistent with the terms of Namoi Cotton’s standard products.
Refer to the Remuneration Report within the Directors’ Report for more information.
Remuneration for the audit and review of the financial reports of the
parent entity and the consolidated entity
173,900
165,500
Remuneration for other services provided to the parent entity and
the consolidated entity:
- Other assurance services
27,000
19,500
200,900
185,000
26. Financial Risk Management Objectives and Policies
The nature of Namoi Cotton’s business involves the potential exposure to a number of major financial and non-
financial risks. The major financial market business risks exposed to by Namoi or later by the NCA joint venture
are:
�
•
�
•
�
•
�
•
�
•
�
•
�
•
Lint cotton, cotton seed and grains commodities price risk;
Cotton basis risk;
Cotton spread risk;
Foreign exchange risk;
Interest rate risk;
Credit risk;
Funding and liquidity risk.
Accordingly, Namoi Cotton conducts its business with a focus on risk management in order to ensure the
alignment of returns achieved from its business activities for stakeholders with the risk capital applied to fund
these activities. The key elements of Namoi Cotton’s risk management policy that facilitate the management of
these risks include various derivative financial instruments, physical risk position limits and techniques and Value
at Risk modelling.
Namoi Cotton is exposed to price risks through entering commodity purchase and sale transactions. To limit
potential impacts upon the trading margin achieved on those transactions Namoi Cotton and later NCA enters
into derivative transactions, including principally cotton futures and options contracts and forward currency
contracts. Where derivatives instruments do not exist for a particular commodity the risk management policy
sets physical limits over trading positions.
Forward rate agreements and interest rate swaps are entered into to manage interest rate risks that exist in
Namoi Cotton’s financing activities.
The MFRMC ensures the effective management of each of these risks through the implementation and
adherence to a risk management policy. The risk management policy of Namoi Cotton requires all risk to be
managed at a crop (i.e. season) level. The key extracts from the risk management policy for managing Namoi
Cotton’s major financial market business risks are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each derivative
financial instrument are disclosed in note 1e to the financial statements.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 67
Year Ended 28 February 2017
Notes to the Financial Statements
Page 68
2017 ANNUAL REPORT | 79
For personal use only Namoi Cotton Co-operative Limited
Risk Exposure and Responses
Price risk
Namoi Cotton is potentially exposed to movements in the price of lint cotton as a result of fixed price purchases
and sales of lint cotton respectively in contracts with growers and mills principally through its investment in the
NCA JV. The co-operative is also exposed to movements to price of cotton seed through fixed price purchases
and sale contracts.
Cotton seed price risk is managed principally through imposition of physical trading limits. It is a risk
management requirement to utilise foreign currency derivatives to minimise the impact of USD/AUD
fluctuations on fixed price sales contracts.
It is the risk management policy that no derivatives will be entered into until such time as a fixed price purchase
or sale commitment exists.
Financial Assets
Derivatives
Financial Liabilities
Derivatives
Net Exposure
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
14,221
14,221
4,330
4,330
14,221
14,221
4,330
4,330
(14,141)
(14,141)
(5,179)
(5,179)
(14,141)
(14,141)
(5,179)
(5,179)
80
(849)
80
(849)
Namoi Cotton Co-operative Limited
Cotton seed price risk
Cotton seed price risk potentially arises when Namoi Cotton enters into a forward commitment to purchase or
sell physical cotton seed without simultaneously entering into the opposing transaction. Namoi Cotton managed
cotton seed price risk by adhering to physical limits in respect of its cotton seed open positions.
The following sensitivity analysis is based upon seed pricing that existed at 28 February 2017 and 29 February
2016, whereby if the cotton seed price had moved, as illustrated in the table below, with all other variables held
constant, post-tax profit and equity (excluding the effect of net profit) would have changed as follows:
At reporting date, the group had the following financial assets and liabilities exposed to Australian variable
Consolidated
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Parent entity
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Interest rate risk
interest rate risk.
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Interest bearing loans and borrowings
Derivatives
Net Exposure
Post Tax Profit
Higher/(Lower)
$'000
Higher/(Lower)
Equity
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
51
(25)
51
(25)
115
(58)
115
(58)
-
-
-
-
-
-
-
-
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
2,176
349
2,525
1,790
59
1,849
2,055
349
2,404
1,785
59
1,844
(59,840)
(60,678)
(59,840)
(60,678)
-
(284)
-
(284)
(59,840)
(60,962)
(59,840)
(60,962)
(57,315)
(59,113)
(57,436)
(59,118)
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 80
Interest rate swap contracts, with a fair value loss of $nil (2016 $283,605) at reporting date to both the group
and parent, are exposed to value movements if interest rates change.
At reporting date, after taking into account the effect of interest rate swaps, nil% (2016: 44.3%) of the group’s
borrowings are at a fixed rate of interest nil% (2016: 3.0%). The group continually monitors its interest rate
exposure with regard to existing and forecast working capital and term debt requirements.
Page 70
Page 69
Year Ended 28 February 2017
Notes to the Financial Statements
For personal use only Namoi Cotton Co-operative Limited
Risk Exposure and Responses
Price risk
Namoi Cotton is potentially exposed to movements in the price of lint cotton as a result of fixed price purchases
and sales of lint cotton respectively in contracts with growers and mills principally through its investment in the
NCA JV. The co-operative is also exposed to movements to price of cotton seed through fixed price purchases
and sale contracts.
Cotton seed price risk is managed principally through imposition of physical trading limits. It is a risk
management requirement to utilise foreign currency derivatives to minimise the impact of USD/AUD
fluctuations on fixed price sales contracts.
It is the risk management policy that no derivatives will be entered into until such time as a fixed price purchase
or sale commitment exists.
Financial Assets
Derivatives
Financial Liabilities
Derivatives
Net Exposure
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
14,221
14,221
4,330
4,330
14,221
14,221
4,330
4,330
(14,141)
(14,141)
(5,179)
(5,179)
(14,141)
(14,141)
(5,179)
(5,179)
80
(849)
80
(849)
Namoi Cotton Co-operative Limited
Cotton seed price risk
Cotton seed price risk potentially arises when Namoi Cotton enters into a forward commitment to purchase or
sell physical cotton seed without simultaneously entering into the opposing transaction. Namoi Cotton managed
cotton seed price risk by adhering to physical limits in respect of its cotton seed open positions.
The following sensitivity analysis is based upon seed pricing that existed at 28 February 2017 and 29 February
2016, whereby if the cotton seed price had moved, as illustrated in the table below, with all other variables held
constant, post-tax profit and equity (excluding the effect of net profit) would have changed as follows:
Post Tax Profit
Higher/(Lower)
$'000
Equity
Higher/(Lower)
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
51
(25)
51
(25)
115
(58)
115
(58)
-
-
-
-
-
-
-
-
Consolidated
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Parent entity
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Interest rate risk
At reporting date, the group had the following financial assets and liabilities exposed to Australian variable
interest rate risk.
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Interest bearing loans and borrowings
Derivatives
Net Exposure
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
2,176
349
2,525
1,790
59
1,849
2,055
349
2,404
1,785
59
1,844
(59,840)
-
(59,840)
(60,678)
(284)
(60,962)
(59,840)
-
(59,840)
(60,678)
(284)
(60,962)
(57,315)
(59,113)
(57,436)
(59,118)
Interest rate swap contracts, with a fair value loss of $nil (2016 $283,605) at reporting date to both the group
and parent, are exposed to value movements if interest rates change.
At reporting date, after taking into account the effect of interest rate swaps, nil% (2016: 44.3%) of the group’s
borrowings are at a fixed rate of interest nil% (2016: 3.0%). The group continually monitors its interest rate
exposure with regard to existing and forecast working capital and term debt requirements.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 69
Year Ended 28 February 2017
Notes to the Financial Statements
Page 70
2017 ANNUAL REPORT | 81
For personal use only Namoi Cotton Co-operative Limited
The following sensitivity analysis is based upon interest rate exposures that existed at 28 February 2017 and 29
February 2016, whereby if interest rates had moved, as illustrated in the table below, with all other variables
held constant, post tax profit and equity (excluding the effect of net profit) would have changed as follows:
Namoi Cotton Co-operative Limited
flow hedges:
At reporting date, the group had the following exposure to USD foreign currency that is not designated as cash
Consolidated
+100 basis points
-50 basis points
Parent entity
+100 basis points
-50 basis points
Post Tax Profit
Higher/(Lower)
$'000
Equity
Higher/(Lower)
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(576)
288
(576)
288
(335)
168
(335)
168
-
-
-
-
-
-
-
-
The movements in post tax profit and equity are due to higher/lower finance costs from variable rate debt offset
by fixed rate derivatives and interest bearing financial assets.
Sensitivity analysis was performed by applying a 100 basis point movement in interest rates to all non-fixed
interest bearing assets and liabilities at reporting date. As a result of recent global market volatility, 100 basis
points has been utilised in the absence of reliable data predicting reasonably possible movements of interest
rates. Year end balances are not reflective of interest bearing assets and liabilities throughout the year, due to
the seasonal nature of the business.
Foreign exchange risk
Namoi Cotton has transactional currency exposures predominantly arising from some cotton seed sales being
denominated in United States dollars (USD) as opposed to the group’s functional Australian dollar (AUD)
currency, which denominates all payments to growers. Potentially foreign currency denominated financial assets
and liabilities may be adversely affected by a change in the value of foreign exchange rates.
Namoi Cotton requires all net foreign exchange exposures to be managed with either forward currency contracts
or foreign exchange options contracts.
