2020
Annual Report
A Year of Modernisation
Namoi Cotton Limited
A B N 7 6 0 1 0 4 8 5 5 8 8
07 4 6 31 6100 | www.namoi cot t o n. com .a u | 1 B K it ch e n e r St , T oow o omba
TABLE OF CONTENTS
I
5 OUR PROFILE
I
5 OUR VALUES
II
6 OUR FINANCIAL YEAR IN REVIEW
V
9 LETTER FROM THE CHAIRMAN
IX
13 CEO REPORT
XII
16 MODERNISATION
XIII
17 FRESH START
XIV
18 WHERE IS NAMOI COTTON LOCATED?
XV
19 GOVERNANCE
XVI
20 OUR BOARD OF DIRECTORS
XVII
21
INTRODUCING OUR EXECUTIVE TEAM
23 2020 FINANCIAL REPORT
111 ASX ADDITIONAL INFORMATION
115 CORPORATE DIRECTORY
Namoi Cotton Boggabri Gin
OUR PROFILE
Namoi Cotton is Australia's largest and 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 Southern Queensland and New South Wales.
As part of its business operations Namoi Cotton is a participant in the Namoi
Cotton Alliance joint venture, which markets cotton globally and owns and
operates warehouse and commodity facilities in Goondiwindi, Wee Waa and
Warren.
Namoi Cotton has an integrated business model with strengths in cotton ginning,
logistics and handling of cotton and other grain based commodities
(through NCA), the marketing of cotton internationally (through NCA) and the
trading of cotton seed domestically and internationally.
CORE VALUES
Integrity – We act honestly, fairly and with integrity in all our dealings, both
internally and externally. We deal honestly and fairly with suppliers and
customers. We commit to only dealing with business partners who demonstrate
similar ethical and responsible business practices.
Respect – We respect the human rights of all people, their ideas and cultures and
our words and actions must reflect this respect, treating fellow directors, senior
executives and employees with respect and not engage in bullying, harassment
or discrimination
Safety – We are committed to providing and maintaining a safe and non-
discriminatory working environment to safeguard the health and safety of our
employees, consultants, contractors, customers, suppliers and other persons who
visit our workplace, or who we work with, as required by law.
Community Standards – We act in a manner that aims to preserve and protect the
Company’s reputation consistent with reasonable expectations of our investors
and the broader community in which we operate, acting ethically and responsibly
and complying with all laws and regulations that apply to the entity and its
operations.
Environment – We are committed to act responsibly towards the environment and
comply with legislation in respect of licenses held as part of the Company’s
operations.
I
2020 O U R F I N A N C I A L
YEAR IN REVIEW
H I G H L I G H T S
from a severely drought affected year
R E V E N U E A N D
T R A D I N G
margin per
bale up 22%
E B I T D A * P E R
B A L E
down 13%
*excluding associates and joint
ventures and impairment charges
2 0 2 0 G I N N E D B A L E S
down 63%
total number of bales ginned =
449,913
Namoi Cotton Goondiwindi Gin
Namoi Cotton Ashley Gin
II
Namoi Cotton Goondiwindi
III
IV
LETTER FROM THE CHAIRMAN
Dear Shareholder,
On behalf of the Namoi Cotton Board of directors I am pleased to present the FY20
annual report. To say the least, the unprecedented continuation of the drought has
presented some enormous financial and emotional challenges for our growers, our
communities and subsequently your company Namoi Cotton. Our team is focused
on providing the best possible ginning services to the limited number of growers
that were able to grow cotton whilst minimising the financial impact to Namoi
Cotton. Despite the extreme drought conditions Namoi Cotton ginned 21% of the
reduced Australian cotton crop. This is in line with our previous year's market share
of the Australian crop.
SAFETY
Safety continues to be a focus at Namoi Cotton and the Board has maintained its
commitment to improving safety as the Company’s number one priority.
I am pleased to report a significant reduction in our LTIFR (Lost Time Injury
Frequency Ratio) across the Company, falling from 20 to 13.
FINANCE
FY20 was a very challenging year and Namoi Cotton was impacted by many factors
including the worst drought in recent history, subsequent reduction in ginning
volumes, and volatile market conditions which have challenged all aspects of our
business. In spite of these challenges, we are pleased to deliver a break even
operating cash flow before interest for Namoi Cotton Limited for FY20 whilst
earnings before interest and cash (excluding impairment and other non-cash
charges) was a positive $4.3million.
Unfortunately, due to the difficult seasonal conditions, impacting on our financial
results, Namoi Cotton was unable to pay a dividend in FY20. We are focused on
driving costs out of the business and right sizing it for when we return to normal
growing seasons. We are also focused on reducing the risk to earnings and
ultimately being able to deliver returns to all our valued stakeholders and
shareholders.
CHANGE AND CONSOLIDATION
FY20 has been a year of significant change and subsequent consolidation. The Board
recognized that for the company to have a sustainable future, it needed to
undertake a significant restructure of its operations. When we return to normal
growing seasons, Namoi Cotton will be in a stronger position to deliver greater
value to our customers and shareholders. This began in September 2019 with the
appointment of our new CEO Michael Renehan.
V
2020 Namoi Cotton had undertaken a strategic and cultural review during
the year that Michael was able to utilise in implementing his
modernisation project. The modernisation process took advantage of
Namoi Cotton’s ginning operations and resources and has focused on empowering
the workforce, providing standardised and safe ginning capabilities, and a customer
orientated process. Unfortunately, this restructure saw a number of people exit the
business. These decisions are always difficult, however, they were necessary to
ensure the long term viability of Namoi Cotton.
JOINT VENTURES
We are pleased to report that the legal dispute with our joint venture partner Cargill
Australia Limited was resolved in October 2019. The outcome is that Namoi Cotton
has been able to maintain a strong working relationship with Cargill Australia
Limited. In November 2019 we instigated a review of the Namoi Cotton Alliance
(NCA) joint venture with our partner Louis Dreyfus Company. Understanding the
disappointing results, the NCA has delivered over the last number of years,
shareholders can be assured that both partners are committed to refining the joint
venture into a profitable business, that delivers our individual objectives going
forward. These discussions are ongoing.
CORPORATE GOVERNANCE AND RISK COMPLIANCE
Our goal is to have modern corporate governance practices that are tailored to
Namoi Cotton's specific needs. To that end we successfully changed the constitution
in January 2020 with your support to enable Namoi Cotton to operate with a smaller
Board. It is our intention to maintain the current six (6) member Board, which we
feel is more befitting a company of Namoi Cotton’s size, whilst also reducing costs
in these difficult times.
FY20 saw the retirement of director Richard Anderson and also the
resignation of our long serving grower director Stuart Boydell.
Stuart joined the Board of Namoi Cotton Co-Operative in 1994 and was chair from
1995-2018. Under his leadership the Co-Operative was stabilised, successfully
defended takeovers, survived numerous droughts and raised capital.
In 2012 the gobal cotton trading market encountered an unprecedented Black Swan
trading situation. This was financially and emotionally devastating to the Co-
Operative however the Board at the time under Stuart's leadership was able to
continue trading and successfully stabilise the business.
Namoi Cotton honoured all growers' contracts through this period when other
merchants didn't.
We would not have the Namoi Cotton we have today if it hadn't been for Stuart and
the Board's steady hand's that led Namoi Cotton through that extremely difficult
period in 2012.
VI
2020 In 2017 Stuart led the Co-Operative through a successful restructure
to become Namoi Cotton Limited.
He did this, understanding it was in the best interests of the business,
but always continuing to maintain the focus on our growers needs. These actions
give Namoi Cotton Limited the strength and integrity that it is today.
On behalf of Namoi Cotton, I would like to take this opportunity to thank Stuart for
his tireless work over many years of service.
Your board is focused on maintaining the appropriate balance of skills, knowledge,
experience and renewal to take Namoi Cotton forward. As Chairman, I would like to
thank my fellow directors for their support and commitment to Namoi Cotton.
OUTLOOK FY21
Already we know that FY21 will be a tough year for cotton farmers and this will no
doubt translate into a challenging business environment for Namoi Cotton.
Widespread rain in all our growing areas in early 2020 has been extremely positive.
Whilst this has not translated into large cotton planting intentions, it has enabled our
growers to plant a significant area of winter crop. This will inject much needed cash
into our rural economies and presents a much more optimistic forward-looking
outlook. The Bureau Of Meteorology first quarter climate forecast is also positive
regards returning to more normal seasons. Our catchment areas for all our river
systems are primed and FY21 certainly looks much more optimistic than FY20.
LOOKING FORWARD
The difficult cropping and market conditions we have experienced in FY20,
highlighted the need for the Board to quickly and critically examine how our
business needed to change to ensure its future success. This has enabled us to
focus on what’s important to the business, our shareholders and customers, and
work to get our foundations right. Once we have consolidated these foundations,
we will be looking to review our strategic plan with the objective of creating real
future value for shareholders.
I would like to thank you our shareholders for your continued support.
Tim Watson
Chairman
Namoi Cotton
VII
2020 VIII
CHIEF EXECUTIVE OFFICER'S REPORT
SAFETY AT NAMOI COTTON
The number one priority in our business is the safety and wellbeing of our
people. We have seen a renewed focus on addressing the simple day-to-day
tasks with our teams as well as initiating improved systems that make our
workplace a safer working environment. Our Long-Term Injury Frequency Rate
(LTIFR) has come down across the group from 20 to 13 which is still high. Our
goal is an injury free workplace at Namoi Cotton, and we need to be under a
LTIFR of 2 to be at best practice Australian industry standard. To reach this goal
our teams are working together at daily toolbox talks, at our safety meetings and
with company wide housekeeping audits, with the Board and the Executive
providing strong support. Making Namoi Cotton a safer place to work is an
ongoing commitment and will remain our key focus within the business.
FINANCIAL PERFORMANCE
This year has been challenging, with most of Namoi Cotton’s footprint, in one of
the most extended droughts in recent history. Ginning volumes have reduced by
63% from the previous year as well as similar reductions in cottonseed and cotton
lint volumes all of which have translated through to essentially a break even
operating cash flow before interest result. Earnings before interest and cash
(excluding impairment and other non-cash charges) was a positive $4.3 million
with significant cost reductions in the second half of FY20.
Key measures were taken in the following areas in H2 FY20:
o Planning and implementing a significant organisational restructure at Namoi
with direct impact on approximately 50 employees. This will deliver annualised
labour savings of more than $4.5 million and increased focus and
accountability in the delivery of services to growers and customers.
o Settlement of the ongoing commercial dispute with Cargill Australia Limited.
o Increasing the focus on working capital efficiency and cash flow performance.
IX
2020 MODERNISATION
Namoi Cotton is working to modernise its organisation to
leverage off its strong capability in ginning operations and take
advantage of the economy of scale of its assets. It is investing
considerable resources to empower our workforce to ensure that safety, customer
service and financial performance are core principles. This change is critical to
compete in a volatile environment with challenging market conditions where the
volumes in FY21 continue to be further exacerbated by this most recent drought
period. As a result of this modernisation, Namoi Cotton will be providing
standardised and customer-orientated ginning capability that is safe, cost
effective and ginning best practice. Our growers’ success in competing in the
international market will be supported by these changes in technology, logistics
and capability. This modernisation will also create a workplace where employees
feel valued, empowered to make pro-active decisions, and be accountable to
deliver a customer experience that is best practice.
OUR PEOPLE
As part of its modernisation, Namoi Cotton has restructured its business to become
more customer focused and efficient in the delivery of its ginning and other services.
We have created the Customer Operations Team with a focus on each of the regional
valleys and their specific grower requirements. Our gin staff are also included in this
team and are working directly with growers to provide immediate support for their
cotton production. A new Engineering and Technology Team has been established
which is focusing on technology and information technology improvements to
enhance the grower experience and to run a lean, efficient cotton ginning operation.
Finally, we conducted a Fresh Start program where we initiated this new approach
with all our staff in Goondiwindi earlier this year. We have a great team at Namoi
who are proud members of their regional communities and we stand behind them to
deliver great service to our growers.
OUR GROWERS
Our growers have seen significant change across the Namoi Cotton business with
upgrades in our portal, the restructure of our grower facing team to form the
Customer Operations team.
This team will combine our gins and our account managers into valley-based
service groups that will be responsive to the immediate needs of growers. This
team will be supported by the newly created Commercial Development team.
X
2020 OUR CUSTOMERS
Namoi Cotton's ginning customers not only utilise our services for the
OUR CUSTOMERS
toll processing of their raw cotton fibre but to facilitate marketing and
Namoi Cotton's ginning customers not only utilise our services for the
logistical alternatives for their cottonseed, either by offering a range of
toll processing of their raw cotton fibre but to facilitate marketing and
cottonseed procurement options or through utilising our extensive cottonseed
logistical alternatives for their cottonseed, either by offering a range of
storage and handling supply chain to bring their cottonseed to market. The
cottonseed procurement options or through utilising our extensive cottonseed
Commercial Development Team will develop new products and services, and work
storage and handling supply chain to bring their cottonseed to market. The
with our customers on technology improvements and logistics solutions for their
Commercial Development Team will develop new products and services, and work
cotton crop. Our customers will see more improvements in our ability to develop
with our customers on technology improvements and logistics solutions for their
and implement more real-time solutions in the future based on this change.
cotton crop. Our customers will see more improvements in our ability to develop
and implement more real-time solutions in the future based on this change.
OUTLOOK
We know that FY21 will be a challenging year with the Australian crop just
OUTLOOK
over a record low forecast of 600,000 bales.
We know that FY21 will be a challenging year with the Australian crop just
Namoi Cotton has prepared itself for this volume by scaling back our ginning
over a record low forecast of 600,000 bales.
footprint in line with customer forecasts.
Namoi Cotton has prepared itself for this volume by scaling back our ginning
We have strong support from our banks and have put in place
footprint in line with customer forecasts.
robust capital management processes to ensure our financial
We have strong support from our banks and have put in place
sustainability. Namoi Cotton will complete its modernisation over the coming
robust capital management processes to ensure our financial
months and be positioned to meet the requirements of our cotton industry.
sustainability. Namoi Cotton will complete its modernisation over the coming
months and be positioned to meet the requirements of our cotton industry.
COVID-19 UPDATE
COVID-19 has had an unprecedented impact on regional, national and
COVID-19 UPDATE
international businesses all over the globe and we are yet to see the full effects of
COVID-19 has had an unprecedented impact on regional, national and
the virus. The business reacted quickly to the COVID-19 situation and
international businesses all over the globe and we are yet to see the full effects of
implemented very strong protocols and practices at all of our regional facilities
the virus. The business reacted quickly to the COVID-19 situation and
and offices.
implemented very strong protocols and practices at all of our regional facilities
Michael Renehan
and offices.
CEO
Michael Renehan
Namoi Cotton Limited
CEO
Namoi Cotton Limited
XI
20202020 M O D E R N I S A T I O N
In Novem ber of 2019, Namoi Cotton began the first step
in the long journey of M oderni sati on. The company has
moved through a num ber of changes that w ill c onti nue to
occur into FY 21.
Management
Our People
Definition of Values
Effective Communication
Respected
New Empowerment
Integrity
Safety First
Accountability
Technological Advancement
Initiative
Our Customers
Namoi Cotton the Best Performing Cotton Ginning Company in Australia
XII
2020 F R E S H S T A R T 2 0 2 0
Fresh Start was an opportunity for all staff to band together
and to begin to make sense of the new environment that was
Namoi Cotton Limited.
Fresh Start is about creating the Namoi Cotton of the future,
this begins and continues with staff. An empowered and
supported workforce has seen Namoi Cotton succeed for going
on 60 years and employees are key to continuing to set the
direction of the company for the next 60.
4 groups of up to 23 employees congregated in Goondiwindi to
come together, from multipl e levels and together found
solutions, teamwork and team spirit to move the company
forward using the 10 Principles that underpin the process of
Modernisation:
Safety first and foremost
Decision at the point of action
Standardisation (not bespoke)
Customer orientation
Accountability Stable
operating window
Margin or profit focus
Change
Centralised vs decentralised
Leadership and teamwork
XIII
2020
W h e r e i s N a m o i C o t t o n
L o c a t e d ?
XIV
GOVERNANCE
During the financial year ended 29 February 2020 and to the
date of this report, the board has undertaken a thorough
review of its governance charters and policies to strengthen
and enhance the company's governance platform.
The Board Charter, Audit Risk and Compliance Charter, People
and Culture Charter and Trading and Operating Risk Charter
were all revised to improve Board and committee governance
standards to achieve a higher standard of accountability,
transparency and reporting in the company. The Board Charter
was amended to state that directors have a maximum term of
12 years of continuous service, in addition to the retirement
provisions contained in the Namoi Cotton Constitution and the
ASX Listing Rules.
The board has also taken a proactive approach to revising its
governance policies and procedures by reviewing and
improving its Code of Conduct, Securities Trading Policy,
Anti-bribery and Corruption Policy, Disclosure and
Communication Policy, Diversity Policy as well as establishing
a Whistleblower Policy and a company wide review of internal
policies and procedures.
XV
2020 OUR BOARD OF DIRECTORS
Tim Watson
GAICD
Mr Watson was
appointed to the Board
in November 2014 and
elected as Chairman in
September 2018. He
grows cotton in the
Hillston area, and has
been involved in the
cotton industry since
2000.
Joseph Di Leo
M.Bus.Acct. & Fin.,
FAICD
Mr Di Leo was
appointed to the Board
in June 2018. He has an
extensive career in
agriculture in executive
and non-executive
roles.
Glen Price
B Rural Science (Hons),
GAICD
Mr Price has been a
Board member since July
2009. He has been
involved in the cotton
industry for 42 years.
Robert Green
B Bus (QAC), MAICD
Mr Green was appointed
to the Board in May
2013. He has extensive
knowledge and
experience in the
international agriculture
industry.
Stuart Boydell
Mr Boydell joined the
Board in June 1994 and
was Chairman between
December 1995 and
August 2018. He is a
cotton grower from the
Moree area. He resigned
in January 2020.
XVI
Juanita Hamparsum
B Bus (UTS), CA, FPCT,
GAICD
Mrs Hamparsum was
appointed to the Board in
June 2018. She is a cotton
grower from the Breeza
area and has extensive
experience in accounting
and finance, agribusiness
and risk management.
James Jackson
B.Com., FAICD
Mr Jackson was appointed
to the Board in June 2018.
He has more than 25 years
experience in capital
markets, corporate
governance, agricultural
supply chains, public
company corporate
governance, strategy
implementation and
financial risk management.
He resigned on 13 May
2020.
Richard Anderson
OAM, B.Com, FCA, FCPA Mr
Anderson joined the Board
in July 2001. His experience
extends to managing
partner of
PricewaterhouseCoopers,
directorships of other ASX
listed companies and his
service to the Guide Dogs
for the Blind Association.
He retired on 30 July 2019.
2020 Shane McGr egor - EGM of
Commercial D evelopment
MBA, MPM, USDA
Accredited Co tton
Classifier
Shane has exten sive
knowledge of Na moi
Cotton and the co tton
industry. This role
suppo rts the current su ite
within Co mmer cial
Development as w ell as
iden tify, develop and
support key bu siness, key
account man agement,
subsidiary busin esses and
future company g rowth
and opportunity.
