NAMOI COTTON LIMITED
ABN 76 010 485 588
ANNUAL REPORT
2021
SIMPLIFY, STRENGTHEN & STRATEGY
2
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
TABLE OF CONTENTS
04 Chairman’s Report
08 Results for Announcement to the Market
10 Directors’ Report
15
Meet our Executive Team
16 Meet Our People
18 Where We Operate
19 Operations and Financial Review
22
Remuneration Report
30 Auditor’s Independence Declaration
31
Independent Auditor’s Report
38 Directors’ Declaration
40 Consolidated Financial Report
3
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 CHAIRMAN’S REPORT
Namoi Cotton has finished FY2021, possibly the
most challenging year on record for the group, in a
strengthened position to capitalise on improved seasonal
conditions. We are heading in the right direction, but
there is still more work to do.
Namoi Cotton is more than a ginner. Our business spans
fibre, feed, supply chain and marketing, with ginning
being at the core. Our Vision and Mission of being the
leading Australian cotton agribusiness is achieved by
independently linking growers to global markets.
We have continued to simplify the business, strengthen
our operations and balance sheet and pursue a strategy
to create superior value for growers and shareholders.
Impact of drought
Eastern Australia experienced a severe drought period
in 2018 and 2019 with record low cotton production.
In 2020 (FY2021) we ginned 0.12 million bales
representing 21% of the estimated Australian cotton
crop. In the prior year, which was also drought affected,
we ginned 0.45 million bales. In the year prior to that,
we ginned 1.2 million bales which highlights the severity
of the drought in 2020.
Cost management
The board and management are focused on the
need to manage costs. Our cost base has reduced
significantly in line with drought impacted volumes
and in FY2021 we received $2.1 million in grants from
the Commonwealth Government’s JobKeeper program
(FY2020: nil). Total costs excluding processing,
depreciation, impairment and finance costs, have
reduced from $43.5 million in FY2019 to $19.5 million
in FY2021, which includes a ~$4.0 million reduction in
permanent staff costs which gives us more flexibility in
low volume seasons.
Despite the reduction in costs, current year ginned
volume which is around 85% below average, this was
insufficient to cover indirect costs. This resulted in a
loss before tax of $16.5 million or an $8.9 million loss
excluding our share of losses from joint ventures and
associates.
Reporting this loss is disappointing for all involved
however the board recognises the effort from
management and staff in minimising the impact of
lower volume. Despite record low ginning volumes
in FY2021, down around 70% from FY2020, our
core Ginning and Co-Product segment generated a
small EBITDA1 loss of ($0.9) million, and the Group’s
consolidated loss before tax increased by $1.2 million or
8% versus the prior year.
1
2
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 and is used throughout this report
Earnings before Interest, Depreciation and Income Tax. Refer to
reconciliation in the Operations and Review section.
4
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
SIMPLIFY, STRENGTHEN & STRATEGY
FY2021 AT A GLANCE
GINNING
VOLUMES
72%
COST
MANAGEMENT
Total costs
45%
LOSS
AFTER TAX
32%
OUTLOOK GINNING VOLUMES
2021 ACTUAL
124,000 BALES 450,000 BALES
2022 FORECAST
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
5
Safety remains a priority
The board recognises our continued improvement in
safety, reflected in a further year on year reduction in
our lost time injury frequency ratio (LTIFR), down to
9 from 10 last year. The board, management and staff
all strive to ensure everyone returns home from work
healthy and happy every day.
People change
Our people have been challenged given seasonal
conditions and cost reduction initiatives. During the
year, our Chief Executive Officer (‘CEO’), Michael
Renehan resigned to pursue other opportunities. We
thank Michael for his contribution to Namoi Cotton.
Subsequently, our Chief Financial Officer (‘CFO’), John
Stevenson has accepted the role of Interim acting
CEO. We thank John for his dedication and effort
whilst acting in dual roles. We also thank the executive
team and all staff for their dedication and persistence
throughout these difficult times.
It is a credit to the strength of the Namoi Cotton
character that we maintain our standards, resilience, and
motivation during this time of significant change for the
Company.
NCA restructure simplifies our business
losses for the Group. Namoi Cotton Alliance’s (‘NCA’)
lint cotton business, in which we hold a majority 51%
share, has increased the Group’s exposure to earnings
volatility and debt.
A new joint venture, Namoi Cotton Marketing Alliance
(‘NCMA’) in which we own a 15% share, has assumed the
trading and marketing lint cotton business from NCA,
with NCA’s debt transferred to NCMA3. Namoi Cotton
earns a fee for every ginned bale offered to NCMA and
maintains a share in the earnings of NCMA4, with our
joint venture partner having responsibility to ensure
NCMA’s operations are fully funded.
Following this restructure post 28 February 2021, NCA
(where Namoi Cotton retains a 51% interest) is free
of trading debt. NCA is now focussed on generating
margin and free cashflow from our quality warehouse
infrastructure and supply chain, for NCMA and other
cotton merchants and commodities.
Debt is streamlined
Without the need for funding the trading and marketing
of lint cotton, the Group’s debt profile has been
streamlined into long-term core debt, which is matched
against the earnings profile of our infrastructure, plus
revolving working capital and equipment lines to
support operations.
The board, management and staff are focussed on
the need to increase our earnings, manage risk and
generate a sound return for our shareholders. The
restructure we announced during the year simplifies and
significantly de-risks our business.
Our goal is to manage net debt levels in line with our
earnings volatility to ensure that we have sufficient
capacity to provide a stable base during both the up
and downsides. Debt management will be a focus for us
as we return to improved seasonal conditions.
Namoi Cotton made a strategic decision to realign
our marketing and supply chain activities, reducing
our exposure to the trading of lint cotton. Volatility
in the lint cotton business – impacted by weather,
political forces and COVID-19, has resulted in significant
2021 (FY2022) production
The 2021 cotton crop is predicted to be 2.5 million
bales5 (prior year was 0.6 million bales) with some
of our production valleys still impacted by water
6
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 availability in 2020. The Group is forecasting to gin
around 0.45 million bales from the 2021 crop, including
100% of joint venture gins, which is nearly four times
higher than the prior year.
2022 (FY2023) expected production
Water availability drives cotton production. Recent
March 2021 flooding rains in eastern Australia has
increased water availability and should support
increased cotton production in the coming seasons.
Dam levels are a lead indicator for cotton production
with October cotton planting correlated with preceding
month’s water availability. As at April 2021, dam water
capacity in our catchment areas has increased to over
50%6 compared to 14% the same time last year.
Current water availability is expected to support
increased cotton planting in 2021, increasing expected
cotton volume for the 2022 season (FY2023) and 2023
season (FY2024).
Covid-19 impacts
Covid-19 has had a disruptive impact on global markets
and supply chains, however the direct impact from
Covid-19 on the Group’s core domestic business has
been limited.
Covid-19 has resulted in economic and logistical
uncertainty resulting in fluctuating prices and exchange
rates, which in turn has increased execution risk for
export cotton. This period of uncertainty and increased
risk could continue for the short to medium term.
The restructure of our NCA and NCMA joint ventures
has reduced our exposure to global cotton lint markets
however, we continue to maintain a 15% share in NCMA
as well as trade and export cottonseed. We manage this
exposure through close monitoring of trading positions
and counter party risk.
Within Australia, the free movement of people across
our internal state borders and the closure of Australia’s
international border is a challenge for our workforce
planning as we head into higher volume seasons.
Conclusion
There are both opportunities and challenges ahead
for Namoi Cotton. With our simpler de-risked business
structure and more variable cost base, we are better
able to translate increased volume from forecast
improved seasonal conditions into earnings and
cashflow.
This will underpin our strategic road map to:
• Strengthen our core ginning business through
improved service and new products to growers
while reducing cost, and
• Grow our core business by unlocking additional
value from cotton co-products and pursuing
opportunities into new geographies.
I would like to extend my thanks to our hard-working
team for their dedication and resilience over the past 12
months to get Namoi Cotton to its present position.
I would also like to thank my fellow Directors for their
dedication and hard work over the last year.
Finally, I would like to thank you our shareholders for
your continued support.
3 Further information refer to Note1(b): Going Concern.
4 Capped between -/+ $1.5 million per annum.
5
6
ABARES (April 2021).
Bureau of Meteorology – water capacity in public dams in the
Border Rivers, Gwydir, Lachlan, Macquarie, Macintyre and Namoi
valleys.
7
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 RESULTS FOR ANNOUNCEMENT
TO THE MARKET
Provided below are the results for announcement to
the market in accordance with Australian Securities
Exchange (ASX) Listing Rule 4.2A and Appendix 4E for
the consolidated entity Namoi Cotton Limited (‘Namoi
Cotton or Namoi’ or ‘Company’) and its controlled
entities (‘Namoi Group or Group or Consolidated
Group’), for the year ended 28 February 2021 (‘FY2021
or FY21’) and the previous corresponding period, 29
February 2020 (‘FY2020 or FY20’).
Financial results and key financial items from continuing
operations are included in the following table. For
further explanation of the annual financial results refer
to the Operations and Financial Review section of the
FY2021 Annual Report.
FOR THE YEARS ENDED 28 & 29 FEBRUARY
Australian Cotton Production
000’ bales
Volumes
Ginned cotton
Cottonseed marketed
Warehoused bales
Grain packed
Earnings & Cashflow
Revenue & Income 1
Underlying EBITDA 2
Share of JV’s and Associates earnings
Loss after tax 3
Net cash (outflow)i
Balance Sheet
Capital employed 4
Non-Current Liabilities
Net Assets
Analysis
Diluted earnings per share 5
Net debt 6
Gearing ratio 7
000’s
bales
tonnes
bales
tonnes
$m
$m
$m
$m
$m
$m
$m
$m
cents
$m
%
Net tangible asset value per share
cents
2021
589
124
34
131
100
19
(4)
(9)
(14)
(3)
153
(46)
107
(10.3)
(51)
32%
76
2020
2,135
450
112
228
29
44
4
(9)
(11)
(4)
169
(47)
121
(7.8)
(46)
28%
87
Movement
(72%)
(72%)
(69%)
(43%)
289%
(57%)
(195%)
(3%)
31%
(6%)
(10%)
(3%)
(12%)
31%
10%
17%
(12%)
ê
ê
ê
ê
é
ê
ê
ê
é
ê
ê
ê
ê
é
é
é
ê
Notes:
1 Revenue plus Trading margin gains plus Other income/(loss)
2
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 and is used throughout this report
3 Loss attributable to the members of Namoi Cotton Limited
4 Current assets less current liabilities plus non-current assets
5 Residual capital stock unconverted has not been included in the calculation because they are antidilutive (refer to Note 4: Earnings per Share)
6
7
Interest bearing liabilities less cash and cash equivalents
Interest bearing liabilities divided by Interest bearing liabilities plus Total Equity
Dividends
Audit Status
Namoi Cotton will not pay any dividends in respect of
the year ended 28 February 2021 (FY2020: nil).
This Appendix 4E is based on the Consolidated
Financial Statements which have been audited and
should be read in conjunction with the complete final
report.
8
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 9
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT
Tim Watson, Chair, Independent Non-executive Grower Director, 59, GAICD
Mr Watson was appointed as Chair for Namoi Cotton Limited from 29 August 2018 and
was re- elected to the Board at the 2020 general meeting. He is a member of the People
and Culture Committee. 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 in 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.
Glen Price, Independent Non-executive Grower Director, 65,
B. Rural Science (Hons), GAICD
Mr Price joined the Namoi Cotton Board in July 2009 as a Grower Director and was re-
elected at the 2018 general meeting. He is a member of the Audit, Risk and Compliance
Committee, Trading and Operating Risk Committee and the Safety Committee. Mr Price
has been involved in the cotton industry since 1978 and has grown cotton in the St George
and Mungindi regions for 24 years and 35 years respectively. 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.
Robert L Green, Independent Non-executive Director, 64, B.Bus. (QAC), MAICD
Mr Green joined the Namoi Cotton Board in May 2013 and was re-elected at the 2019
general meeting. He is Chair of the Trading and Operating Risk Committee and a
member of the People and Culture Committee. 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. Mr Green is
also a Non-Executive Director of Lindsay Australia Limited.
10
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Your Directors present their report together with the financial report of Namoi Cotton Limited and the entities
it controlled at the end of or during the year ended 28 February 2021 (FY2021) and the independent auditor’s
report thereon.
The above Chairman’s Report and the following Operations and Financial Review and Remuneration Report
form a part of the Directors’ Report.
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.
Juanita Hamparsum, Independent Non-executive Grower Director, 50,
B.Bus. (UTS), CA, FPCT, GAICD
Mrs Hamparsum was appointed to the Board in June 2018 as a casual Director
appointment and was elected at the 2018 general meeting. She is Chair of the Audit, Risk
and Compliance Committee and a member of the Safety Committee. Mrs Hamparsum
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 the audit committee of Cotton Seed Distributors Ltd. Her former positions
include chair of Great Artesian Basin Coordinating Committee, chair of Cotton Innovation
Network, Director of Cotton Research and Development Corporation and Deputy Chair of
Namoi Catchment Management Authority.
Joseph Di Leo, Independent Non-executive Director, 64,
M.Bus.Acct. & Fin., FAICD
Mr Di Leo was appointed to the Board in June 2018 as a casual Director appointment
and was elected at the 2018 general meeting. He is Chair of the Safety Committee
and a member of the Audit, Risk and Compliance Committee. Mr Di Leo has extensive
experience in the agribusiness sector in Executive and Non-Executive roles. He is currently
a Non-Executive Director and Chair of LUCRF Super.
Ian Wilton, Independent Non-executive Director, 68,
MSc, FCCA, FCPA, FAICD, CA
Mr Wilton was appointed to the Board on 17 June 2020 as a casual Director appointment.
He was elected at the 2020 general meeting. He is also Chair of the People and Culture
Committee and a member of the Trading and Operating Risk Committee. Mr Wilton
is an experienced Non-Executive Director with extensive executive experience in the
agribusiness sector. He is currently Chair of Elders Limited and the Chair of the Advisory
Board of MacKay’s Banana Marketing.
James Jackson, Independent Non-executive Director, 58,
B.Com., FAICD (resigned 13 May 2020)
Mr Jackson was appointed to the Board in June 2018 as a casual Director appointment
and was elected at the 2018 general meeting. Prior to his resignation on 13 May 2020,
Mr Jackson was the Chair of the People and Culture Committee and a member of the
Trading and Operating Risk Committee and the Safety Committee. 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 agribusiness. 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.