The group’s policy is to enter into forward exchange contracts at the time it enters into a firm purchase
commitment for lint cotton (through NCA) or a US dollar cotton seed sale commitment.
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Financial Liabilities
Trade and other payables
Derivatives
Consolidated
AUD/USD +100 basis points
AUD/USD -50 basis points
Parent entity
AUD/USD +100 basis points
AUD/USD -50 basis points
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
464
659
444
1,567
(118)
-
(118)
284
1,289
30
1,603
-
(8)
(8)
464
659
444
1,567
(118)
-
(118)
284
1,289
30
1,603
-
(8)
(8)
Post Tax Profit
Higher/(Lower)
$'000
Higher/(Lower)
Equity
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(34)
17
(34)
17
(41)
21
(41)
21
-
-
-
-
-
-
-
-
Net Exposure
1,449
1,595
1,449
1,595
Foreign exchange contracts that are subject to fair value movements through the statement of comprehensive
income as foreign exchange rates move.
Priced cotton seed sales contracts are treated as financial instruments under AASB 139.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 82
Page 71
Year Ended 28 February 2017
Notes to the Financial Statements
Page 72
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
The following sensitivity analysis is based upon interest rate exposures that existed at 28 February 2017 and 29
February 2016, whereby if interest rates had moved, as illustrated in the table below, with all other variables
held constant, post tax profit and equity (excluding the effect of net profit) would have changed as follows:
At reporting date, the group had the following exposure to USD foreign currency that is not designated as cash
flow hedges:
Consolidated
+100 basis points
-50 basis points
Parent entity
+100 basis points
-50 basis points
Post Tax Profit
Higher/(Lower)
$'000
Higher/(Lower)
Equity
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(576)
288
(576)
288
(335)
168
(335)
168
-
-
-
-
-
-
-
-
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Financial Liabilities
Trade and other payables
Derivatives
Consolidated
$'000
Parent
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
464
659
444
1,567
(118)
-
(118)
284
1,289
30
1,603
-
(8)
(8)
464
659
444
1,567
(118)
-
(118)
284
1,289
30
1,603
-
(8)
(8)
The movements in post tax profit and equity are due to higher/lower finance costs from variable rate debt offset
by fixed rate derivatives and interest bearing financial assets.
Sensitivity analysis was performed by applying a 100 basis point movement in interest rates to all non-fixed
interest bearing assets and liabilities at reporting date. As a result of recent global market volatility, 100 basis
points has been utilised in the absence of reliable data predicting reasonably possible movements of interest
rates. Year end balances are not reflective of interest bearing assets and liabilities throughout the year, due to
the seasonal nature of the business.
Foreign exchange risk
Namoi Cotton has transactional currency exposures predominantly arising from some cotton seed sales being
denominated in United States dollars (USD) as opposed to the group’s functional Australian dollar (AUD)
currency, which denominates all payments to growers. Potentially foreign currency denominated financial assets
and liabilities may be adversely affected by a change in the value of foreign exchange rates.
Namoi Cotton requires all net foreign exchange exposures to be managed with either forward currency contracts
or foreign exchange options contracts.
The group’s policy is to enter into forward exchange contracts at the time it enters into a firm purchase
commitment for lint cotton (through NCA) or a US dollar cotton seed sale commitment.
Net Exposure
1,449
1,595
1,449
1,595
Foreign exchange contracts that are subject to fair value movements through the statement of comprehensive
income as foreign exchange rates move.
Consolidated
AUD/USD +100 basis points
AUD/USD -50 basis points
Parent entity
AUD/USD +100 basis points
AUD/USD -50 basis points
Post Tax Profit
Higher/(Lower)
$'000
Equity
Higher/(Lower)
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(34)
17
(34)
17
(41)
21
(41)
21
-
-
-
-
-
-
-
-
Priced cotton seed sales contracts are treated as financial instruments under AASB 139.
Year Ended 28 February 2017
Notes to the Financial Statements
Page 71
Year Ended 28 February 2017
Notes to the Financial Statements
Page 72
2017 ANNUAL REPORT | 83
For personal use only Namoi Cotton Co-operative Limited
The following sensitivity analysis is based upon foreign currency exposures that existed at 28 February 2017 and
29 February 2016, whereby if the AUD had moved (relative to the USD), as illustrated in the table below, with
all other variables held constant, post tax profit and equity (excluding the effect of net profit) would have
changed as follows:
Namoi Cotton Co-operative Limited
Funding and liquidity risk
Consolidated
AUD/USD +100 basis points
AUD/USD -50 basis points
Parent entity
AUD/USD +100 basis points
AUD/USD -50 basis points
Post Tax Profit
Higher/(Lower)
$'000
Equity
Higher/(Lower)
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(34)
17
(34)
17
(41)
21
(41)
21
-
-
-
-
-
-
-
-
The sensitivity results in the table are considered immaterial to the group. It is the group’s risk management
policy to maintain foreign exchange contracts to a 95% to 105% band relative to exposures.
Management believe the reporting date risk exposures are representative of the risk exposure inherent in the
financial instruments.
Sensitivity analysis was performed by taking the USD foreign exchange rate as at balance date, moving this rate
by 100 basis points and then converting all USD denominated assets and liabilities. This calculation reflects the
translation methodology undertaken by the group. As a result of recent global market volatility, 100 basis points
has been utilised in the absence of reliable data predicting reasonably possible movements in foreign exchange
rates.
Credit risk
Namoi Cotton and later NCA exports the majority of lint cotton and some cotton seed to international
counterparties. These export sales are concluded under contract and the potential risk exists for a counterparty
to default on its contractual obligations and expose Namoi Cotton (seed) or NCA (lint cotton) to a financial loss.
Trade receivables outstanding from international counterparties are settled through high-ranking credit
instruments such as irrevocable letters of credit and cash against documents.
In respect of its cotton seed and grain commodity sales to major domestic counterparties, Namoi Cotton has
trade credit indemnity insurance policies for non-related parties.
The group is normally entitled to recover loans to growers and deferred costs through an offset to lint cotton,
seed proceeds and other credits to a growers account. Where a formal finance facility has been established, the
exposures are typically covered by crop mortgage and in some cases by real estate mortgages and/or guarantee.
In addition, trade debtor balances are monitored frequently, minimising Namoi Cotton’s exposure to bad debts.
Namoi Cotton’s maximum exposure to credit risk at balance date in relation to each class of recognised financial
asset is the carrying amount of these assets as indicated in the balance sheet less relevant trade credit insurance
recoverables.
The group utilises only recognised and creditworthy third parties in respect to derivative transactions. These
parties are regularly reviewed by the Board.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 84
Page 73
Year Ended 28 February 2017
Notes to the Financial Statements
The group’s objective in managing liquidity is to maintain a balance between continuity of funding, competitive
pricing and flexibility so as to ensure sufficient liquidity exists to meet all short, medium and long term financial
obligations. This is achieved through the utilisation of working capital facilities, term debt and bank overdrafts.
Year ended 28 February 2017
$'000
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
>5 Years
$'000
Total
$'000
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
2,256
5,264
14,566
22,086
-
24
99
123
(8,244)
(157)
(10,736)
(9,192)
(5,853)
(4,949)
(43,288)
(43)
Net Exposure
(6,086)
(10,836)
(43,288)
-
-
(28,172)
(10,959)
(43,288)
(447)
(490)
(490)
Year ended 29 February 2016
$'000
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
>5 Years
$'000
Total
$'000
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
Net Exposure
(4,359)
(121)
1,790
4,536
2,837
9,163
(58,896)
(3,650)
-
(66,905)
(57,742)
-
25
1,516
1,541
(373)
(1,813)
-
(2,307)
(766)
(2,408)
(2,408)
(2,408)
(447)
(447)
(447)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,256
5,288
14,665
22,209
(8,401)
(59,920)
(14,141)
(447)
(82,909)
(60,700)
1,790
4,561
4,353
10,704
(4,480)
(61,677)
(5,463)
(447)
(72,067)
(61,363)
Page 74
For personal use only Namoi Cotton Co-operative Limited
The following sensitivity analysis is based upon foreign currency exposures that existed at 28 February 2017 and
29 February 2016, whereby if the AUD had moved (relative to the USD), as illustrated in the table below, with
all other variables held constant, post tax profit and equity (excluding the effect of net profit) would have
changed as follows:
Consolidated
AUD/USD +100 basis points
AUD/USD -50 basis points
Parent entity
AUD/USD +100 basis points
AUD/USD -50 basis points
Post Tax Profit
Higher/(Lower)
$'000
Higher/(Lower)
Equity
$'000
28 Feb
2017
29 Feb
2016
28 Feb
2017
29 Feb
2016
(34)
17
(34)
17
(41)
21
(41)
21
-
-
-
-
-
-
-
-
The sensitivity results in the table are considered immaterial to the group. It is the group’s risk management
policy to maintain foreign exchange contracts to a 95% to 105% band relative to exposures.
Management believe the reporting date risk exposures are representative of the risk exposure inherent in the
financial instruments.
Sensitivity analysis was performed by taking the USD foreign exchange rate as at balance date, moving this rate
by 100 basis points and then converting all USD denominated assets and liabilities. This calculation reflects the
translation methodology undertaken by the group. As a result of recent global market volatility, 100 basis points
has been utilised in the absence of reliable data predicting reasonably possible movements in foreign exchange
rates.