Prue Turnbull - EGM of
Customer Operations
BBus., GradDipAppFin
Prue brings nearly a
decade of experience
across all aspects of
customer management
including account
relationships, export
management and logistics
and trading. She has
family connections in
Mungindi and spent a
number of years working
in Northern NSW.
I N T R O D U C I N G O U R
E X E C U T I V E T E A M
Michael Renehan - Chief
Executive Officer
MBA, M. Eng (Chem),
MAICD
Michael was appointed in
September 2019. He has
vast experience in
engineering,
manufacturing,
management and grower
relationships.
John Stevenson - Chief
Financial Officer
FCA, GAICD, FGIA, BBus.
John was appointed in
March 2020. He has
extensive executive
experience having been
the CFO for Australian
public companies as well
as large private entities in
the agribusiness sector.
Ernesto Mollica - EGM of
Engineering and
Technical
MEngSc(Man),
PostGradDipIndEng, EEng
Ernesto has experience in
manufacturing,
engineering and
management. Previously
working for global mining
company's, he brings a
strong safety culture,
excellent communication
strategies, and the
understanding to drive
performance in the
market.
XVII
engineerin g and
management
background. Previ ously
workin g for global
mining compan y's, he
bri ngs a strong safety
culture, e xcellent
communic ation
stra tegies, and the
und erstan din g to drive
performa nce in the
market.
2020 XVIII
2020
Financial Report
Year ended 29 February 2020
Namoi Cotton Limited
A B N 7 6 0 1 0 4 8 5 5 8 8
Namoi Cotton Limited
Contents
Directors’ Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Statement of Profit and Loss and Other Comprehensive Income
Balance Sheet
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
4
22
23
29
30
31
32
33
34
1.
Summary of Significant Accounting Policies ........................................................................................... 34
2. Revenue and Expenses ............................................................................................................................ 49
3.
Income Tax .............................................................................................................................................. 50
4. Earnings per Share .................................................................................................................................. 52
5. Distributions Paid or Provided on Ordinary Shares ................................................................................. 53
6. Cash and Cash Equivalents ...................................................................................................................... 53
7. Trade and Other Receivables .................................................................................................................. 55
8.
Inventories .............................................................................................................................................. 57
9. Derivative Financial Instruments............................................................................................................. 57
10. Investments in Associates and Joint Ventures using the equity method................................................ 58
11. Interest in Joint Operations..................................................................................................................... 61
12. Interest in Jointly Controlled Assets ........................................................................................................ 61
13. Intangible Assets ..................................................................................................................................... 61
14. Property, Plant and Equipment ............................................................................................................... 62
15. Changes in accounting policies ............................................................................................................... 65
16. Trade and Other Payables ....................................................................................................................... 68
17. Interest Bearing Liabilities ....................................................................................................................... 69
18. Provisions ................................................................................................................................................ 70
19. Contributed Equity .................................................................................................................................. 70
20. Nature and Purpose of Reserves ............................................................................................................. 71
21. Segment Information .............................................................................................................................. 72
22. Commitments and Contingencies ........................................................................................................... 75
23. Significant Events after Balance Date ..................................................................................................... 76
24. Related Party Disclosures ........................................................................................................................ 76
25. Directors’ and Executive Disclosure ........................................................................................................ 77
26. Remuneration of Auditors ...................................................................................................................... 78
27. Financial Risk Management Objectives and Policies ............................................................................... 78
28. Other Non-Financial Information ............................................................................................................ 88
Year Ended 29 February 2020
Contents
Page 2
Namoi Cotton Limited
Appendix 4E
The information contained in this report is for the full-year ended 29 February 2020 and the previous
corresponding period, 28 February 2019.
RESULTS FOR ANNOUNCEMENT TO MARKET
Revenues from ordinary activities
% Change
$'000
Down 41%
to
3,516
Profit/(Loss) from ordinary activities after tax attributable to members
Down 1,877%
Net profit/(loss) for the period attributable to members
Down 1,294%
(10,990)
(8,381)
Dividends (distributions)
Amount
per Security
Unfranked Amount
per Security
Final distribution - (Refer Note 5)
0.0 cent
0.0 cent
Interim distribution
-
-
Record date for determining entitlements to the final dividend
-
For further explanation of the annual financial results please refer to
the Review of Operations shown in Page 6 of this report.
Earnings per share
29 February 2020
28 February 2019
Basic earnings per ordinary security
Diluted earnings per ordinary security 1
(7.8 cents)
(0.4 cents)
(7.8 cents)
(0.4 cents)
Net tangible assets per security
29 February 2020
28 February 2019
Net tangible asset backing per ordinary security
87 cents
93 cents
1 Residual capital stock unconverted has not been included in the calculation of diluted earnings per
share because they are antidilutive, refer to note 4.
Associates and joint ventures - refer to notes 10 and 11 of the financial statements.
The above specific requirements of Appendix 4E should be read in conjunction with the complete
final report. This financial report has been audited.
Year Ended 29 February 2020
Directors’ Report
Page 3
Namoi Cotton Limited
DIRECTORS’ REPORT
Financial report for the year ended 29 February 2020
Your directors present their report on the consolidated entity consisting of Namoi Cotton Limited (‘Namoi’)
and the entities it controlled at the end of or during the year ended 29 February 2020 (‘FY20’).
Principal activities
Namoi is an Australian domiciled public company listed on the Australian Stock Exchange. The principal
activities of the entities in the Namoi consolidated group in FY20 were the ginning and marketing of cotton
including its by products such as cotton seed and moss/mote.
FY20 financial results
Namoi recorded an FY20 consolidated net loss after tax of $10.9 million, compared to a net loss after tax of
$0.6 million for the year ended 28 February 2019 (‘FY19’). On a pre-tax basis, Namoi recorded an FY20 net
loss of $15.3 million (FY19: profit of $0.1 million).
Namoi’s performance is impacted by seasonal conditions and volumes in relation to its recurring cost base
(both fixed and variable), as well as market conditions which have a mostly non-cash impact on asset
valuations. Major non-cash items impacting on Namoi results include Impairments and Fair Value
adjustments totalling $9.2 million in FY20 (FY19: $5.6 million).
Despite the challenging seasonal conditions in FY20 Namoi managed to achieve a positive EBITDA (excluding
associates and joint ventures and impairment charges) of $4.3 million (FY19: $23.0 million) as reconciled in
the table below. Although total EBITDA reduced significantly in FY20, the conversion of EBITDA into operating
cash flow before borrowing costs compares favourably with FY19 noting the fixed costs required to maintain
future capacity. This reflects the benefits achieved from an organisational restructure as well as improved
working capital management. FY20 EBITDA compares to an almost breakeven (i.e. -$0.01 million) net cash
inflow from operating activities before borrowing costs (FY19: $18.9 million).
Profit/(Loss) before Income Tax
Add back:
Share of loss of associates and joint ventures
Depreciation
Fair value decrement - ginning assets
Impairment - joint venture
Impairment - goodwill/parent investment
Finance costs
EBITDA (excluding impairment charges and
associates and joint ventures) 1
Consolidated
$’000
29 Feb
2020
$’000
28 Feb
2019
(15,300)
124
8,539
5,239
5,217
(2,438)
961
2,082
19,600
5,882
9,278
2,018
3,563
-
2,180
22,921
4,300
23,045
1 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation, and amortisation and
is presented prior to the impact of associates and joint ventures and impairment charges.
FY20 financial performance of the core ginning activities was negatively impacted by the 63% decrease in
Namoi’s ginning volumes compared to the prior comparative period (‘pcp’) as a result of the record-breaking
drought in South Eastern Australia and its impact on the 2019 growing season. Namoi’s cottonseed shipment
Year Ended 29 February 2020
Directors’ Report
Page 4
Namoi Cotton Limited
volumes were similarly impacted with a 57% decrease on pcp. Namoi Cotton Alliance’s (NCA) lint
procurement volumes also decreased by 57% compared to pcp.
In line with cotton volume decreases, Namoi’s ginning business recorded a lower FY20 contribution than in
the pcp, however margins per bale were maintained as a result of underlying productivity gains.
Namoi’s seed trading business shipped and handled 112,000Mt (2018 crop: 260,000Mt), with a strong
positive contribution recorded.
Losses from NCA increased substantially in FY20 relative to pcp as a result of the volume decreases noted
above and also shipping delays, contract renegotiations and a decline in the cotton futures market. Following
on from the FY19 impairment charge of $3.56 million, the Board considered NCA’s further losses in the first
half of FY20 and determined that its future cash flows remained insufficient to support Namoi’s NCA
investment carrying value. Accordingly, a further $2.98 million impairment was booked in respect of Namoi’s
51% interest in NCA in the first half of FY20. NCA impaired its intangible assets in the second half of FY20 by
$10.62m (Namoi’s share $5.42m) which resulted in a recoupment of impairments previously taken up by
Namoi. As NCA’s impairment flowed through the share of associates losses the write-back of the impairment
in Namoi amounted to $2.44m for the full year FY20. This impairment results in Namoi’s NCA investment
carrying value equating to its share of NCA’s tangible net assets.
On 6 February 2018 Namoi recognised $0.96 million of goodwill on its 100% acquisition of Australian Classing
Services Pty Limited (‘ACS’). As a result of the poor outlook for FY21 ACS classing sample volume given the
severity of the drought, the Board has determined that the goodwill arising on acquisition is fully impaired.
Accordingly, a $0.96 million non-cash, non-recurring impairment charge has been recognised in FY20.
In FY20, Namoi booked a $5.22 million non-cash charge to the Statement of Profit and Loss (‘P&L’) relating to
a decrement in the fair value of ginning assets. This was driven primarily by valuation of the Ashley ginning
site to a nil book value given a change in its service potential. This was in turn partially offset by the
repositioning of bales to other sites and thus Namoi has booked a $3.73 million revaluation increment direct
to the asset revaluation reserve. Accordingly, the net revaluation of the book value of ginning assets as at 29
February 2020 was a decrease of $1.49 million.
A $1.1 million non-recurring gain was made in relation to the settlement of the commercial dispute with
Cargill Australia Limited (‘CAL’) and the associated disposal of Namoi’s 15% interest in Cargill Processing
Limited (‘CPL’) and dissolution of the Cargill Oilseeds Australia partnership (‘COA’).
In December 2019, Namoi announced that, in light of unprecedented drought conditions it had commenced a
long ranging modernisation plan designed to deliver efficiencies and operational flexibility. This plan included
a significant organisational restructure to streamline its recurring cost base to better align with production
volume volatility, whilst at the same time it recognises the need for ongoing skills renewal in order to remain
successful in a forever changing environment. The FY20 P&L includes $1.50 million of non-recurring costs
associated with the organisational restructure, noting that statutory leave entitlements paid to these staff
were already largely provided for prior to FY20.
In FY20, net cash outflows from operating activities were $2.1 million (FY19: net cash inflows of $21.0
million). While a disappointing outcome for the full year, Namoi achieved a strong second half cash flow
result for FY20 with net cash inflows from operating activities of $9.4 million. This in turn reflected a solid
outcome from the cotton seed and mote/moss marketing businesses and improved working capital
management.
Net assets as at 29 February 2020 decreased on the pcp by $8.4 million or 6% to $121.4 million (2019: $129.8
million) representing a net asset backing of $0.87 per ordinary share (2019: $0.93 per ordinary share).
Dividends
The Board has announced that Namoi will not pay an FY20 final dividend (FY19: nil).
Year Ended 29 February 2020
Directors’ Report
Page 5
Namoi Cotton Limited
Review of operations
The overall 2019 Australian cotton crop production was 2.15 million bales (2018 crop: 4.54 million bales)
representing a 53% decrease. Early season forecasts estimated the crop at 2.3 million bales, however the
continued dry conditions almost completely decimated the dry land crop and also adversely impacted
irrigated yields. The latter fell back to 10.0 bales per hectare in 2019 compared to 11.5 bales per hectare in
2018.
Namoi ginned 449,913 bales (including 100% of joint venture bales) of the 2019 crop (2018 crop: 1,202,000
bales) representing a 63% decrease on pcp. The dry weather conditions again facilitated a dry harvest
resulting in seed cotton being delivered to gins with very low moisture content. Cotton quality was above
average for the season, which increased throughputs, however, low volumes prima facie impacted processing
efficiencies. In response to this several gin sites did not process cotton while others operated single shifts
and five-day weeks. The impact on variable costs was mitigated by sharing permanent staff between sites
and keeping electricity costs to a minimum by reducing peak period charges. Variable costs were up 2.8% per
bale on 2018 crop.
Despite the extreme drought, Namoi continued to invest in its ginning network to improve service offerings.
During FY20 Namoi successfully commissioned a new press at the Macintyre II gin and upgraded the press
hydraulics and controls of the Trangie gin to increase pressing efficiency.
Namoi’s commitment to workplace health and safety continued to bear fruit in FY20 as it achieved a lost time
injury frequency rate (‘LTIFR’) of 13 (FY19: 15). This continued improvement can be attributed to greater staff
engagement and the implementation of safety representatives and committee members being on the ground
and increasing communication and consultation from all areas of the business.
Namoi’s FY20 cotton seed trading margins increased on a per unit basis with effective risk and position
management producing a strong outcome through maintenance of a controlled long position through a
period of strong increases in cotton seed prices.
Joint Ventures and Associates
NCA’s total cotton lint marketing volumes procured for the 2019 season were 350,000 bales (2018 season:
817,000 bales). This reflects a 57% decrease in volume traded which was again down essentially due to the
drought conditions. In recent years lint marketing gross margins have been under pressure through
competition to secure cotton and these adverse market forces were exacerbated by recognition of unrealised
contract losses as a result of shipping delays, contract renegotiations and a decline in cotton futures. In
addition, NCA’s commodity packing business packed just 29,000Mt compared to 55,000Mt in the pcp; again,
largely as a result of the drought. These factors combined to cause a loss after impairments in NCA in FY20,
with Namoi’s share being $8.59 million (FY19: $1.08 million loss).
Other
Namoi’s finance costs have reduced by $0.1 million with the interest rate environment being even more
favourable than the pcp. No term debt amortisations occurred during FY20 with $42 million of term debt
carried throughout the financial year. Finance facilities were renewed with Commonwealth Bank of Australia
(‘CBA’) in April 2020 with an extension to the maturity date of the $10 million working capital facility to 30
April 2021.
Mr Michael Renehan was appointed as Chief Executive Officer with effect from 1 September 2019. His
immediate task was to ensure that Namoi was most favourably positioned to deal with the unprecedented
drought conditions which were having a material adverse impact on financial performance. Key measures
were taken in the following areas:
• Planning and implementing a significant organisational restructure at Namoi with direct impact on
approximately 50 employees. This was executed in the last quarter of FY20 and will deliver annualised
labour savings of more than $4.5 million and also increased focus and accountability in the delivery of
services to growers and customers;
Increasing the focus on working capital efficiency and cash flow performance. Enhanced procedures were
instituted with positive outcomes in terms of working capital realisation into cash in the second half of
FY20;
•
Year Ended 29 February 2020
Directors’ Report
Page 6
Namoi Cotton Limited
•
•
Settlement of the ongoing commercial dispute with Cargill Australia Limited almost one year after court
proceedings had been initiated;
Ensuring Namoi maintained its funding facilities. This was achieved with CBA extending banking facilities
to Namoi which now mature in April 2021.
COVID-19
As at the date of publishing this report, 29 April 2020, the novel coronavirus (COVID-19) pandemic has
resulted in significant health, societal and economic impacts across the globe. This was an emerging issue as
at reporting date, 29 February 2020, and remains so given that the situation has worsened since the reporting
date up until the date of publishing this report.
Namoi’s core competency and most of its assets are directly connected with the ginning of cotton cropped in
South Eastern Australia. The crop that will be ginned in 2020 (i.e. FY21) had already been planted prior to the
emergence of COVID-19. Any future impact of COVID-19 on the ultimate global demand for cotton products
and the associated logistics and supply chains may have an impact on the size of cotton acreage planted in
2020 to be ginned in 2021 (i.e. FY22) and beyond. However, seasonal conditions and specifically the timing
and availability of water in growing regions is likely to remain the key driver of crop size and quality and
hence the subsequent ginning volumes, at least in the short term. To that end, Australia has had its most
significant rain event in years, if not decades, and together with positive seasonal forecasts from the Bureau
of Meteorolgy this will start to push crop sizes higher.
The global cotton industry is suffering impacts from COVID-19 as the reduction in demand resulting from
market shutdowns and restrictions forces disruptions down the supply chain back to origins. Assets along the
supply chain from production, logistics and storage, through to manufacturing and retail will respond and
recover differently as markets re-emerge. Namoi is exposed to future cotton prices and customer execution
risk through its share of losses from its associate, NCA. Nevertheless, while the global cotton industry will
inevitably suffer impacts from COVID-19, potentially sudden shifts in consumer demand and logistical
challenges, the underlying global demand still exists and will serve to underpin the industry as markets and
behaviour return to normalcy.
Namoi remains committed to keeping its employees and families safe and to closely monitoring everyone’s
physical and mental well-being during this trying time. Staff are working from home or in shifts where
possible. Gins being utilised are open and ready for the upcoming season having completed their
maintenance programs as normal. New no-touch procedures, split teams, emergency backups and other such
programs have been introduced in line with Government recommendations and regulations, and best
practice.
For more detailed assessments on the impacts of COVID-19, including on Namoi’s associate NCA, refer to
Note 1: Summary of Significant Accounting Policies in the Consolidated final financial report, specifically to
Significant accounting judgments, estimates and assumptions. Otherwise there have been no significant
events after balance date other than as disclosed in Note 23 in this report.
Likely developments
2020 Season
The area finally planted to cotton for the 2020 season was approximately 62,000 hectares irrigated or semi-
irrigated (2019: 201,000 hectares). With limited water availability for irrigation from public water storages
and next to no water in on-farm storages, the crop will rely heavily on bore water availability. The 2020
dryland crop will be negligible (2019: 165,000 hectares planted). Considering all these factors, we estimate
that the 2020 Australian cotton crop will produce approximately 0.6 million bales. Namoi also notes that the
impact of drought upon water storage levels and associated allocations has had the greatest impact upon
central growing regions where the majority of Namoi’s ginning infrastructure is located.
Namoi anticipates that it will gin between 100,000 and 160,000 bales from the 2020 crop, including 100% of
joint venture gins, representing a further reduction of between 64% and 78% of the already poor prior year
crop volumes. To put the situation more clearly into context, FY21 ginning volumes are expected to be
between 8% and 13% of the volumes processed in FY19; the last season not adversely impacted by drought.
Year Ended 29 February 2020
Directors’ Report
Page 7
Namoi Cotton Limited
Namoi expects that its cotton seed trading volumes will reduce proportionally in line with ginning volumes.
However, there are already clear signs of weaker prices being paid for cotton seed following recent rainfall.
NCA’s lint marketing volumes are estimated to fall to between 50,000 and 100,000 bales from the 2020 crop,
representing a decrease of between 71% and 86% from the prior crop. The lower crop size has seen
competition for marketing volumes and is anticipated to continue to pressure marketing gross margins in
2020. NCA’s containerised commodity packing volumes are expected to bounce back to some degree in the
latter half of FY21 given recent rainfall.