11
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 FY2021 were the ginning and marketing of
cotton including its by products such as cotton seed
and moss/mote.
Dividends
The Board has announced that Namoi will not pay an
FY2021 final dividend (FY2020: nil).
Significant changes in the state of affairs
Effective from 28 February 2021, NCMA assumed the
trading and marketing lint cotton business from NCA.
Otherwise, 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.
Committee membership
As at the date of this report, the company has 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.
Members acting on the committees of the Board during
the year were:
Audit, Risk and Compliance
Trading and Operating Risk
People and Culture
Safety
J Hamparsum (Chair)
R Green (Chair)
I Wilton (Chair)
J Di Leo (Chair)
J Di Leo
G Price
G Price
I Wilton
J Jackson
T Watson
R Green
J Di Leo
J Jackson
G Price
J Hamparsum
T Watson
R Green
J Jackson
Notes:
• Mr James Jackson resigned from the Board and Committees effective 13 May 2020.
• Mr Ian Wilton was appointed to the Board effective 17 June 2020, was appointed to the People and Culture Committee on 6 August 2020 and
was appointed Chair on 29 September 2020.
• Mr Tim Watson and Mr Robert Green resigned from the Safety Committee on 29 September 2020.
• Mr Joseph Di Leo resigned from the Trading and Operating Risk Committee on 13 May 2020 and was appointed Chair of the Safety Committee on
29 September 2020.
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 5
People and
Culture
T Watson (Chairman) 2
G Price
R Green
J Hamparsum
J Di Leo 3
I Wilton 4
J Jackson (resigned 13 May 2020)
Total number of meetings held
30
28
30
30
30
16
10
30
-
9
-
9
9
-
-
9
-
8
8
-
3
4
3
8
-
3
-
3
3
-
-
3
13
-
13
-
10
5
3
13
1
All board members were available to attend Directors’ meetings and relevant committee meetings. Prior to resigning J Jackson was available to
attend 10 of 11 Directors’ meetings held.
2 Appointed as People and Culture Chair 13 May 2020 resigned as People and Culture Chair 29 September 2020.
3
Appointed to People and Culture 13 May 2020, was available to attend 10 of 10 meetings held, resigned from Trading and Operational Risk 13 May
2020.
4 Appointed to People and Culture 6 August 2020, appointed as People and Culture Chair 29 September 2020.
5 The Safety Committee was formed as a separate Committee on 29 September 2020
12
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 28.
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
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, Namoi Cotton 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 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 management on risk
matters that may have a material impact on the
Group’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.
13
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Non-audit services
Any non-audit services provided by the entity’s auditor,
Ernst & Young, are described in Note 24 of the financial
report. The Directors are satisfied that the provision
of non-audit services is compatible with the general
standard of independence for auditors imposed by the
Corporations Act 2001. The nature and scope of each
type of non-audit service provided means that auditor
independence was not compromised.
Auditor’s independence declaration
The auditor’s independence declaration is included on
page 30 of the Annual 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.
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;
• oversee the financial reporting process to ensure
the balance, transparency and integrity of published
financial information; and
•
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 submitted
to the ASX and published prior to the issuance of the
AGM notice in June. It will also be available on Namoi
Cotton’s public website (www.namoicotton.com.au) at
that time.
14
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 MEET OUR EXECUTIVE TEAM
Shane McGregor, Executive
General Manager Operations, MBA,
MPM, USDA Accredited Cotton
Classifier
Shane has extensive knowledge
of Namoi Cotton and the cotton
industry. His role supports the
current suite within Commercial
Development as well as identify,
develop and support key business,
key account management,
subsidiary businesses and future
company growth and opportunity.
Prue Turnbull, Executive General
Manager Customer Engagement,
B.Bus., GradDipAppFin
John Stevenson, Interim Chief
Executive Officer, Chief Financial
Officer, FCA, GAICD, FGIA, B.Bus.
Prue brings a range of experience
across all aspects of the supply
from procuring, the execution
through the supply chain,
operations and trading & marketing
various commodities.
John was appointed in March 2020.
He has extensive experience having
been the CFO of Australian public
companies as well as large private
entities in the agribusiness sector.
Andrew Metcalfe, CPA, FGIA,
FCSA, GAICD
Neil Johns, Strategy & Business
Development, BCom, MCom, MBus
Andrew was appointed company
secretary on 15 November 2019.
He 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.
Neil was contracted in 2020 and
brings over 30 years agribusiness
experience in strategy, M&A,
operations and supply chain
management.
15
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 MEET OUR PEOPLE
16
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Our vision and mission is to be
the leading Australian cotton
agribusiness, linking growers to
global markets
17
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 18
NAMOI COTTON IS MORE THAN A GINNER Network of 4 integrated businesses operating along the cotton value chain from the grower to spinner (1)Average volume(2)Cotton lint by-products from ginning (3)NCA JV with Louis Dreyfus -Namoi has 51% interest(4)NCMA JV with Louis Dreyfus -Namoi has 15% interestPort Botanyserving >200 growersGin 830,000 bales1Network 9 gins in 6 valleys Capacity 1.7m balesCotton GinningTrading cottonseed to>50 feed buyers Sale of other co-products(mote and trash2)Co-productsTrading cotton lintCotton classing Exporting to 8 countries (managed by NCMA4)Cotton Marketing 3 warehouses and 2 grain storages with 3 terminals Packing export containers (managed by NCA3)Supply Chain GinsCottonseed StoragesGrain StorageWarehouses & terminalsAustralian Classing ServicesEngineering WorkshopJV Marketing & LogisticsToowoombaMacIntyreMerah NorthWee WaaBorder Rivers ValleyGwydir ValleyBourke ValleyLachlan ValleyMacquarie ValleyNamoi ValleysWarrenNorth BourkeHillstonWathagarTrangieBoggabriMoominMungindiPort of BrisbanePort of MelbourneNAMOI COTTON LIMITED | ANNUAL REPORT 2021 OPERATIONS AND FINANCIAL REVIEW
Overview
Namoi Cotton generated an EBITDA loss, including its
share of earnings from joint ventures and associates6,
of $(12.7) million in FY2021 [FY2020: $(4.2) million].
Earnings in FY2021 was negatively impacted by poor
seasonal conditions, significantly reducing ginning
volume, and poor cotton lint trading performance.
Namoi Cotton’s underlying EBITDA7 was $(4.0) million
in FY2021 from a ginning volume of 0.12 million bales
[FY2020: $4.3 million from 0.45 million bales]. This
excludes Namoi Cotton’s share of loss in joint ventures
and associates8 of $(8.7) million in FY2021 [FY2020:
$(8.5) million] and impairments.
FOR THE YEARS ENDED 28 & 29 FEBRUARY
2021
2020
Movement
EBITDA Reconciliation per Segment
Loss before tax
Add back:
Depreciation
Decrements
Impairments
Finance costs
EBITDA
Split per Segment:9
Ginning & Co-Products
Marketing
Commodities
Unallocated (Corporate Cost)
Results of associates and joint venture’s
Underlying EBITDA
Namoi Cotton is well positioned to return to profitability
given improved seasonal conditions, from:
•
•
Strong and resilient core business (Ginning and
Co-products) that generated near break-even
EBITDA position (of $(0.8) million) in FY2021
despite the lowest volume in over 10 years.
Simplified business and improved focus with a
more variable cost structure and reduced exposure
to trading volatility and risk.
Safety
Namoi Cotton is committed to keeping its employees
safe through its Safety Management System. This
commitment continued to bear fruit in FY2021 with a
lost time injury frequency rate (‘LTIFR’) of 9 [FY2020:
10]. This improvement is attributed to a range of
safety initiatives implemented in FY2020 that include
strengthening staff safety engagement through toolbox
talks and increased focus on supervision and fatigue
management.
30
20
10
0
(16.5)
(15.3)
8%
é
3.2
0.0
(1.1)
1.6
(12.7)
(0.8)
(7.8)
0.6
(4.7)
8.7
(4.0)
5.2
5.2
(1.5)
2.1
(4.2)
12.1
(6.6)
(0.9)
(8.8)
8.5
4.3
(38%)
(100%)
(24%)
(22%)
200%
(107%)
18%
164%
(47%)
2%
(193%)
ê
ê
é
ê
é
ê
Namoi Lost Time Injury Frequency Rate
27
23
15
10
9
FY17
FY18
FY19
FY20
FY21
6
7
Refer to Note 10: Investments in Associates and Joint Ventures
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 and is used throughout this report
8 Before Impairments included in the Profit and Loss Statement
9 Refer to Note 19: Segment Information
19
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Strategy Update
Cotton production
Namoi Cotton in FY2021 simplified its business to better
manage volume variability, through the implementation
of the following initiatives:
NCA restructure: Formation of NCMA joint venture
to separately manage cotton lint marketing that
is structured to cap Namoi Cotton’s exposure
to volatile earnings from trading with no debt
support. This will enable the continuing NCA
business to focus and grow its warehousing and
logistics services for NCMA and other customers.
Variable cost structure: $4 million reduction in
permanent staff costs with a reduction of 40
permanent staff in FY2021 (to 95 FTE’s) in addition
to a reduction of 20 FTE’s in FY2020, giving us
more flexibility in low volume seasons.
Structure alignment: Improved business focus and
reorganised executive team, with the combination
of cost focused operations under EGM Operations
(led by Shane McGregor) and combination of
revenue focused customer activities under EGM
Customer Engagement (led by Prue Turnbull).
Namoi Cotton has developed a strategic road map,
called the 4-Point Plan (4PP), to strengthen and grow
its core business over the next 3-5 years through the
following 4 strategic pillars:
1
2
3
4
Leading service and cost position: Partner
growers with a superior network to deliver a
premium ginning service.
Innovative and sustainable solutions:
Empower growers with differentiated
products to unlock the value of cotton.
Broaden revenue base: Geographically
diversify the network and grow the core to
manage variability.
Great place to work: Attract and retain
talented staff in a safe and engaging
environment.
20
Australian cotton planted area for the 2020 (FY2021)
harvest was 60,000 hectares, the lowest since
2008, due to drought conditions and reduced water
availability for irrigation. Australian cotton production in
2020 was only 0.6 million bales, around 70% lower than
2019 (2.1 million bales) and around 80% lower than the
10-year average cotton production (3.4 million bales)10.
Ginning and Co-Products
Namoi Cotton operates a network of 9 gins in
Queensland and NSW, across 6 cotton production
valleys, with a ginning capacity of 1.5 million bales.
Namoi Cotton also markets co-products from ginning
that include cottonseed and moss waste lint. This is
supported by a network of 8 sheds that store and
distribute cottonseed to local and overseas feed
customers.
Namoi Cotton ginned 124,000 bales in FY2021
representing around 70% decrease to FY2020
[450,000 bales] and around 85% lower than the 10-
year average of 835,000 bales11. However, dry harvest
conditions resulted in a smooth harvest and delivery of
high quality cotton.
Namoi Ginned Bales vs Production
Namoi Bales
1.5 Mb
Production
6 Mb
1.0 Mb
0.5 Mb
0.0 Mb
4 Mb
2 Mb
0 Mb
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Namoi Ginned Bales
Australia Production
Namoi Cotton marketed 34,000 tonnes of cottonseed
in FY2021 representing around 70% decrease to
FY2020 [112,000 tonnes]. Namoi Cotton also marketed
waste (moss) lint. The marketing of co-products, given
its higher margin in low volume seasons, generate
counter cyclical earnings.
10
11
10 year average cotton production from 2011 to 2020 - Australian
Bureau of Agricultural and Resource Economics and Sciences
(ABARES)
10 year average bales ginned from FY2012 to FY2021 excluding
closed gin at Ashley.
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Ginning and Co-products EBITDA loss in FY2021 was
$(0.8) million [FY2020: $12.1 million]. Namoi Cotton
implemented a range of measures to manage revenue
and cost to deliver near breakeven earnings from the
significantly reduced ginning and cottonseed volume:
• Strong counter cyclical contribution from
cottonseed marketing, through effective risk and
position management from higher drought feed
prices and margins.
• Operated 5 of its 9 gins by consolidating cotton,
maintaining contribution per bale by containing
variable cost in FY2021 to within 7% of the variable
cost in FY2020.
• Reduced staff numbers, through redundancy
and natural attrition, and other costs. Transferred
permanent staff between gins and reduced shifts to
minimise fixed labour cost.
This demonstrates the ability for the restructured NCA
business to generate sound earnings with improved
seasonal conditions.
Unallocated Costs (Corporate Cost)
Unallocated cost in FY2021 was $(4.7) million with a
corporate cost base of $(6.8) million. Namoi Cotton
reduced unallocated costs by $4.1 million compared
to FY2020 [$(8.8) million] through disciplined cost
management and government grants:
•
•
$1.6 million reduction in salaries plus $0.5 million
reduction in other administrative expenses.
$2.1 million received from the Commonwealth
Government’s JobKeeper program.
• $0.7 million profit from the sale of surplus and non-
Debt facilities
core assets.
Marketing and Commodities (NCA)
NCA (now NCMA for cotton lint trading) buys cotton
lint from growers and markets to overseas customers.
This is supported by NCA’s network of 3 cotton
warehouses and packing facilities, with rail and road
access to the container port terminals, for the export of
cotton lint and other commodities.
NCA’s trading business shipped 162,000 bales in FY2021
that was supported by carry over inventory from
FY2020. [FY2020: 290,000 bales]. NCA’s warehouse
and logistics business delivered 130,000 bales of cotton
from its warehouses in FY2021 [FY2020: 227,000
bales].
Marketing and Commodities (combined) EBITDA loss
in FY2021 was $(7.2) million [FY2020: $(7.5) million].
This was driven by Namoi Cotton’s share of loss
from joint ventures and associates of $(8.7) million in
FY2021 [FY2020: $(8.5) million] arising from cotton lint
trading. NCA’s trading margin in FY2021 was negatively
impacted by the rally then significant fall in the cotton
basis due to the interplay of the drought in eastern
Australia with:
• Covid-19 impact on textile demand and reduction in
flat prices,
• Slow down in Australian cotton exports, and
• Counter-party defaults.
NCA was supported by a positive contribution from its
warehousing and grain packing business despite the
significant reduction in cotton volume. This included
an increase in grain packing from the large 2020
grain harvest, with 100,000 tonnes packed in FY2021
[FY2020: 29,000 tonnes].