Credit risk
Namoi Cotton and later NCA exports the majority of lint cotton and some cotton seed to international
counterparties. These export sales are concluded under contract and the potential risk exists for a counterparty
to default on its contractual obligations and expose Namoi Cotton (seed) or NCA (lint cotton) to a financial loss.
Trade receivables outstanding from international counterparties are settled through high-ranking credit
instruments such as irrevocable letters of credit and cash against documents.
In respect of its cotton seed and grain commodity sales to major domestic counterparties, Namoi Cotton has
trade credit indemnity insurance policies for non-related parties.
The group is normally entitled to recover loans to growers and deferred costs through an offset to lint cotton,
seed proceeds and other credits to a growers account. Where a formal finance facility has been established, the
exposures are typically covered by crop mortgage and in some cases by real estate mortgages and/or guarantee.
In addition, trade debtor balances are monitored frequently, minimising Namoi Cotton’s exposure to bad debts.
Namoi Cotton’s maximum exposure to credit risk at balance date in relation to each class of recognised financial
asset is the carrying amount of these assets as indicated in the balance sheet less relevant trade credit insurance
recoverables.
The group utilises only recognised and creditworthy third parties in respect to derivative transactions. These
parties are regularly reviewed by the Board.
Namoi Cotton Co-operative Limited
Funding and liquidity risk
The group’s objective in managing liquidity is to maintain a balance between continuity of funding, competitive
pricing and flexibility so as to ensure sufficient liquidity exists to meet all short, medium and long term financial
obligations. This is achieved through the utilisation of working capital facilities, term debt and bank overdrafts.
Year ended 28 February 2017
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
$'000
>5 Years
$'000
Total
$'000
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
2,256
5,264
14,566
22,086
-
24
99
123
(8,244)
(157)
(10,736)
(9,192)
-
(28,172)
(5,853)
(4,949)
-
(10,959)
-
-
-
-
-
(43,288)
-
-
(43,288)
Net Exposure
(6,086)
(10,836)
(43,288)
-
-
-
-
-
(43)
-
(447)
(490)
(490)
2,256
5,288
14,665
22,209
(8,401)
(59,920)
(14,141)
(447)
(82,909)
(60,700)
Year ended 29 February 2016
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
$'000
>5 Years
$'000
Total
$'000
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
Net Exposure
1,790
4,536
2,837
9,163
-
25
1,516
1,541
(4,359)
(121)
-
-
-
-
-
(58,896)
(3,650)
-
(66,905)
(57,742)
(373)
(1,813)
-
(2,307)
(766)
(2,408)
-
-
(2,408)
(2,408)
-
-
-
-
-
-
-
(447)
(447)
(447)
Year Ended 28 February 2017
Notes to the Financial Statements
Page 73
Year Ended 28 February 2017
Notes to the Financial Statements
1,790
4,561
4,353
10,704
(4,480)
(61,677)
(5,463)
(447)
(72,067)
(61,363)
Page 74
2017 ANNUAL REPORT | 85
For personal use only Namoi Cotton Co-operative Limited
Year ended 28 February 2017
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
$'000
>5 Years
$'000
Total
$'000
Namoi Cotton Co-operative Limited
Fair value hierarchy
Parent
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
2,135
10,516
14,566
27,217
-
24
99
123
(8,242)
(17,889)
(10,736)
(9,192)
-
(28,170)
(5,853)
(4,949)
-
(28,691)
-
-
-
-
-
(43,288)
-
-
(43,288)
Net Exposure
(953)
(28,568)
(43,288)
-
-
-
-
-
(2,092)
-
(447)
(2,539)
(2,539)
2,135
10,540
14,665
27,340
(26,131)
(61,969)
(14,141)
(447)
(102,688)
(75,348)
Year ended 29 February 2016
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
$'000
>5 Years
$'000
Total
$'000
Parent
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
1,785
9,966
4,352
16,103
-
25
-
25
(4,358)
(17,853)
(59,596)
(3,650)
-
(67,604)
(373)
(1,813)
-
(20,039)
Net Exposure
(51,501)
(20,014)
-
-
-
-
-
-
-
-
-
-
(1,708)
-
-
(1,708)
(1,708)
(2,049)
-
(447)
(2,496)
(2,496)
1,785
9,991
4,352
16,128
(22,211)
(63,726)
(5,463)
(447)
(91,847)
(75,719)
1 Derivatives reflect the actual cashflow and are net settled.
2 In addition to the maturity profile of interest bearing loans and borrowings, there are actual cashflows in
relation to interest for the 6-month period of $1.32 million (2016: $0.30 million), for the 6-12 month period of
$1.09 million (2016: nil) and for the 1-5 year period $3.77 million (2016: nil).
Namoi Cotton’s risk management policy in respect to funding and liquidity risk reflects actual and forecast
seasonal borrowing requirements not exceeding 95% of the group’s total approved banking facilities.
Namoi Cotton is unable at this time to provide guidance on individual components of liquidity for the financial
year ended 28 February 2017 due to the cash flow components being contingent on forward crop commodity
purchase and sale contracts.
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 86
Page 75
Year Ended 28 February 2017
Notes to the Financial Statements
The group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
The fair value is calculated using quoted prices in active markets. Quoted market price represents the fair value
determined based on quoted prices on active markets as at the reporting date without any deduction for
transaction costs.
The fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices). For financial instruments not
quoted in active markets, the group uses various valuation techniques that compare to other similar instruments
for which market observable prices exist and also other relevant models used by market participants. These
valuation techniques use both observable and unobservable market inputs.
Level 1
Level 2
Level 3
The fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Application of fair value hierarchy to Namoi’s financial statements
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and
interest bearing liabilities approximate their fair value.
The fair value of Cotton Seed Contracts (Purchase and Sale) and Cotton Seed Inventory (at fair value less cost to
sell) is determined with reference to an observable market, reports and adjustments for freight premiums and
discounts which are unobservable. During the period there has not been a change in unobservable inputs (i.e.
freight premiums, discounts and cost to sell), accordingly no gains or losses have been recognised as a result in
changes of unobservable inputs during the year. (2016: nil). The nature of the market used to determine the
Cotton Seed Price is assessed as being illiquid given the low volume of transactions, accordingly the contracts
are classified as level 3.
The fair value of unlisted debt securities are based on valuation techniques using market data that is not
observable. The grower shares are issued and can be redeemed for a fixed amount of $2.70 per share.
Disclosures of movements in member shares are reconciled in note 17 of the financial accounts.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised
in the table below:
Year ended 28 February 2017
Consolidated
Current assets
Foreign exchange contracts
Cotton seed purchase contracts
Current liabilities
Cotton seed sale contracts
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
-
-
-
-
-
444
444
-
-
-
-
14,221
14,221
(14,141)
(14,141)
Total
$'000
444
14,221
14,665
(14,141)
(14,141)
Page 76
For personal use only Namoi Cotton Co-operative Limited
Year ended 28 February 2017
$'000
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
>5 Years
$'000
Total
$'000
Parent
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
2,135
10,516
14,566
27,217
-
24
99
123
(8,242)
(17,889)
(10,736)
(9,192)
(5,853)
(4,949)
(43,288)
(2,092)
Net Exposure
(953)
(28,568)
(43,288)
-
-
(28,170)
(28,691)
(43,288)
(447)
(2,539)
(2,539)
(447)
(102,688)
(75,348)
Year ended 29 February 2016
$'000
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
>5 Years
$'000
Total
$'000
Parent
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
Financial Liabilities
Trade and other payables
Interest bearing loans
and borrowings2
Derivatives1
Co-operative grower member
shares
Net Exposure
1,785
9,966
4,352
16,103
25
-
-
25
(4,358)
(17,853)
(59,596)
(3,650)
(373)
(1,813)
-
-
(67,604)
(20,039)
(51,501)
(20,014)
(1,708)
(2,049)
(1,708)
(1,708)
(447)
(2,496)
(2,496)
-
-
-
-
-
-
-
-
-
-
-
-
2,135
10,540
14,665
27,340
(26,131)
(61,969)
(14,141)
1,785
9,991
4,352
16,128
(22,211)
(63,726)
(5,463)
(447)
(91,847)
(75,719)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Derivatives reflect the actual cashflow and are net settled.
2 In addition to the maturity profile of interest bearing loans and borrowings, there are actual cashflows in
relation to interest for the 6-month period of $1.32 million (2016: $0.30 million), for the 6-12 month period of
$1.09 million (2016: nil) and for the 1-5 year period $3.77 million (2016: nil).
Namoi Cotton’s risk management policy in respect to funding and liquidity risk reflects actual and forecast
seasonal borrowing requirements not exceeding 95% of the group’s total approved banking facilities.
Namoi Cotton is unable at this time to provide guidance on individual components of liquidity for the financial
year ended 28 February 2017 due to the cash flow components being contingent on forward crop commodity
purchase and sale contracts.
Year Ended 28 February 2017
Notes to the Financial Statements
Namoi Cotton Co-operative Limited
Fair value hierarchy
The group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1
The fair value is calculated using quoted prices in active markets. Quoted market price represents the fair value
determined based on quoted prices on active markets as at the reporting date without any deduction for
transaction costs.
Level 2
The fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices). For financial instruments not
quoted in active markets, the group uses various valuation techniques that compare to other similar instruments
for which market observable prices exist and also other relevant models used by market participants. These
valuation techniques use both observable and unobservable market inputs.
Level 3
The fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Application of fair value hierarchy to Namoi’s financial statements
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and
interest bearing liabilities approximate their fair value.