Namoi’s FY21 operations and financial performance will be adversely impacted by the lower volumes
predicted. However, the business has been ‘right sized’ and is focused on operating the network in the most
efficient manner to deliver per unit labour utilisation and energy consumption savings despite sub-optimal
volumes.
2021 Season
Public water storages from Queensland to Southern NSW are beginning to recover from the historical near
zero levels. While it is far too early to declare the drought broken, considerable rainfall was recorded across
the eastern states during March after a very wet February. The promising change in rainfall patterns since
the beginning of 2020 has begun to relieve the pressure on the farming sector.
With a favourable rainfall outlook and continued competitive cotton prices, there is increasing confidence
that the 2021 Australian cotton crop will return to meaningful levels. Current estimates are for a crop in the
region of between 2.1 million to 2.5 million bales.
While the ICE #2 futures market fell by 24% from early February to the end of March 2020, A$/US$ weakness
and strong basis have insulated this fall in Australia where prices have dipped by just 9% over the same
period. Accordingly, Namoi expects that cotton will remain the summer crop of choice for farmers in
2020/21.
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.
Year Ended 29 February 2020
Directors’ Report
Page 8
Namoi Cotton Limited
Directors
The names, qualifications and experience of the company’s directors that held office throughout the financial
year and up to the date of this report, unless otherwise indicated, are as follows.
Tim Watson, Chair, Non-executive Director, 58, GAICD
Mr Watson was appointed as Chair for Namoi Cotton Limited from 29 August 2018. He was re- elected to the
Board at the 2018 general meeting. Mr Watson 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. Mr Watson is a member of the People and Culture Committee
and the Safety Committee.
Glen Price, Non-executive Director, 64, B. Rural Science (Hons), GAICD
Mr Price joined the Namoi Cotton Board in July 2009 as a Grower Director. He was re-elected at the 2018
general meeting. Mr Price has previously grown cotton in the Mungindi region for 35 years and continues to
grow cotton in the St George region and has done so for 24 years. Mr Price has been involved in the cotton
industry since 1978. Mr Price is a past member of the Mungindi Cotton Growers and Water Users Association,
as well as the Australian Cotton Grower’s and Research Association and Border Rivers Food and Fibre and
brings with him extensive industry and commercial expertise. Mr Price is a member of the Audit Committee,
Trading and Operating Risk Committee and the Safety Committee.
Robert L Green, Non-executive Director, 63, B.Bus. (QAC), MAICD
Mr Green joined the Namoi Cotton Board in May 2013. He was re-elected 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 over many years. Key areas of experience include Business
Management, Operations Management and Business Development. His most recent role was Chief executive
Officer of Louis Dreyfus in Australia. Mr Green is Chair of the Trading and Operating Risk Committee and the
Safety Committee and a member of the People and Culture Committee.
James Jackson, Non-executive Director, 57, B.Com., FAICD
Mr Jackson was appointed to the Board in June 2018 as a casual director appointment. He was elected at the
2018 general meeting. He has more than 25 years’ experience in capital markets and agribusiness, both in
Australia and overseas. He held a Senior Vice President role with investment bank SG Warburg (now part of
UBS) in New York. He was a director of MSF Sugar Limited from 2004 to 2012 and was Chair from 2008 to
2012. He also served as the Deputy Chair of Elders Limited (ASX: ELD) from 2014 to 2017, and is currently
Chair of Australian Rural Capital Limited, (ASX:ARC), an investment company focused on agriculture. Mr
Jackson has experience and skills in capital markets, agricultural supply chains, financial risk management, the
development and implementation of strategy and public company corporate governance. Mr Jackson is the
Chair of the People and Culture Committee and a member of the Trading and Operating Risk Committee and
the Safety Committee.
Juanita Hamparsum, Non-executive Director, 49, B.Bus. (UTS), CA, FPCT, GAICD
Mrs Hamparsum was appointed to the Board in June 2018 as a casual director appointment. She was elected
at the 2018 general meeting. She grows cotton and grains in the Upper Namoi region and has been involved
in the cotton industry since 1998. Mrs Hamparsum has extensive financial, agricultural and natural resource
management experience. She is a chartered accountant and currently a director and chair of board audit
committee of Cotton Seed Distributors Ltd and Chair of Great Artesian Basin Coordinating Committee. Her
former positions include chair of Cotton Innovation Network, director of Cotton Research and Development
Corporation and Deputy Chair of Namoi Catchment Management Authority. Mrs Hamparsum is chair of the
Audit, Risk and Compliance Committee and a member of the Safety Committee.
Joseph Di Leo, Non-executive Director, 63, M.Bus.Acct. & Fin., FAICD
Mr Di Leo was appointed to the Board in June 2018 as a casual director appointment. He was elected at the
2018 general meeting. Mr Di Leo has an extensive career in agriculture and is a former Managing Director of
Allied Mills Australia Pty Ltd. He is a former Chief Operating Officer of GrainCorp Limited, and previously held
a number of senior roles in the rail freight sector. Mr Di Leo has also previously been a Non -Executive
Year Ended 29 February 2020
Directors’ Report
Page 9
Namoi Cotton Limited
Director of the Port Kembla Port Corporation and Teys Australia Pty Ltd. He is currently the Chair of LUCRF
Super. Mr Di Leo is a member of the Audit Committee, the Trading and Operating Risk Committee and the
Safety Committee.
Stuart C Boydell, Non-executive Director, 73 (resigned 20 January 2019)
Mr. Boydell joined the board of directors as a grower director in June 1994 and was Chair between December
1995 and August 2018. He was most recently re-elected at the 2017 general meeting. He has grown cotton on
“Cooma” near Moree, NSW for over 20 years and was a member of the People and Culture Committee, the
Audit Committee and the Safety Committee.
Richard Anderson, Non-executive Director, 74, OAM, B.Com., FCA, FCPA (retired 30 July 2019)
Mr Anderson joined the Namoi Cotton Board in July 2001. He was re-elected at the 2016 general meeting. Mr
Anderson previously held the position of managing partner of PricewaterhouseCoopers in Queensland.
During the past three years Mr Anderson has held ASX listed company directorships at Data#3 Limited
(current) and Lindsay Australia Ltd (current). He is also currently president of the Guide Dogs for the Blind
Association of Queensland. Mr Anderson was the Chair of the Audit Committee and a member of the Safety
Committee.
Company secretary
Andrew Metcalfe, 55, CPA, FGIA, FCSA, GAICD
Mr Metcalfe was appointed company secretary on 15 November 2019. Mr Metcalfe is an experienced
company secretary having worked with many ASX listed companies across a variety of industry sectors over
the past 25 years. Mr Metcalfe is engaged under contract through a service provider and is not part of the
KMP.
Bailey Garcha, 45, BLLB., BFA., Dip. Legal Studies, Dip. Legal Practice, ACIS, GAICDMr 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. Mr Garcha resigned on 15 November 2019.
Board & committee meeting attendance
Meetings held and attended by each of the directors during the financial year were as follows:
Committee Meetings1
Directors'
Meetings1
Audit, Risk
and
Compliance
Trading and
Operational
Risk
Safety
People and
Culture
T Watson (Chairman)
G Price 2
R Green
J Jackson
J Hamparsum
J Di Leo
RA Anderson (retired 30 July 2019)
SC Boydell (resigned 20 January 2020)
Total number of meetings held
16
16
16
16
15
16
8
12
16
-
-
-
-
9
9
3
8
9
-
4
4
4
-
4
2
-
4
1
1
1
1
1
1
1
1
1
7
-
7
7
-
-
-
6
7
1 All board members were available to attend directors’ meetings and relevant committee meetings. Prior to retiring
RA Anderson was available to attend 8 meetings of 8 Directors’ meetings held. Prior to resigning SC Boydell was available
to attend 12 meetings of 14 Directors’ meetings held.
2 Appointed to the Audit, Risk and Compliance Committee on 26 February 2020.
Year Ended 29 February 2020
Directors’ Report
Page 10
Namoi Cotton Limited
Committee membership
As at the date of this report, the company had an Audit, Risk and Compliance Committee, Trading and
Operating Risk Committee, Safety Committee and People and Culture Committee. Set out below is the
representatives for the various Committees.
Notes:
26 February 2020 the Financial Risk Committee was changed its title to the Trading and Operating Risk
Committee.
26 February 2020 the Audit Committee changed its title to the Audit, Risk and Compliance Committee.
26 February 2020 the Nominations and Remuneration Committee changed its title to the People and
Culture Committee.
Members acting on the committees of the Board during the year were:
Audit, Risk and
Compliance
J Hamparsum (Chair)
J Di Leo
G Price
RA Anderson
SC Boydell
Trading and
Operating Risk
R Green (Chair)
J Jackson
G Price
J Di Leo
RA Anderson
People and
Culture
J Jackson (Chair)
T Watson
R Green
SC Boydell
Safety
R Green (Chair)
T Watson
J Hamparsum
G Price
J Jackson
J Di Leo
RA Anderson
SC Boydell
Notes:
Mr R Anderson retired from the Board and Committees effective 30 July 2019
Mr SC Boydell resigned from the Board and Committees effective 20 January 2020
Remuneration report (audited)
This remuneration report outlines the director and executive remuneration arrangements of the company
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 company and the group, including any director of the company.
Changes to KMP
The following changes in KMP occurred in the year ended 29 February 2020.
Non-Executive Directors
Richard Anderson retired as a Non-Executive Director effective 30 July 2019.
Stuart Boydell resigned as a Non-Executive Director effective 20 January 2020
Senior Executives
Michael Renehan, Chief Executive Officer, was appointed 30 July 2019 effective 1 September 2019.
Michael Newbury was appointed to the position of Interim Acting CFO effective 13 December 2019.
Jeremy Callachor, Chief Executive Officer, ceased employment with Namoi Cotton effective 8 March 2019.
Bailey Garcha, Company Secretary, ceased employment with Namoi Cotton effective 15 November 2019.
Stuart Greenwood, Chief Financial Officer, was appointed to the position of Interim Acting CEO effective from
close of business 8 March 2019 to 1 September 2019. Mr Greenwood ceased employment with Namoi Cotton
effective 20 January 2020.
Year Ended 29 February 2020
Directors’ Report
Page 11
Namoi Cotton Limited
David Lindsay, General Manager – Grower Services and Marketing, ceased employment with Namoi Cotton
effective 25 November 2019.
Alex Mehl, Chief Information Officer, ceased employment with Namoi Cotton effective 11 November 2019.
There has been one change to KMP in the period after reporting date and prior to the date when this
financial report was authorised for issue.
John Stevenson, Chief Financial Officer, was appointed 27 March 2020 effective 30 March 2020.
Key Management Personnel for the 2020 Financial Year include the following persons:
Directors
Mr T J Watson
Mr G Price
Mr R Green
Mr J Jackson
Ms J Hamparsum
Mr J Di Leo
Mr S C Boydell
Mr R A Anderson
Executives
Mr M Renehan
Mr S McGregor
Mr M Newbury
Mr J Stevenson
Mr J Callachor
Mr S Greenwood
Mr D Lindsay
Mr B Garcha
Mr A Mehl
Compensation of KMP
Chair, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive
Director, non-executive (resigned 20 January 2020)
Director, non-executive (retired 30 July 2019)
Chief Executive Officer (appointed 30 July 2019 effective 1 September 2019)
Business Development (formerly Chief Operations Officer)
Group Financial Controller (Interim Acting CFO appointed 13 December 2019)
Chief Financial Officer (appointed 27 March 2020 effective 30 March 2020)
Chief Executive Officer (resigned 8 March 2019)
Chief Financial Officer (and also appointed Interim Acting CEO 8 March 2019 to
1 September 2019, resigned 13 December 2019 effective 20 January 2020)
General Manager – Grower Services and Marketing (resigned 25 November 2019)
General Counsel and Company Secretary (resigned 15 November 2019)
Chief Information Officer (resigned 11 November 2019)
Compensation Policy
For Namoi Cotton the following principles in its compensation framework apply:
Provide market competitive remuneration;
Link executive rewards to company performance and to align with the interests of shareholders; and
A portion of executive compensation is ‘at risk’, dependent upon the financial performance of the
company and the individual executive meeting pre-determined performance benchmarks (individual key
performance indicators KPI’s);
People and Culture Committee
The role and responsibility of the People and Culture Committee of the Board of directors of Namoi Cotton is
to assist and advise the board of directors to fulfil its responsibilities to shareholders of the company on
matters relating to:
the composition, structure and operation of the board.
senior executive selection and performance.
the compensation, bonuses incentives and remuneration issues of the chief executive officer and senior
executives (as defined by the board).
Year Ended 29 February 2020
Directors’ Report
Page 12
Namoi Cotton Limited
policies relating to remuneration, incentives, superannuation, evaluation and termination, affecting all
staff.
remuneration of the directors of the board and Chair of the board
In considering the impact of the Group’s performance on shareholder wealth, the Directors have regard to
various factors including the table of metrics detailed on page 18 – Group financial performance and position.
Compensation Structure
In accordance with best practice corporate governance, the structure of non-executive director and executive
compensation is separate and distinct.
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 with the appropriate qualifications, experience and skills and compensate
directors for the time required to exercise its duties as a director.
Structure
The Constitution for Namoi Cotton Limited provides for aggregate directors’ fees of up to $850,000 per
annum to be paid to Directors. For the FY20 financial year the aggregate directors’ fees paid was $605,445.
The amount of compensation 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.
Any Director in office at 10 October 2017 who had served two terms (6 years) is entitled to a retirement
benefit equivalent to two year’s remuneration based on their remuneration for the 2017-18 financial year.
One incumbent Director is entitled to this benefit.
The compensation of non-executive directors for the period ending 29 February 2020 is detailed on page [17]
of this report.
Executive Compensation
Objective
The company aims to reward executives with a level and mix of compensation commensurate with their
position and responsibilities within the company in order to:
reward executives for performance against targets set by reference to appropriate benchmarks;
align the interests, actions and behaviours of executives with those of shareholders;
link rewards with the strategic goals and performance of the company to drive long term sustainable
growth; and
ensure total compensation is competitive by market standards and aligned to impact and accountability.
Structure
Employment agreements have been agreed with the CEO and other KMP. Details of these contracts are
provided on pages 13 and 14 of this report.
Each KMP agreement includes compensation which consists of the following key elements (where
applicable):
Variable Compensation comprising Short Term Incentives (STI)
Variable Compensation comprising Long Term Incentives (LTI)
Fixed Compensation;
The People and Culture Committee recommends to the Board the proportion of fixed and variable (potential
STI and LTI) compensation for KMP.
Year Ended 29 February 2020
Directors’ Report
Page 13
Namoi Cotton Limited
Fixed Compensation
Objective
The People and Culture Committee reviews fixed compensation annually. The process consists of a review of
company-wide, business unit and individual performance, relevant internal and market comparative
compensation and, where appropriate, independent external remuneration data of equivalent industry
sectors.
Effective from 8 March 2019 to 1 September 2019, the fixed remuneration for Mr Stuart Greenwood, for the
period in which he acted as Interim Acting CEO for the Company, was increased by $109,500 per annum (pro-
rata for lesser period) plus superannuation legislation requirements.
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms which in FY20
included cash, superannuation, motor vehicles and any associated fringe benefits. The form chosen will be
optimal for the recipient without creating undue cost for the company.
Variable Compensation – STI
Objective
The objective of the STI program is to link the achievement of the company’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.
For FY19 the STI compensation included an ‘at risk bonus’ element which constitutes forty percent of the
executives’ overall available STI compensation linked to company financial performance. For FY20 no STI
compensation was included.
The remaining sixty percent of each executive’s STI compensation is dependent upon the achievement of
financial and non-financial individual KPI’s. 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 Board after review by the People and
Culture Committee. However, when taking into account this discretion, the Board considers the above criteria
in determining the appropriate allocation.
For the 2020 financial year 0% (2019: 69% amounting to $252,500) of the STI compensation (both
components) was accrued in the financial statements which amount to $Nil.
Variable Compensation – LTI
Objective
The objective of the LTI program is to link the achievement of the company’s long-term performance targets
with the compensation received by the executives charged with meeting those targets.
Structure
LTI compensation for the CEO is conditional upon board and shareholder approval which has not been
received as at the date of this report and is to include options or performance rights on the following terms:
For the period 1 September 2019 to 29 February 2020 with a face value of $100,000 converted into
ordinary shares of the Company,
For each financial year onward commencing 1 March 2020 and ending 28 February with a face value of
$200,000 converted into ordinary shares of the Company,
The vesting of these options or performance rights will be subject to achievement of company
performance measures and other service conditions over a 3-year period,
Year Ended 29 February 2020
Directors’ Report
Page 14
Namoi Cotton Limited
The Company has the right to review the LTI from time to time.
Contract for Services
Major provisions of KMP employment agreements are set out below.
Mr Michael Renehan, Chief Executive Officer (appointed 30 July 2019 effective 1 September 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $400,000 per
annum on a pro-rata basis.
Short Term Incentive (STI) compensation for the year ended 29 February 2020 of $Nil.
Long Term Incentive (LTI) compensation including options or performance rights for the year ended
29 February 2020 of $100,000 conditional upon board and shareholder approval which had not been
received as at the date of this report.
Period of notice to be given by employee or employer – 3 months
Mr Michael Newbury, Group Financial Controller (and Acting Interim CFO from 13 December 2019 until 29
March 2020)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $250,000 per
annum on a pro-rata basis from 13 December 2019.
Variable compensation, for the year ended 29 February 2020 of $Nil
Period of notice to be given by employee or employer – 4 weeks
Mr Shane McGregor, Projects and Business Development (formerly Chief Operations Officer)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $304,649 (28
February 2019: $304,610)
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $50,000)
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 Jeremy Callachor, Chief Executive Officer (resigned 8 March 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $475,000 (28
February 2019: $475,000) on a pro-rata basis.
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $75,000)
As part of Mr Jeremy Callachor’s resignation he was paid a severance payment of $578,470, which
included statutory entitlements for annual leave, long service leave and termination benefits. This
amount was paid on 8 March 2019.
Mr Stuart Greenwood, Chief Financial Officer (and Acting Interim CEO from 8 March 2019 to 1 September
2019, resigned 13 December 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $271,000
(28 February 2019: $271,000)
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $38,500)
For Mr Stuart Greenwood undertaking the role of Acting Interim CEO and Chief Financial Officer he was
paid $109,500 per annum, plus superannuation, on a pro-rata basis in addition to his base salary from 8
March 2019 to 1 September 2019 during the interim period.
As part of Mr Stuart Greenwood’s resignation, he was paid a severance payment of $97,675, which
included statutory entitlements for annual leave and long service leave. This amount was paid on
20 January 2020.
Mr Balhar Garcha, General Counsel and Company Secretary (resigned 15 November 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $276,000 (28
February 2019: $276,000)
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $35,000)
As part of Mr Balhar Garcha’s resignation he was paid a severance payment of $316,045, which included
statutory entitlements for annual leave, long service leave and termination benefits. This amount was
paid on 25 November 2019.