No term debt amortisations occurred during FY2021
with $42 million of term debt carried throughout the
financial year. Finance facilities were renewed with
Commonwealth Bank of Australia (‘CBA’) with an
extension to the maturity date of the $42 million term
debt and $12.5 million working capital and overdraft
facilities to 30 April 2022.
2021 (FY2022) Season
Namoi Cotton is forecasting around a four-fold increase
in ginning volume in FY2022 compared to FY2021,
but still well below average volume. Forecast ginning
volume is around 450,000 bales of cotton from a
forecast cotton crop of around 2.5 million bales.
Namoi Cotton is well prepared for the 2021 cotton
harvest with the planned operation of 8 gins for
ginning and 3 NCA warehouses for cotton lint storage
and container packing. It has spent over $3 million in
maintenance in FY2021, that will continue into early
FY2022, to ensure its gins and facilities are harvest-
ready including:
•
Increasing gin speed at North Bourke to
accommodate record cotton production.
• Refreshing Mungindi and Trangie gins to
accommodate improved cotton production.
• Reopening the closed warehouse at Warren, and
reengagement of rail services, to service export
cotton from the Trangie gin and the Macquarie
valley.
• Dismantling and relocating the closed gin at Ashley.
21
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 28 February 2021.
Non-Executive Directors
James Jackson resigned as a Non-Executive Director
effective 13 May 2020.
Ian Wilton appointed as a Non-Executive Director
effective 17 June 2020.
Senior Executives
Michael Renehan, Chief Executive Officer, resigned 10
February 2021.
John Stevenson, Chief Financial Officer, was appointed
27 March 2020 effective 30 March 2020. John was
appointed Acting interim CEO 10 February 2021
effective 7 February 2021.
Company secretary
Andrew Metcalfe, 55, CPA, FGIA, FCSA, GAICD, 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.
Key Management Personnel for the 2021
Financial Year include the following persons:
Directors
Mr T J Watson
Chair, non-executive
Mr G Price
Director, non-executive
Mr R Green
Director, non-executive
Mr J Jackson
Director, non-executive
(resigned 13 May 2020)
Ms J Hamparsum Director, non-executive
Mr J Di Leo
Director, non-executive
Mr I Wilton
Director, non-executive
(appointed 17 June 2020)
Executives
Mr M Renehan
Chief Executive Officer
(resigned 10 February 2021)
Acting interim CEO (appointed 10
February 2021 effective 7 February
2021) and Chief Financial Officer
(appointed 27 March 2020 effective
30 March 2020)
Prue Turnbull, Executive General Manager of Customer
Operations, was appointed 6 April 2020.
Mr J Stevenson
Ernesto Mollica, Executive General Manager of
Engineering and Technical, was appointed 13 April 2020
resigned 8 January 2021.
22
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Mr S McGregor
Ms P Turnbull
Executive General Manager of
Operations
Executive General Manager of
Customer Operations
Mr Ernesto Mollica Executive General Manager
of Engineering and
Technical (Appointed 13 April 2020
resigned 8 January 2021).
Compensation of KMP
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
(CEO) and senior executives (as defined by the
board).
• 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 29 – Group financial performance and position.
to attract and retain Directors with the appropriate
qualifications, experience and skills and compensate
Directors for the time required to exercise their 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 FY2021 financial year
the aggregate Directors’ fees paid was $496,522.
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 28 February 2021 is detailed on page 26
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 25 and 26 of this report.
Each KMP agreement includes compensation which
consists of the following key elements (where
applicable):
Compensation Structure
• Fixed Compensation;
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
• Variable Compensation comprising Short Term
Incentives (STI)
• Variable Compensation comprising Long Term
Incentives (LTI)
The People and Culture Committee recommends to the
Board the proportion of fixed and variable (potential STI
and LTI) compensation for KMP.
23
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
The Board resolved that no STI compensation would be
paid or accrued to KMP’s in FY2021 given the Group’s
negative earnings (2020: 0%).
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.
Structure
Executives are given the opportunity to receive their
fixed remuneration in a variety of forms which in FY2021
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 KPI’s covering both financial and non-
financial measures of performance.
For FY2021 the STI compensation included an ‘at
risk bonus’ element linked to company financial
performance.
The FY2021 STI compensation also included an element
that is dependent upon the achievement of individual
KPI’s. The KPI’s include, but are not limited to, critical
operational, profit, safety and developmental targets.
24
KMP STI payments are ultimately subject to the
discretion of the Board after review of achievement
by the People and Culture Committee. However, when
taking into account this discretion, the Board considers
the above criteria in determining the appropriate
allocation.
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 under the Namoi Cotton Limited
Equity Plan (the “Plan”) in the form of performance
rights was approved by the Board on 21 June 2020 and
subsequently ratified at the Annual General Meeting
on 29 September 2020. The purpose of the Plan is
to enable the Board to issue rights, as part of the
Company’s remuneration arrangements, to acquire
shares in the Company. The granting of rights to
employees and non-executive Directors of the Company
is conditional upon the absolute discretion of the board.
The rights are issued on the following terms:
• The Board may make offers to Eligible Employees
to apply for a grant of Rights upon the terms of the
Plan to receive shares in Namoi Cotton Limited,
• For each financial year onward commencing 1 March
2020 and ending 28 February, there is a target
opportunity of 50% for the CEO and 25% of fixed
remuneration for all other eligible employees. For
2021, 2022 and 2023 the number of rights granted
is determined using the hurdle price determined
by the Directors set out in the terms of the relevant
offer for each year,
• The vesting of these performance rights will be
subject to achievement of company performance
measures and other service conditions over a 3-year
period.
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Contract for Services
Major provisions of KMP employment
agreements are set out below.
Mr Michael Renehan, Chief Executive Officer (resigned
10 February 2021)
• Fixed compensation, inclusive of superannuation,
for the year ended 28 February 2021 of $400,000
(29 February 2020: $400,000) per annum on a
pro-rata basis.
• Short Term Incentive (STI) compensation for the
year ended 28 February 2021 of $Nil. (29 February
2020: $Nil).
• Fixed compensation, inclusive of superannuation,
for the year ended 28 February 2021 of $275,674
(29 February 2020: $304,649) per annum on a pro-
rata basis.
• Short Term Incentive (STI) compensation for the
year ended 28 February 2021 of $Nil. (29 February
2020: $Nil).
• Long Term Incentive (LTI) compensation of 205,838
rights for the period beginning 01 March 2020 with
a value on issue date of $1,230 (29 February 2020:
$Nil).
• Payment of a benefit on termination equal to 50%
of annual fixed compensation.
• Long Term Incentive (LTI) compensation of 898,204
rights for the period beginning 1 September
2019 with a value on issue date of $5,369 (29
February 2020: $Nil). Nil rights retained as rights
subsequently cancelled on resignation.
• Period of notice to be given by employee or
employer – 3 months.
Mrs Prue Turnbull, EGM of Customer Operations
(formerly Operations – Appointed 6 April 2020)
• Period of notice to be given by employee or
• Fixed compensation, inclusive of superannuation,
employer – 3 months.
Mr John Stevenson, Chief Financial Officer (Appointed
CFO 27 March 2020 and Acting Interim CEO
effective 7 February 2021)
• Fixed compensation, inclusive of superannuation,
for the period ended 6 February 2021 of $300,000
increased to $400,000 for the year ended 28
February 2021 effective from 7 February 2021 (29
February 2020: $Nil) per annum on a pro-rata basis.
for the year ended 28 February 2021 of
$230,000 (29 February 2020: $Nil) per annum on a
pro-rata basis.
• Short Term Incentive (STI) compensation for the
year ended 28 February 2021 of $Nil. (29 February
2020: $Nil).
• Long Term Incentive (LTI) of 164,671 rights for the
period beginning 01 March 2020 with a value on
issue date of $984 (29 February 2020: $Nil).
• Short Term Incentive (STI) compensation for the
• Period of notice to be given by employee or
year ended 28 February 2021 of $Nil (29 February
2020: $Nil).
• Long Term Incentive (LTI) compensation of 224,551
rights for the period beginning 01 March 2020 with
a value on issue date of $1,342 (29 February 2020:
$Nil).
• Period of notice to be given by employee or
employer – 3 months.
employer – 3 months.
Mr Ernesto Mollica, EGM of Engineering and
Technical (Appointed 13 April 2020 resigned 8 January
2021)
• Fixed compensation, inclusive of superannuation,
for the year ended 28 February 2021 of
$275,000 (29 February 2020: $Nil) per annum on a
pro-rata basis.
Mr Shane McGregor, EGM of Operations (formerly
Business Development)
• Variable compensation, for the year ended 28
February 2021 of $Nil (29 February 2020: $Nil)
25
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 KMP Remuneration Table
The table below sets out the remuneration paid or
payable to the Directors, CEO and Senior Executive
KMP for the financial year ended 28 February 2021.
Compensation of Key Management Personnel for the Year Ended 28 February 2021:
Short-term
Employee
benefits
Post-employment
Benefits
Long-term
Incentives
Salary
& Fees1
Cash
Bonus
Super-
annuation
Retirement
Benefits2
Employee
Rights3
Long
Service
Leave4
Termination
Benefits
Total
%
Performance
Related5
Directors
T Watson
110,000
SC Boydell6
150,000
G Price
R Green
J Jackson7
70,000
70,000
14,269
J Hamparsum 70,000
J Di Leo
I Wilton8
Executives
70,000
49,269
M Renehan9
368,816
J Stevenson10
264,423
S McGregor
261,823
P Turnbull11
E Mollica12
195,987
199,749
1,894,336
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,450
-
-
(150,000)
6,650
6,650
1,356
6,650
6,650
4,578
29,237
23,170
22,097
18,602
17,802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,369
1,342
-
-
-
-
-
-
-
-
-
415
1,230 (7,399)
984
-
311
-
-
-
-
-
-
-
-
-
120,450
-
76,650
76,650
15,625
76,650
76,650
53,847
222,587 626,009
-
-
-
-
289,350
277,751
215,884
217,551
153,892 (150,000)
8,925 (6,673)
222,587 2,123,067
-
-
-
-
-
-
-
-
-
-
-
-
-
Salary & Fees plus cost of accrued annual leave for the period.
1
2 Payment on retirement of previously accrued entitlements.
3 Value of Rights to take up shares under the Namoi Cotton Limited Equity Plan as at issue date.
4 Cost of long service leave entitlement accrued during the period. Negative amount reflects change in liability.
5 The percentage that STI forms part of total remuneration.
6 Resigned on 20 January 2020 and was paid previously accrued retirement benefits.
7 Resigned on 13 May 2020.
8 Appointed on 17 June 2020.
9
Resigned on 10 February 2021. Non-monetary benefits included in Termination Benefits for relocation expenses and out-placement fees of
$30,000. Employee rights to take up shares under the Namoi Cotton Limited Equity Plan subsequently cancelled upon resignation. Termination
benefits net of previously accrued LSL as not payable.
10 Appointed on 27 March 2020 effective 30 March 2020. Appointed acting interim CEO effective on 7 February 2021.
11 Appointed 7 April 2020.
12 Appointed 13 April 2020, resigned on 8 January 2021.
26
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Compensation of Key Management Personnel for the Year Ended 29 February 2020:
Short-term
Employee benefits
Post-employment
Benefits
Long-term
Incentives
Salary
& Fees1
Cash
Bonus
Super-
annuation
Retirement
Benefits2
Employee
Rights2
Long
Service
Leave3
Termination
Benefits
Total
%
Performance
Related 4
Directors
T Watson
110,423
RA Anderson5
149,077
SC Boydell6
G Price
R Green
J Jackson7
62,071
70,269
70,269
70,269
J Hamparsum
70,269
J Di Leo
70,269
Executives
M Renehan7
216,754
J Callachor8
D Lindsay9
B Garcha10
2,781
197,449
180,581
S Greenwood11
283,687
M Newbury12
50,704
S McGregor
275,760
A Mehl13
161,448
2,042,080
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,490
-
2,762
(120,000)
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139,491
(120,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
341
-
-
-
-
-
3,601
-
-
-
-
-
-
-
-
-
120,913
31,839
67,968
76,945
76,945
76,945
76,945
76,945
228,880
399,651
403,237
148,500 360,658
162,351
346,913
-
-
-
296,719
55,521
300,842
-
36,185
213,985
3,942
746,687 2,812,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Salary & Fees plus cost of accrued annual leave for the period.
1
2 Payment on retirement of previously accrued entitlements.
3 Cost of long service leave entitlement accrued during the period.
4 The percentage that STI forms part of total remuneration.
5 Retired on 30 July 2019 and was paid previously accrued retirement benefits.
6 Resigned on 20 January 2020.
7
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.
8 Resigned on 8 March 2019.
9 Resigned on 25 November 2019.
10 Resigned on 15 November 2019.
11 Resigned on 13 December 2019 effective 20 January 2020.
12 Appointed acting Interim CFO from 13 December 2019.
13 Resigned on 11 November 2019.
27
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 KMP Shareholdings1
Year ended 28 February 2021
Directors
T Watson (Chairman)
G Price
R Green
J Jackson (resigned 13 May 2020)
J Hamparsum
J Di Leo
I Wilton (appointed 17 June 2020)
Executives
M Renehan
J Stevenson
S McGregor
P Turnbull
E Mollica
Balance held
1 March 2020
Granted as
Remuneration
On Exercise
of Rights
Net Change
Other2
Balance held
28 February
2021
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
1,683,831
611,048
-
13,471,111
158,504
-
-
-
-
2,000
-
-
15,926,494
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
715,328
2,399,159
-
-
(13,471,111)
611,048
-
-
76,641
235,145
-
-
700,000
700,000
-
-
-
-
-
-
-
2,000
-
-
(11,979,142)
3,947,352
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.
any Namoi Cotton gin in at least three out of the
last five cotton seasons; or
All ordinary share transactions by the company with
KMP are made through the ASX on normal commercial
terms.