The fair value of Cotton Seed Contracts (Purchase and Sale) and Cotton Seed Inventory (at fair value less cost to
sell) is determined with reference to an observable market, reports and adjustments for freight premiums and
discounts which are unobservable. During the period there has not been a change in unobservable inputs (i.e.
freight premiums, discounts and cost to sell), accordingly no gains or losses have been recognised as a result in
changes of unobservable inputs during the year. (2016: nil). The nature of the market used to determine the
Cotton Seed Price is assessed as being illiquid given the low volume of transactions, accordingly the contracts
are classified as level 3.
The fair value of unlisted debt securities are based on valuation techniques using market data that is not
observable. The grower shares are issued and can be redeemed for a fixed amount of $2.70 per share.
Disclosures of movements in member shares are reconciled in note 17 of the financial accounts.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised
in the table below:
Year ended 28 February 2017
Consolidated
Current assets
Foreign exchange contracts
Cotton seed purchase contracts
Current liabilities
Cotton seed sale contracts
Page 75
Year Ended 28 February 2017
Notes to the Financial Statements
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
-
-
-
-
-
444
-
444
-
-
-
14,221
14,221
(14,141)
(14,141)
Total
$'000
444
14,221
14,665
(14,141)
(14,141)
Page 76
2017 ANNUAL REPORT | 87
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
27. Other Non-Financial Information
Namoi Cotton Co-operative Limited
ABN 76 010 485 588
AFSL 267863
Registered Office
Pilliga Road
Wee Waa NSW 2388
Principal place of business
Pilliga Road
Wee Waa NSW 2388
Phone:
Facsimile:
61 2 6790 3000
61 2 6790 3087
Computershare Investor Services Pty Ltd
Share Register
GPO Box 7045
Sydney NSW 1115
Investor Inquiries: 1300 855 080
Bankers
Commonwealth Bank of Australia
Auditors
Ernst & Young
Brisbane, Australia
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
Level 1
Quoted
market
prices
$'000
Level 1
Quoted
market
prices
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
-
22
(284)
-
(284)
-
4,330
4,330
-
(5,179)
(5,179)
22
4,330
4,352
(284)
(5,179)
(5,463)
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
444
-
444
-
-
-
14,221
14,221
444
14,221
14,665
(14,141)
(14,141)
(14,141)
(14,141)
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
22
-
22
(284)
-
(284)
-
4,330
4,330
-
(5,179)
(5,179)
22
4,330
4,352
(284)
(5,179)
(5,463)
Page 77
Year Ended 28 February 2017
Notes to the Financial Statements
Page 78
Year ended 29 February 2016
Consolidated
Current assets
Foreign exchange contracts
Lint cotton and cotton seed sale contracts
Current liabilities
Interest rate swap contracts
Cotton seed purchase contracts
Year ended 28 February 2017
Parent
Current assets
Foreign exchange contracts
Cotton seed purchase contracts
Current liabilities
Cotton seed sale contracts
Year ended 29 February 2016
Parent
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Current liabilities
Interest rate swap contracts
Cotton seed purchase contracts
Year Ended 28 February 2017
Notes to the Financial Statements
2017 ANNUAL REPORT | 88
For personal use only Namoi Cotton Co-operative Limited
Namoi Cotton Co-operative Limited
27. Other Non-Financial Information
Namoi Cotton Co-operative Limited
ABN 76 010 485 588
AFSL 267863
Registered Office
Pilliga Road
Wee Waa NSW 2388
Principal place of business
Pilliga Road
Wee Waa NSW 2388
Phone:
Facsimile:
61 2 6790 3000
61 2 6790 3087
Share Register
Computershare Investor Services Pty Ltd
GPO Box 7045
Sydney NSW 1115
Investor Inquiries: 1300 855 080
Bankers
Commonwealth Bank of Australia
Auditors
Ernst & Young
Brisbane, Australia
Year ended 29 February 2016
Consolidated
Current assets
Foreign exchange contracts
Lint cotton and cotton seed sale contracts
Current liabilities
Interest rate swap contracts
Cotton seed purchase contracts
Year ended 28 February 2017
Parent
Current assets
Foreign exchange contracts
Cotton seed purchase contracts
Current liabilities
Cotton seed sale contracts
Year ended 29 February 2016
Parent
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Current liabilities
Interest rate swap contracts
Cotton seed purchase contracts
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
22
-
22
(284)
-
(284)
4,330
4,330
-
-
(5,179)
(5,179)
22
4,330
4,352
(284)
(5,179)
(5,463)
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
444
444
-
-
-
-
14,221
14,221
444
14,221
14,665
(14,141)
(14,141)
(14,141)
(14,141)
Level 1
Quoted
market
prices
$'000
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
22
-
22
(284)
-
(284)
4,330
4,330
-
-
(5,179)
(5,179)
22
4,330
4,352
(284)
(5,179)
(5,463)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Year Ended 28 February 2017
Notes to the Financial Statements
Page 77
Year Ended 28 February 2017
Notes to the Financial Statements
Page 78
2017 ANNUAL REPORT | 89
For personal use only 2017
CORPORATE
GOVERNANCE
STATEMENT
The Board has established a number of sub Committees
to assist the Board in discharging its responsibilities. The
sub Committees review certain matters designated within
its Charter and make recommendations to the Board. The
Committees include:
•
•
•
Audit and Compliance Committee;
Marketing and Financial Risk Management
Committee (“MFRM Committee”); and
Nomination and Remuneration Committee.
The various Board Committees are governed by the relevant
adopted Charter which sets out the Committee’s purpose,
responsibilities, role, membership, meeting process, Board
reporting obligations and assessment of performance.
During the 2017 Financial Year the various Committees
composition and attendance is set out in the Directors
Report.
Namoi Cotton’s corporate governance practices are outlined
in this Corporate Governance Statement. In developing the
governance framework for Namoi Cotton the Board has
taken into account the Corporate Governance Principles and
Recommendations (“Best Practice Recommendations”)
published by the ASX Corporate Governance Council
(“ASX CGC”). Namoi Cotton believes that its corporate
governance practices comply in all substantial respects
with the Best Practice Recommendations released by the
ASX CGC. However, where Namoi Cotton has not followed
a recommendation, this has been identified along with
reasons why it has not been followed. Copies of all of the
Namoi Cotton Key Policies and Charters for Namoi Cotton
and the Board and its current Board Committees referred to
in the statement are available in the Corporate Governance
section of Namoi Cotton’s website at www.namoicotton.
com.au (collectively such policies known as the “Corporate
Governance Documents”).
The 2017 Corporate Governance Statement is dated 20
June 2017 and covers the corporate governance practices
and policies in place during the 2017 Financial Year. The
2017 Corporate Governance was approved by the Board on
20 June 2017.
2017 ANNUAL REPORT | 90
For personal use only PRINCIPLE 1: LAY SO LID FOUNDAT I ONS
FO R MANAGEMEN T AND OV ERSI GHT
Recommendation 1.1 – Recognise and
publish the respective roles of the Board and
Management
Fundamentally, the Board operates in accordance with the
principles set out in the National Co-operatives Law, Namoi
Cotton Rules and Board Charter. The Board of Directors for
Namoi Cotton are responsible to its stakeholders, which
includes Grower Members and Namoi Capital Stockholders.
The Board’s main responsibilities and reserved decision
making parameters are set out in the Board Charter. The
roles and responsibilities of the Board are defined in the
Board Charter, Audit and Compliance Committee Charter,
Marketing & Financial Risk Management Charter and the
Nomination and Remuneration Committee Charter.
The Board has delegated the day to day management,
operation and administration of Namoi Cotton to the Chief
Executive Officer, Mr Jeremy Callachor who sub-delegates
duties to various members of the Management team. The
Chief Executive Officer has the authority to sub-delegate
and is accountable to the Board. The Board is responsible
for reviewing the performance of the Chief Executive Officer.
Namoi Cotton has written agreements with all Directors
and Senior Executive setting out the key terms of such
appointment.
Recommendation 1.2 – Undertake appropriate
background checks on Directors and information
to be given for election of directors
The Board will undertake appropriate checks before
appointing a person or putting forward a person for
election as director. If Grower Members or Namoi Capital
Stockholders are making a decision whether to elect or
not to elect or re-elect the Board will provide the Grower
Members and/or the Namoi Capital Stockholders with all
the relevant information in its possession.
Recommendation 1.3 – A listed entity should
have a written agreement with each Director and
Senior Executive
Namoi Cotton has written agreements with all Directors
and Senior Executives setting out the key terms of such
appointment. These documents
in conjunction with
Corporate Governance Documents and the Namoi Cotton
delegation matrix outline the responsibilities and duties.
Recommendation 1.4 – The Company Secretary
accountable to the Board, through the Chair, on
matters with proper functioning of the Board
The Company Secretary has access to all Board members.
The role of the Company Secretary is outlined in the Board
Charter. The Company Secretary does assist and advises
the Board on governance and compliance from time to time.
Recommendation 1.5 – The listed entity should
have a diversity policy with set parameters
Namoi Cotton has a diversity and inclusive strategy.
Diversity within Namoi Cotton is created by an inclusive
working environment. Namoi Cotton has a publicly released
Diversity Policy on its website which promotes gender,
cultural and leadership diversity.
The intention is to achieve the objectives over time as
employment positions become available.
Namoi Cotton’s Workplace Gender Equality Act public
report for 2016 is available on its website.
Namoi Cotton at the time of this report has 26% of women
employed on a full time basis across all sites and locations.