Year Ended 29 February 2020
Directors’ Report
Page 15
Namoi Cotton Limited
Mr David Lindsay, General Manager - Grower Services and Marketing (resigned 25 November 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $297,000 (28
February 2019: $297,000)
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $30,000)
As part of Mr David Lindsay’s resignation he was paid a severance payment of $163,983, which included
statutory entitlements for annual leave and long service leave. This amount was paid on 25 November
2019.
Mr Alex Mehl, Chief Information Officer (resigned 11 November 2019)
Fixed compensation, inclusive of superannuation, for the year ended 29 February 2020 of $260,00 (28
February 2019: $260,000)
Variable compensation, for the year ended 29 February 2020 of $Nil (28 February 2019: $24,000
prorated from date of appointment)
As part of Mr Alex Mehl’s resignation he was paid a severance payment of $46,150, which included
statutory entitlements for annual leave and termination benefits. This amount was paid on 11 November
2019.
The table below sets out the remuneration paid or payable to the Directors, CEO and Senior Executive KMP
for the financial year ended 29 February 2020:
Compensation of Key Management Personnel for the Year Ended 29 February 2020
Short-term Employee benefits
Post-employment Benefits
Long-term
Benefits
Salary & Fees
Cash Bonus
Superannuation
Retirement
Benefits 1
Long Service
Leave 2
Termination
Benefits
Total
% Performance
Related 3
Directors
T Watson
RA Anderson 4
SC Boydell 5
G Price
R Green
J Jackson
J Hamparsum
J Di Leo
Executives
M Renehan 6
J Callachor 7
D Lindsay 8
B Garcha 9
S Greenwood 10
M Newbury 11
S McGregor
A Mehl 12
110,423
149,077
62,071
70,269
70,269
70,269
70,269
70,269
216,754
133,736
216,225
255,680
345,665
50,704
275,760
161,448
2,328,888
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,490
2,762
5,897
6,676
6,676
6,676
6,676
6,676
11,785
805
14,709
3,981
13,032
4,817
21,481
16,352
-
(120,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
341
(130,955)
(18,776)
(75,099)
(61,978)
-
3,601
(345)
139,491
(120,000)
(283,211)
-
-
-
-
-
-
-
-
-
399,651
148,500
162,351
-
-
-
36,530
747,032
120,913
31,839
67,968
76,945
76,945
76,945
76,945
76,945
228,880
403,237
360,658
346,913
296,719
55,521
300,842
213,985
2,812,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Payment on retirement of previously accrued entitlements.
2. Negatives relate to the taking of previously accrued leave within the period which is greater than the entitlements accrued for in the current the period.
3. The percentage that STI forms part of total remuneration.
4. Retired on 30 July 2019 and was paid previously accrued retirement benefits.
5. Resigned on 20 January 2020.
6. Appointed on 30 July 2019 effective 1 September 2019. Non-monetary benefits included in Salary & Fees
for relocation expenses and initial rental assistance of $23,600.
7. Resigned on 8 March 2019.
8. Resigned on 25 November 2019.
9. Resigned on 15 November 2019.
10. Resigned on 13 December 2019 effective 20 January 2020.
11. Appointed acting Interim CFO from 13 December 2019.
12. Resigned on 11 November 2019.
Year Ended 29 February 2020
Directors’ Report
Page 16
Namoi Cotton Limited
Compensation of Key Management Personnel for the Year Ended 28 February 2019
Short-term Employee benefits
Post-employment Benefits
Long-term
Benefits
Salary & Fees
Cash Bonus
Superannuation
Retirement
Benefits 1
Long Service
Leave 2
Termination
Benefits
Total
% Performance
Related 3
Directors
T Watson
RA Anderson
SC Boydell
M Boyce 4
G Price
R Green
J Jackson
J Hamparsum
J Di Leo
Executives
J Callachor 5
D Lindsay 2
B Garcha
S Greenwood
S McGregor 2
A Mehl 6
90,577
70,269
90,115
105,500
70,269
70,269
51,154
51,154
51,154
467,091
276,252
279,710
261,370
300,065
187,989
-
-
-
-
-
-
-
-
-
75,000
30,000
35,000
38,500
50,000
24,000
8,605
6,676
8,561
997
6,676
6,676
4,860
4,860
4,860
22,480
17,951
18,667
19,108
22,006
17,917
-
-
-
(95,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,548
(252)
6,831
7,925
(8,412)
-
2,422,938
252,500
170,900
(95,000)
10,640
1. Payment on retirement of previously accrued entitlements. During the current period the Board clarified that
no further entitlements should be accrued and therefore the 2019 accruals were reversed.
2. Negatives relate to the taking of leave within the period greater than entitlements accrued during the period.
3. The percentage that STI forms part of total remuneration.
4. Resigned on 24 April 2018 and was paid previously accrued retirement benefits.
5. Resigned subsequent to year end on 8 March 2019.
6. Appointed 28 May 2019.
Shareholdings of KMP1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,182
76,945
98,676
11,497
76,945
76,945
56,014
56,014
56,014
569,119
323,951
340,208
326,903
363,659
229,906
2,761,978
-
-
-
-
-
-
-
-
-
16.8%
9.3%
10.3%
11.8%
13.7%
10.4%
Balance held
Granted as
On Exercise
1 March 2019
Remuneration
of Option
Net Change
Other 2
Balance held
29 February 2020
Year ended 29 February 2020
Ordinary Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary Shares
Directors
T Watson (Chairman)
SC Boydell
G Price
R Green
J Jackson
J Hamparsum
J Di Leo
Executives
M Renehan
J Callachor
D Lindsay
S Greenwood
M Newbury
S McGregor
707,629
714,387
611,048
-
13,471,111
158,504
-
-
4,000
25,000
6,000
-
2,000
15,699,679
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
976,202
(714,387)
-
-
-
-
-
-
(4,000)
(25,000)
(6,000)
-
-
1,683,831
-
611,048
-
13,471,111
158,504
-
-
-
-
-
-
2,000
226,815
15,926,494
1 Includes ordinary shares that are held directly, indirectly and beneficially by KMP.
2 Net Change Other includes shares held at appointment and retirement.
All shares above are held in the parent entity Namoi Cotton Limited.
All ordinary share transactions by the company with KMP are made through the ASX on normal commercial
terms.
Year Ended 29 February 2020
Directors’ Report
Page 17
Namoi Cotton Limited
Loans to KMP
No loans remain outstanding from KMP as part of the Employee Incentive Scheme that was suspended in
August 2004 (refer to note 19 to the financials). The amounts owed by KMP at year end were D. Lindsay $Nil
(2019: $2,630).
Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the eligibility criteria to be
appointed as a Grower Director. Grower directors are required to:
have ginned at least 1,500 cotton bales in aggregate per cotton season at a Namoi Cotton gin in at least
three out of the last five cotton seasons; and
sell at least 50% of their seed cotton production at any Namoi Cotton gin in at least three out of the last
five cotton seasons; or
sell at least 50% of their seed cotton production which is grown within 100km of any Namoi Cotton gin at
a Namoi Cotton gin in at least three out of the last five cotton seasons; and
is the registered owner or lessee of cotton farming property which annually can plant a minimum of 150
hectares of seed cotton and is capable of producing 1,500 cotton bales in aggregate per cotton season to
be ginned at a Namoi Cotton gin.
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
Freight Payments
Name
Mr T Watson
Mr SC Boydell
Mr G Price
29 Feb
2020
28 Feb
2019
$
$
2,142,079
1,359,217 3,136,449
-
1,607,440 2,117,930
Ms J Hamparsum
-
235,264
2,966,657 7,631,722
29 Feb
2020
$
-
-
30,942
29,237
60,179
28 Feb
2019
$
-
-
40,714
-
Ginning Charges Levied
28 Feb
2019
29 Feb
2020
Grain & Seed
29 Feb
2020
28 Feb
2019
$
605,529
138,397
174,174
41,397
$
930,783
336,209
243,596
139,896
$
247,275
311,393
338,775
68,105
965,548
$
200,000
338,768
202,452
128,614
869,834
40,714
959,497
1,650,484
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 Namoi Cotton Alliance (“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.
Other transactions with KMP
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
Year Ended 29 February 2020
Directors’ Report
Page 18
Namoi Cotton Limited
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;
Costs associated with the provision of crop finance;
Cotton seed sales;
Module relocation costs; and
Travel expense reimbursements.
Compensation Options
Namoi Cotton is proposing to offer LTI compensation to executives in the form of options or performance
rights over its shares. 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.
2020
2019
2018
2017
2016
Earnings per CCU (cents)
Distribution per CCU (cents) 1
CCU/share price at year end (cents)
CCU buyback average (cents)
Earnings per Ordinary Share (diluted)
Dividend per Ordinary Share (cents/share) 1
Share price at year end (cents)
Net assets ($m)
Net assets per CCU (cents)
Net assets per ordinary share (cents) - basic 2
Net assets per ordinary share (cents) - diluted 3
1 Represents amounts paid during the financial year (refer note 5).
2 Ordinary shares on issue at balance date.
3 Diluted for conversion of residual capital stock to ordinary shares.
N/a
N/a
N/a
N/a
(7.8)
-
30.0
121.4
N/a
86.6
85.2
End of Remuneration Report
N/a
N/a
N/a
N/a
(0.4)
1.9
40.0
129.8
N/a
94.7
93.0
N/a
N/a
N/a
N/a
4.7
-
53.0
131.8
N/a
103.4
92.4
0.2
-
49.0
N/a
N/a
N/a
N/a
123.8
112.7
N/a
N/a
5.7
0.5
34.0
N/a
N/a
N/a
N/a
124.6
112.5
N/a
N/a
Directors’ interests in ordinary shares of the company
As at the date of this report, the interest of the directors and their related parties in the ordinary shares of
the company were as set out on page 18.
Environmental performance & regulation
The directors regularly review the business activities of the company to ensure it operates within the
environmental laws established by regulatory authorities.
Indemnification and insurance of directors and officers
Under the Constitution, every person who is or has been a director of the company is indemnified, to the
maximum extent permitted by law, out of the property of the company against any liability to another person
(other than the company) 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 company.
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
Year Ended 29 February 2020
Directors’ Report
Page 19
Namoi Cotton Limited
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 has established a Trading and Operating Risk Committee (formerly the Financial Risk Committee)
which reviews the integrity of Namoi Cotton’s trading operation risk limits and risk management systems,
identifies and monitors the company’s trading risk profile on a timely basis in addition to reviewing
management of portfolio exposures. The Trading and Operating Risk Committee ensures Namoi Cotton’s risk
management policies are aligned to its corporate philosophies and principles. The Trading and Operating Risk
Committee regularly reports to the full board on risk matters that may have a material impact on the
company’s operation and trading activities.
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
Trading and Operations Risk Committee has developed comprehensive policies and procedures to monitor,
assess and manage all our major business risks.
The purpose of the Trading and Operating Risk Committee is to:
Review the integrity of Namoi Cotton’s trading operation risk limits and risk management systems; and
Obtain regular updates from Company management on risk matters that may have a material impact on
the company’s operation and trading activities.
The Audit, Risk and Compliance Committee oversees the audit function as well as compliance with financial
and risk management policies of the company.
The purpose of the Audit, Risk and Compliance Committee is to:
assist the Board by monitoring the implementation of Board policy and making recommendations to the
Board in respect of matters for which it is responsible; and
oversee the financial reporting process to ensure the balance, transparency and integrity of published
financial information. Review the management process for the identification of significant business risks
and exposures (including fraud), and review and assess the adequacy of management information and
internal control structures.
The Safety Committee is tasked with monitoring workplace health, safety and environment risks identified as
part of the risk register.
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 2020 Annual Report due in June 2020 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 26 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.
Year Ended 29 February 2020
Directors’ Report
Page 20
Namoi Cotton Limited
Auditor’s independence declaration
The auditor’s independence declaration is included on page 22 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 ASIC Corporations (Rounding in Financial
Directors Reports) Instrument 2016/191. The company 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
T WATSON
Director
Brisbane
29 April 2020
Year Ended 29 February 2020
Directors’ Report
Page 21
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
Auditor’s independence declaration to the directors of Namoi Cotton
Limited
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year ended 29
February 2020, I declare to the 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; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial year.
Ernst & Young
Wade Hansen
Partner
Brisbane
29 April 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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
Independent auditor's report to the members of Namoi Cotton Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Namoi Cotton Limited (the Company) and its subsidiaries (collectively
the Group), which comprises:
•
•
•
•
the Group consolidated and Company balance sheets as at 29 February 2020;
the Group consolidated and Company statements of profit and loss and other comprehensive income,
statements of changes in equity and statements of cash flows for the year then ended;
notes to the financial statements, including a summary of significant accounting policies; and
the directors' declaration.
In our opinion, the accompanying financial report is in accordance with the Corporations Act 2001, including:
a)
b)
giving a true and fair view of the Company’s and the Group's financial position as at 29 February 2020
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our
audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise doubt
about the Group’s ability to continue as a going concern. These events or conditions indicate that a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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. In addition to the matter described in the Material Uncertainty Related to Going Concern
section, we have determined the matters described below to be the key audit matters to be communicated in
our report. 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
The Company and the Group measure ginning
infrastructure assets (“ginning assets”) at fair
value as disclosed in Note 1(p) to the financial
statements. Ginning assets represent 64.1% of
total assets of the Company and 63.2% of total
assets of the Group.
The Group uses an internally generated
discounted cash flow model to determine the fair
value of the ginning assets supported by periodic
valuations conducted by external experts on a
three-year rolling basis.
The Group last commissioned an independent
valuation of ginning assets to provide external
support for the assessment of fair value as at 28
February 2019.
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 14 and Policy Note 1(p).
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.
Our audit procedures included the following:
►
►
►
Evaluated the input assumptions and
estimates made by the Group in applying its
valuation methodology including sustainable
bales and earnings against average
production and earnings over the previous
ten years (covering a broad spread of high
and low production seasons) to take into
account the seasonal variations and
considered any changes or lack of changes in
other assumptions or estimates since the
prior year including growth rates and discount
rates;
Evaluated sensitivities performed by
management relating to forecast crop
assumptions including considering the impact
of drought conditions on future cotton crops.
We also considered the potential impact of
COVID 19 restrictions on forecast
assumptions;
Considered the continuing appropriateness of
independent valuations obtained by the Group
in the prior financial year and performed
sensitivity testing to understand the impact of
changes in key assumptions to valuation;
►
Involved our valuation specialists to assist in
assessing the modelling used by the Group to
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Why significant
How our audit addressed the key audit matter
support its valuation, by evaluating the model
calculation methodology and discount rates
used; and
►
Assessed the adequacy of the related
financial report disclosures.
2. Investment in Namoi Cotton Alliance Joint Venture
Why significant
How our audit addressed the key audit matter
At 29 February 2020 the Group held a 51% stake
in the Namoi Cotton Alliance joint venture
(“NCA)”.
Our audit procedures related to the carrying value
of Namoi Cotton’s investment in NCA and the
equity accounted result included the following:
As explained in Note 1 to the financial
statements, this investment was accounted for
using the equity method of accounting in
accordance with Australian Accounting
Standards. An investment of $31.2m is recorded
on the Group’s consolidated balance sheet. This
is reflected in the Company balance sheet in
Trade and Other Receivables where a loan was
made to a controlled entity which holds the
interest in NCA. An equity accounted loss of
$7.8m contributed to the financial performance
of the Group.
The Group also assesses the carrying amount of
its equity accounted investment in NCA for
impairment at balance date. The Group’s
impairment assessment is based on NCA’s fair
value less costs of disposal (FVLCD) and is
determined with reference to the net tangible
assets of the entity. The Group’s impairment
testing resulted in the recognition of an
impairment loss of $2.9 million for the half year
ended 31 August 2019.
The impacts of COVID 19 on the results of NCA
at 29 February 2020 and subsequent to year
end impact the groups assessment of the
carrying amount of its investment. The impacts
relating to COVID 19 are disclosed in Note 1(a).
►
►
►
►
►
►
Audited the financial statements of NCA for
the year ending 29 February 2020 and issued
a separate audit report to the participants of
the joint venture;
In the context of the audit of the Company
and the Group, we evaluated the scope of the
NCA audit and the execution of audit
procedures, significant areas of estimation
and judgement and audit findings;
Enquired of NCA management in relation to
areas of judgement and movements in the
balance sheet and income statement at year
end and through to the date of this report;
Considered the monthly results reported by
NCA to the Group during the year;
Recalculated the Group’s share of the equity-
accounted result with reference to the
audited financial statements of NCA for the
year ended 29 February 2020 and ensured
these were correctly reflected in the carrying
value of NCA;
Involved our valuation specialists to test the
mathematical accuracy of the NCA
impairment model, evaluate the
appropriateness of the methodology used to
measure FVLCD and assess the discount rate
used;
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Why significant
How our audit addressed the key audit matter
The Group and its 49% joint venture participant
in NCA are in negotiation to restructure NCA
operations beyond 29 May 2020. The terms of
the restructure may impact the availability of the
Group’s tax losses and related deferred tax asset
recognition, which may impact the groups
ongoing compliance with financial covenants.
The terms of the restructure may also require
the group to amend its finance facilities.
The significance of the carrying amount of the
Group’s investment in NCA to its financial
position, NCA’s contribution to the Group’s
financial performance and judgements and
estimates involved in impairment testing, mean
this was a key audit matter.
►
►
►
Details of the Group’s investment in this joint
venture are outlined in Note 10 to the financial
statements.
Assessed future cash flow assumptions
through comparison with current trading
performance, impact of new contractual
arrangements, externally derived data (where
applicable) and other evidence and enquiry
with the Group in respect of key growth and
trading assumptions; and
Considered the impacts and potential impacts
of COVID 19 on the forecast financial
performance of NCA and the possible impact
on the Group’s carrying value assessment.
Considered the possible impact of the
proposed restructure of NCA and the
consequential impacts on the availability of
the Group’s tax losses, related deferred tax
assets recognition, ongoing compliance with
financial covenants and the potential
requirement for the group to amend its
finance facilities.
►
Assessed the adequacy of the related
financial report disclosures.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2020 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Directors’ Report that is 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.
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s
report, we 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Company’s and Group’s
ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Company or Group or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and 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 one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the 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 disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company or the Group to cease
to continue as a going concern
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
•
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 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.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most significance
in the audit of the 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 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.
Report on the audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 11 to 19 of the directors' report for the year
ended 29 February 2020.
In our opinion, the Remuneration Report of Namoi Cotton Limited for the year ended 29 February 2020,
complies with section 300A of the Corporations Act 2001.
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 on our audit conducted in accordance with Australian Auditing
Standards.
Ernst & Young
Wade Hansen
Partner
Brisbane
29 April 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Namoi Cotton Limited
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Namoi Cotton 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 company and of the consolidated entity are in accordance with the Corporations Act
2001, including:
i)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 29
February 2020 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);
c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
This declaration 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 29 February 2020.