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
•
•
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:
Cotton Purchases
Freight Payments
Ginning Charges
Levied
Grain & Seed
Purchases
Consolidated
Name
Mr T Watson
Mr G Price
28 Feb
2021
29 Feb
2020
$
-
$
-
28 Feb
2021
$
19,000
29 Feb
2020
$
-
28 Feb
2021
$
29 Feb
2020
$
28 Feb
2021
$
29 Feb
2020
$
72,040
605,529
5,269
247,275
538,225
1,607,440
18,915
30,942
60,131
174,174
154,207
338,775
Ms J Hamparsum
274,670
-
-
29,237
89,324
41,397
206,939
68,105
812,895 1,607,440
37,915
60,179
221,495
821,100
366,415
654,155
28
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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”) and/or Namoi Cotton Marketing Alliance
(“NCMA”) joint ventures.
• 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 decisions
about the allocation of scarce resources made by users
of the financial report, or the discharge of accountability
by the Directors. These transactions may 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.
Group Financial performance and position
The following table highlights key components of the
groups’ financial performance for the last 5 years.
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) - basic2
Net assets per ordinary share (cents) - diluted3
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.
2021
2020
2019
2018
2017
N/a
N/a
N/a
N/a
(10.3)
-
35.5
106.8
N/a
76.0
74.9
N/a
N/a
N/a
N/a
(7.8)
-
30.0
121.4
N/a
86.6
85.2
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
Signed in accordance with a resolution of the Directors
on behalf of the board.
T WATSON
Director
Sydney
30 April 2021
29
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 AUDITOR’S INDEPENDENCE DECLARATION
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
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
Auditor’s independence declaration to the directors of Namoi Cotton
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
Limited
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
b. No contraventions of any applicable code of professional conduct in relation to the audit.
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
year.
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
Ernst & Young
Wade Hansen
Partner
Brisbane
30 April 2021
Wade Hansen
Partner
Brisbane
30 April 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
30
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent auditor's report to the members of Namoi Cotton Limited
Auditor’s independence declaration to the directors of Namoi Cotton
Report on the audit of the financial report
Limited
Opinion
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
We have audited the financial report of Namoi Cotton Limited (the Company) and its subsidiaries
(collectively the Group), which comprises:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
the consolidated balance sheet as at 28 February 2021;
b. No contraventions of any applicable code of professional conduct in relation to the audit.
the consolidated statements of profit and loss and other comprehensive income, statement of
changes in equity and statement of cash flows for the year then ended;
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
year.
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:
Ernst & Young
a)
b)
giving a true and fair view of the Group's financial position as at 28 February 2021 and of their
financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Wade Hansen
Partner
Basis for opinion
Brisbane
30 April 2021
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 (including Independence Standards) (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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
31
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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
Key audit matters
Auditor’s independence declaration to the directors of Namoi Cotton
Limited
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
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.
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.
1. Basis of preparation of the financial statements – going concern
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
year.
Why significant
How our audit addressed the key audit matter
During the current and previous financial years,
the Group’s financial performance has been
impacted by drought which has in turn impacted
Ernst & Young
the Group’s liquidity and compliance with
financial covenants associated with its borrowing
arrangements.
As described in Note 1(b) to the financial report,
the financial statements have been prepared by
the Group on a going concern basis.
Wade Hansen
The Group’s management of liquidity risk is
Partner
disclosed in Note 25. In assessing the Group’s
Brisbane
ability to continue as a concern, the directors
30 April 2021
have considered existing cash and working
capital balances, borrowing terms including
financial covenants, financing facilities available
and due to mature during the next 12 months,
and forecast of future cash flows, for a period of
at least 12 months from the date the financial
report is authorised for issue (forecast
cashflows). The forecast cash flows include the
proceeds from a capital raising approved by the
Board.
Our audit procedures included the following:
►
►
►
►
Evaluated whether the period covered by the
Group’s going concern assessment is at least 12
months from the date of our auditor’s report and
all relevant information based on our knowledge
of the Group as a result of the audit has been
included in the assessment;
Enquired of management and the Board of
Directors as to their knowledge of events or
conditions that may impact Group’s ability to
continue as a going concern;
Assessed the Group’s forecast cashflow
assumptions by considering historical results,
cashflow expenditure initiatives undertaken,
growth rates and relevant external forecast
information for the range of possible scenarios
resulting from the ongoing uncertainty
associated with the current cotton crop.
Assessed the consistency of forecasts with the
scenarios considered as part of the Group’s fair
value of ginning assets analysis;
Read the terms associated with the Group’s
financing arrangements, including covenant
waivers obtained by the Group in relation to its
financing facility, assessing the amount of the
facilities available for drawdown over the
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
32
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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
Why significant
How our audit addressed the key audit matter
Auditor’s independence declaration to the directors of Namoi Cotton
forecast period, and assessing the likelihood of
Assessing the appropriateness of the Group’s
Limited
asset sale and planned capital raise options
basis of preparation for the financial statements
available to the Group to access over the next 12
was a key audit matter due to this importance to
months
the financial statements and the level of
judgment required in the assessing the Group’s
Considered the impact on the Group’s going
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
forecast cashflows (for a period of at least 12
concern assessment related to the restructure to
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
months from the audit report date) and its ability
the Group’s investments in joint ventures and
to comply with debt covenants at 28 February
their financing arrangements
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
2022.
►
relation to the audit; and
► Obtained written representation from
management and the Board of Directors
b. No contraventions of any applicable code of professional conduct in relation to the audit.
regarding their plans for future action and the
feasibility of these plans
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
Assessed the appropriateness of the disclosures
year.
►
regarding the Group’s going concern basis of
preparation for the financial statements.
2. Fair value of ginning assets
Ernst & Young
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
Wade Hansen
statements. Ginning assets represent 65% of
Partner
total assets of the Company and 67% of total
Brisbane
assets of the Group.
30 April 2021
The Group uses a 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, market
share, discount rates, bale ginning contributions
and revenue growth rates.
The key assumptions relating to the valuations
are disclosed in Note 13 and Note 1(p).
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 eight 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 the Group
relating to forecast crop assumptions including
considering the impact of drought conditions on
future cotton crops;
Considered the continuing appropriateness of
independent valuations obtained by the Group in
prior periods and performed sensitivity testing
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
33
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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
Why significant
How our audit addressed the key audit matter
Auditor’s independence declaration to the directors of Namoi Cotton
Given the value and complexity of the valuation
of ginning assets and the extent of the
Limited
disclosures relating to the assumptions used in
Involved our valuation specialists to assist in
the valuation, this was determined to be a key
assessing the modelling used by the Group to
audit matter.
support its valuation, by evaluating the model
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
methodology and discount rates used; and
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
to understand the impact of changes in key
assumptions to the valuation;
►
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
►
Assessed the adequacy of the related financial
report disclosures.
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
3. Namoi Cotton Alliance Joint Venture Investment and restructure
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
year.
Why significant
How our audit addressed the key audit matter
At 28 February 2021 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, NCMA and the
equity accounted results included the following:
As explained in Note 1 to the financial
Ernst & Young
statements, the Group’s investment in NCA is
accounted for using the equity method of
accounting in accordance with Australian
Accounting Standards. An investment of $23m is
recorded on the Group’s consolidated balance
sheet. An equity accounted loss of $9.2m
Wade Hansen
contributed to the financial performance of the
Partner
Group.
Brisbane
The Group also assesses the carrying amount of
30 April 2021
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 and its 49% joint venture participant
in NCA negotiated a restructure to the NCA
operations during the current financial year. The
terms of the restructure resulted in the cotton
lint trading business of NCA being transferred to
a new joint venture, Namoi Cotton Marketing
Alliance (“NCMA”) effective 28 February 2021.
At 28 February 2021, the Group held a 15%
stake in NCMA.
►
►
►
Audited the financial statements of NCA for the
year ending 28 February 2021 and issued a
separate audit report to the participants of the
joint venture;
Performed specified audit procedures over the
accounting records of NCMA for the period
ending 28 February 2021;
In the context of the audit of the Group, we
evaluated the scope of the NCA audit and NCMA
specified procedures, the execution of these
audit and specified procedures, significant areas
of estimation and judgement and audit findings;
► Recalculated the Group’s equity-accounting for
NCA and NCMA with reference to the audited
financial statements of NCA for the year ended
28 February 2021 and the accounting records of
NCMA for the period ended 28 February 2021.
In addition, we tested the movement in the
carrying value of the Group’s investments in NCA
and NCMA for the financial year were consistent
with the share of equity accounted results;
►
Reviewed all relevant restructure and transfer
documentation relating to the NCA restructure
including transfer of its cotton lint trading
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
34
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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
business to NCMA and considered the
accounting treatments adopted in each entity;
Why significant
How our audit addressed the key audit matter
Auditor’s independence declaration to the directors of Namoi Cotton
The significance of the carrying amount of the
Limited
Group’s investment in NCA and NCMA to its
financial position, NCA’s and NCMA’s
contribution to the Group’s financial
performance, judgements and estimates
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
involved in impairment testing and the complex
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
financial arrangements forming part of the
restructure, mean this was a key audit matter.
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
Details of the Group’s investment in the joint
ventures are outlined in Note 10 to the financial
statements.
b. No contraventions of any applicable code of professional conduct in relation to the audit.
Assessed management’s impairment testing of
the Group’s investment in NCA given the
restructure and the net tangible assets retained
by NCA after the restructure; and
Assessed the adequacy of the related financial
report disclosures.
relation to the audit; and
►
►
Information other than the financial report and auditor’s report thereon
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
year.
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 Annual Report other than the financial report and our
auditor’s report thereon.
Ernst & Young
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, with the exception of the Remuneration Report
and our related assurance opinion.
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.
Wade Hansen
Partner
Brisbane
30 April 2021
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 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 Group or to cease
operations, or have no realistic alternative but to do so.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
35
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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 responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
Auditor’s independence declaration to the directors of Namoi Cotton
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
Limited
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
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
decisions of users taken on the basis of this financial report.
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
judgement and maintain professional scepticism throughout the audit. We also:
relation to the audit; and
•
b. No contraventions of any applicable code of professional conduct in relation to the audit.
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
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
detecting a material misstatement resulting from fraud is higher than for one resulting from
year.
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
Ernst & Young
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 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 Group
to cease to continue as a going concern
Wade Hansen
Partner
Brisbane
30 April 2021
•
•
•
•
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
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.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
36
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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
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
Auditor’s independence declaration to the directors of Namoi Cotton
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Limited
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
As lead auditor for the audit of the financial report of Namoi Cotton Limited for the financial year
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
ended 28 February 2021, I declare to the best of my knowledge and belief, there have been:
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
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
reasonably be expected to outweigh the public interest benefits of such communication.
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
Report on the audit of the remuneration report
This declaration is in respect of Namoi Cotton Limited and the entities it controlled during the financial
year.
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 22 to 29 of the directors' report for the
year ended 28 February 2021.
In our opinion, the Remuneration Report of Namoi Cotton Limited for the year ended 28 February
Ernst & Young
2021, 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
Wade Hansen
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
Partner
accordance with Australian Auditing Standards.
Brisbane
30 April 2021
Ernst & Young
Wade Hansen
Partner
Brisbane
30 April 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
37
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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 consolidated entity are in accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the consolidated entity’s financial position as at 28 February 2021 and of
its performance for the year ended on that date; and
ii)
complying with Accounting Standards and Corporations Regulations 2001;
b)
c)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 1(a);
there are reasonable grounds to believe that the 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 28 February 2021.
On behalf of the board
T WATSON
Director
Sydney
30 April 2021
38
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
39
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 NAMOI COTTON LIMITED
ABN 76 010 485 588
CONSOLIDATED
FINANCIAL REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2021
40
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL REPORT CONTENTS
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
1. Summary of Significant Accounting Policies
2. Revenue and Expenses
3.
Income Tax
4. Earnings per Share
5. Distributions Paid or Provided on Ordinary Shares
6. Cash and Cash Equivalents
7. Trade and Other Receivables
8.
Inventories
9. Derivative Financial Instruments
10. Investments in Associates and Joint Ventures using the equity method
11. Interest in Joint Operations
12. Interest in Jointly Controlled Assets
13. Property, Plant and Equipment
14. Trade and Other Payables
15. Interest Bearing Liabilities
16. Provisions
17. Contributed Equity
18. Nature and Purpose of Reserves
19. Segment Information
20. Commitments and Contingencies
21. Significant Events after Balance Date
22. Related Party Disclosures
23. Directors’ and Executive Disclosure
24. Remuneration of Auditors
25. Financial Risk Management Objectives and Policies
26. Share-based payments
27. Information relating to Namoi Cotton Limited (the Parent)
28. ASX Additional Information
29. Corporate Directory
30. Other Non-Financial Information
42
43
44
45
46
46
56
57
59
59
60
62
64
64
65
68
68
69
71
72
73
73
74
75
78
79
79
80
81
81
88
89
90
92
93
41
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 28 February 2021
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 reversal - 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
Note
28 Feb
2021
29 Feb
2020
2a
2a
2a
2b
10
2c
13
10
2d
2e
3
542
311
853
3,166
350
3,516
15,222
39,367
2,761
1,125
(8,704)
(8,539)
(3,388)
(11,027)
(3,246)
-
1,126
-
(1,634)
(8,420)
(10,419)
(19,433)
(5,239)
(5,217)
2,438
(961)
(2,082)
(9,856)
(16,458)
(15,300)
2,040
4,310
(14,418)
(10,990)
Other comprehensive income items that will not be reclassified
subsequently to profit and loss:
Increment/(decrement) to asset revaluation reserve (net of tax)
(264)
2,609
Profit/(loss) and other comprehensive income attributable to the
members of Namoi Cotton Limited
Earnings per ordinary share
Basic earnings per share
Diluted earnings per share 1
(14,682)
(8,381)
Cents
28 Feb
2021
29 Feb
2020
(10.3)
(10.3)
(7.8)
(7.8)
Note
4
4
1 Residual capital stock unconverted has not been included in the calculation of diluted earnings per share because they are antidilutive,
refer to note 17
The above statement of profit and loss and other comprehensive income should be read in conjunction with the
accompanying notes.
42
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 BALANCE SHEET
as at year ended 28 February 2021
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
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
Deferred tax assets
Derivative financial instruments
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
Contributed equity
Reserves
Retained earnings / (deficit)
Total parent entity interest in equity
TOTAL EQUITY
Note
Consolidated
$’000
28 Feb
2021
29 Feb
2020
6
7
8
9
7
25
10
13
13
3
10
14
15
16
9
15
16
3
17
18
497
2,196
7,445
837
767
7,481
19,223
731
3,531
7,254
-
683
4,280
16,479
-
-
-
-
21,300
28,878
-
-
129,703
133,939
-
-
-
-
151,003
162,817
170,226
179,296
4,315
5,664
1,671
5,996
4,184
1,710
1,524
3,024
17,646
10,442
45,639
44,778
185
-
45,824
571
2,067
47,416
63,470
57,858
106,756
121,438
37,639
70,075
(958)
37,639
70,330
13,469
106,756
121,438
106,756
121,438
43
The above balance sheet should be read in conjunction with the accompanying notes.