Namoi Cotton does not currently have any women in senior
executive positions or on its Board. However Namoi Cotton
is committed to a diversity strategy aimed to promote
the appointment of qualified, experienced and diverse
Directors, Management and Employees in order to achieve
Namoi Cotton’s objectives on diversity. The Namoi Cotton
Diversity Policy also sets out measurable objectives.
In respect of the diversity strategy the Board and
Management will:
•
•
•
•
promote diversity in the Namoi Cotton workplace;
support equal opportunity in the recruitment,
selection and promotion of employees from different
backgrounds, knowledge, gender and experience.
The Namoi Cotton recruitment process is structured
to provide equality in recruitment and unbiased
selection and promotion decisions;
reward excellence on agreed goals to remove bias
and promote equality; and
identify and implement initiatives that encourage
development of careers and enhance skills.
The Namoi Cotton existing diversity policies include the
recruitment policy, paid parental leave, carer’s leave,
flexible work arrangements and mentoring programs.
The Board in consultation with the Nomination and
Remuneration Committee will set measurable objectives
for achieving diversity, in particular gender diversity.
2017 ANNUAL REPORT | 91
For personal use only PRINCI PLE 2:
STRUCTURE T HE
BOARD TO A DD VALUE
Recommendation 2.1 – The Board should have a
Nomination and Remuneration Committee
Namoi Cotton has established a Nomination and
Remuneration Committee to assist the Board in reviewing
Namoi Cotton’s succession planning, remuneration
policies and practices. The Board has adopted a Charter
for the Nomination and Remuneration Committee which
sets out the Committees responsibilities, structure, access
to resources and information, meeting processes and
performance evaluation. In addition the Board has adopted
a Remuneration Policy which is available on the Namoi
Cotton website.
The Nomination and Remuneration Committee conducts
an annual assessment of the performance of the Board,
Committees, the Directors, the Chief Executive Officer
and Senior Management. It is the Board’s responsibility
to ensure that Namoi Cotton has the appropriate
remuneration policies in place, which are designed to meet
the needs of Namoi Cotton and enhance corporate and
individual performance.
The primary function of the Nomination and Remuneration
Committee is to assist the Board in fulfilling its corporate
governance responsibilities that:
•
•
•
•
•
executive remuneration and incentive policies take
into account market practices and trends;
remuneration packages for the Chief Executive
Officer and Management are fair and reasonable;
incentive schemes align with the interest of Namoi
Cotton performance;
the remuneration framework for Directors is fair
and reasonable; and
ensure appropriate succession planning and
retention is taking place for Namoi Cotton.
Namoi Cotton may pay retirement benefits to directors
from time to time in accordance with Namoi Cotton Rules
and the Co-operatives Act.
It meets at least six monthly and comprises of four
independent directors and an independent chairperson.
The qualifications of members of the Committee are set
out in the Directors Report and Annual Report for 2016 and
attendance at meetings is included in the Directors Report.
Measurable diversity metrics may include:
•
•
•
•
representation of roles by age and gender for
Management and Board levels;
gender salary comparison in same role and same
level positions;
gender representation in talent and succession
planning; and
setting diversity targets.
Measurable diversity metrics may include:
•
•
•
•
representation of roles by age and gender for
Management and Board levels;
gender salary comparison in same role and same
level positions;
gender representation in talent and succession
planning; and
setting diversity targets.
Namoi Cotton at present have the following Diversity
Measurable Objectives:
1.
2.
3.
4.
Ensure employees are selected from a diverse pool.
Candidates to be interviewed with equality and
unbiased – Completed - Ongoing
Provide flexible work practices where possible and
as required – Completed - Ongoing
Increase improve women in Management and Board
positions – one senior executive by February 2019,
as Namoi Cotton is a small group and comprises of
long term employees this objective will be assessed
against position criteria and applicant qualifications
Have current second line female Management
employees participate in a formal mentoring
program – February 2019
Recommendation 1.6 – Board Performance and
Evaluation
The Board conducts annual evaluations of its performance
and the performance of its Committees. The process of
performance review enables the Board to identify areas for
improvement. The Board performance evaluation, amongst
other things, is based on Namoi Cotton’s performance
against long term objectives, the business plan and
budgeted performance. An internal performance evaluation
for the Board and its Committees has taken place in the
reporting period in accordance with the process disclosed.
Recommendation 1.7 – Management
Performance and Evaluation
Namoi Cotton’s Corporate Governance Documents details
the procedures for performance review and evaluation.
Senior Management are evaluated against
individual
performance and business measures on an ongoing basis.
2017 ANNUAL REPORT | 92
For personal use only Recommendation 2.2, 2.3, 2.4, 2.5 and 2.6
- Board skills matrix, Board Independence,
Majority of Board being Independent, the
Chairperson being Independent and Inducting
New Directors and provide professional
development opportunities
Composition of the Board
The Board is to be comprised of individuals with an
appropriate mix of skills, knowledge, qualifications and
experience. The Namoi Cotton Rules provide that the
Board may comprise a maximum of seven (7) Directors and
a minimum of five (5) Directors. The Namoi Cotton Rules
provide that the Board may include two but not more than
three Non Grower Directors, with the balance to be made
up of Grower Directors, with the overriding requirement
that at all times the majority of Directors must be Grower
Directors. The composition of the Board is reviewed
annually by the Board, to ensure it meets the requirements
of the Namoi Cotton Rules and the National Co-operatives
Law. The qualifications and experience of each Director is
set out in the Directors Report. With the Board composition
requirements of the Namoi Cotton Rules, Namoi Cotton
aims to achieve a mix of industry, finance, governance,
trading, risk management, compliance, IT and strategy
experience.
Independence
The Board supports the principle that a majority of the
Board should be independent. When determining the
independent status of a Director, the Board considers
whether the Director:
•
•
•
•
•
is a substantial shareholder of Namoi Cotton or an
officer of, or otherwise associated directly with, a
substantial shareholder of Namoi Cotton;
is employed, or has previously been employed in
an executive capacity by Namoi Cotton or another
member of the Namoi Cotton group, and there has
not been a period of at least three years between
ceasing such employment and serving on the Board;
has within the last three years been a principal
of a material professional adviser or a material
consultant to Namoi Cotton or another member of
the Namoi Cotton group, or an employee materially
associated with the service provided;
is a material supplier or customer of Namoi Cotton
or another member of the Namoi Cotton group,
or an officer of or otherwise associated directly or
indirectly with a material supplier or customer; and
has a material contractual relationship with Namoi
Cotton or another member of the Namoi Cotton
group other than as a director.
independent Directors but also recognises that Board
members must add value in context of Namoi Cotton’s
business. The Board recognises the need for the Board to
comprise Directors that have a strong understanding of the
Namoi Cotton business, cotton industry and co-operative
principles, however with the ability to bring independent
views and judgement to Board decision making and
deliberations.
As a co-operative the Board must have Grower Directors
who are required to have business relationships with
Namoi Cotton for the ginning and marketing of cotton and
related commodities. Additionally the Grower directors
do have skills, knowledge, qualifications and experience
necessary to the proper functioning of the Board.
Each of Mr Boydell, Mr Coulton, Mr Watson and Mr Price,
as Grower Directors, are cotton producers and sell cotton
to Namoi Cotton and use Namoi Cotton’s ginning services.
The Board regularly assesses whether or not the nature and
extent of those transactions would cause these Directors
not to be independent. The Board is satisfied each of these
Directors are independent as the nature and magnitude of
their dealings with Namoi Cotton do not cause the Board
to consider that the relationship could materially interfere
with the independent exercise of their judgment.
Mr Green is Chief Executive Officer of Louis Dreyfus
Company Australia Pty Limited, a related entity of Namoi
Cotton’s joint venture partner in Namoi Cotton Alliance
and which also holds 13% of Namoi Capital Stock. The
Board considers that Mr Green’s experience with the Louis
Dreyfus Group and business expertise in a range of soft
commodity products will be invaluable to Namoi Cotton
in advancing its business activities. Having considered Mr
Green’s relationship with the Louis Dreyfus Group and the
principle of independence referred to above, the Board
does not consider Mr Green to be an independent Director
having regard to the significance of Namoi Cotton’s
relationship with the Louis Dreyfus Group. However the
Board is confident that Mr Green will be able to exercise
an independent judgment on all Board decisions. The
appointment of Mr Robert Green as a Director of Namoi
Cotton is an integral part of the overall arrangements
between Louis Dreyfus and Namoi Cotton which the Board
believes will continue to be of significant benefit to Namoi
Cotton. Since the appointment of Mr Robert Green as a
Director of Namoi Cotton the Board considers that Mr
Robert Green has shown independent judgment on all
Board decisions.
Chairperson
The Board Charter provides that the Chairperson is to
be appointed by the Board and must be a Non-Executive
Grower Director. Mr Stuart Boydell is the Chairman, he is
a Non-Executive Grower Director and has been determined
by the Board as independent.
The Board, when assessing materiality, takes a qualitative
approach rather than setting quantitative thresholds. In
accordance with the Namoi Cotton policies a relationship
will be assessed as “material” in context of the nature,
circumstance and activities of Namoi Cotton and in context
of the Director’s activities or its affiliates’ activities.
The Board recognises the need to have a majority of
Director Induction
Namoi Cotton has a program and process to induct new
Directors. New Directors and existing Directors are offered
to undertake professional development opportunities and
training internally and externally. Each Director may take
independent legal advice at the expense of Namoi Cotton
in accordance with the Corporate Governance Documents.