On behalf of the board
T WATSON
Director
Brisbane
29 April 2020
Year Ended 29 February 2020
Directors’ Declaration
Page
29
Namoi Cotton Limited
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 29 February 2020
Revenue from customers
Revenue - other
Revenue
Trading margin gains
Other income/(loss)
Share of profit/(loss) of associates
and joint ventures
Processing and distribution costs
Employee benefits expense
Depreciation
Fair value decrement - ginning assets
Impairment - joint venture
Impairment - goodwill/parent investment
Finance costs
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to the members
of Namoi Cotton Limited
Consolidated
$'000
Parent
$'000
29 Feb
2020
3,166
350
3,516
28 Feb
2019
5,350
598
5,948
29 Feb
2020
2,136
350
2,486
28 Feb
2019
3,089
610
3,699
39,367
83,534
39,367
83,534
1,125
-
(8,539)
(5,882)
(10,419)
(19,433)
(5,239)
(5,217)
2,438
(961)
(2,082)
(9,856)
(15,300)
(22,891)
(28,046)
(9,278)
(2,018)
(3,563)
-
(2,180)
(15,500)
124
2
-
(10,354)
(19,059)
(5,158)
(5,217)
-
(8,396)
(2,128)
(9,408)
(17,865)
-
-
(22,794)
(27,300)
(9,197)
(2,018)
-
-
(2,227)
(14,802)
8,895
4,310
(680)
5,348
(2,692)
(10,990)
(556)
(12,517)
6,203
Note
2a
2a
2a
2b
10
2c
14
10
13
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 other comprehensive income
attributable to the members of
Namoi Cotton Limited
2,609
1,258
2,609
1,258
(8,381)
702
(9,908)
7,461
Earnings per ordinary share
Basic earnings per share
Diluted earnings per share 1
Cents
29 Feb
2020
28 Feb
2019
(7.8)
(7.8)
(0.4)
(0.4)
Note
4
4
1 Residual capital stock uncovered has not been included in the calculation of diluted earnings per
share because they are antidilutive, refer to note 19.
The above statement of profit and loss and other comprehensive income should be read
in conjunction with the accompanying notes.
Year Ended 29 February 2020
Statement of Profit and Loss and Other Comprehensive Income
Page 30
Namoi Cotton Limited
BALANCE SHEET
as at 29 February 2020
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
Available-for-sale financial assets
Investments in associates and joint ventures
Intangibles
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
Interest bearing liabilities
Provisions
Deferred tax liabilities (net)
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
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
6
7
8
9
7
24
10
13
14
16
17
18
9
17
18
3
19
20
731
3,531
7,254
683
4,280
16,479
-
-
28,878
-
133,939
162,817
5,827
3,974
10,048
304
18,796
38,949
-
-
36,851
961
138,290
176,102
543
4,057
7,226
671
1,326
13,823
34,376
428
-
-
133,505
168,309
5,541
4,757
10,014
298
7,773
28,383
41,820
1,380
-
-
137,774
180,974
179,296
215,051
182,132
209,357
4,184
1,710
1,524
3,024
10,442
44,778
571
2,067
47,416
13,226
1,061
2,964
18,261
35,512
43,630
831
5,259
49,720
19,002
1,310
1,521
70
21,903
45,291
571
2,553
48,415
23,091
1,061
2,961
7,238
34,351
45,679
822
6,783
53,284
57,858
85,232
70,318
87,635
121,438
129,819
111,814
121,722
37,639
70,330
13,469
121,438
37,639
67,721
24,459
129,819
37,639
70,330
3,845
111,814
37,639
67,721
16,362
121,722
121,438
129,819
111,814
121,722
The above balance sheet should be read in conjunction with the accompanying notes.
Year Ended 29 February 2020
Balance Sheet
Page 31
Namoi Cotton Limited
STATEMENT OF CASH FLOWS
for the year ended 29 February 2020
Cash flows from operating activities
Receipts from customers
Currency derivative flows
Payments to suppliers and employees
Payments to growers
Interest received
Borrowing costs
Net cash (outflow)/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
Loan payments (partnership and JV)
Net cash (outflow)/inflow from investing
activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Loans advanced to growers
Proceeds from repayment of grower loans
Repayment of equipment loans
Payment of principal portion of lease liabilities
Dividends paid
Net cash (outflow)/inflow from financing
activities
Consolidated
$'000
Parent
$'000
Note
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
308,561
(28)
(52,820)
(255,733)
9
(2,130)
679,779
(371)
(102,723)
(553,524)
44
(2,176)
293,897
(14)
(51,029)
(242,715)
8
(2,190)
677,479
(370)
(100,601)
(553,464)
56
(2,223)
6b
(2,141)
21,029
(2,043)
20,877
(1,123)
(7,611)
(1,123)
(7,604)
19
(7)
25
(400)
653
(43)
61
-
19
(7)
25
(400)
653
(43)
61
-
(1,486)
(6,940)
(1,486)
(6,933)
13,543
(13,543)
(119)
119
(1,097)
(372)
-
5,557
(11,548)
(1,048)
1,048
(1,108)
-
(2,638)
13,543
(13,543)
119
(119)
(1,097)
(372)
-
5,557
(11,548)
(1,048)
1,048
(1,108)
-
(2,638)
6c
(1,469)
(9,737)
(1,469)
(9,737)
Net increase/(decrease) in cash
Add cash at the beginning of the financial year
Cash at end of the financial year
6a
(5,096)
5,827
731
4,352
1,475
5,827
(4,998)
5,541
543
4,207
1,334
5,541
The above statement of cash flows should be read in conjunction with the accompanying notes.
Year Ended 29 February 2020
Statement of Cash Flows
Page 32
Namoi Cotton Limited
STATEMENT OF CHANGES IN EQUITY
for the year ended 29 February 2020
Consolidated $'000
Total equity at 1 March 2019
Net loss for the period
Other comprehensive income
Equity dividends
Total equity at 29 February 2020
Parent $'000
Total equity at 1 March 2019
Net loss for the period
Other comprehensive income
Equity dividends
Total equity at 29 February 2020
Consolidated $'000
Total equity at 1 March 2018
Net loss for the period
Other comprehensive income
Equity dividends
Total equity at 28 February 2019
Parent $'000
Total equity at 1 March 2018
Net profit for the period
Other comprehensive income
Equity dividends
Total equity at 28 February 2019
Asset
Revaluation
Reserve
(Note 20)
67,721
-
2,609
2,609
-
70,330
Asset
Revaluation
Reserve
(Note 20)
67,721
-
2,609
2,609
-
70,330
Asset
Revaluation
Reserve
(Note 20)
66,463
-
1,258
1,258
-
67,721
Asset
Revaluation
Reserve
(Note 20)
66,463
-
1,258
1,258
-
67,721
Issued
Capital 1
37,639
-
-
-
-
37,639
Issued
Capital 1
37,639
-
-
-
-
37,639
Issued
Capital 1
37,639
-
-
-
-
37,639
Issued
Capital 1
37,639
-
-
-
-
37,639
Retained
Earnings
Total
Equity
24,459
129,819
(10,990)
-
(10,990)
-
13,469
(10,990)
2,609
(8,381)
-
121,438
Retained
Earnings
Total
Equity
16,362
121,722
(12,517)
-
(12,517)
-
3,845
(12,517)
2,609
(9,908)
-
111,814
Retained
Earnings
Total
Equity
27,653
131,755
(556)
-
(556)
(2,638)
24,459
(556)
1,258
702
(2,638)
129,819
Retained
Earnings
Total
Equity
12,797
116,899
6,203
-
6,203
(2,638)
16,362
6,203
1,258
7,461
(2,638)
121,722
1 The shares of Namoi Cotton Limited have no par value.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Year Ended 29 February 2020
Statement of Changes in Equity
Page 33
Namoi Cotton 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 Limited as an individual entity (under CO
10/654) and the consolidated entity consisting of Namoi Cotton 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 29 April 2020 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 and
Corporations Act 2001.
The financial statements have been prepared on a going concern basis 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 Parent’s current liabilities exceed current assets. The net current liability position is caused by loans from
controlled entities (refer to note 16) which won’t be called upon.
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 1l and Note 27) and derivative
financial instruments (refer to Note 1m and Note 9);
Fair value of ginning assets (refer Note 1o and Note 15);
Impairment testing of property plant and equipment (refer to Note 1o and Note 14);
Classification of associates and joint ventures (refer to Note 1c and Note 11);
Treatment of deferred tax balances including tax loss recognition (refer to Note 1h and Note 3); and
Assessment of the useful lives of assets (refer to Note 1o)
COVID-19 (refer to description below)
COVID-19
Subsequent to 29 February 2020, significant measures have been taken by governments and the private
sector to respond to the outbreak of COVID-19. On 11 March 2020, the World Health Organisation
characterised COVID-19 as a pandemic. In addition to health and societal issues, this has begun to cause
disruptions to businesses and economic activity. The scale and duration of these developments remain
uncertain as at the date of this report however they will have an impact on our earnings, cash flow and
financial condition.
The financial report has been prepared based upon conditions existing at 29 February 2020 and considering
those events occurring subsequent to that date, that provide evidence of conditions that existed at the end of
the reporting period. At a Namoi Group level, the directors determined there was no financial impact to the
Year Ended 29 February 2020
Notes to the Financial Statements
Page 34
Namoi Cotton Limited
group at 29 February 2020 as a result of COVID 19, other than through the Group’s share of losses from its
associate, NCA, which is discussed further below.
The current forecast is for COVID 19 to have limited impact on the upcoming cotton ginning season however,
it is not possible to estimate the impact of the outbreak’s near-term and longer effects or Governments’
varying efforts to combat the outbreak and support businesses. This being the case, we do not consider it
practicable to provide a quantitative or qualitative estimate of the potential impact of this outbreak on the
Group at this time.
The financial report of NCA has been prepared based upon conditions existing at 29 February 2020 and
considering those events occurring subsequent to that date, that provide evidence of conditions that existed
at the end of the reporting period. At an NCA level, the entity determined there was a negative impact of
$2.01 million directly to NCA at 29 February 2020 as a result of COVID 19 impacts in the cotton futures
market. Subsequent to year end for the month ended 31 March 2020, an additional negative impact of $4.61
million was recorded directly by NCA due to COVID 19. The negative impact to NCL is a 51% share of these
amounts recorded through the share of associates profits/losses.
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 2019 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 16 Leases effective 1 March 2019 (Refer to Note 1j)
IFRIC Interpretation 23 Uncertainty over Income Tax Treatments
Prepayment Features with Negative Compensation – Amendments to IFRS 9
Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28
AIP IFRS 3 Business Combination – Previously held Interests in a joint operation
AIP IFRS 11 Joint Arrangements – Previously held interests in a joint operation
AIP IAS 23 Borrowing Costs – Borrowing cost eligible for capitalization.
AASB 16 has been implemented from 1 March 2019 using the modified retrospective approach with right of
use assets equal to lease liabilities on transition date and will not restate comparative amounts for the period
ended 28 February 2019. The Group has availed itself of the exemptions within AASB 16 paragraph 5 relating
to short-term leases and leases for which the underlying asset is low value. Refer to Note 1(j) and Note 15 for
the adjustments as of 1 March 2019 in relation the adoption of AASB 16.
Certain new accounting standards and interpretations have been published that are not mandatory for
29 February 2020 reporting periods and have not yet been applied in the consolidated Financial Statements.
These new Standards are as follows and where appropriate commentary as to their likely impact has been
included:
Amendments to IFRS 3: Definition of Business
Amendments to IAS 1 and IAS 8 Definition of Material
IFRS 17 Insurance Contracts
b) Going Concern
The financial report has been prepared on the going concern basis that assumes the continuity of normal
business activities and the realisation of assets and the discharge of liabilities as and when they fall due, in
the ordinary course of business. The ability of the Group to continue as a going concern is impacted by the
continuing availability of the Group’s financing facilities as well as the continuing availability of the financing
facilities of Namoi Cotton Alliance (NCA), its 51% owned joint venture.
Consistent with prior years, the Group’s operations are funded by a working capital facility which has an
annual renewal of 30 April each year.
Namoi announced on 6 April 2020 that it had renewed its $10 million working capital banking facility and that
this facility together with the Company’s $42 million term facility will mature on 30 April 2021. Considering
the current disruptions to businesses and economic activity, the financial covenants associated with the
Year Ended 29 February 2020
Notes to the Financial Statements
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Namoi Cotton Limited
working capital facility were adjusted to provide the Company with additional operational flexibility. Note 17
to the financial report summarises the details of all of the Group’s banking facilities, including working capital,
term debt and the amendments to financial covenants.
Namoi has embarked on a non-core assets sales program during 2020/21 and funds generated from that
program will help fund the Company’s debt servicing requirements and meet the renewed financing facility
financial covenants.
Namoi owns a 51% interest in Namoi Cotton Alliance (NCA) joint venture (refer to Note 10 Investments in
Associates and Joint Ventures using the equity method). NCA has a range of banking facilities with a syndicate
of banks with a total drawn balance of $62.4 million as at 29 February 2020. These syndicated bank facilities
expire as at 30 April 2020 and as at the date of this report NCA has executed an agreement with one bank to
extend the existing facilities until 29 May 2020.
Namoi is in discussions with its joint venture partner in NCA around the best form of funding for the joint
venture beyond 29 May 2020 and has signed a non-binding term sheet with its joint venture partner agreeing
on an ongoing funding plan for NCA. The funding plan contemplates an extension of the existing or similar
banking facilities for NCA or for one partner in NCA to provide funding to NCA beyond 29 May 2020 in the
event certain milestones are reached. The partners in NCA will need to raise their own financing if the
milestones are not met on or before 29 May 2020.
The joint venture partners in NCA are in discussion around a potential restructuring of NCA’s operations to
better align with its future funding requirements, as well as to ensure maximum value of NCA’s presence in
the marketplace. There is a risk that NCA’s performance and structure, being impacted by the potential
restructure as well as extreme market volatility, could result in the need for NCL to seek waivers and
amendments to its existing banking agreements.
As a consequence of the above matters, a material uncertainty exists that may cast significant doubt as to
whether Namoi will be able to continue as a going concern and therefore, whether it will realise its assets and
extinguish its liabilities in the normal course of business and at the amounts in this report. However, the
Directors believe that there are reasonable grounds to believe that the use of the going concern basis
remains appropriate as there is an expectation that the Group:
• will be able to extend existing finance facilities or establish new facilities; and
• will be able to raise sufficient amounts of either debt or equity or cash from asset sales.
The financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or to the amounts and classification of liabilities should the Group not be able to
continue as a going concern.
The outbreak of COVID-19 has caused disruptions to businesses and economic activity as outlined in Note 1:
Summary of Significant Accounting Policies in the Consolidated final financial report, specifically to Significant
accounting judgments, estimates and assumptions. This was an emerging issue as at 29 February 2020, and
remains so given that the impact in the community in general has worsened since the reporting date. The
scale and duration of these developments remain uncertain as at the date of this report however they are
likely to continue to have an impact on our earnings, cash flow and financial condition.
c) 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.
The ginning segment takes delivery of cottonseed from growers largely in the first half of the year between
March and August. Under Namoi Cotton’s accounting policies, profits on cottonseed are recognised when
delivery occurs.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 36
Namoi Cotton Limited
The lint cotton marketing business is undertaken by the Namoi Cotton Alliance (NCA) associate. Namoi
continues to purchase bales from growers which it on-sells to NCA. NCA normally takes delivery of lint cotton
from Namoi in the first half of the year and under NCA’s accounting policies, profits from this activity arise on
receipt of the lint cotton. Namoi equity accounts for its share of the NCA joint venture net result (refer Note
10) which is reflected in the share of profits from joint ventures and associates in the Statement of Profit and
Loss and Other Comprehensive Income.
d) Basis of consolidation
The consolidated financial statements comprise the financial statements of Namoi and its subsidiaries as at
29 February 2020. 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:
Rights arising from other contractual arrangements; and
The Namoi’s voting rights and potential voting rights.
The contractual arrangement with the other vote holders of the investee;
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,
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
Year Ended 29 February 2020
Notes to the Financial Statements
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Namoi Cotton Limited
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 within share of profit/(loss) of associates and joint ventures 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 it’s carrying value, then recognises the loss as Impairment –
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.
Liabilities, including its share of any liabilities incurred jointly
Namoi recognises the following as its share:
Assets, including its share of any assets held 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.
e) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value,
Year Ended 29 February 2020
Notes to the Financial Statements
Page 38
Namoi Cotton Limited
and the amount of any non-controlling interests in the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate
share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and
included in administrative expenses.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
f) 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 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.
g) Revenue from contracts with customers
The Group’s core business is the provision of cotton ginning services to cotton farmers and participation in
the marketing of the resultant cotton lint bales and cotton seed as products of the ginning process.
Revenue from contracts with customers is recognised when control of the goods or services are transferred
to the customer at an amount that reflects the consideration to which the Group expects to be entitled in
exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue
arrangements because it typically controls the goods or services before transferring them to the customer.
The Group apportions the transaction price to the separate performance obligations. The Group considers
the effects of variable consideration, the existence of significant financing components, noncash
consideration, and consideration payable to the customer where relevant.
Contract Balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If
the Group performs by transferring goods or services to a customer before the customer pays consideration
or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the
passage of time is required before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Group transfers goods or services to the customer, a contract liability is recognised
when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as
revenue when the Group performs under the contract.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 39
Namoi Cotton Limited
h) Revenue recognition
Revenue from customers
Sale of Byproducts
The performance obligation is satisfied upon transfer of control under the terms of sale. This is a
combination of delivered container terminal and ex-gin. Payment is due 30 days end of week from shipping.
Classing Revenue
Classing is the process of mechanically and visually inspecting cotton to determine grade characteristics.
Classing is provided to both related (NCA joint venture) and non-related cotton merchants and has been
treated as revenue from contracts with customers under AASB15. The Group recognises revenue from
classing services at the point in time.
The performance obligation is satisfied upon provision of results to the lint marketer or customer. Payment is
due within 30 days of the date of issue of the classing invoice.
Revenue - other
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.
Trading margin
Ginning revenue
Ginning is the mechanical process of separating raw seed cotton into resultant lint cotton bales and cotton
seed for cotton growers.
The Group provides ginning services that are bundled together with the purchase of cotton seed. As these
contracts are accounted for under AASB 9 they are excluded from the treatment as a sale to a customer
under AASB 15.
Sale of lint cotton
Sales revenue is brought to account when the terms of delivery under the sales contract have been satisfied.
As lint sales between the Group and NCA (Associate) are accounted for under AASB 9 they are excluded from
treatment as a sale to a customer under AASB 15.
There are no fair value adjustments required for forward lint cotton sales due to the contractual relationship
between the Group and NCA.
Sale of cotton seed
Sales revenue is brought to account when the terms of delivery under the sales contract have been satisfied.
As cotton seed sales (to feedlots, graziers, other traders and the COA Associate) are accounted for under
AASB 9 they are not treated as a sale to a customer under AASB 15.
The 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 profit and loss and other comprehensive income.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 40
Namoi Cotton Limited
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
contracts with similar maturity profiles.
i)
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.
Tax consolidation legislation
Namoi Cotton 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.
j)
Leases
The Group recognises lease liabilities to make lease payments and right of use assets representing the right to
use the underlying assets. Leases are recognised as a right-of-use asset and a corresponding liability at the
date at which the leased asset is available for use by the Group. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use
asset is measured at cost less any accumulated depreciation and impairment and is depreciated on a straight-
line basis over the lease term or the useful life of the leased asset.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 41
Namoi Cotton Limited
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of fixed lease payments (including in-substance fixed payments), less any lease
incentives receivable.