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 STATEMENT OF CASH FLOWS
for the year ended 28 February 2021
Consolidated
$’000
Note
28 Feb
2021
29 Feb
2020
Cash flows from operating activities
Receipts from customers
Government grants
Currency derivative flows
Payments to suppliers and employees
Payments to growers
Interest received
Borrowing costs
Net cash (outflow)/inflow from operating activities
6b
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
79,724
308,561
2,088
(25)
-
(28)
(30,014)
(52,820)
(55,771)
(255,733)
8
9
(1,627)
(5,617)
(2,130)
(2,141)
(170)
2,816
-
1
(1,123)
19
(7)
25
(400)
(400)
2,247
(1,486)
8,500
13,543
(4,350)
(13,543)
-
-
(1,007)
(234)
(119)
119
(1,097)
(372)
Net cash (outflow)/inflow from financing activities
6c
2,909
(1,469)
Net increase/(decrease) in cash
Add cash at the beginning of the financial year
Cash at end of the financial year
6a
The above statement of cash flows should be read in conjunction with the accompanying notes.
(461)
(5,096)
731
270
5,827
731
44
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2021
Consolidated $’000
Asset
Revaluation
Reserve
(Note 18)
Share
Rights
Reserve
(Note 18)
Issued
Capital
Total equity at 1 March 2020
37,639
70,330
Net loss for the period
Other comprehensive income/(loss)
Equity dividends
-
-
-
-
-
(264)
(264)
-
Total equity at 28 February 2021
37,639
70,066
Consolidated $’000
Asset
Revaluation
Reserve
(Note 18)
Share
Rights
Reserve
(Note 18)
Issued
Capital
Total equity at 1 March 2019
37,639
67,721
Net loss for the period
Other comprehensive income/(loss)
Equity dividends
-
-
-
-
-
2,609
2,609
-
Total equity at 29 February 2020
37,639
70,330
Retained
Earnings
Total
Equity
13,469
121,438
(14,427)
-
(14,418)
(264)
(14,427)
(14,682)
-
-
(958)
106,756
Retained
Earnings
Total
Equity
24,459
129,819
(10,990)
(10,990)
-
(10,990)
-
2,609
(8,381)
-
13,469
121,438
-
9
-
9
-
9
-
-
-
-
-
-
The above statement of changes in equity should be read in conjunction with the accompanying notes.
45
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS
1. Summary of Significant Accounting
loss recognition (refer to Note 1i and Note 3); and
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 presents the consolidated entity
consisting of Namoi Cotton Limited and its subsidiaries.
In previous years separate financial statements for
Namoi Cotton Limited as an individual entity were
also presented but this is not required in the current
year therefore summary parent information has been
disclosed in Note 27.
For the purposes of disclosure of events occurring after
balance date the Directors have authorised this financial
report for issue on 30 April 2021 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.
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 1m and Note 25) and derivative
financial instruments (refer to Note 1n and Note 9);
• Fair value of ginning assets (refer Note 1p and Note
13);
•
Impairment testing of property plant and
equipment (refer to Note 1p and Note 13);
• Classification of associates and joint ventures (refer
to Note 1d and Note 11);
• Treatment of deferred tax balances including tax
46
• Assessment of the useful lives of assets (refer to
Note 1p)
• COVID-19 (refer to description below)
COVID-19
The COVID-19 outbreak was declared a pandemic
by the world health organisation in March 2020. The
outbreak and response of Governments in dealing
with the pandemic is interfering with general activity
levels within the community, the economy and business
operations however, there has not been a significant
impact on Namoi Cotton’s ginning operations to date.
The scale and duration of these circumstances remain
uncertain as at the date of this report however they may
have an impact on our earnings, cash flow and financial
condition. Despite the current uncertainty associated
with COVID-19, the Directors are confident that there
has been no impact on the Group’s asset capacity
and potential to service forecast ginning volumes and
therefore also has no material impact on the fair value
of ginning assets at 28 February 2021.
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 2020 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.
Certain new accounting standards and interpretations
have been published that are not mandatory for 28
February 2021 reporting period 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:
•
IFRS 17 Insurance Contracts (effective for reporting
periods beginning on or after 1 January 2023)
• Amendments to IFRS 3: Definition of Business
(effective for annual reporting periods beginning on
or after 1 January 2022)
• Amendments to IAS 1 Classification of Liabilities
(effective for reporting periods beginning on or
after 1 January 2023)
• Amendments to IAS 16 Property, Plant and
Equipment (effective for annual reporting periods
beginning on or after 1 January 2022)
• Amendments to IAS 37 Onerous Contracts
(effective for annual reporting periods beginning on
or after 1 January 2022)
• Amendment to IAS 41 Agriculture (effective for
annual reporting periods beginning on or after 1
January 2022)
• These new standards and amendments are not
expected to have a material impact on Namoi
Cotton.
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 and its joint venture
and associate’s debt financing facilities.
The Group’s debt financing facilities totalling $54
million (i.e. available limit) are due for renewal on 30
April 2022. These facilities contain financial covenants
reflective of current trading conditions, including a
requirement to fund debt repayment from operations,
asset sales or equity. The Directors are confident that:
• A capital raise, approved by the board at the
date of this report, will successfully close given
the commitments made to the Company by key
shareholders and other parties;
• All covenants in existing debt facilities will continue
to be met;
• These facilities are sufficient to fund the Group’s
ongoing operations for the 2022 financial year; and
• The facilities will be able to be refinanced at
maturity.
During the year, the Group restructured its NCA joint
venture in which it owns a 51% share and established a
new joint venture, NCMA in which it owns a 15% share.
NCA operates in three business divisions: Warehousing;
Packing and Cotton Lint. On 26 February 2021, NCA
ceased undertaking new business in its Cotton Lint
operations and on the same day NCMA commenced
business in the trading and marketing of cotton lint
acquired by the Group.
As at 28 February 2021, NCA maintained debt facilities
to fund the settlement of pre-existing business in its
Cotton Lint division. Since that date, NCA has fully
repaid all drawn debt in its Cotton Lint division.
As of 30 April 2021, NCA’s Cotton Lint debt facilities
totalling US$52.5 million (i.e. available limit) have been
fully repaid and cancelled and equivalent facilities
were established in NCMA. The NCMA facilities
have no recourse to NCA (other than a customary
“featherweight” security subject to a maximum amount
recoverable of $1,000 and, subject to finalisation of new
ISDA documentation for foreign currency activities).
NCA’s only other debt facility is an equipment facility
for its Warehouse and Packing divisions with a drawn
amount of $0.55 million at 28 February 2021 (FY2020
$1.05 million), all of which mature by April 2023. NCA‘s
restructured operations are funded from existing
reserves and future cashflow which are sufficient to
fund NCA’s ongoing operations.
As previously announced, the Group’s joint venture
partner in NCMA has assumed primary responsibility for
ensuring NCMA’s ongoing operations are funded. Namoi
Cotton’s exposure to NCMA’s debt and other funding is
limited to its 15% share and:
NCMA’s debt is limited in recourse to the security of the
NCMA assets; and
• Except to the extent Namoi’s joint venture entity’s
liability is satisfied from that limited recourse
security, is further subject to a “cap” arrangement
that places a limit on Namoi Cotton’s exposure in
any financial year to $1.5 million.
Recent flooding rains have increased water availability
and should support increased cotton production in the
coming seasons. Namoi Group’s simplified structure,
strengthened outlook, renegotiated finance facilities
including covenants and the NCA restructure, together
with management of Covid-19 conditions, provide
the Directors with confidence in the Group’s financial
position.
The Directors believe there are reasonable grounds that
the use of the going concern basis remains appropriate
as there is an expectation that the Group:
• will be able to extend existing debt finance facilities
or establish new facilities; and
• will be able to raise sufficient amounts of either
debt or equity or cash from asset sales.
c) Seasonality of operations
Cotton Ginning, one of Namoi Cottons business
segments, operates on a seasonal basis whereby
ginning normally occurs during the first half of each
year. Accordingly, that segment traditionally generates
net income in the first half of the year and incurs net
expenditure in the second half of the year during the
ensuing maintenance period.
The ginning segment takes delivery of cottonseed from
growers largely in the first half of the year. Under Namoi
Cotton’s accounting policies, profits on cottonseed are
recognised when delivery to end user customers occurs.
The lint cotton marketing business is undertaken by
NCA and NCMA (effective from 28 February 2021)
associates. Namoi Cotton continues to purchase bales
from growers which it on-sells to NCA and NCMA.
These associates normally take delivery of lint cotton
from Namoi Cotton in the first half of the year and
under the associates accounting policies, profits from
this activity arise on receipt of the lint cotton. Namoi
Cotton 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 Cotton and its
subsidiaries as at 28 February 2021. Control is achieved
when Namoi Cotton is exposed, or has rights, to
47
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 variable returns from its involvement with the investee
and has the ability to affect those returns through its
power over the investee.
Specifically, Namoi Cotton 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 Cotton has less than a majority of the
voting or similar rights of an investee, Namoi Cotton
considers all relevant facts and circumstances in
assessing whether it has power over an investee,
including:
• The contractual arrangement with the other vote
holders of the investee;
• Rights arising from other contractual arrangements;
and
• Namoi Cotton’s voting rights and potential voting
rights.
Namoi Cotton 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 Cotton obtains control over the subsidiary
and ceases when Namoi Cotton 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 Cotton gains control until the date
Namoi Cotton 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 Cotton 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 Cotton’s
accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to
transactions between members of Namoi Cotton 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 Cotton 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 Cotton has
significant influence. Significant influence is the power
to participate in the financial and operating policy
decisions of the investee but is not control or joint
control over those policies. A joint venture is a type of
joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets
of the joint venture. Joint control is the contractually
agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities
require unanimous consent of the parties sharing
control.
The considerations made in determining significant
influence or joint control are similar to those necessary
to determine control over subsidiaries. Namoi Cotton’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 Cotton’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 Cotton’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 Cotton’s OCI. In
addition, when there has been a change recognised
directly in the equity of the associate or joint venture,
Namoi Cotton recognises its share of any changes,
when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions
between Namoi Cotton and the associate or joint
venture are eliminated to the extent of the interest in
the associate or joint venture.
The aggregate of Namoi Cotton’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
48
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 Cotton. When necessary, adjustments are made
to bring the accounting policies in line with those of
Namoi Cotton.
After application of the equity method, Namoi Cotton
determines whether it is necessary to recognise an
impairment loss on its investment in its associate or
joint venture. At each reporting date, Namoi Cotton
determines whether there is objective evidence that the
investment in the associate or joint venture is impaired.
If there is such evidence, Namoi Cotton 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 Cotton
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 Cotton determines its interest in the assets and
liabilities relating to each joint operation on the basis
of its rights and obligations in a specified proportion in
accordance with the contractual arrangement.
Namoi Cotton recognises the following as its share:
• Assets, including its share of any assets held jointly
• Liabilities, including its share of any liabilities
incurred jointly
• Revenue from the sale of its share of the output
arising from the joint operation
• Share of the revenue from the sale of the output by
the joint operation
• Expenses, including its share of any expenses
incurred jointly.
Jointly controlled assets
Interests in jointly controlled assets have been
incorporated in the financial statements under the
appropriate headings.
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, 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, the marketing of
cotton seed and by-products of the ginning process
and, participation in the marketing of cotton lint bales.
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, non-
cash consideration, and consideration payable to the
customer where relevant.
49
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Contract Balances
Contract assets
Trading margin
Ginning revenue
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.
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.
Trade receivables
Sale of lint cotton
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.
h) Revenue recognition
Revenue from customers
Sale of By-products
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 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.
50
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 and/or NCMA
(Associates) 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 and NCMA.
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, and other
traders) 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.
Government Grants
Government grants are recognised where there is
reasonable assurance that the grant will be received,
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as
income on a systematic basis over the periods that the
related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the
expected useful life of the related asset.
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. 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
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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.
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.
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 contracted
value and subsequently measured at amortised cost
using the effective interest method, less an allowance
for any expected credit losses. 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 expected
credit losses 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.
51
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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.
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.
52
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.
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
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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
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
Other assets are carried at cost less accumulated
depreciation and any accumulated impairments in value.
Depreciation
Ginning infrastructure assets
Ginning infrastructure assets are depreciated on a
units of production basis over their rolling estimated
remaining useful lives of 20 years of sustainable bales
(2020: 20 years).
Other property, plant and equipment
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.
The recoverable amounts of plant and equipment are
the greater of fair value less costs to sell and value
in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset.
For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
Where the carrying values exceed the estimated
recoverable amount, the assets or cash-generating units
are written down to their recoverable amount.
Disposal
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the statement of comprehensive income in
the year the asset is derecognised.
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.
Major depreciation rates are:
t) Provisions
Ginning assets
20 years (2020: 20 years)
Other assets
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.
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.
53
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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.
The group now provides benefits to employees through
the Namoi Cotton Equity Plan. This equity plan was
approved by the board on 21 June 2020 and ratified
at the AGM on 29 September 2020. Under the terms
of the plan, eligible employees and non-executive
Directors can be granted share rights in the parent. The
exercise price of the share rights is a price determined
by the Directors in their absolute discretion. The share
rights vest if and when the conditions set out at the
time of granting are met.
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.
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;
• Type or class of customer for the products and
services;
• Methods used to distribute the products or provide
the services; and if applicable
• Nature of the regulatory environment.
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
54
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 •
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 Cotton.
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 Cotton 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 Cotton
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 Cotton’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,
Risk and Compliance Committee. Selection criteria
include market knowledge, reputation, independence
and whether professional standards are maintained. The
committee decides, after discussions with the Group’s
external valuers, which valuation techniques and inputs
to use for each case.
At each reporting date, the Directors analyse the
movements in the values of assets and liabilities which
are required to be re-measured or re-assessed as per
Namoi Cotton’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,
Risk and Compliance Committee and Namoi Cotton’s
independent auditors. This includes a discussion of the
major assumptions used in the valuations.