2017 ANNUAL REPORT | 93
For personal use only PRINCIPLE 3: PRO MOTE E THICA L A ND RE S PONSI B LE
DEC ISI ON MAKIN G
Recommendation 3.1 – Listed entity should have
a code of conduct and securities trading policy
Code of Conduct
The Board has established a Code of Conduct, which guides
and applies to the Directors, the Chief Executive Officer,
Management, employees and third parties dealing with
Namoi Cotton. The Code of Conduct is to guide the practices
necessary to maintain confidence in Namoi Cotton’s
integrity and ethical practice. The Board is committed to
ensuring that all business affairs of Namoi Cotton must be
conducted legally, ethically, honestly and with integrity. The
Code of Conduct is available on the Namoi Cotton website.
The Code of Conduct addresses Namoi Cotton’s position
on ethical conduct requirements, compliance with laws,
privacy, safety, conflicts of interest, gifts and gratuities. The
Board of Namoi Cotton has adopted the Code of Conduct
which sets out the conduct and behaviour expected for
employees, consultants, contractors and business partners
of Namoi Cotton.
Share Trading Policy
The Board has adopted a Namoi Capital Stock Trading
Policy, which regulates dealing in Namoi Cotton Securities
by Key Management Personnel (including Directors) and
employees. Directors, Management and employees must
comply with the Namoi Capital Stock Trading Policy. Key
Management Personnel, employees and other persons
must not deal in Namoi Cotton Securities if they are in
possession of unpublished information that, if generally
available, might affect the price of Namoi Cotton
Securities. Under the Namoi Capital Stock Trading Policy
Key Management Personnel and employees must not
buy, sell or subscribe for Namoi Capital Stock except
during permitted periods. Key Management Personnel
and employees may only trade in Namoi Capital Stock in
accordance with the Namoi Capital Stock Trading Policy.
The Namoi Capital Stock Trading Policy is available on the
Namoi Cotton website.
The Namoi Capital Stock Trading Policy provides:
The Directors, Key Management Personnel, Employees
and Related Parties may only deal in Namoi Capital Stock
during the following periods:
•
•
•
•
30 Business Days commencing 48 hours after the
date the full year financial results for Namoi Cotton
are received and announced to the general market
by the ASX;
30 Business Days commencing 48 hours after the
date the half year financial results are received and
announced to the general market by the ASX;
30 Business Days commencing 48 hours after the
close of the Annual General Meeting of Namoi
Cotton; and
at any other time for a specified period determined
by the Board of Namoi Cotton.
Prior to any Director or Key Management Personnel dealing
in Namoi Capital Stock or options or other securities for
Namoi Cotton, they must advise the relevant Notification
Officer (Company Secretary or as otherwise listed).
The Director or Key Management Personnel proposing to
deal in Namoi Capital Stock (or enter into an agreement
to do so) must first complete and forward to the Company
Secretary the notification form to deal. If a Director or
Key Management Personnel deal in Namoi Capital Stock,
then the individual must notify the Company Secretary the
details for the deal which includes:
•
•
the number of Namoi Capital Stock for the trade;
and
the unit price paid or received for the Namoi Capital
Stock.
A breach of the Namoi Capital Stock Trading Policy will be
regarded by Namoi Cotton as serious misconduct which
may lead to disciplinary action and/or dismissal.
Whistleblower Policy
Namoi Cotton has adopted a Whistleblowing Policy, under
its Whistleblowing Policy Namoi Cotton encourages all
Employees to report to the Whistleblower Protection Officer,
misconduct and unethical behaviour in relation to Namoi
Cotton. Such reports can be made by anonymous reporting
to ally fear of retribution. The Namoi Cotton Whistleblower
Policy is available on the Namoi Cotton website.
2017 ANNUAL REPORT | 94
For personal use only PRINCIPLE 4: SAF EGUARD INT E GRIT Y
IN F INAN CIAL RE PORTING
Recommendation 4.1, 4.2 and 4.3 – Listed entity
should have an Audit Committee, CEO and CFO
declarations and Auditors available at the AGM
to answer questions
Audit and Compliance Committee
The Board has established an Audit and Compliance
Committee which is governed by the Audit and Compliance
Committee Charter. The Charter for the Audit and
Compliance Committee sets out its authority, objectives,
structure,
responsibilities, membership, meeting
protocols, access to company personnel and information,
reporting requirements and performance evaluation.
The Committee’s Charter provides that the Committee
be structured to have at least three (3) members and
that at least one (1) member has financial expertise.
The Committee Chairperson, Mr Richard Anderson and
Committee members Mr Michael Boyce and Mr Robert
Green have previously held senior executive accounting
roles. Details of member qualifications can be found in the
Directors Report and Annual Report.
The Audit and Compliance Committee is to assist the Board
on:
•
•
•
•
•
the systems of control which Management have
established effectively safeguard the assets of
Namoi Cotton;
the accounting records are properly maintained in
accordance with statutory requirements;
financial information provided to the Board,
shareholders, potential investors and to the public
is relevant and reliable and to review, assess and
approve the annual report and make the appropriate
recommendations to the Board ;
the full-year and half-year audits are conducted
appropriately;
the accounting policies and practices adopted by
Namoi Cotton are appropriate, up-to-date and
relevant;
•
•
•
•
•
make appropriate recommendations to the Board
as to whether the financial statements should be
approved;
review and discuss with the External Auditors
any relationship that may impact on the auditors
objectivity and independence;
review and approve the level of non-audit services
provided by the External Auditor and ensure it
does not impact the independence of the External
Auditor;
review and monitor related party transactions; and
review the External Auditors performance.
The Audit and Compliance Committee receives updates
from the Chief Executive Officer, Chief Financial Officer,
Management and the External Auditor. The Committee
meets with the External Auditor at least three times a year.
Ernst and Young was appointed as the External Auditor for
Namoi Cotton for the Financial Year ending 28th February
2017.
In accordance with the Corporations Act 2001, the lead
audit partner and the review partner of the external auditor
will be rotated every five years. The external auditor as
previously is invited to the Namoi Cotton Annual General
Meeting to be available to answer questions from Namoi
Stockholders and Grower Members.
Prior to approving Namoi Cotton’s financial statements
for FY2017 (28 February 2017) the Board received from the
CEO and CFO a declaration in their opinion, the financial
records of the entity have been properly maintained and
the financial statements comply with the appropriate
accounting standards and give a true and fair view of the
financial position and performance of Namoi Cotton, and
the that the opinion has been formed on the basis of a
sound system of risk management and control which is
operating effectively.
The Auditors independence declaration forms part of the
Director’s Report.
2017 ANNUAL REPORT | 95
For personal use only PRINCIPLE 5: MAK E TIMELY
AN D BALANCED D ISCLOSURE
Recommendation 5.1 – Make timely exposure
and set policies to meet ASX Listing Rule
Disclosure
The Board respects the rights of its Grower Members
and Namoi Capital Stockholders to receive effective
communications, having access to balanced and up to date
information about Namoi Cotton. The Company Secretary
has been nominated as the person responsible for
communication with the ASX. The Board, with a Disclosure
Committee, authorises all disclosures necessary to ensure
compliance with the ASX Listing Rules. Namoi Cotton has
a Disclosure and Communications Policy which is available
on the Namoi Cotton website. The Board is committed to
complying with its continuous disclosure obligations under
the ASX Listing Rules and the Corporations Act. Namoi
Cotton’s Disclosure and Communications Policy has been
adopted to ensure:
•
the timely release of accurate information to all
Grower Members, Namoi Capital Stockholders
and market participants regarding Namoi Cotton
including its financial performance, strategy and
material activities; and
•
the Grower Members and Namoi Capital
Stockholders have equal access to the information
issued by Namoi Cotton and it is disseminated fairly,
is cost efficient to access and is delivered in a timely
manner.
Namoi Cotton’s website contains copies of ASX releases
covering such publications as market updates, annual and
half yearly financial statements and material business
updates. Significant ASX announcements are to be
approved by the Board.
The Namoi Cotton Disclosure and Communications Policy
is to establish guidelines to facilitate compliance with the
ASX Listing Rules by:
•
•
•
•
identifying the requirements and types of
information subject to disclosure under the ASX
Listing Rules;
providing quantitative and qualitative materiality
guidance on whether information should be
considered material;
guidance on whether information is subject to the
ASX Listing Rules Confidentiality Exception; and
establishing procedures and processes for
evaluating whether information is market sensitive
which may require disclosure.
PRINCIPLE 6: RE SP ECT THE RI GHT S OF GROWE R
MEMBERS AND N AMO I CAPITA L STOC KH OL DE RS
The Board is committed to enabling Grower Members and
Namoi Capital Stockholders to effectively participate in
general meetings by:
•
•
Namoi Cotton adopting in all substantial
respects ASX Corporate Governance Principles
and Guidelines for improving stakeholder
communication and participation; and
attendance of its external auditors at the Annual
General Meeting to answer questions about the
Namoi Cotton audit and contents of the Auditor’s
Report.
Notice of Meetings are provided to Grower Members
and Namoi Capital Stockholders and posted on the
Namoi Cotton website, both classes of stakeholders are
encouraged to attend the Annual General Meeting.