The lease payments are discounted using the lessee’s incremental borrowing, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Adoption of AASB 16
AASB 16 supersedes AASB 117 Leases, and determining whether an arrangement contains a lease, SIC-15
Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of
a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for most leases under a single on-balance sheet model. Lessor
accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases
as either operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 did not have
an impact for leases where the Group is the lessor.
The Group adopted AASB 16 using the modified retrospective method of adoption with right of use assets
equal to lease liabilities with the date of initial application of 1 March 2019. The Group also elected to use the
recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months
or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the
underlying asset is of low value (‘low-value assets’).
The effect of adopting AASB 16 is disclosed in Note 15.
k) 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.
l)
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.
The simplified method is utilised to determine expected credit losses. In applying this method, the expected
credit losses are calculated by reference to not only historical collection history but rely on forward
estimations and the expected lifetime credit loss is recognised. The methodology applies to trade debtors,
grower loans and certain intercompany balances which are eliminated within consolidated balances.
m) Inventories
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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 42
Namoi Cotton Limited
Fair value less costs to sell may be higher or lower than cost with any differences taken to the statement of
comprehensive income.
Operating supplies and spares
Operating supplies and spares are carried at the lower of 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.
n) Financial instruments
AASB 9 contains three principal classification categories for financial assets: Amortised Cost, Fair Value
Through Other Comprehensive Income (FVOCI), and Fair Value Through Profit and Loss (FVTPL).
Debt financial instruments are subsequently measured at amortised cost, FVOCI or FVTPL. The classification
is based upon two criteria:
• The Group’s business model for managing the assets;
• Whether the instruments’ contractual cash flows represent solely payments of principal and interest on
the principal amount outstanding (‘the SPPI criterion’).
The classification and measurement of the Group’s financial assets are as follows:
• Debt instruments at amortised cost for financial assets that are held within a business model with the
objective to hold financial assets to collect contractual cash flows that meet the SPPI criterion. This category
includes the Group’s Cash and cash equivalents and Trade & other receivables.
• Financial assets at FVTPL comprise derivative instruments. This category would also include debt
instruments whose cash flow characteristics fail SPPI criterion or are not held within a business model whose
objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. This
category includes the Group’s Foreign exchange contracts, interest rate derivatives and also forward
commodity purchase and sales contracts.
The assessment of whether contractual cash flows on debt instruments met the SPPI criterion was made
based on the facts and circumstances as at initial recognition of the assets.
The new classification requirements of the standard did not have any significant impact on the Group’s
existing financial assets, being cash and cash equivalents, trade and other receivables or derivative financial
instruments.
At initial recognition, the Group measures a financial asset at its fair value. Measurement of cash and cash
equivalents and trade and other receivables remain at amortised cost consistent with the comparative
period. Purchases or sales of financial assets that require delivery of assets with a time frame established by
regulation or market convention (regular trades) are recognised on the trade date i.e. the date that the group
commits to purchase or sell the asset. AASB 9 requires financial liabilities to be measured with gains or losses
on financial liabilities designated at inception to be measured at fair value are recognised in profit or loss,
except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income.
All loans and borrowings are initially recognised at fair value, being the amount received less attributable
transaction costs. After initial recognition, interest bearing liabilities are stated at amortised cost with any
difference between cost and redemption value being recognised in the statement of profit or loss over the
period of the borrowings on an effective interest basis.
The Group recognises gains or losses on financial liabilities, designated at inception to be measured at fair
value, in profit or loss. The Group has had no material change in the credit risk of these financial liabilities
during the period.
Trade and other payables are recognised for amounts to be paid for goods or services received. Trade
payables are settled on terms aligned with the normal commercial terms.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 43
Namoi Cotton Limited
o) Recoverable amounts of non-financial 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.
p) Property, plant and equipment
Cost and valuation
Gin, warehouse, other infrastructure and major equipment assets are measured at fair value (refer to Note
1n) 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 recognised in the statement of comprehensive income, in which case,
the increase is recognized in the statement of comprehensive income. A revaluation deficit is recognised in
the statement of comprehensive income, except to the extent that it offsets an existing surplus on the same
asset recognised 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.
Depreciation
Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
remaining useful lives of 20 years of sustainable bales (2019: 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.
Major depreciation rates are:
Ginning assets
Other assets
20 years (2019: 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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 44
Namoi Cotton Limited
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.
q)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
r) 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.
s)
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.
t) 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.
u) 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.
v) 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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 45
Namoi Cotton Limited
w) 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;
fair value movements in interest rate derivatives.
x) Earnings per share
Basic earnings per share 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 shares.
Diluted earnings per share 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 shares and potential
dilutive shares but not including any antidilutive shares.
y) 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”.
z) Fair value measurement
Namoi measures financial instruments, such as derivatives, at fair value at each balance sheet date and non-
financial assets at revalued 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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 46
Namoi Cotton Limited
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
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 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 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.
aa) Cash Dividends
Namoi recognises a liability when the dividends are declared, determined or publicly recommended on or
before the reporting date
bb) 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 ASIC Corporations (Rounding in Financial
Year Ended 29 February 2020
Notes to the Financial Statements
Page 47
Namoi Cotton Limited
Directors Reports) Instrument 2016/191. The company is an entity to which this legislative instrument
applies.
cc) Changes to comparatives
Changes to comparative figures are made where there is a conflict with the current-year accounts.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 48
Namoi Cotton Limited
2. Revenue and Expenses
a) Revenue
i) Revenue from customers
By type of goods or service
Sale of byproducts
Classing services
Moss
Other
ii) Other revenue
Rental revenue
Other service revenue
Finance revenue
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
207
824
2,090
45
3,166
106
236
8
350
568
1,693
3,085
4
5,350
154
400
44
598
-
-
2,090
46
2,136
106
236
8
350
-
-
3,085
4
3,089
154
400
56
610
Total revenue
3,516
5,948
2,486
3,699
iii) Trading margin gains
Ginning services and seed sales
Lint Handling
b) Other income
Net gain on disposal of property, plant and equipment
Net gain on disposal of investments
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 - leases
Finance charges payable under equipment loans
Interest expense - interest rate derivatives
39,184
183
39,367
83,124
410
83,534
39,184
183
39,367
83,124
410
83,534
5
1,120
1,125
-
-
-
2
-
2
-
-
-
18,203
1,230
19,433
26,464
1,582
28,046
17,857
1,202
19,059
25,764
1,536
27,300
1,843
29
94
116
2,082
2,036
-
106
38
2,180
1,897
29
86
116
2,128
2,083
-
106
38
2,227
Year Ended 29 February 2020
Notes to the Financial Statements
Page 49
Namoi Cotton Limited
e) Other expenses
Maintenance
Net loss on disposal of property, plant
and equipment
Insurance
Motor vehicle related
Consulting fees
Audit fees
Business travel
Strategic restructuring-consulting 1
Other
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
1,656
5,091
1,621
5,032
-
1,046
814
1,704
408
595
4
3,629
9,856
31
910
1,766
1,159
292
692
454
5,105
15,500
-
1,003
809
1,657
406
593
4
3,315
9,408
31
876
1,763
1,114
291
692
454
4,549
14,802
1 Includes the engagement of external corporate, legal, accounting and taxation advisors in relation to the
corporate restructure and fair value increment to grower member shares in the prior year (Refer Note 21).
3. Income Tax
Statement of Comprehensive Income
Accounting profit/(loss) from continuing operations
before income tax expense
At the Group's statutory income tax rate of 30%
(2018: 30%)
Non-allowable expenditure
Tax loss incurred - not recognised
Tax losses previously not recognised 1
Income tax expense/(benefit) recorded in the
statement of comprehensive income
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
(15,300)
124
(17,865)
8,895
(4,590)
100
243
(63)
37
613
191
(161)
(5,359)
11
-
-
2,669
23
-
-
(4,310)
680
(5,348)
2,692
1 Tax losses previously unrecognised for individual entities outside the tax consolidated group.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 50
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Namoi Cotton Limited
1 Tax losses recognised for individual entities in the tax consolidated group
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 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 Share
Basic earnings per share is calculated by dividing the consolidated net profit after tax for the year by the
number of ordinary shares at year end.
The following reflects the income and equity data used in the basic and diluted earnings per share
computations below the profit/(loss):
Consolidated loss attributable to ordinary shares
Earnings per share - basic (cents)
Earnings per share - diluted (cents) 1
Consolidated
$'000
29 Feb
2020
(10,990)
No.
(7.8)
(7.8)
28 Feb
2019
(556)
No.
(0.4)
(0.4)
Weighted average number of ordinary shares for basic EPS
140,223,484
137,044,276
Weighted number unconverted residual capital stock
2,430,123
5,609,331
Weighted average number of ordinary shares
adjusted for the effect of dilution
142,562,115
139,601,822
1 Residual capital stock unconverted has not been included in the calculation of diluted earnings per
share because they are antidilutive.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of authorisation of these financial statements.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 52
Namoi Cotton Limited
5. Distributions Paid or Provided on Ordinary Shares
Final distribution for the year ended 28 February 2019 of 0.0 cents
per ordinary share (2018: 1.9 cents)
Net distributions during the year
6. Cash and Cash Equivalents
Consolidated
$'000
29 Feb
2020
28 Feb
2019
-
-
2,638
2,638
(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
(Gain)/loss on sale of investments
Impairment
Foreign exchange (gain)/loss on finance leases
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
Year Ended 29 February 2020
Notes to the Financial Statements
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
731
-
731
5,827
-
5,827
543
-
543
5,541
-
5,541
(10,990)
(556)
(12,517)
6,203
5,239
(5)
(1,120)
3,740
55
-
(1,700)
377
8,539
15,125
426
2,417
(378)
(720)
(3,559)
(152)
(4,310)
(2,141)
9,279
31
-
5,581
34
(71)
189
(60)
5,883
20,866
4
(528)
989
(598)
(58)
190
720
21,029
5,158
(2)
-
13,613
55
-
(1,691)
377
-
17,510
683
2,410
(375)
(720)
(3,534)
(152)
(5,348)
(2,043)
9,197
31
-
2,018
34
(20)
211
-
-
11,471
528
(507)
992
(599)
(93)
190
2,692
20,877
Page 53
Namoi Cotton Limited
(c) Disclosure of financing activities
1 March
2019
$'000
Cash
flows
$'000
Foreign
exchange
movement
$'000
New
leases
$'000
28
February
2020
$'000
Other
$'000
Current interest-bearing loans
-
-
Current obligations under
equipment loans
lease liabilities
Current other borrowings
Non-current interest bearing
loans
Non-current obligations under
equipment loans
lease liabilities
Dividends paid
1,062
-
41
(954)
(372)
(3)
42,000
-
1,630
-
-
(140)
-
-
44,733
(1,469)
-
10
-
-
-
41
-
-
51
-
28
372
-
-
62
814
-
400
824
340
-
400
970
340
38
1,535
43,535
(824)
(340)
-
769
474
-
1,276
1,935
46,526
1 March
2018
$'000
Cash
flows
$'000
Foreign
exchange
movement
$'000
New
leases
$'000
28
February
2019
$'000
Other
$'000
Current interest-bearing loans
6,000
(6,000)
Current obligations under
equipment loans
Current other borrowings
Non-current interest bearing
loans
Non-current obligations under
equipment loans
Dividends paid
758
32
42,000
1,226
(1,108)
9
-
-
-
(2,638)
50,016
(9,737)
-
16
-
-
19
-
35
-
-
-
503
893
1,062
-
-
-
-
41
42,000
1,278
(893)
1,630
2,638
2,638
-
44,733
1,781
Year Ended 29 February 2020
Notes to the Financial Statements
Page 54
Namoi Cotton Limited
(d) Disclosure of non-cash financing and investing activities
(i) Equipment Finance Transactions
During the financial year, the consolidated entity acquired plant and equipment with an aggregate
fair value of $90,561 (2019: $1,780,525) by means of equipment loans.
(ii) Distribution Reinvestment Plan
No distributions were paid via the issue of units/shares in 2020 (2019: nil). Refer note 5
and note 19.
(e) Fair Value
All cash balances are reflective of fair value based on observable market data.
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
Loans to employees3
Loans to controlled entities4
Non-current
Loans to controlled entities4
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
3,212
-
97
3,309
221
-
221
1
-
3,531
-
-
3,012
-
930
3,942
12
-
12
20
-
3,974
3,165
-
97
3,262
221
-
221
2
572
4,057
2,967
-
930
3,897
12
-
12
20
828
4,757
-
-
34,376
34,376
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 buyback contracts payable by the grower. These debtors are settled under a range
of agreed payment terms. These debtors are non-interest bearing.
3 Loans to employees represent non-interest-bearing loans advanced under the Namoi Cotton employee
incentive share plan (refer note 19) and other staff advances.
4 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 fair value of these loans approximate their
carry amounts due to the short-term maturities.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 55
Namoi Cotton Limited
Expected Credit Losses
An impairment analysis is performed at each reporting date. The simplified method has been used to
determine expected credit losses. In applying this method, the expected credit losses are calculated by
reference to not only historical collection history but rely on forward estimations and the expected lifetime
credit loss is recognised.
Individual receivables are written off only upon exhaustion of all means of recovery and only with Board
approval. Expected credit losses are immaterial for the Group and Parent entity.
At 1 March 2019
Charge for the year
Amounts written off
Recoveries
At 29 February 2020
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
-
-
-
-
-
71
-
(71)
-
-
-
-
-
-
-
20
-
(20)
-
-
At balance date the ageing analysis of trade and other receivables is as follows:
Consolidated
$'000
Parent
$'000
Total outstanding
Unimpaired
Within terms
Past Due 1 - 30 days
Past Due 31 - 60 days
Past Due 60+ days
Impaired
Past Due 60+ days
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
3,531
3,974
38,433
46,577
3,223
189
87
32
3,783
124
48
19
38,166
148
87
32
46,425
124
9
19
-
-
-
-
Receivables past due but not considered impaired are: Group $307,324 (2019: $190,819); Parent $266,402
(2019: $151,664). 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.
All receivables are carried at amortised cost. Details regarding foreign exchange and interest rate risk are
disclosed in Note 27. The maximum exposure to credit risk is the carrying amount of the receivables less
insurance recoverable.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 56
Namoi Cotton Limited
8. Inventories
Seed cotton and moss (at cost)
Cotton seed (at fair value less costs to sell)
Operating supplies and spares (at cost)
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
-
102
7,152
7,254
259
326
9,463
10,048
-
102
7,124
7,226
259
326
9,429
10,014
Refer to Note 27 for further information relating to the valuation techniques for determining the fair value of
Cotton Seed.
9. Derivative Financial Instruments
Current assets
Cotton seed sale contracts
Cotton seed purchase contracts
Lint Cotton purchase contracts
Current liabilities
Interest rate swap contracts
Cotton seed sale contracts
Lint Cotton sales contracts - NCA
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
695
561
2,954
4,210
-
-
2,954
2,954
-
7,773
11,023
18,796
57
7,181
11,023
18,261
695
561
-
1,256
-
-
-
-
-
7,773
-
7,773
57
7,181
-
7,238
Derivatives are used by the group to manage trading and financial risks as detailed in note 27.
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 loss on foreign
exchange contracts at year end was $nil for the group (2019: nil) and $nil for the parent entity (2019: nil).
Cotton lint purchase contracts are forward dated and deliverable contracts from growers. The fair value of
cotton lint commodity contracts is determined by reference to market prices and foreign exchange rates. The
fair value of the open cotton lint purchase contracts at year end was a derivative asset (unrealised gain) of
$2,953,926 for the group (2019: Gain $11,022,523) and lint sales contracts are a derivative liability
(unrealised loss) of $2,953,926 for the group as back-to-back sales contracts with NCA.
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 asset (unrealised gain) of
$695,147 for the group (2019: Loss $7,181,065) and $695,147 for the parent entity (2019: Loss $7,181,065).
Year Ended 29 February 2020
Notes to the Financial Statements
Page 57
Namoi Cotton Limited
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 $560,594 for the group (2019: Gain $7,773,102) and $560,594 for the
parent entity (2019: Gain $7,773,102).
Interest bearing loans of the group incurred a weighted average variable interest rate of 3.2% (2019: 3.2%).
Swaps in place at the reporting date accounted for 0 % (2019: 47.6%) of the principal outstanding. The
average fixed interest rates were 0% (2019: 2.1%) and the average variable rates were 0.96% (2019: 1.65%) at
balance date. The net fair value loss on interest rate swaps was $0 (2019: $91,270).
10. Investments in Associates and Joint Ventures using the equity method
Investment in associates (material) 10d
Investment in joint ventures (material) 10e
Investment in joint ventures (non material) 10f
(a) Ownership interest
Consolidated
$'000
Parent
$'000
29 Feb
2020
-
31,171
(2,293)
28,878
28 Feb
2019
1,820
36,514
(1,483)
36,851
29 Feb
2020
28 Feb
2019
-
-
-
-
-
-
-
-
Name
Balance Date
% Ownership
interest held by
consolidated entity
29 Feb
2020
28 Feb
2019
Investments in Associates
Cargill Oilseeds Australia Partnership (COA)
Cargill Processing Ltd (CPL) 1
Investments in Joint Ventures
Namoi Cotton Alliance (NCA)
NC Packing Services Pty Ltd (NCPS) 1
1 Incorporated in Australia
31 May
31 May
29 February
29 February
0%
0%
51%
51%
15%
15%
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.
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.
COA and CPL were divested in November 2019 as part of the settlement of the commercial dispute with
Cargill Australia Limited (‘CAL’) and the associated disposal of Namoi’s 15% interest in Cargill Processing
Limited (‘CPL’) and dissolution of the Cargill Oilseeds Australia partnership (‘COA’). (Refer to Note 2b).
Year Ended 29 February 2020
Notes to the Financial Statements
Page 58
Namoi Cotton Limited
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.