For the purpose of fair value disclosures, Namoi Cotton
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 Cotton 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 Directors Reports) Instrument 2016/191. The
company is an entity to which this legislative instrument
applies.
cc) Changes to comparatives
Where necessary, comparative figures have been
reclassified to conform with changes in the presentation
for the current year.
55
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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
28 Feb
2021
29 Feb
2020
74
169
295
4
542
93
209
8
311
207
824
2,090
45
3,166
106
236
8
350
Total revenue
853
3,516
iii) Trading margin gains
Ginning services and seed sales
Lint Handling
b) Other income
Government grants
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
56
15,185
39,184
37
183
15,222
39,367
2,088
673
-
2,761
-
5
1,120
1,125
10,178
849
11,027
18,203
1,230
19,433
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 d) Finance costs
Interest on bank loans and overdrafts
Interest expense - leases
Finance charges payable under equipment loans
Interest expense - interest rate derivatives
e) Other expenses
Maintenance
Insurance
Motor vehicle related
Consulting1
Audit fees
Business travel
Other
Consolidated
$’000
28 Feb
2021
29 Feb
2020
1,522
1,843
49
55
8
29
94
116
1,634
2,082
1,297
1,020
584
1,990
346
425
2,758
8,420
1,656
1,046
814
1,708
408
595
3,629
9,856
1 Includes the engagement of external corporate, legal, accounting and taxation advisers in relation to the restructure of NCA and other business
opportunities arising.
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%
(2020: 30%)
Non-allowable expenditure
Tax losses - not recognised/(utilised) - outside tax consolidated group
Under/over provision
Temporary difference not previously recognised
Tax losses previously not recognised 1
Tax loss incurred - not recognised - tax consolidated group
Consolidated
$’000
28 Feb
2021
29 Feb
2020
(16,458)
(15,300)
(4,937)
(4,590)
63
(180)
403
15
(44)
2,640
100
243
-
-
(63)
-
Income tax expense/(benefit) recorded in the statement of comprehensive income
(2,040)
(4,310)
1
Tax losses previously unrecognised for individual entities outside the tax consolidated group
57
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Deferred Tax Liabilities
Accelerated depreciation for tax purposes
and revaluations
(27,832)
(26,577)
(1,255)
Timing of Joint Venture and Investments
Income recognition
Deferred Tax Assets
Deferred costs
Provisions and accruals
Recognised losses available for offsetting against
future taxable income 1, 2
Balance Sheet
Consolidated
$’000
Statement of Profit and
Loss and Other
Comprehensive Income
Consolidated
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
1,894
1,401
(25,938)
(25,176)
389
523
396
1,204
493
(762)
(7)
(681)
65
213
278
(154)
(493)
25,026
25,938
21,509
23,109
(6,561)
(7,249)
(3,561)
(4,208)
Net deferred tax assets/(liabilities)
Deferred tax expense/(income)
-
(2,067)
(8,011)
(3,930)
Unrecognised deferred tax liabilities
(24)
(39)
Tax loss incurred - not recognised
(outside tax consolidated group)
Tax loss incurred - not recognised
(tax consolidated group)
Unrecognised net deferred tax assets
1,048
1,271
2,640
3,664
-
1,232
Reconciliation of net deferred tax assets/(liabilities)
Opening balance as of 1 March
Tax income/(expense) during the period
recognised in profit or loss
Tax income/(expense) during the period recognised in
other comprehensive income
Closing balance as at 28 February
Consolidated
$’000
28 Feb
2021
29 Feb
2020
(2,067)
(5,259)
2,040
4,310
27
-
(1,118)
(2,067)
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.
58
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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 weighted
average number of shares.
The following reflects the income and equity data used in the basic and diluted earnings per share computations
below the profit/(loss):
Consolidated
$’000
28 Feb
2021
29 Feb
2020
Consolidated loss attributable to ordinary shares
(14,418)
(10,990)
Earnings per share - basic (cents)
Earnings per share - diluted (cents) 1
Weighted average number of ordinary shares for basic EPS
(10.3)
(10.3)
(7.8)
(7.8)
No.
No.
140,407,713 140,223,484
Weighted number unconverted residual capital stock
2,245,894
2,430,123
Weighted average number of ordinary shares adjusted for the effect of dilution
142,505,324
142,562,115
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.
5. Distributions Paid or Provided on Ordinary Shares
Final distribution for the year ended 28 February 2021 of 0.0 cents
per ordinary share (2020: 0.0 cents)
Net distributions during the year
Consolidated
$’000
28 Feb
2021
29 Feb
2020
-
-
-
-
-
-
59
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 6.
Cash and Cash Equivalents
(a) Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows,
cash comprises the following items:
Cash at bank and in hand
Bank Overdraft (Refer Note 15)
(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
Share-based payments expense
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
Consolidated
$’000
28 Feb
2021
29 Feb
2020
497
(227)
270
731
-
731
(14,418)
(10,990)
3,246
(673)
-
-
(40)
1
5,239
(5)
(1,120)
3,740
55
-
(238)
(1,700)
9
(377)
7,616
9,544
869
407
(96)
(230)
-
377
8,539
15,125
426
2,417
(378)
(720)
(1,090)
(3,559)
1,465
(152)
(2,068)
(4,310)
(743)
(6,276)
Net cash inflow/(outflow) from operating activities
(5,617)
(2,141)
60
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 (c) Disclosure of financing activities
29 February
2020
Cash
flows
Foreign
exchange
movement
$’000
$’000
$’000
Current interest-bearing loans
400
4,150
-
Current obligations under
equipment loans
lease liabilities
Current other borrowings
(933)
(308)
970
340
38
Non-current interest bearing
loans
43,535
Non-current obligations under
equipment loans
lease liabilities
Dividends paid
769
474
-
-
-
-
-
(19)
-
-
-
(24)
-
-
New
leases
$’000
-
-
403
-
-
-
1,531
-
Other
$’000
28 February
2021
$’000
-
4,550
431
2
-
449
437
38
(363)
43,172
(388)
104
357
2,109
-
-
46,526
2,909
(43)
1,934
(214)
51,112
1 March
2019
Cash
flows
Foreign
exchange
movement
$’000
$’000
$’000
Current interest-bearing loans
-
-
Current obligations under
equipment loans
lease liabilities
Current other borrowings
Non-current interest bearing
1,062
-
41
(954)
(372)
(3)
loans
42,000
-
Non-current obligations under
equipment loans
lease liabilities
Dividends paid
1,630
(140)
-
-
-
-
44,733
(1,469)
-
10
-
-
-
41
-
-
51
New
leases
$’000
Other
$’000
29 February
2020
$’000
-
400
400
28
372
-
-
62
814
-
824
340
-
970
340
38
1,535
43,535
(824)
(340)
-
769
474
-
1,276
1,935
46,526
61
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 (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 $115,790 (2020: $90,561) by means of equipment loans.
(ii) Distribution Reinvestment Plan
No distributions were paid via the issue of units/shares in 2021 (2020: nil). Refer note 5 and note 17.
(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
Non-current
Loans to controlled entities4
1
Trade debtors arise from the following:
Consolidated
$’000
28 Feb
2021
29 Feb
2020
1,821
(1)
363
2,183
12
-
12
1
3,212
-
97
3,309
221
-
221
1
2,196
3,531
-
-
-
-
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.
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.
Loans to employees represent non-interest-bearing loans advanced under the Namoi Cotton employee incentive share plan (refer note 17) and
other staff advances.
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.
2
3
4
62
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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.
At 1 March 2020
Charge for the year
Foreign exchange translation
Amounts written off
Recoveries
At 28 February 2021
At balance date the ageing analysis of trade and other receivables is as follows:
Total outstanding
Unimpaired
Within terms
Past Due 1 - 30 days
Past Due 31 - 60 days
Past Due 60+ days
Impaired
Past Due 60+ days
Consolidated
$’000
28 Feb
2021
29 Feb
2020
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
$’000
28 Feb
2021
29 Feb
2020
2,196
3,531
2,054
3,223
48
25
69
189
87
32
-
-
Receivables past due but not considered impaired are: Group $142,505 (2020: $307,324). 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 25. The maximum exposure to credit risk is the carrying amount of the receivables less insurance
recoverable.
63
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
8. Inventories
Seed cotton and moss (at cost)
Cotton seed (at fair value less costs to sell)
Grain (at cost)
Operating supplies and spares (at cost)
Consolidated
$’000
28 Feb
2021
29 Feb
2020
-
915
-
6,530
7,445
-
102
-
7,152
7,254
Refer to Note 25 for further information relating to the valuation techniques for determining the fair value of Cotton
Seed.
9. Derivative Financial Instruments
Current assets
Interest rate swap contracts
Cotton seed sale contracts
Cotton seed purchase contracts
Due from currency broker
Lint Cotton purchase contracts
Current liabilities
Cotton seed sale contracts
Due to currency broker
Lint Cotton sales contracts - NCA
Consolidated
$’000
28 Feb
2021
29 Feb
2020
20
676
1,294
112
5,379
7,481
495
122
5,379
5,996
-
765
561
-
2,954
4,280
-
-
2,954
2,954
Derivatives are used by the group to manage trading and financial risks as detailed in note 25.
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/loss within the
statement of comprehensive income in the period they occur. The net fair value loss on foreign exchange contracts
at year end was $5,545 for the group (2020: 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 $5,378,646 for the
group (2020: Gain $2,953,926) and lint sales contracts are a derivative liability (unrealised loss) of $5,378,646 for
the group as back-to-back sales contracts with NCA and NCMA.
64
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
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 $181,255 for the group
(2020: Gain $695,147).
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 $1,293,853 for the group (2020: Gain $560,594).
Interest bearing loans of the group incurred a weighted average variable interest rate of 2.5% (2020: 3.2%).
10.
Investments in Associates and Joint Ventures using the equity method
Investment in associates (material)
Investment in joint ventures (material)
Investment in joint ventures (non material)
10d
10e
10f
(a) Ownership interest
Name
Balance Date
Consolidated
$’000
28 Feb
2021
29 Feb
2020
-
23,043
(1,743)
-
31,171
(2,293)
21,300
28,878
% Ownership
interest held by
consolidated entity
28 Feb
2021
29 Feb
2020
Investments in Joint Ventures
Namoi Cotton Alliance (NCA)
NC Packing Services Pty Ltd (NCPS) 1
Namoi Cotton Marketing Alliance (NCMA)
1 Incorporated in Australia
28 February
28 February
31 December
51%
51%
15%
51%
51%
0%
(b) The principal activities of the associates and joint ventures are:
• NCA markets Australian lint cotton and owns significant up-country warehousing and logistics facilities to
support the marketing operations
• NCMA markets Australian lint cotton
• NCPS operates containerised commodity packing facilities primarily packing cottonseed, coarse grains and
pulses.
NCA and NCPS are 51% owned, however, the two entities are jointly controlled due to the joint venture agreement
terms in relation to committee decision making etc.. The NCA and NCPS joint venture participants have indemnified
each other against any and all joint venture liabilities in proportions equal to their participating interest at the time
they are incurred.
(c) Significant influence
NCMA is 15% owned. Due to the joint venture agreement terms in relation to committee decision making, significant
influence is exerted.
Cargill Oilseeds Australia partnership (‘COA’) and Cargill Processing Limited (‘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 CPL and dissolution of the COA partnership.
65
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Significant influence existed 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 was also a significant
supplier of the primary input product for the Narrabri cotton seed crushing facility.
Consolidated
$’000
28 Feb 2021
29 Feb 2020
COA
CPL
COA
CPL
(d) Material Investments in Associates
(i)
Associates results
Revenue
Profit/(Loss)
Group share of associates profit/(loss)
(ii)
Associates assets and liabilities:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Associates net assets
Group share of associates net assets
(iii)
Carrying amount of investments in associates:
Balance at the beginning of the financial year
Distribution paid out of retained earnings
Share of associates profits/(losses) for the
financial year
Carrying amount of investment in associates at
the end of the financial year
Less asset transferred to interest bearing liabilities
(Refer to Note 15)
Less cost transferred on sale of shares in CPL
(iv)
Share of contingent liabilities of associate:
(iv)
Share of associates commitments:
66
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,661
192
142
156
29
23
25,080
-
(20,121)
(564)
4,395
1,310
13,903
(2,919)
-
12,294
659
1,844
-
-
29
1,820
-
23
29
1,843
(29)
-
-
-
-
-
(1,843)
-
-
-
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 (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)
Consolidated
$’000
28 Feb
2021
29 Feb
2020
1,122
3,022
(2,624)
(1,563)
(18,145)
(2,611)
(3,767)
(15,257)
-
-
(18,145)
(15,257)
(a) The Joint Venture is a partnership for tax purposes accordingly is not a taxable entity
Group share of joint venture net profit/(loss)
(9,254)
(7,781)
(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
3,467
59,712
39,891
6,095
90,519
45,657
(46,622)
(73,772)
(10,079)
(4,440)
(1,151)
(36)
(423)
(309)
45,182
63,327
23,043
32,297
-
(1,126)
23,043
31,171
31,171
1,126
(9,254)
36,514
2,438
(7,781)
end of the financial year
23,043
31,171
67
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 (f) Share of Non Material Investments in joint venture entities:
(i) Carrying amount of non material investments in joint ventures NCPS:
Balance at the beginning of the financial year
Non Material Joint Venture Results
(ii) Carrying amount of non material investments in joint ventures NCMA:
Balance at the beginning of the financial year
Non Material Joint Venture Results
Consolidated
$’000
28 Feb
2021
29 Feb
2020
(2,293)
599
(1,483)
(810)
-
(49)
-
-
Carrying amount of non material investments in joint ventures at the end of
the financial year
(1,743)
(2,293)
Within the NCA joint venture, management performed an impairment test at period end on intangibles, which
resulted in an impairment loss amounting to $2.21m (NCL 51% share $1.126m). The group has recorded its share of
the impairment as part of its share in associate’s loss during the period. Given the impairment taken at the joint
venture level, the previous impairments taken by the group against its investment were reversed. The above $1.126m
reversal was taken at year end.
11. Interest in Joint Operations
Name
Balance Date
% Ownership
interest held by
consolidated entity
28 Feb
2021
29 Feb
2020
Wathagar Ginning Company (WGC)
Moomin Ginning Company (MGC)
28 February
28 February
50%
75%
50%
75%
(b) Principal activities
The joint operations provide ginning services to cotton growers in their respective catchment areas.