Recommendation 6.1, 6.2, 6.3 and 6.4 – Respect
rights of security holders
The Board and Management are committed to Grower
Members and Namoi Capital Stockholders are informed
and kept up to date with Namoi Cotton’s activities. All
information disclosed to the ASX is posted to Namoi
Cotton’s website www.namoicotton.com.au after
is
disclosed to the ASX. A copy of Namoi Cotton’s Annual
Report is issued to Grower Members and Namoi Capital
Stockholders who have requested one. The financial and
annual reports for the past five years for Namoi Cotton are
archived and available on the Namoi Cotton website.
it
Namoi Cotton has established a Disclosure and
Communication Policy which is available on the Namoi
Cotton website. The Disclosure and Communication
Policy requires communication with Grower Members and
Namoi Capital Stockholders in an open, balanced, timely
manner in order for market participants to make informed
decisions on Namoi Cotton. The Board is committed to
improving Grower Member and Namoi Capital Stockholder
communication practices with technological developments
and regulatory changes.
2017 ANNUAL REPORT | 96
For personal use only PRINCIPLE 7:
RECOG NISE AND
MANAGE RISK
Recommendation 7.1. 7.2 and 7.3 – Risk
Management Committee, Review of Risk
Management Framework and Internal Audit
Function
The Board has established a Marketing and Financial Risk
Management Committee (MFRM Committee). The MFRM
Committee has adopted a Charter which sets out its role,
responsibilities, access to management and information
protocols, meeting processes and performance evaluation.
The general function of the Committee is to review the risk
management policies and framework for Namoi Cotton
and make recommendations to the Board.
At Namoi Cotton risk management is a continuous and
ongoing process. The Chief Executive Officer and Chief
Financial Officer provide written statements on the
financial accounts to the Board that:
•
•
the integrity of Namoi Cotton’s financial statements
are prepared on the basis that there are appropriate
internal controls and that there is sufficient
compliance with their controls to ensure no material
misstatement of Namoi Cotton’s affairs and financial
position; and
Namoi Cotton’s risk management and control
systems are operating effectively in all material
aspects.
Namoi Cotton’s management has reported to the Board as
to the effectiveness of Namoi Cotton’s management of its
material business risks.
The CEO and CFO have given the Board their declaration in
accordance with section 295A of the Corporations Act 2001.
The CEO and CFO have confirmed that the declarations
are founded on a sound system of risk management and
internal control and also that the system is operating
effectively in all material respects in relation to financial
risks.
Namoi Cotton has established policies for the management
and governance of material business risks for Namoi
Cotton. The risk management framework for Namoi Cotton
covers:
•
•
•
financial risk – risks associated with financial
outcomes. These risks include market risk, credit
risk, liquidity risk;
operational risk – risks associated with
normal operations. These risks include project
management, systems, fraud and day to day running
risks; and
regulatory and compliance risk – failure to comply
with legislative requirements corporate and
operational.
the
Namoi Cotton recognises
the
environment and occupational health and safety issues
and is committed to advancements of safety systems,
protective equipment and capital expenditure to mitigate
environmental, occupational health and safety risks.
importance of
Broadly the MFRM Committee is responsible for:
•
•
•
•
reviewing and monitoring the policies and limits in
the risk management policy;
reviewing and monitoring the procedures adopted
for treasury functions;
reviewing and monitoring hedging strategies
adopted by Namoi Cotton;
receiving external reports relating to risk
management activities.
2017 ANNUAL REPORT | 97
For personal use only The Namoi Cotton Alliance joint venture (in which Namoi
Cotton is a substantial 51% shareholder), has the potential
exposure to a number of market and financial risks
associated primarily with its cotton lint marketing business,
which may include movements in commodity and currency
markets. The MFRM Committee and the Namoi Cotton
Board regularly receives reporting on the risk positions
held by Namoi Cotton Alliance. The MFRM Committee
will review and monitor these risk positions and provide
guidance on these matters to the Namoi Cotton Board.
The Namoi Cotton Alliance business comprises a Joint
Venture Committee and Risk Management Committee
to monitor that, Namoi Cotton Alliance Management is
complying with the comprehensive Namoi Cotton Alliance
Risk Management Policy. The risks governed by the Namoi
Cotton Alliance Risk Management Policy includes cotton
price risk, cotton basis risk, cotton futures spread risk,
foreign exchange risk, interest rate risk, credit risk, cotton
grade risk and funding and liquidity risks. The Namoi
Cotton Alliance Risk Management Committee and Namoi
Cotton Alliance Joint Venture Committee, along with Namoi
Cotton Co-operative Ltd (indirectly) monitor compliance
with the Namoi Cotton Alliance Risk Management Policy
from time to time to ensure risks are managed within the
appropriate risk parameters.
The MFRM Committee, Management and the Board reviews
Namoi Cotton’s risk management framework annually to
satisfy itself the framework continues to be sound.
Namoi Cotton does not have an internal audit function.
The Board considers that due to the size of Namoi Cotton
such function would not be cost effective. However certain
employee task segregation for example back office and
front office treasury and payment functions. The Board may
engage an independent third party to undertake an internal
audit if necessary at any time.
Recommendation 7.4 – Should disclose
whether it has material exposure to economic,
environmental and social sustainability risks and
if so how such risks are intended to be managed
Namoi Cotton is committed to identifying and managing
economic, environment, and social sustainability risks
which may create material exposure for Namoi Cotton in
the short, medium and long term.
Economic Sustainability risks for Namoi Cotton are
financial management, maintaining market share, retaining
existing ginning clients and obtaining new ginning clients,
managing and trading the cotton seed business prudently.
In addition a major economic risk is the performance and
distribution pursuant to the Namoi Cotton Alliance Joint
Venture. Namoi Cotton Alliance key economic risks are
supply and demand risks which can be impacted by cotton
futures and foreign exchange trading conditions, overseas
demand and regulatory conditions.
Namoi Cotton and Namoi Cotton Alliance have risk
management policies (“RMP’s”) which considers and
provides limits for economic risk exposures. The Board
exercise economic risk management by fiscal control on
capital projects and approval of budgets.
Namoi Cotton manages risks in relation to environmental
sustainability include spills at gin sites, air and noise
pollution or EPA license breaches. Namoi Cotton during
2014 and 2015 conducted independent environmental risk
assessments for each ginning site.
Internally Namoi Cotton on an annual basis conducts
environmental audits. Namoi Cotton does not believe it has
any material exposure to such environmental risks.
Namoi Cotton is primarily based in regional locations,
the sustainability of these communities is important to
Namoi Cotton. When possible Namoi Cotton supports local
communities and organisations. Namoi Cotton has various
charity events in which it supports local regional schools,
clubs, hospitals and emergency services.
2017 ANNUAL REPORT | 98
For personal use only PRINCIPLE 8:
REMU NE RATE FAIRLY
AN D RESPO NSIBLY
Namoi Cotton is committed to ensuring that remuneration
packages for Directors and Management are fair and
reasonable. Namoi Cotton has established a Nomination
and Remuneration Committee to assist the Board in
reviewing Namoi Cotton remuneration policies and
practices. The Board has adopted a Charter for the
Nomination and Remuneration Committee which sets
out the Committees responsibilities, structure, access
to resources and information, meeting processes and
performance evaluation. In addition the Board has adopted
a Remuneration Policy which is available on the Namoi
Cotton website.
The Nomination and Remuneration Committee conducts
an annual assessment of the performance of the Board,
Committees, the Directors, the Chief Executive Officer
and Senior Management. It is the Board’s responsibility
to ensure that Namoi Cotton has the appropriate
remuneration policies in place, which are designed to meet
the needs of Namoi Cotton and enhance corporate and
individual performance.
The primary function of the Nomination and Remuneration
Committee is to assist the Board in fulfilling its corporate
governance responsibilities that:
•
executive remuneration and incentive policies take
into account market practices and trends;
•
•
•
•
remuneration packages for the Chief Executive
Officer and Management are fair and reasonable;
incentive schemes align with the interest of Namoi
Cotton performance;
the remuneration framework for Directors is fair
and reasonable; and
ensure appropriate succession planning and
retention is taking place for Namoi Cotton.
Namoi Cotton may pay retirement benefits to directors
from time to time in accordance with Namoi Cotton Rules
and the Co-operatives Act.
The Directors Remuneration is subject to annual approval
by Namoi Capital Stockholders for Non-Grower Directors
and then by the Grower Members and Grower Directors
Remuneration is subject to annual approval by Grower
Members.
Senior Executive remuneration for any increase is reviewed
on an annual basis. To assist in Director or Senior Executive
remuneration reviews the Board may seek bench marking
from external advisers.
2017 ANNUAL REPORT | 99
For personal use only ASX ADD ITION AL IN FO RMATION FOR T HE YE A R E ND ED
28 F EBRUARY 2017
Additional information required by the Australian Stock Exchange. This information is current as at 2 June 2017.