(c) Significant influence
Significant influence exists over the Cargill associates, 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
Consolidated
$'000
29 Feb 2020
COA
CPL
28 Feb 2019
COA
CPL
7,661
192
29
142
156
23
257,525
(20,389)
17,327
(11,615)
(3,058)
(1,742)
25,080
-
(20,121)
(564)
4,395
1,310
13,903
(2,919)
-
12,294
30,619
-
(66,141)
-
(35,522)
1,339
12,937
(2,142)
-
12,134
Group share of associates net assets
659
1,844
(5,328)
1,820
(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
end of the financial year
Less asset transferred to interest bearing liabilities
(Refer to Note 17)
Less cost transferred on sale of shares in CPL
(iv) Share of contingent liabilities of associate:
(iv) Share of associates commitments:
-
-
29
29
1,820
-
23
(2,270)
-
(3,058)
3,562
-
(1,742)
1,843
(5,328)
1,820
(29)
-
-
-
(1,843)
-
5,328
-
-
-
-
1,820
-
-
-
-
-
-
-
-
Year Ended 29 February 2020
Notes to the Financial Statements
Page 59
Namoi Cotton Limited
(e) Material Investments in Joint Ventures: NCA
(i) Joint Venture results
Revenue
Depreciation and Amortisation
Interest Expense
Profit/(loss) before income tax expense
Income tax expense(a)
Joint Venture net profit/(loss)
(a) The Joint Venture is a partnership for tax purposes 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
Less impairment
(iii) Carrying amount of investments in joint venture:
Balance at the beginning of the financial year
Impairment of joint venture
Share of joint venture profits/(losses) for the financial year
Carrying amount of investments in joint venture at the
end of the financial year
(iv) Share of contingent liabilities of joint venture:
(v) Share of joint venture commitments:
(f) Share of Non Material Investments in joint venture entities: NCPS
(i) Carrying amount of non material investments in joint ventures:
Balance at the beginning of the financial year
Non Material Joint Venture Results
Carrying amount of non material investments in joint ventures at the
end of the financial year
Consolidated
$'000
29 Feb
2020
28 Feb
2019
3,022
(2,611)
(3,767)
(15,257)
-
(15,257)
4,031
(2,547)
(6,100)
(869)
-
(869)
(7,781)
(444)
6,095
90,519
45,657
9,309
78,583
56,008
(73,772)
(4,440)
(45,851)
(17,203)
(423)
(309)
63,327
32,297
(1,126)
31,171
(1,068)
(1,194)
78,584
40,077
(3,563)
36,514
36,514
2,438
(7,781)
40,521
(3,563)
(444)
31,171
36,514
-
-
-
-
(1,483)
(810)
(844)
(639)
(2,293)
(1,483)
Within the NCA joint venture, management performed an impairment test at period end on intangibles,
which resulted in an impairment loss amounting to $10.62m (NCL 51% share $5.42m). The group has
recorded its share of the impairment as part of its share in associates loss during the period. Given the
impairment taken at the joint venture level some of the previous impairments taken by the group against its
investment were able to be reversed. The above $2,438k net reversal represents the net of the half year
Year Ended 29 February 2020
Notes to the Financial Statements
Page 60
Namoi Cotton Limited
$2,979k impairment and the year end $5,417k reversal. Refer to significant judgments and estimates note
(1a) for details of the impact of COVID 19 on NCA at year end and subsequent to year end.
11. Interest in Joint Operations
(a) Ownership interest
Name
Wathagar Ginning Company (WGC)
Moomin Ginning Company (MGC)
Balance Date
29 February
29 February
% Ownership
interest held by
consolidated entity
29 Feb
2020
50%
75%
28 Feb
2019
50%
75%
(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 (2019: $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, NSW with a book carrying value of $2.14m at 29 February 2020 (2019: $2.19m).
Namoi Cotton pays for its 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.
13. Intangible Assets
Goodwill
Written down value
Impairment
Written down value
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
961
(961)
-
961
-
961
-
-
-
-
-
-
Goodwill on acquisition of Australian Classing Services Pty Ltd of $0.96 million was fully impaired during the
year.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 61
Namoi Cotton Limited
14. Property, Plant and Equipment
Gin Assets
Ginning infrastructure 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
Net Gin Assets
Other Assets
Other infrastructure 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
Right of Use Assets
Provision for depreciation and impairment
Closing written down value
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
119,427
(2,825)
116,602
(1,561)
115,041
137,800
(18,266)
119,534
(914)
118,620
119,427
(2,825)
116,602
(1,561)
115,041
137,800
(18,266)
119,534
(914)
118,620
10,977
(5,734)
5,243
9,878
(5,151)
4,727
10,977
(5,734)
5,243
9,878
(5,151)
4,727
120,284
123,347
120,284
123,347
6,430
(175)
6,255
80
6,335
12,812
(7,096)
5,716
12,051
802
6,402
(739)
5,663
692
6,355
12,051
(9,004)
3,047
9,402
5,541
6,430
(175)
6,255
80
6,335
11,694
(6,412)
5,282
11,617
802
6,402
(739)
5,663
692
6,355
10,917
(8,381)
2,536
8,891
5,536
121,376
11,761
124,975
13,315
121,376
11,327
124,975
12,799
133,137
138,290
132,703
137,774
1,186
(384)
802
-
-
-
1,186
(384)
802
-
-
-
Property, plant and equipment
133,939
138,290
133,505
137,774
If the above categories of assets were still measured using the cost model, the carrying amount (WDV) would
be as follows:
Year Ended 29 February 2020
Notes to the Financial Statements
Page 62
Namoi Cotton Limited
Ginning infrastructure and major equipment
Other infrastructure and major equipment
Consolidated and Parent
$'000
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
67,648
2,972
70,620
63,825
4,287
68,112
67,648
2,972
70,620
63,825
4,287
68,112
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 28 February 2019 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. CBRE
Australia (“CBRE”) were engaged for this purpose. The methodology applied by CBRE to value the ginning
assets was an in-one-line discount rate of 14% (implied multiple of 7). Colliers (in 2016) utilised an earnings
based multiple approach whereby a multiple of 6.5 was applied to the future maintainable EBITDA. An
assessed sustainable EBITDA was multiplied by an appropriate earnings multiple derived from market
sources. The 2019 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. The internal valuation methodology applies a DCF methodology to a 10 year cash flow from
earnings with a 6 year terminal yield. A discount rate of 15.4% resulted in the internal methodology and CBRE
methodology producing the same result at that time. In 2020 the same internal methodology was used with
the following adjustments to assumptions:
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 29 February 2020 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 29 % (2019: 29%) market share of an Australian
sustainable crop size of 3.2 million bales (2019: 3.2 million bales) which also approximates the average
number of bales achieved over the last 8 years, noting that individual seasons can fluctuate significantly
dependent upon water availability;
Growth rate - revenues 1.65% (2019 - 1.65%)
Growth rate - expenses 2.20% (2019 - 2.20%)
Pre-tax discount rate of 15.4% (2019 – 15.4 %)
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.
Based on the above fair value methodology there were a number of increments and decrements (reversals of
previous increments) adjustments posted to the asset revaluation reserve at year end. In addition, where a
decrement was not covered by a previous increment the excess was posted to the profit and loss statement
as a fair value decrement - ginning assets.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 63
Namoi Cotton Limited
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 1p), the assets or cash-
generating units are written down to their recoverable amount.
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 29 February 2020 ($'000)
Gins
Other
CWIP
Consolidated and parent entity
Written down value - 1 March 2019
Additions and Transfer to/(from) CWIP
Disposals
Depreciation1
Revaluation increments/(decrements)
Written down value - 29 February 2020
123,347
2,399
(255)
(3,647)
(1,560)
120,284
9,402
3,779
(2)
(1,208)
80
12,051
5,541
(4,726)
(13)
-
-
802
Year Ended 28 February 2019 ($'000)
Gins
Other
CWIP
Consolidated and parent entity
Written down value - 1 March 2018
Acquisition of subsidiary
Additions and Transfer to/(from) CWIP
Disposals
Depreciation
Revaluation increments/(decrements)
Written down value - 28 February 2019
127,529
-
5,409
(675)
(8,002)
(914)
123,347
8,261
-
1,734
(9)
(1,276)
692
9,402
3,292
-
2,249
-
-
-
5,541
1 Ginning infrastructure assets are depreciated on a units of production basis over their rolling estimated
remaining useful lives of 20 years of sustainable bales.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 64
Namoi Cotton Limited
15. Changes in accounting policies
(a) Accounting standards and interpretations applied from 1 March 2019
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as
of 1 March 2019.
The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 March 2019
was 2.9%.
Operating lease commitments as at 28 February 2019
Discounted using the incremental borrowing rate
Less:
Commitments relating to short-term lease
Add:
Payments in optional extension periods not recognised
as at 28 February 2019
Lease liabilities recognised as at 1 March 2019
Consolidated
$'000
1,149
1,115
(86)
140
1,169
The associated right-of-use assets for leases were recognised based on the amount equal to the lease
liabilities, adjusted for any related prepaid and accrued lease payments previously recognised.
(b) The Group’s leasing activities and how these are accounted for
The Group leases property and operating equipment. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. The lease agreements do not impose any covenants,
but leased assets may not be used as security for borrowing purposes.
Prior to 1 March 2019, leases of property and equipment were classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) were charged to the income
statement, within rent expenses and equipment hire.
From 1 March 2019, the Group applied a single recognition and measurement approach for all leases of
which it is the lessee, except for low-value assets. The Group recognised lease liabilities to make lease
payments and right of use assets representing the right to use the underlying assets. Leases are recognised as
a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by
the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is depreciated on a straight-line basis over the
lease term or the useful life of the leased asset.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of fixed lease payments (including in-substance fixed payments), less any lease
incentives receivable.
The lease payments are discounted using the lessee’s incremental borrowing, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
Year Ended 29 February 2020
Notes to the Financial Statements
Page 65
Namoi Cotton Limited
the amount of the present value of lease liability
adjusting previously recognised prepaid or accrued lease payments
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise of office equipment.
(c) Right of Use Assets
Leased property
Cost
Remeasurement adjustment
Accumulated deprecation
Net carrying amount
Leased operating equipment
Cost
Remeasurement adjustment
Accumulated deprecation
Net carrying amount
Total right of use of assets
Cost
Remeasurement adjustment
Accumulated deprecation
Net carrying amount
(d) Lease Liabilities
Current
Lease property
Lease operating equipment
Total Current lease liabilities
Non-current
Lease property
Lease operating equipment
Total Non-Current lease liabilities
Consolidated
$'000
29 Feb
2020
28 Feb
2019
961
14
(284)
691
208
3
(100)
111
1,169
17
(384)
802
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
$'000
29 Feb
2020
28 Feb
2019
284
56
340
417
57
474
-
-
-
-
-
-
-
Year Ended 29 February 2020
Notes to the Financial Statements
Page 66
Namoi Cotton Limited
(e) Movements in Carrying Amounts of Right of Use Assets
Movements in carrying amounts for each right of use asset class of premises and equipment between the
beginning and the end of the current financial year
Balance at 1 March 2019 on adoption of AASB 16
Additions
Remeasurement adjustment
Disposal
Depreciation
Balance at 29 February 2020
Consolidated
$'000
Lease
property
961
-
14
-
(284)
691
Lease
operating
equipment
208
-
3
-
(100)
111
(f) Movements in Carrying Amounts of Lease Liabilities
Movements in carrying amounts for each lease liability class of premises and equipment between the
beginning and the end of the current financial year.
Balance at 1 March 2019 on adoption of AASB 16
Additions
Remeasurement adjustment
Disposal
Interest expense
Repayments
Balance at 29 February 2020
Consolidated
$'000
Lease
property
961
-
14
-
24
(298)
701
Lease
operating
equipment
208
-
3
-
5
(103)
113
(g) Maturity Analysis of Lease Liabilities
The table below sets out the expected maturity analysis for lease liabilities.
<1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
> 5 years
Total Expected Maturity Lease Liability
$'000
Lease
operating
equipment
56
37
20
-
-
-
113
Lease
property
284
293
124
-
-
-
701
Total
1,169
-
17
-
(384)
802
Total
1,169
-
17
-
29
(401)
814
Total
340
331
144
-
-
-
815
(h) Qualitative Information
i) Nature of leasing activities
The Group leases property and operating equipment. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions.
ii) Variable lease payments
Year Ended 29 February 2020
Notes to the Financial Statements
Page 67
Namoi Cotton Limited
Approximately $691 of premises lease liabilities relate to rental agreements which have a component of CPI
or market increases.
iii) Extension options and termination options
Lease extension option of 4 years of premise lease has not been measured in the lease liability
iv) Leases not yet commenced to which the lessee is committed
There are no leases committed to which are yet to commence.
v) Restrictions or covenants imposed by leases
The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
vi) Sale and leaseback transactions
No sale and leaseback transactions.
vii) Short-term leases or leases of low-value assets
The Group also elected to use the recognition exemptions for lease contracts that, at the commencement
date, have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and
lease contracts for which the underlying asset is of low value (‘low-value assets’). Payments associated with
short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit
or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise of
office equipment.
16. Trade and Other Payables
Current
Trade creditors and accruals1
Grower deposits
Customer deposits
Liability for associate losses 2
Loans from controlled entities
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
4,093
38
53
-
-
4,184
7,652
41
205
5,328
-
13,226
3,657
38
53
-
15,254
19,002
7,591
41
205
-
15,254
23,091
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.
2 The Cargill Oilseeds Australia Partnership Agreement provides for partners to contribute to partnership
losses to the extent of our interest in the partnership (15%). The partnership was dissolved during the
financial year and, therefore, no current liability for losses.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 68
Namoi Cotton Limited
17. Interest Bearing Liabilities
Interest bearing liabilities at balance date were as follows:
Current
Lease liabilities 1
Equipment loans 2
Cargill Australia Ltd 3
Non Current
Loans from controlled entities
Term Debt 4
Lease liabilities 1
Equipment loans 2
Cargill Australia Ltd 3
AUD $'000
Consolidated
29 Feb
2020
28 Feb
2019
Parent
29 Feb
2020
28 Feb
2019
340
970
400
1,710
-
42,000
474
768
1,536
44,778
-
1,061
-
1,061
-
42,000
-
1,630
-
43,630
340
970
-
1,310
2,049
42,000
474
768
-
45,291
-
1,061
-
1,061
2,049
42,000
-
1,630
-
45,679
Total Current and Non-Current
46,488
44,691
46,601
46,740
1 Lease liabilities include leases considered under AASB 16.
2 Equipment loans have an average term of 1.5 years (2019: 2.0) with the average interest rate implicit in the
contracts of 4.74% (2019: 4.8%).
3 Cargill deferred settlement of $800,318.60 incurs interest of 6.5% pa in arrears. Cargill advance of
$1,135,253.24 is the present value repayable over 5 years discounted at 6.5% pa.
4 Term debt facilities remained fully drawn during FY20.
The following facilities were in place with Commonwealth Bank of Australia (‘CBA’) at balance date:
AUD Facility Limit
Uncommitted overdraft
Working capital 1
Term - A 2
Term - B 2
Facility Limit - AUD $'000
Consolidated
29 Feb
2020
28 Feb
2019
Parent
29 Feb
2020
28 Feb
2019
2,500
10,000
35,000
7,000
54,500
2,500
10,000
35,000
7,000
54,500
2,500
10,000
35,000
7,000
54,500
2,500
10,000
35,000
7,000
54,500
1 Working capital facilities are committed, non-amortising lines utilised to fund day to day expenses of the
business including specific funding needs for cotton seed inventory and debtors, ginning consumables and
general working capital needs; and
2 Term debt facilities are committed, non-amortising lines utilised to fund capital projects relating to the
plant, property and equipment of the business.
Financing arrangements
A Deed of Amendment was executed by Namoi and CBA on 6 April 2020 extending the maturity date of the
working capital facility to 30 April 2021 in line with the maturity date of the Term debt facilities.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 69
Namoi Cotton Limited
Namoi and CBA have also agreed to certain financial covenants at what are considered appropriate levels to
meet the needs of the business. Namoi expects the finance facilities outlined above will be sufficient to fund
operations in FY21.
Namoi was in compliance with all financial covenants during FY20.
Details of interest rate risk, foreign exchange risk and liquidity risk are disclosed in Note 27.
18. Provisions
Current
Employee leave entitlements
Employee variable compensation
Non-current
Employee leave entitlements
19. Contributed Equity
Ordinary Shares
1 cent Residual Capital Stock (fully paid)
Residual capital stock at the beginning
of the financial year
Residual capital stock converted to ordinary shares
Residual capital stock at the end
of the financial year
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
1,524
-
1,524
571
571
2,511
453
2,964
831
831
1,521
-
1,521
571
571
2,508
453
2,961
822
822
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
37,639
37,639
37,639
37,639
Consolidated and Parent
No. '000
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
2,558
(219)
15,226
(12,668)
2,339
2,558
25
(2)
23
152
(127)
25
Ordinary Shares (fully paid)
Ordinary shares at the beginning of the financial year
Residual capital stock converted to ordinary shares
Ordinary shares at the end of the financial year
140,096
219
140,315
127,427
12,669
140,096
1,401
2
1,403
1,274
127
1,401
At balance date some 2.3 million Residual Capital Stock had not been converted to ordinary shares. Under the
terms of the Restructure in October 2017 and the Constitution of Namoi Cotton Limited the redemption of
Residual Capital Stock is permitted. The conditions of such redemption include that redemption cannot occur
Year Ended 29 February 2020
Notes to the Financial Statements
Page 70
Namoi Cotton Limited
until the earlier of a minimum of 90% of Residual Capital Stock have being converted to Ordinary Shares or
the 30th June 2018.
The number of residual capital stock available to redeem is expected to be immaterial given the redemption
is at market price less a 10% discount, they are not entitled to any dividends, are non-transferrable and are
not listed on the ASX. The Board has discretion in determining whether, and if so when, to redeem the
outstanding residual capital stock.
Capital stock terms and conditions (previously):
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.
Ordinary shares terms and conditions:
Ordinary shareholders are entitled to dividends as declared by the directors;
On winding up, ordinary shareholders are entitled to the proceeds from surplus assets.
Each ordinary shareholder is entitled to one vote per one share;
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 $650
(2019: $19,173).
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 2,000 residual capital
stock (2019: 97,000 units) under escrow.
Capital management
Namoi Cotton manages capital through the payment of dividends and participation in the buy back or
issuance of ordinary shares. Decisions on capital management are made having regard to compliance with
externally imposed capital requirements principally through maintaining a minimum level of net assets.
20. Nature and Purpose of Reserves
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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 71
Namoi Cotton Limited
21. 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 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 10)
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 ACS provides classing services for the NCA joint venture and other cotton merchants.
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.
Interest Revenue;
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:
Rental Revenue;
Corporate employee benefits expense;
Corporate depreciation; and
Other corporate administrative expenses.
Share of profit from associate (other than NCA and Cargill);
Finance costs;
A segment balance sheet and cashflow is not reported to the chief operating decision makers and are,
therefore, not disclosed as part of this report.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 72
Namoi Cotton Limited
Business Segments
Year ended 29 February 2020
Ginning
$'000
Marketing Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
Revenue
Other revenues
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Trading margin gains
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation
2,342
236
2,578
-
-
39,184
1,854
(2,114)
52
(208)
824
-
824
-
-
183
2,541
-
(8,591)
(6,050)
-
-
-
-
-
-
82
55
-
137
-
-
-
8
106
-
3,166
236
3,402
8
106
39,367
(9,157)
(22)
-
(9,179)
(4,680)
(2,081)
(8,539)
(15,300)
(4,726)
(139)
(35)
(339)
(5,239)
Included in the unallocated results for the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
8
106
114
(4,249)
(339)
(22)
(4,683)
(9,179)
Year Ended 29 February 2020
Notes to the Financial Statements
Page 73
Namoi Cotton Limited
Business Segments
Year ended 28 February 2019
Ginning
$'000
Marketing Commodities Unallocated Consolidated
$'000
$'000
$'000
$'000
Revenue
Other revenues
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
Trading margin gains
Results
Profit/(loss) before tax and finance costs
Finance costs
Share of profit from associates
Net Profit before tax
Other segment information
Depreciation and decrement
of ginning assets
3,656
400
4,056
-
-
83,124
19,189
(2,204)
(4,800)
12,185
1,693
-
1,693
-
-
410
(2,200)
-
(1,082)
(3,282)
-
-
-
-
-
-
-
-
-
44
154
5,349
400
5,749
44
154
-
83,534
266
47
-
313
(9,069)
(23)
-
(9,092)
8,186
(2,180)
(5,882)
124
(10,570)
(132)
(137)
(457)
(11,296)
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
44
154
198
-
(4,283)
(457)
(23)
(4,527)
(9,092)
Geographic Area
The economic entity operates in two separate geographic areas.