(c) Impairment
No assets employed in the jointly controlled operation were impaired during the year (2020: $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 $2.09m at 28 February 2021 (2020: $2.14m).
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.
68
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 13. Property, Plant and Equipment
Gin Assets
Ginning infrastructure and major equipment at fair value
Provision for depreciation and impairment
Transfers In/Out At WDV
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
Transfers In/Out At WDV
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
Property, plant and equipment
Consolidated
$’000
28 Feb
2021
29 Feb
2020
119,353
123,277
(3,178)
(475)
(2,825)
-
115,700
120,452
-
115,700
(1,561)
118,891
13,961
14,244
(6,399)
(5,734)
7,562
8,510
123,262
127,401
1,955
(119)
(418)
1,418
-
1,418
2,580
(175)
-
2,405
80
2,485
9,164
9,545
(7,407)
(7,096)
1,757
3,175
2,449
4,934
841
802
117,118
10,160
121,376
11,761
127,278
133,137
3,153
(728)
2,425
1,186
(384)
802
129,703
133,939
69
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 If the above categories of assets were still measured using the cost model, the carrying amount (WDV) would be as
follows:
Ginning infrastructure and major equipment
Other infrastructure and major equipment
Revaluation of Ginning Assets
Consolidated
$’000
28 Feb
2021
29 Feb
2020
64,437
67,648
1,999
2,972
66,436
70,620
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 independently assessed 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 appropriate terminal yield. A discount rate of 15.4%
resulted in the internal methodology and CBRE methodology producing the same result at that time. In 2021 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 28 February 2021 included:
• Sustainable bales. The average annual sustainable ginning bales have been included following a gin by gin
assessment of production areas, seasonal rotation, estimated yields, reliability of contracting and the impact of
competition. The measure is inclusive of Namoi’s respective shares of throughputs of the joint venture cotton
gins and is used from year four onwards. The number being approximately a 25 % (2020: 29%) market share
of an Australian sustainable crop size of 3.4 million bales (2020: 3.2 million bales) which also approximates
the average number of bales achieved over the last 10 years, noting that individual seasons can fluctuate
significantly dependent upon water availability;Growth rate - revenues 1.30% (2020 - 1.65%)
• Growth rate - expenses 2.00% (2020 - 2.20%)
• Pre-tax discount rate of 13.6% (2020 – 15.4 %)
• An independent WACC of 9.5% (post tax) as at 28 February 2021 was used to validate the reduction in discount
rates.
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 no adjustments posted to the asset revaluation reserve at
year end or the profit and loss statement.
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.
70
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of
the current financial year are set out below.
Year Ended 28 February 2021 ($’000)
Gins
Other
CWIP
Consolidated and parent entity
Written down value - 1 March 2020
Additions and Transfer to/(from) CWIP
Disposals
Transfers to assets held for sale
Depreciation1
127,401
127
(1,916)
(475)
(1,875)
4,934
164
(533)
(418)
(972)
802
39
-
-
-
Written down value - 28 February 2021
123,262
3,175
841
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
130,464
2,399
(255)
(3,647)
(1,560)
2,285
3,779
(2)
(1,208)
80
5,541
(4,726)
(13)
-
-
127,401
4,934
802
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.
14. Trade and Other Payables
Current
Trade creditors and accruals1
Grower deposits
Customer deposits
Non-current
Trade creditors and accruals1
Consolidated
$’000
28 Feb
2021
29 Feb
2020
2,759
38
1,518
4,315
4,093
38
53
4,184
-
-
-
-
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.
71
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 15. Interest Bearing Liabilities
Interest bearing liabilities at balance date were as follows:
Current
Bank overdraft
Working capital finance 1
Lease liabilities 2
Equipment loans 3
Cargill Australia Ltd 4
Non Current
Term Debt 5
Lease liabilities 2
Equipment loans 3
Cargill Australia Ltd 4
AUD $’000
Consolidated
28 Feb
2021
29 Feb
2020
227
4,150
437
450
400
5,664
-
-
340
970
400
1,710
42,000
42,000
2,109
358
1,172
474
768
1,536
45,639
44,778
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.
Lease liabilities include leases considered under AASB 16.
2
3 Equipment loans have an average term of 1.2 years (2020: 1.5) with the average interest rate implicit in the contracts of 4.82% (2020: 4.74%).
4
Cargill deferred settlement of $400,159.30 incurs interest of 6.5% pa in arrears. Cargill advance of $1,172,386.01 is the present value repayable over
3 years discounted at 6.5% pa.
5 Term debt facilities remained fully drawn during FY2021.
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
28 Feb
2021
29 Feb
2020
2,500
2,500
10,000
10,000
35,000
35,000
7,000
7,000
54,500
54,500
1
2
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
Term debt facilities are committed, non-amortising lines utilised to fund capital projects relating to the plant, property and equipment of the
business.
72
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Financing arrangements
A Deed of Amendment was executed by Namoi Cotton and CBA on 29 October 2020 extending the maturity date
of the working capital and term debt facilities to 30 April 2022.
Namoi Cotton and CBA have agreed to certain financial covenants at what are considered appropriate levels to
meet the needs of the business. Namoi Cotton forecasts the finance facilities outlined above will be sufficient to
fund operations in FY22.
Namoi was in compliance with all financial covenants during FY2021.
Details of interest rate risk, foreign exchange risk and liquidity risk are disclosed in Note 25.
16. Provisions
Current
Employee leave entitlements
Non-current
Employee leave entitlements
17. Contributed Equity
Ordinary Shares
Consolidated
$’000
28 Feb
2021
29 Feb
2020
1,671
1,671
1,524
1,524
185
185
571
571
Consolidated
$’000
28 Feb
2021
29 Feb
2020
37,639
37,639
Consolidated
No. ‘000
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
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
Ordinary Shares (fully paid)
2,339
(241)
2,558
(219)
2,098
2,339
23
(2)
21
Ordinary shares at the beginning of the financial year
140,315
140,096
1,403
Residual capital stock converted to ordinary shares
241
219
2
Ordinary shares at the end of the financial year
140,556
140,315
1,406
25
(2)
23
1,401
2
1,403
73
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 At balance date some 2.1 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 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;
• Each ordinary shareholder is entitled to one vote per one share;
• On winding up, ordinary shareholders are entitled to the proceeds from surplus assets.
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 (2020: $650).
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 (2020:
2,000 units) under escrow.
Namoi Cotton Equity Plan
This equity plan was approved by the board on 21 June 2020 and ratified at the AGM on 29 September 2020.
Under the terms of the plan, eligible employees and non-executive Directors can be granted share options in the
parent. The exercise price of the share options is a price determined by the Directors in their absolute discretion. The
share options vest if and when the conditions set out at the time of granting are met.
The net present value of the options granted to date have been expensed in the current year.
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.
18. 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.
74
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Share rights reserve
The share rights reserve is used to record the fair value of share rights granted during the year.
19. 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
CEO (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 and Co-Products
The ginning business operates 9 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. The controlled entity Namoi Cotton Commodities Pty Ltd procures
ginning waste by-products and processes them for sale into various domestic and international markets. The
controlled entity ACS provides classing services for the marketing associates and other cotton merchants.
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. Bales procured by Namoi
Cotton from growers are on-sold to marketing associates (i.e. NCA and/or NCMA) with approximately 99% of
marketing associate sales ultimately being to Asia. The marketing associates manage their 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 marketing associates and other cotton merchants.
Commodities
The joint venture entity NC Packing Services Pty Ltd operates containerised commodity packing facilities primarily
packing cottonseed, coarse grains and pulses.
Accounting policies
The accounting policies used by the group in reporting segments internally are the same as those contained in note
1 to the accounts and in the prior period.
The following items (or a portion thereof) of income and expenditure are not allocated to operating segments as
they are not considered part of the core operations of any segment:
•
Interest Revenue;
• Rental Revenue;
• Share of profit from associate (other than NCA);
• Finance costs;
• Corporate employee benefits expense;
• Corporate depreciation; and
• Other corporate administrative expenses.
75
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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.
Business Segments
Year ended 28 February 2021
Ginning
$’000
Marketing
$’000
Commodities
$’000
Unallocated
$’000
Consolidated
$’000
Revenue
Other revenues
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
542
229
771
-
-
-
-
-
-
-
-
-
-
-
-
-
82
82
8
74
542
311
853
8
74
Trading margin gains
12,494
(105)
74
-
12,463
Results
Profit/(loss) before tax and finance
costs
Finance costs
(3,688)
(1,620)
1,449
-
Share of profit from associates
-
(8,178)
Net Profit/(loss) before tax
(5,308)
(6,729)
(61)
-
599
538
(4,945)
(14)
-
(7,245)
(1,634)
(7,579)
(4,959)
(16,458)
Other segment information
Depreciation
(2,882)
(42)
(39)
(282)
(3,245)
Included in the unallocated results for
the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Employee benefits expense
Government grants
Depreciation
Finance costs
Other corporate administrative
expenses
Total Unallocated Result
1 Marketing revenue remains inclusive of lint sales values upon transfer of bales from Namoi to NCA.
2 Marketing results include the net result for the NCA joint venture.
8
74
82
(2,656)
2,049
(282)
(14)
(4,138)
(4,959)
76
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Business Segments
Year ended 29 February 2020
Ginning
$’000
Marketing
$’000
Commodities
$’000
Unallocated
$’000
Consolidated
$’000
Revenue
Other revenues
Total consolidated revenue
Non-segment revenues
Interest revenue
Rental revenue
3,166
236
3,402
-
-
-
-
-
-
-
Trading margin gains
39,184
183
-
-
-
-
-
-
-
-
-
8
106
3,166
236
3,402
8
106
-
39,367
Results
Profit/(loss) before tax and finance costs
1,972
Finance costs
Share of profit from associates
Net Profit/(loss) before tax
(2,059)
52
(35)
2,616
-
(7,781)
(5,165)
(111)
-
(810)
(921)
(9,157)
(22)
-
(4,680)
(2,081)
(8,539)
(9,179)
(15,300)
Other segment information
Depreciation
(4,808)
(57)
(35)
(339)
(5,239)
Included in the unallocated results for
the period are:
Interest Revenue
Rental Revenue
Total Unallocated Revenue
Share of profit/(loss) of other associates
Employee benefits expense
Depreciation
Finance costs
Other corporate administrative expenses
Total Unallocated Result
8
106
114
-
(4,249)
(339)
(22)
(4,683)
(9,179)
77
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 28 February 2021
Revenue
Sales
Other revenues
Total consolidated revenue
Australia
$’000
Asia
$’000
Consolidated
$’000
173
311
484
369
-
369
542
311
853
Geographic Areas
Year ended 29 February 2020
Australia
$’000
Asia
$’000
Consolidated
$’000
Revenue
Sales
Other revenues
Total consolidated revenue
20. Commitments and Contingencies
Commitments for capital expenditure
Property, plant and equipment
Estimated capital expenditure contracted for at
balance date but not provided for:
Payable within one year
Payable after one year but not more
than five years
1,076
236
1,312
2,090
-
2,090
3,166
236
3,402
Consolidated
$’000
28 Feb
2021
29 Feb
2020
806
1,263
-
-
Operating lease commitments receivable – group as lessor
Future minimum rentals receivable under non-cancellable operating leases as at 28 February 2021 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
60
240
300
7
-
7
78
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Equipment loans – group as lessee
The group has equipment loans for gin packaging and logistics supply chain equipment with a carrying value of
$1,923,521 (2020: $3,151,078) for both the group and the company. The equipment is mainly presented in Gin Assets
in Note 13. 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
28 Feb
2021
29 Feb
2020
469
377
-
846
(39)
807
1,014
815
-
1,829
(92)
1,737
The weighted average interest rate implicit in the contracts for the group is 4.8% (2020: 4.7%).
21. Significant Events after Balance Date
Namoi Cotton requested a trading halt on 29 April 2021 to facilitate an orderly market in Namoi Cotton’s securities
pending the Company making an announcement to the ASX in connection with a capital raising which Namoi
Cotton anticipates will be made before commencement of trading on Monday, 3 May 2021.
Refer to Note (1a) for details of the ongoing impacts of COVID 19.
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.
22. 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
Australian Raw Cotton Marketing Corp. Pty Ltd
Namcott Investments Pty Limited
Namcott Marketing Pty Ltd
NC Packing Services 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
%
Investment
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
100%
100%
100%
100%
51%
96%
100%
100%
100%
100%
100%
100%
51%
96%
100%
100%
428
428
-
-
-
-
-
-
-
-
-
-
-
-
1,830
2,258
1,830
2,258
(1,830)
(1,830)
428
428
79
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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.
• Namcott Marketing Pty Ltd, a subsidiary of Namoi Cotton, is the beneficial owner of the interests in NCPS shares
and the NCA and NCMA Partnerships.
• 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 NCA
Management fees received by Namoi Cotton for services provided to NCA and NCMA totalling $2.9m (inclusive of
bale handling fees) (2020: $2.3m).
Lint cotton sales from Namoi Cotton to Namoi Cotton Alliance $40.1m (2020: $199.6m).
Insurance on-charged by Namoi Cotton to Namoi Cotton Alliance $0.4m (2020: $0.5m).
Lease payments made to Namoi Cotton Alliance as lessee in relation to Wee Waa complex $48.5k
Lease payment received from Namoi Cotton Alliance as lessor in relation to Yarraman bunker $19.4k
23. Directors’ and Executive Disclosure
Compensation by category of KMP
Short-term
Post Employment
Other Long-term
Termination Benefits
Consolidated
$’000
28 Feb
2021
$
29 Feb
2020
$
1,894,336
2,328,888
3,892
8,925
19,491
(283,211)
222,587
747,032
2,129,740
2,812,200
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.
80
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Amounts paid/received or payable/receivable from/to Directors and their respective related parties were as follows:
Consolidated
Name
Mr T Watson
Mr G Price
Ms J
Hamparsum
Cotton Purchases
Other Services
28 Feb
2021
29 Feb
2020
$
-
$
-
28 Feb
2021
$
19,000
29 Feb
2020
$
-
Ginning Charges
Levied
Grain & Seed Purchases
28 Feb
2021
$
29 Feb
2020
$
28 Feb
2021
$
29 Feb
2020
$
72,040
605,529
5,269
247,275
538,225
1,607,440
18,915
30,942
60,131
174,174
154,207
338,775
274,670
-
-
29,237
89,324
41,397
206,939
68,105
812,895 1,607,440
37,915
60,179
221,495
821,100
366,415
654,155
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.