DIS TRIBUTIO N OF N AM OI CAPITA L S TOCKHOLDE RS
1 -1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of holders
140
515
264
480
133
1,532
Number of Namoi Capital Stock
66,860
1,544,695
2,132,402
16,298,572
89,800,750
109,843,279
%
0.06
1.41
1.94
14.84
81.75
100.00
TOP 20 NAMO I CAP ITAL STOCKHOLDE RS
Rank
Name
Number of
Namoi Capital Stock
% held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
LOUIS DREYFUS COMMODITIES ASIA PTE LTD
AUSTRALIAN RURAL CAPITAL LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
JVH COTTON PTY LIMITED
BRAZIL FARMING PTY LTD
MR ROSS ALEXANDER MACPHERSON
J P MORGAN NOMINEES AUSTRALIA LIMITED
MRS FRANCES CLAIRE FOX ‹THOMAS J BERESFORD WILL
A/C›
MR ALBERT JOHN PANIZZA + MS KIM DIANNA BROADFOOT
‹ALKIRA SUPER FUND A/C›
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BELFORT INVESTMENT ADVISORS LIMITED
GRANTULLY INVESTMENTS PTY LIMITED
BRUCE CLYDE BAILEY + JANET BEATRICE SHAFIK BAILEY
DUDDY MANAGEMENT PTY LTD
MR MARK JOSEPH PANIZZA + MRS SUSAN KATHLEEN
PANIZZA ‹SUMA SUPER FUND A/C›
AVENUE 8 PTY LIMITED ‹GAN SUPER FUND A/C›
MR PETER SINCLAIR GURNER ‹GIT A/C›
BOYCE FAMILY SUPERANNUATION FUND PTY LIMITED
‹BOYCE FAMILY S/F A/C›
GIBBS FAMILY SUPER PTY LTD ‹MICHAEL GIBBS FAMILY S/F
A/C›
14,327,384
11,857,249
8,915,981
5,827,664
4,110,353
2,279,803
1,250,000
1,057,828
1,009,386
903,344
880,395
840,929
839,000
820,122
809,720
802,734
800,000
790,041
775,272
740,291
13.04
10.79
8.12
5.31
3.74
2.08
1.14
0.96
0.92
0.82
0.80
0.77
0.76
0.75
0.74
0.73
0.73
0.72
0.71
0.67
Total
59,637,469
54.29
2017 ANNUAL REPORT | 100
For personal use only RESTRICTED SECURITIES
Namoi Cotton Employee Incentive Plan
The Board of Namoi Cotton suspended the Namoi Cotton Employee Incentive Plan indefinitely from 28 August 2004. Namoi
Capital Stock previously issued under the Plan is subject to a three year restriction period from the date of allotment
(or until the interest free loan provided under the Plan to acquire the Namoi Capital Stock has been repaid in full.) The
following Namoi Capital Stock was allotted pursuant to offers made under Employee Incentive Plan and quoted on the ASX.
No. of Namoi Capital
Stock allotted and
issued
Issue Price - $
Allotment Date
141,000
151,000
140,000
99,500
104,000
69,000
55,000
50,000
34,000
57,000
TOTAL 900,500
0.8000
0.7500
0.6700
0.5024
0.3700
0.2213
0.2480
0.2150
0.2906
0.3895
31 March 1998
31 December 1998
31 January 2000
6 December 2000
19 June 2001
End of restriction
date*
31 March 2001
31 January 2001
31 January 2003
6 December 2003
19 June 2004
13 December 2001
13 December 2004
12 June 2002
4 December 2002
29 May 2003
18 June 2004
12 June 2005
4 December 2005
29 May 2006
18 June 2007
*The Namoi Capital Stock remains restricted after this time if the interest free loan has not been repaid in full.
THE AN NUAL G EN ERAL MEETING
Namoi Cotton’s Annual General Meeting will be held at the Wee Waa Bowling Club, 69 Alma Street, Wee Waa, NSW
on Friday, 28 July 2017 at 10am.
NAMO I CAP ITAL STOCKH OLDE RS ME E T ING
A meeting of Namoi Capital Stockholders will be held at the Wee Waa Bowling Club, 69 Alma Street, Wee Waa,
NSW on Friday, 28 July 2017 at 10am in conjunction with the Annual General Meeting.
DIS TRIBUTIO N
No final distribution will be paid to Namoi Capital Stockholders for the year ended 28 February 2017.
2017 ANNUAL REPORT | 101
For personal use only OTHER SHAREHO LDER INFORM AT ION
Distribution - lodge your tax file number (TFN), Australian Business Number (ABN) or exemption
You are strongly recommended to lodge your TFN, ABN or exemption with our Share Registry. If you choose not to provide
these details to the Share Registry, then we are required to deduct tax at the highest marginal tax rate (plus the Medicare
levy) from any distribution payment. To lodge your details, you should contact our Share Registry or download a form from
the Computershare website at www.computershare.com.au (under investors/investorservices/downloadableforms).
Change of Address
Changes of address of shareholders or other key details should be notified to the Share Registry in writing without delay.
Change of address and other forms can be downloaded from the Computershare website at www.computershare.com.au
(under investors/investorservices/downloadableforms). Shareholdings, which are broker sponsored on the CHESS sub-
register, should contact their broker without delay.
Distribution Payments
Dividend and distribution payments can be credited directly into any nominated bank, building society or credit union account
in Australia. To request this service, you should contact our Share Registry or download a form from the Computershare
website at www.computershare.com.au (under investors/investorservices/downloadableforms).
MA JOR ASX ANN OUN CEMENTS FOR 2 01 6 - 20 1 7
Date
ASX Releases
30/05/2017
Change of Directors Interest – Appendix 3Y – Tim Watson
30/05/2017
2017 AGM Notice of Meeting
30/05/2017
Namoi Cotton Full Year 2016/17 Financial Results
30/05/2017
Full Year Accounts Financial Year 2017
21/10/2016
Stakeholder Briefing – Corporate Structure 2016
24/06/2016
Grower Member Proxy Form
24/06/2016
Namoi Stockholders Proxy Form
24/06/2016
Annual Report 2016
21/06/2016
App 4G Corporate Govenance
20/06/2016
2016 AGM Notice of Meeting
27/04/2016
Namoi Cotton Full Year 2015/16 Financial Results
29/02/2016
Full Year Accounts Financial Year 2016
2017 ANNUAL REPORT | 102
For personal use only DIRE CTORY
OFFICES
Wee Waa (Head Office)
Pilliga Road
Wee Waa NSW 2388
Telephone: 02 6790 3000
Fax: 02 6790 3087
Goondiwindi
139 Marshall St
Goondiwindi QLD 4390
Telephone: 07 4671 6900
Fax: 07 4671 6999
Moree
49 Greenbah Rd
Moree NSW 2400
Telephone: 02 6752 5599
Fax: 02 6752 5357
Trangie
Trangie Gin
Old Warren Road
Trangie NSW 2823
Telephone: 02 6888 9611
Fax: 02 6888 9678
Toowoomba
(Corporate Office)
1B Kitchener St
Toowoomba QLD 4350
Telephone: 07 4631 6100
Fax: 07 4631 6184
GINS
Ashley Cotton Gin
Mungindi Road
Ashley NSW 2400
Telephone: 02 6754 2150
Boggabri Cotton Gin
Blairmore Road
Boggabri NSW 2382
Telephone: 02 6743 4084
Hillston Cotton Gin
Roto Road
Hillston NSW 2675
Telephone: 02 6967 2951
Macintyre Cotton Gin
Kildonan Road
Goondiwindi QLD 4390
Telephone: 07 4671 2277
Merah North Cotton Gin
Middle Route
Merah North NSW 2385
Telephone: 02 6795 5124
Mungindi Cotton Gin
Boomi Road
Mungindi NSW 2406
Telephone: 02 6753 2145
North Bourke Cotton Gin
Wanaaring Road
North Bourke NSW 2840
Telephone: 02 6872 1453
Trangie Cotton Gin
Old Warren Road
Trangie NSW 2823
Telephone: 02 6888 9729
Yarraman Cotton Gin
Burren Road
Wee Waa NSW 2388
Telephone: 02 6795 5196
NAMOI COTTON
ALLIANCE
JOINT VENTURE
Macintyre Warehouse
Kildonan Road
Goondiwindi QLD 4390
Telephone: 07 4671 1449
Warren Warehouse
Red Hill, Warren NSW 2824
Telephone: 02 6847 3746
Wee Waa Warehouse
Pilliga Road
Wee Waa NSW 2388
Telephone: 02 6790 3139
Jakarta, Indonesia
Jakarta Representative Office
Gedung Manggala Wanabakti
Blok IV, Lantai 5, Ruang no. 511 B
Jln. Gatot Subroto, Senayan
Jakarta 10270
Indonesia
Telephone: 62 21 5790 2977
Fax: 62 21 5790 2945
JOINT VENTURE GINS
Moomin Cotton Gin
Moomin Ginning Co (Namoi Cotton/Harris
Parties Joint Venture)
Merrywinebone
Via Rowena NSW 2387
Telephone: 02 6796 5102
Wathagar Cotton Gin
Wathagar Ginning Co (Namoi Cotton/
Sundown Pastoral Co Pty Ltd)
Collarenebri Road
Moree NSW 2400
Telephone: 02 6752 5200
CLASSING ROOMS
Australian Classing Services
(Namoi Cotton/Twynam Agricultural Group
Joint Venture)
Pilliga Road
Wee Waa NSW 2388
Telephone: 02 6790 3053
Fax: 02 6790 3030
2017 ANNUAL REPORT | 103
For personal use only
REGISTE RED OFF ICE
Registered Office
Namoi Cotton Co-operative Ltd
ABN 76 010 485 588
AFSL 267863
Pilliga Road
Wee Waa NSW 2388
Australia
Telephone: 61 2 6790 3000
Facsimile: 61 2 6790 3087
www.namoicotton.com.au
Share Registry
Computershare Investor Services Pty Ltd
GPO Box 7045
Sydney NSW 1115
Investor inquiries: 1300 855 080
Facsimile: 61 2 8234 5050
Auditors
Ernst & Young
Key Bankers
Commonwealth Bank of Australia
2017 ANNUAL REPORT | 104
For personal use only 2017 ANNUAL REPORT | 105
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For personal use only