Namoi 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 29 February 2020
Revenue
Sales
Other revenues
Total consolidated revenue
Geographic Areas
Year ended 28 February 2019
Revenue
Sales
Other revenues
Total consolidated revenue
Australia
$'000
Asia
$'000
Consolidated
$'000
1,076
236
1,312
2,090
-
2,090
3,166
236
3,402
Australia
$'000
Asia
$'000
Consolidated
$'000
2,265
400
2,665
3,085
-
3,085
5,350
400
5,750
Year Ended 29 February 2020
Notes to the Financial Statements
Page 74
Namoi Cotton Limited
22. Commitments and Contingencies
Commitments for capital expenditure
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
Property, plant and equipment
Estimated capital expenditure contracted for at
balance date but not provided for:
Payable within one year
1,263
1,414
1,263
1,414
Operating lease commitments receivable – group as lessor
Future minimum rentals receivable under non-cancellable operating leases as at 29 February 2020 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
7
-
7
11
-
11
7
-
7
11
-
11
Equipment loans – group as lessee
The group has equipment loans for gin packaging and logistics supply chain equipment with a carrying value
of $3,151,078 (2019: $3,484,187) for both the group and the company. The equipment is mainly presented in
Gin Assets in Note 14. Property, Plant and Equipment.
Future minimum payments under equipment loans together with the present value of the net minimum loan
payments are as follows:
Within one year
After one year but within five years
After five years
Total minimum loan payments
Unexpired finance charges
Present value of minimum loan payments
Consolidated
$'000
Parent
$'000
29 Feb
2020
1,014
815
-
1,829
(92)
1,737
28 Feb
2019
1,145
1,728
-
2,873
(182)
2,691
29 Feb
2020
1,014
815
-
1,829
(92)
1,737
28 Feb
2019
1,145
1,728
-
2,873
(182)
2,691
The weighted average interest rate implicit in the contracts for both the group and parent is 4.7% (2019:
4.6%).
Year Ended 29 February 2020
Notes to the Financial Statements
Page 75
Namoi Cotton Limited
23. Significant Events after Balance Date
Refer to Note (1a) for details on impacts of COVID 19 subsequent to period end.
No further events of a material nature have occurred between balance date and the date of this report, other
than as disclosed elsewhere in this report.
24. Related Party Disclosures
The consolidated financial statements include the financial statements of Namoi Cotton Limited and the
subsidiaries listed in the following table. All subsidiaries were incorporated in Australia. Namoi Cotton Limited
is the ultimate parent entity of the group.
Ownership and investment
Name of entity
Australian Classing Services Pty Ltd 1
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 eliminated
Equity Interest
%
29 Feb
2020
28 Feb
2019
100%
100%
100%
0%
100%
100%
96%
100%
100%
100%
100%
100%
100%
100%
100%
96%
100%
100%
Investment
$'000
29 Feb
2020
428
-
-
-
-
-
-
-
1,830
2,258
(1,830)
428
28 Feb
2019
1,380
-
-
-
-
-
-
-
1,830
3,210
(1,830)
1,380
Principal activities:
Namcott Investments Pty Ltd, a subsidiary of Namoi Cotton, was 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 company’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.
Australian Classing Services Pty Ltd trading activities are mainly the provision of classing services.
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 (2019: $35,906).
Year Ended 29 February 2020
Notes to the Financial Statements
Page 76
Namoi Cotton Limited
Sales of white cotton seed to the COA Partnership were $Nil (2019: $6,454,626) and purchases of white
cotton seed from the COA Partnership were $Nil (2019: $1,085,579).
Transactions with NCA
Management fees received by Namoi for services provided to Namoi Cotton Alliance $2.5m (inclusive of bale
handling fees) (2019: $2.5m).
Lint Cotton Sales from Namoi to Namoi Cotton Alliance $199.6m (2019: $455.9m).
Insurance on-charged by Namoi to Namoi Cotton Alliance $0.5m (2019: $0.6m).
25. Directors’ and Executive Disclosure
Compensation by category of KMP
Consolidated
29 Feb
2020
$
28 Feb
2019
$
Parent
29 Feb
2020
$
28 Feb
2019
$
2,328,888 2,675,438 2,328,888 2,675,438
19,491
(283,211)
75,900
10,640
19,491
(283,211)
75,900
10,640
747,032
-
2,812,200 2,761,978 2,812,200 2,761,978
747,032
-
Short-term
Post Employment
Other Long-term
Termination Benefits
Marketing and ginning transactions and balances with KMP
Transactions with directors and their related parties were in accordance with the eligibility criteria to be
appointed as a Grower Director. Under the Constitution Grower Directors are required to:
have ginned at least 1,500 cotton bales in aggregate per cotton season at a Namoi Cotton gin in at least
three out of the last five cotton seasons; and
at least 50% of their seed cotton production at any Namoi Cotton gin in at least three out of the last five
cotton seasons; or
at least 50% of their seed cotton production which is grown within 100km of any Namoi Cotton gin at a
Namoi Cotton gin in at least three out of the last five cotton seasons; and
is the registered owner or lessee of cotton farming property which annually can plant a minimum of 150
hectares of seed cotton and is capable of producing 1,500 cotton bales in aggregate per cotton season to
be ginned at a Namoi Cotton gin.
In accordance with the rules, 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
Freight Payments
29 Feb
2020
$
28 Feb
2019
$
2,966,657 7,631,722
29 Feb
2020
$
60,179
28 Feb
2019
$
40,714
Ginning Charges Levied
28 Feb
2019
29 Feb
2020
$
959,497
$
1,650,484
Grain & Seed
29 Feb
2020
28 Feb
2019
$
$
965,548
869,834
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 29 February 2020
Notes to the Financial Statements
Page 77
Namoi Cotton Limited
26. Remuneration of Auditors
Consolidated and
Parent Entity
$
$
28 Feb
29 Feb
2019
2020
Remuneration for the audit and review of the financial reports of the
parent entity and the consolidated entity
383,970
280,000
27. 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 Financial Risk Committee 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 1n to the financial statements.
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 company is also exposed to movements to price of cotton seed through fixed
price purchases and sale contracts.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 78
Namoi Cotton Limited
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
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
1,326
1,326
7,773
7,773
1,326
1,326
7,773
7,773
(70)
(70)
(7,181)
(7,181)
(70)
(70)
(7,181)
(7,181)
1,256
592
1,256
592
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 29 February 2020 and 28 February
2019, 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:
Consolidated
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Parent entity
+$10/Mt (cotton seed)
-$5/Mt (cotton seed)
Post Tax Profit
Higher/(Lower)
$'000
Equity
Higher/(Lower)
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
(40)
20
(40)
20
100
(50)
100
(50)
-
-
-
-
-
-
-
-
Year Ended 29 February 2020
Notes to the Financial Statements
Page 79
Namoi Cotton Limited
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
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
731
273
1,004
5,827
51
5,878
543
273
816
5,541
51
5,592
(44,556)
-
(44,556)
(44,692)
(57)
(44,749)
(46,606)
-
(46,606)
(44,692)
(57)
(44,749)
(43,552)
(38,871)
(45,790)
(39,157)
Interest rate swap contracts, with a fair value of $Nil (2019 -$91,270) 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, 0% (2019: 47.6%) of the group’s
borrowings are at a fixed rate of interest nil% (2019: 2.1%). The group continually monitors its interest rate
exposure with regard to existing and forecast working capital and term debt requirements.
The following sensitivity analysis is based upon interest rate exposures that existed at 29 February 2020 and
28 February 2019, 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:
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
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
(419)
210
(419)
210
(189)
95
(189)
95
-
-
-
-
-
-
-
-
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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 80
Namoi Cotton Limited
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.
At reporting date, the group had the following exposure to USD foreign currency that is not designated as
cash flow hedges:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Financial Liabilities
Trade and other payables
Interest bearing loans and borrowings
Derivatives
Net Exposure
Consolidated
$'000
Parent
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
84
3
-
87
-
(433)
-
(433)
(346)
163
-
-
163
(1,575)
(523)
-
(2,098)
(1,935)
84
3
-
87
-
433
-
433
520
163
-
-
163
(1,575)
(523)
-
(2,098)
(1,935)
The group has USD denominated leasing contracts of USD $285,338 (2019: USD $373,533) over certain
ginning equipment supplied from the United States. Foreign exchange contracts are subject to fair value
movements through the statement of comprehensive income as foreign exchange rates move.
Foreign exchange contracts held at balance date
Group
Sell US$/Buy AUD$ maturity 0-12 months
Buy US$/Sell AUD$ maturity 0-12 months
Parent
Sell US$/Buy AUD$ maturity 0-12 months
Buy US$/Sell AUD$ maturity 0-12 months
Notional Amount
AUD $'000
Average Exchange
Rate
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Priced cotton seed sales contracts are treated as financial instruments under AASB 9. No FEC contracts were
held at balance date due to no export sales contracts of cotton seed in place.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 81
Namoi Cotton Limited
The following sensitivity analysis is based upon foreign currency exposures that existed at 29 February 2020
and 28 February 2019, 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
Equity
Higher/(Lower)
$'000
29 Feb
2020
28 Feb
2019
29 Feb
2020
28 Feb
2019
5
(3)
5
(3)
27
(14)
28
(14)
-
-
-
-
-
-
-
-
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 recoverable.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 82
Namoi Cotton Limited
The group utilises only recognised and creditworthy third parties in respect to derivative transactions. These
parties are regularly reviewed by the Board.
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 29 February 2020
$'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
Net Exposure
731
3,530
4,012
8,273
(4,153)
(759)
(3,024)
(7,936)
337
-
1
268
269
(31)
(951)
-
(982)
(713)
-
-
-
-
-
(44,778)
-
(44,778)
(44,778)
Year ended 28 February 2019
$'000
$'000
≤6 Months 6-12 Months
1-5 Years
$'000
>5 Years
$'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
Net Exposure
5,827
3,955
18,796
28,578
-
19
-
19
(12,902)
(324)
-
-
-
-
-
(617)
(15,748)
(29,267)
(689)
(444)
(2,513)
(3,281)
(3,262)
(43,630)
-
(43,630)
(43,630)
Year Ended 29 February 2020
Notes to the Financial Statements
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
731
3,531
4,280
8,542
(4,184)
(46,488)
(3,024)
(53,696)
(45,154)
Total
$'000
5,827
3,974
18,796
28,597
(13,226)
(44,691)
(18,261)
(76,178)
(47,581)
Page 83
Namoi Cotton Limited
Year ended 29 February 2020
$'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
543
4,056
1,058
5,657
-
1
268
269
(3,717)
(15,285)
-
-
-
-
-
-
-
-
-
-
(759)
(45)
(4,521)
(551)
(25)
(15,861)
(43,242)
-
(43,242)
(2,049)
-
(2,049)
543
4,057
1,326
5,926
(19,002)
(46,601)
(70)
(65,673)
Net Exposure
1,136
(15,592)
(43,242)
(2,049)
(59,747)
Year ended 28 February 2019
$'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
5,541
4,738
7,773
18,052
-
19
-
19
(7,814)
(15,277)
(567)
(4,724)
(444)
(2,513)
-
(13,105)
-
(18,234)
-
-
-
-
-
-
-
-
-
-
(43,507)
-
-
(43,507)
(2,049)
-
-
(2,049)
5,541
4,757
7,773
18,071
(23,091)
(46,567)
(7,237)
-
(76,895)
Net Exposure
4,947
(18,215)
(43,507)
(2,049)
(58,824)
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 $0.73 million (2019: $0.96 million), for the 6-12 month period of
$0.72 million (2019: $0.94 million) and for the 1-5 year period $1.41 million (2019: $3.67 million).
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.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 84
Namoi Cotton Limited
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. (2019: 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 is based on valuation techniques using market data that is not
observable.
Year Ended 29 February 2020
Notes to the Financial Statements
Page 85
Namoi Cotton Limited
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 29 February 2020
Consolidated
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Foreign exchange contracts
Interest rate swap contracts
Cotton seed sale contracts
Year ended 29 February 2020
Parent
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Foreign exchange contracts
Interest rate swap contracts
Cotton seed sale contracts
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 2
Market
observable
inputs
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
765
561
1,326
-
-
(70)
(70)
-
765
561
1,326
-
-
(70)
(70)
Level 3
Non-market
observable
inputs
$'000
Total
$'000
-
765
561
1,326
-
-
(70)
(70)
-
765
561
1,326
-
-
(70)
(70)
Year Ended 29 February 2020
Notes to the Financial Statements
Page 86
Namoi Cotton Limited
Year ended 28 February 2019
Consolidated
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Foreign exchange contracts
Interest rate swap contracts
Cotton seed sale contracts
Year ended 28 February 2019
Parent
Current assets
Foreign exchange contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Current liabilities
Foreign exchange contracts
Interest rate swap contracts
Cotton seed sale contracts
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(57)
-
(57)
-
-
7,773
7,773
-
-
7,181
7,181
-
-
7,773
7,773
-
(57)
7,181
7,124
Level 2
Market
observable
inputs
$'000
Level 3
Non-market
observable
inputs
$'000
Total
$'000
-
-
-
-
-
(57)
-
(57)
-
-
7,773
7,773
-
-
(7,181)
(7,181)
-
-
7,773
7,773
-
(57)
(7,181)
(7,238)
Year Ended 29 February 2020
Notes to the Financial Statements
Page 87
Namoi Cotton Limited
28. Other Non-Financial Information
Namoi Cotton Limited
ABN 76 010 485 588
Registered Office
1b Kitchener Street
Toowoomba QLD 4350
Australia
Principal place of business
1b Kitchener Street
Toowoomba QLD 4350
Australia
Telephone: 61 7 4631 6100
Facsimile: 61 7 4631 6184
namoi@namoicotton.com.au
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
Bankers
Commonwealth Bank of Australia
Auditors
Ernst & Young
Brisbane, Australia
Year Ended 29 February 2020
Notes to the Financial Statements
Page 88
ASX ADDITIONAL INFORMATION FOR THE YEAR ENDED
29 FEBRUARY 2020
The shareholder information set out below was applicable as at 31 May 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding
Range
Total holders
Units
70
313
183
386
316
34,389
962,466
1,480,290
13,871,850
123,974,981
1,268
140,323,976
100.00
% of
Issued
Capital
0.02
0.69
1.05
9.89
88.35
0.00
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Rounding
Total
Unmarketable Parcels
Minimum
Holders
Units
Parcel Size
Minimum $ 500.00 parcel at $ 0.35
1429
96
65381
per unit
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Rank
Name
Ordinary
% of total
Shares held
issued
shares
1.
LOUIS DREYFUS COMPANY ASIA PTE LTD
14,327,384
10.21
2.
AUSTRALIAN RURAL CAPITAL LIMITED
13,471,111
9.60
3.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
12,400,786
8.84
4.
CITICORP NOMINEES PTY LIMITED
5,564,126
3.97
5.
JVH COTTON PTY LIMITED
4,110,353
2.93
6.
MR ROSS ALEXANDER MACPHERSON
1,490,500
1.06
7.
8.
MR MARK JOSEPH PANIZZA + MRS SUSAN
KATHLEEN PANIZZA
MR ALBERT JOHN PANIZZA + MS KIM DIANNA
BROADFOOT
1,391,072
0.99
1,063,089
0.76
9.
RATHVALE PTY LIMITED
1,059,885
0.76
10.
MR DAVID FOX
1,009,386
0.72
11.
MCNEIL NOMINEES PTY LIMITED
1,000,000
0.71
12.
13.
14.
RED PEPPERCORNS PTY LTD
BELL POTTER NOMINEES LTD
BRUCE CLYDE BAILEY + JANET BEATRICE SHAFIK
BAILEY
976,202
0.70
840,929
0.60
820,122
0.58
15.
AVENUE 8 PTY LIMITED
800,000
0.57
16.
17.
18.
ESTATE LATE PETER SINCLAIR GURNER
NETWEALTH INVESTMENTS LIMITED
GIBBS FAMILY SUPER PTY LTD
790,041
0.56
775,272
0.55
740,291
0.53
19.
MR FRANKLIN C HADLEY
642,605
0.46
20.
STILETTO INVESTMENTS PTY LTD
640,000
0.46
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (TOTAL)
Total Remaining Holders Balance
63,913,154
76,410,822
45.55
54.45
Unquoted equity securities
The Company has 374 holders of 2,329,631 residual capital stock, representing shares
held by co-operative shareholders
that has not been converted to ordinary shares
Substantial holders
The following are substantial holders in the Company.
Ordinary
% of total
Shares held
issued
shares
LOUIS DREYFUS COMPANY ASIA PTE LTD
14,327,384
10.21
AUSTRALIAN RURAL CAPITAL LIMITED
13,471,111
9.60
SAMUEL TERRY ASSET MANAGEMENT PTY LTD
11,829,909
8.4
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have
one vote and upon a poll each share shall have one vote.
There are no other classes of equity securities.
Corporate Directory
www.namoicotton.com.au
Corporate
Office
1B Kitchener Street
Toowoomba QLD 4350
0746 316 100
Cotton
Classing
Australian Classing Services
Pilliga Road
Wee Waa NSW 2388
0267 903 053
Namoi Cotton Gins
MacIntyre Cotton Gin
Kildonan Road
Goondiwindi QLD 4390
0746 712 277
Boggabri Cotton Gin
Blairmore Road
Boggabri NSW 2382
0267 434 084
Merah North Cotton Gin
Middle Route
Merah North NSW 2385
0267 955 124
Trangie Cotton Gin
Old Warren Road
Trangie NSW 2823
0268 889 729
Hillston Cotton Gin Roto
Road
Hillston NSW 2675
0269 672 951
North Bourke Cotton Gin
Wanaaring Road
Bourke NSW 2380
0268 721 453
Namoi Cotton
Alliance
Joint Venture
MacIntyre Warehouse
Kildonan Road
Goondiwindi QLD 4390
0746 711 449
Wee Waa Warehouse
Pilliga Road
Wee Waa NSW 2388
0267 903 139
Ashley Cotton Gin
Mungindi Road
Ashley NSW 2400
0267 542 150
Joint Venture Gin Moomin
Cotton Gin
(Namoi Cotton/Harris
Joint Venture)
Merrywinebone
Via Rowena NSW 2387
0267 965 102
Yarraman Cotton Gin
Kamilaroi Highway
Wee Waa NSW 2388
0267 955 196
Mungindi Cotton Gin
Bruxner Road
Mungindi NSW 2406
0267 532 145
Joint Venture Gin
Wathagar Cotton Gin
(Namoi Cotton/Sundown
Pastoral Co Pty Ltd)
Collarenebri Road
Moree NSW 2400
0267 525 200