24. Remuneration of Auditors
Consolidated
$
28 Feb
2021
$
29 Feb
2020
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial report of the parent covering the
group and auditing the statutory financial reports of any controlled entities
339,630
383,970
Fees for assurance services that are required by legislation to be provided
by the auditor
Fees for other assurance and agreed-upon-procedures services under
other legislation or contractual arrangements where there is discretion
as to whether the service is provided by the auditor or another firm
-
-
-
-
Total fees to Ernst & Young (Australia)
339,630
383,970
25. 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 to which Namoi Cotton and its associates and joint ventures
are exposed to 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.
81
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 and its associates
and joint ventures enter 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 Audit, Risk and Compliance Committee and the Trading and Operational Risk Committee ensure 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
The Group 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 associates
and joint ventures.
Namoi Cotton is also exposed to movements in the price of cotton seed through fixed price purchases and sale
contracts. Cotton seed price risk is managed principally through imposition of physical trading limits. It is a risk
management requirement to utilise foreign currency derivatives to minimise the impact of USD/AUD fluctuations on
fixed price sales contracts. It is the risk management policy that no derivatives will be entered into until such time as
a fixed price purchase or sale commitment exists.
Financial Assets
Derivatives
Financial Liabilities
Derivatives
Net Exposure
Cotton seed price risk
Consolidated
$’000
28 Feb
2021
29 Feb
2020
1,970
1,970
1,326
1,326
(495)
(495)
(70)
(70)
1,475
1,256
Cotton seed price risk potentially arises when Namoi Cotton enters into a forward commitment to purchase or sell
physical cotton seed without simultaneously entering into the opposing transaction. Namoi Cotton managed cotton
seed price risk by adhering to physical limits in respect of its cotton seed open positions.
The following sensitivity analysis is based upon seed pricing that existed at 28 February 2021 and 29 February 2020,
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:
82
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Post Tax Profit
Higher/(Lower)
$’000
Equity
Higher/(Lower)
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
(84)
84
(40)
20
-
-
-
-
Consolidated
+$10/Mt (cotton seed)
-$10/Mt (cotton seed) - last year -$5/Mt
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
Derivatives
Financial Liabilities
Interest bearing loans and borrowings
Net Exposure
Consolidated
$’000
28 Feb
2021
29 Feb
2020
497
269
20
786
731
273
-
1,004
(51,303)
(44,556)
(51,303)
(44,556)
(50,517)
(43,552)
Interest rate swap contracts, with a fair value of $Nil (2020 -$ Nil) at reporting date to the group, are exposed to
value movements if interest rates change.
At reporting date, after taking into account the effect of interest rate swaps, 0% (2020: 0%) of the group’s
borrowings are at a fixed rate of interest nil% (2020: nil%). 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 28 February 2021 and 29
February 2020, 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
Post Tax Profit
Higher/(Lower)
$’000
Equity
Higher/(Lower)
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
(463)
232
(419)
210
-
-
-
-
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.
83
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Sensitivity analysis was performed by applying a 100-basis point movement in interest rates to all non-fixed interest-
bearing assets and liabilities at reporting date. As a result of recent global market volatility, 100 basis points has
been utilised in the absence of reliable data predicting reasonably possible movements of interest rates. Year end
balances are not reflective of interest-bearing assets and liabilities throughout the year, due to the seasonal nature
of the business.
Foreign exchange risk
Namoi Cotton has transactional currency exposures predominantly arising from some cotton seed sales being
denominated in United States dollars (USD) as opposed to the group’s functional Australian dollar (AUD) currency,
which denominates all payments to growers. Potentially foreign currency denominated financial assets and liabilities
may be adversely affected by a change in the value of foreign exchange rates.
Namoi Cotton requires all net foreign exchange exposures to be managed with either forward currency contracts or
foreign exchange options contracts.
The group’s policy is to enter into forward exchange contracts at the time it enters into a firm purchase commitment
for lint cotton (through its marketing associates) 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
Consolidated
$’000
28 Feb
2021
29 Feb
2020
278
(130)
112
260
-
242
122
364
84
3
-
87
-
(433)
-
(433)
Net Exposure
624
(346)
The group has USD denominated leasing contracts of USD $191,386 (2020: USD $285,338) 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.
Notional Amount
AUD $’000
Average
Exchange Rate
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
-
-
-
-
-
-
-
-
Foreign exchange contracts held at balance date
Group
Sell US$/Buy AUD$ maturity 0-12 months
Buy US$/Sell AUD$ maturity 0-12 months
84
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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.
The following sensitivity analysis is based upon foreign currency exposures that existed at 28 February 2021 and
29 February 2020, 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
Post Tax Profit
Higher/(Lower)
$’000
Equity
Higher/(Lower)
$’000
28 Feb
2021
29 Feb
2020
28 Feb
2021
29 Feb
2020
58
(29)
5
(3)
-
-
-
-
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 its associates and joint ventures export 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 and/or its associates and joint
ventures to a financial loss.
Trade receivables outstanding from international counterparties are in general 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.
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.
85
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Year ended 28 February 2021
≤6 Months
$’000
6-12 Months
$’000
1-5 Years
$’000
>5 Years
$’000
Total
$’000
Consolidated Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
497
2,659
1,859
5,015
-
1
243
244
Financial Liabilities
Trade and other payables
(4,522)
(38)
-
-
-
-
-
-
-
-
-
-
497
2,660
2,102
5,259
(4,560)
Interest bearing loans
and borrowings2
Derivatives1
(4,890)
(443)
(9,855)
(774)
(173)
(985)
(44,193)
(1,446)
(51,303)
-
-
(616)
(44,193)
(1,446)
(56,479)
Net Exposure
(4,840)
(741)
(44,193)
(1,446)
(51,220)
Year ended 29 February 2020
≤6 Months
$’000
6-12 Months
$’000
1-5 Years
$’000
>5 Years
$’000
Total
$’000
Consolidated Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivatives1
731
3,530
4,012
8,273
-
1
268
269
Financial Liabilities
Trade and other payables
(4,153)
(31)
-
-
-
-
-
Interest bearing loans
and borrowings2
Derivatives1
(759)
(3,024)
(7,936)
(951)
(44,778)
-
-
(982)
(44,778)
Net Exposure
337
(713)
(44,778)
-
-
-
-
-
-
-
-
-
731
3,531
4,280
8,542
(4,184)
(46,488)
(3,024)
(53,696)
(45,154)
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. 55 million (2020: $0.73 million), for the 6-12 month period of $0.54 million (2020: $0.72 million) and for the 1-5 year period $1.07
million (2020: $1.41 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.
86
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 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 Cotton’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. (2020: 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.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in
the table below:
Year ended 28 February 2021
Consolidated
Current assets
Foreign exchange contracts
Interest rate swap 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
-
-
-
-
-
-
-
-
-
112
20
-
-
132
(122)
-
-
(122)
-
-
676
1,294
1,970
-
-
(495)
(495)
112
20
676
1,294
2,102
(122)
-
(495)
(617)
87
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 Level 1
Quoted
market
prices
$’000
Level 2
Market
observable
inputs
$’000
Level 3
Non-market
observable
inputs
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
765
561
-
765
561
1,326
1,326
-
-
(70)
(70)
-
-
(70)
(70)
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
26. Share-based payments
Namoi Cotton Limited Equity Plan
Under the Namoi Cotton Limited Equity Plan (“the Plan”), approved by the Board on 21 June 2020 and ratified at
the 2020 AGM, share rights of the parent can be granted to employees and non-executive Directors of the parent
company. The Board has resolved that non-executive Directors will not participate in the plan. The exercise price of
the share rights is a price determined by the Directors in their absolute discretion. The share rights vest if and when
the conditions (market and non-market) set out at the time of granting are met.
Movements during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share rights during the year:
2021 Number
2021 WAEP
2020 Number
2020 WAEP
Outstanding at 1 March
Granted during the year
-
-
1,493,264
$ 0.3340
Cancelled during the year
(898,204)
$ 0.3340
Exercised during the year
Expired during the year
-
-
-
-
Outstanding at 28 February
595,060
$ 0.3340
Exercisable at 28 February
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The weighted average remaining contractual life for the share rights outstanding as at 28 February 2021 was
2 years (2020: nil years).
The weighted average fair value of rights granted during the year was $0.006 (2020: nil).
The exercise price on vesting for rights outstanding at the end of the year was $nil (2020: nil).
88
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
The following tables list the inputs to the models used for the plans for the years ended 28 February 2021:
Vesting date
Rights granted
Fair values at issue date
Dividend yield (%)
Annualised volatility (%)
Risk–free interest rate (%)
Expected life of share rights (years)
Hurdle rate for vesting
Model used
28 February 2023
1,493,263
$0.006
0%
24%
1.0%
2.21
$0.5079 per share
Black Scholes
The expected life of the share rights is based on their vesting date and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period
similar to the life of the rights is indicative of future trends, which may not necessarily be the actual outcome.
27. Information relating to Namoi Cotton Limited (the Parent)
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Asset revaluation surplus
Share rights reserve
Profit or loss of the Parent entity
Total comprehensive income of the Parent entity
Parent
$’000
28 Feb
2021
29 Feb
2020
13,643
177,796
26,529
73,716
37,639
(3,633)
13,823
182,132
21,903
70,318
37,639
3,845
70,066
70,330
9
-
104,081
111,814
(7,481)
(7,741)
(12,517)
(9,908)
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 which won’t be called upon.
89
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 28. ASX Additional Information
for the year ended 28 February 2021
The shareholder information set out below was applicable as at 12 April 2021.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding.
Namoi Cotton Limited
Fully Paid Ordinary Shares (Total)
Range of Units As Of 12/04/2021
Composition : FP
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
Unmarketable Parcels
Minimum $ 500.00 parcel at $ 0.4000 per
unit
Unquoted Equity Securities
Total holders
345
366
207
415
328
Units
81,514
1,109,631
1,680,540
14,709,864
122,974,447
% Units
0.06
0.79
1.20
10.47
87.49
-0.01
1,661
140,555,996
100.00
Minimum Parcel Size
Holders
Units
1,250
362
100,257
Namoi Cotton Limited
Conversion Group - Rcs And Rce
Range of Units As Of 12/04/2021
Composition : RCE,RCS
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
Unmarketable Parcels
Total holders
69
170
46
50
1
336
Units
29,709
475,239
363,652
1,007,570
221,441
2,097,611
% Units
1.42
22.66
17.34
48.03
10.56
-0.01
100.00
Minimum $ 500.00 parcel cannot be calculated due to no price
Minimum Parcel
Size
Holders
Units
90
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
Equity Security Holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Namoi Cotton Limited
Fully Paid Ordinary Shares (Total)
Top Holders (Grouped) As Of 12/04/2021
Composition : FP
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
12
14
15
16
17
18
19
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
LOUIS DREYFUS COMPANY ASIA PTE LTD
CITICORP NOMINEES PTY LIMITED
JVH COTTON PTY LIMITED
RED PEPPERCORNS PTY LTD
MR ROSS ALEXANDER MACPHERSON
MR MARK JOSEPH PANIZZA + MRS SUSAN KATHLEEN
PANIZZA
MR ALBERT JOHN PANIZZA + MS KIM DIANNA BROADFOOT
RATHVALE PTY LIMITED
MR DAVID FOX
DR EWAN RODERICK NIXON
FEDERAL PACIFIC HOLDINGS PTY LTD
MISTOVER PTY LTD
AGRICO INVESTMENTS PTY LIMITED
AGRICO PTY LTD
BELL POTTER NOMINEES LTD
BRUCE CLYDE BAILEY + JANET BEATRICE SHAFIK BAILEY
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NETWEALTH INVESTMENTS LIMITED
20
AVENUE 8 PTY LIMITED
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (Total)
Total Remaining Holders Balance
Substantial Shareholders
Name
SAMUEL TERRY ASSET MANAGEMENT PTY LTD
LOUIS DREYFUS COMPANY ASIA PTE LTD
Voting Rights
The voting rights attached to ordinary shares are set out below:
Units
14,375,202
14,327,384
5,835,383
4,110,353
1,676,202
1,490,500
1,391,072
1,063,089
1,059,885
1,009,386
1,001,000
1,000,001
1,000,001
921,931
880,743
840,929
820,122
819,364
810,272
800,000
55,232,819
85,323,177
% Units
10.23
10.19
4.15
2.92
1.19
1.06
0.99
0.76
0.75
0.72
0.71
0.71
0.71
0.66
0.63
0.60
0.58
0.58
0.58
0.57
39.30
60.70
Units
% Units
14,228,450
14,327,384
10.10
10.19
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.
91
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 29. Corporate Directory
Corporate Office
1B Kitchener Street
Toowoomba QLD 4350
0746 316 100
Namoi Cotton Gins
MacIntyre Cotton Gin
Kildonan Road
Goondiwindi QLD 4390
0746 712 277
Mungindi Cotton Gin
Bruxner Road
Mungindi NSW 2406
0267 532 145
Boggabri Cotton Gin
Blairmore Road
Boggabri NSW 2382
0267 434 084
Merah North Cotton Gin
Middle Route
Merah North NSW 2385
0267 955 124
Yarraman Cotton Gin
Kamilaroi Highway
Wee Waa NSW 2388
0267 955 196
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
Wathagar Cotton Gin
(Namoi Cotton/Sundown Pastoral Co Pty Ltd Joint
Venture)
Collarenebri Road
Moree NSW 2400
0267 525 200
Moomin Cotton Gin
(Namoi Cotton/Harris Joint Venture)
Merrywinebone
Via Rowena NSW 2387
0267 965 102
Other Joint Ventures
Namoi Cotton Alliance
MacIntyre Warehouse
Kildonan road
Goondiwindi QLD 4390
0746 711 449
Wee Waa Warehouse
Pilliga Road
Wee Waa NSW 2388
0267 903 139
Namoi Cotton Marketing Alliance
Corporate Office
1B Kitchener Street
Toowoomba QLD 4350
0746 316 100
www.namoicotton.com.au
www.facebook.com/namoi.cotton.ltd
www.instagram.com/namoicottonlimited
92
NAMOI COTTON LIMITED | ANNUAL REPORT 2021
30. 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
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 93
94
NAMOI COTTON LIMITED | ANNUAL REPORT 2021 95
NAMOI COTTON LIMITED | ANNUAL REPORT 2021