1 | Namoi Cotton
aq
Financial Statement FY2024 |2
LETTER FROM THE EXECUTIVE CHAIR
Dear shareholders,
In FY2024 your company delivered an improved financial performance with an of EBITDA of
$22.9m (FY2023 – $18.0 million) and NPAT of $6.9m (FY2023 – $4.0 million). Despite the almost
identical ginning volumes of 1.16m bales (FY2023: 1.17m bales), this better performance was
driven by improved gin operating conditions, record warehousing volumes, complementary cotton
seed & grain packing and greater discipline applied to cotton seed trading. Our focus remains on
demonstrating the value of our services to growers. We continue to build our capabilities with a
focus on safety management and improved operational execution. The last two years of above
average seasons have allowed us to strengthen our balance sheet to tolerate future seasonal
variability. Our gearing and term debt levels are the lowest they have been in the last 10 years.
More detailed analysis of the FY2024 operating performance is contained below and in the
Directors’ Report.
SAFETY FOCUS
We are committed to a safe workplace and engaged culture for all employees, contractors and
customers and are pleased to report further improvement in our safety metrics. We continue to
build on the strength of our safety management system and have invested in setting up a focused
and accountable framework where safety is a priority topic from our Board right through to the front
line. We incurred 3 lost time injuries in FY2024 down from 5 in FY2023. This resulted in a reduction
in our LTIFR to 4.15 in FY2024 from 7.48 in FY2023. We benchmark ourselves on total reportable
incidents not just lost time. This attention on forward looking measures such as hazard and incident
reporting, focuses our attention in the priority areas with the goal of preventing incidents from
becoming injuries.
EXCELLENCE IN EXECUTION – 2023 SEASON
In the 2023 season (FY2024) we ginned 1.16m bales, nearly the same as the 1.17m bales in the 2022
season (FY2023). Despite this similarity the two seasons could not have been more different. At the
conclusion of FY2023 we reflected on the weather challenges that the 2022 season had presented to
both the ginning operation and to our supply chain and marketing activities. We are happy to report
that the 2023 season presented no such difficulties.
Ginning operations were positively impacted by better quality cotton and lower moisture levels,
both leading to more efficient ginning. This, together with an earlier start to ginning, lead to a
significant improvement in our ginning performance, demonstrated by the ginning progress reported
at the half year. Ginning was 86% completed at the end of August 2023 compared to 81% at the end
of August 2022.
Supply chain and marketing benefited from larger crop volumes generally and more efficient supply
chain execution allowing for higher throughput. In FY2024 over 1 million cotton bales were shipped,
up by 30% compared to FY2023 although cottonseed shipments were down by 16% to 302,000 MTs
(FY2023 – 360,000MTs). The Goondiwindi and Wee Waa sites broke long standing throughput
records. Significant grain volumes, specifically pulses in Wee Waa, kept rail utilisation high in the
October to February period.
3| Namoi Cotton
FINANCIAL PERFORMANCE
The combination of much improved ginning conditions and higher than average grain volumes,
resulted in an EBITDA1 of $22.9 million (FY2023 – $18.0 million) and NPAT of $6.9 million (FY2023 –
$4.0 million). The contribution from the Ginning segment in FY2024 was $28.8 million (FY2023 -
$21.0 million) has been positive on similar volumes. Supply Chain and Marketing earnings
contributed $6.6 million (FY2023 – $4.5 million) to Group earnings.
CAPITAL ALLOCATION
After a prolonged drought affected period (FY2020 – FY2022), it was important to rebuild our core
strengths. Accordingly, our capital allocation over the last two years has focused on reducing our
term debt and catching up on deferred maintenance and capital expenditure.
The $8.0 million reduction in Term Debt during FY2024 (FY2023 - $9.9 million) leaves us with Term
Debt of $24.5 million as at FY2024 (FY2023 – $32.6 million). Our FY2024 gearing ratio2 of 14%
(FY2023 – 26%), which is at the lowest level in the last 10 years.
On 24 October 2023 Namoi renewed and extended its banking facilities with the Commonwealth
Bank of Australia until 30 October 2026. The debt facilities provide headroom and flexibility to cost
effectively manage variable seasons and to fund our 4PP initiatives. This includes locking in a
reduced interest margin, funding year-round cottonseed inventory and, if required, ability to make
and reborrow voluntary repayments.
On 1 December 2023 Namoi Cotton paid a $0.005 dividend. This was the first dividend paid since
FY2019.
On 16 April 2024, the directors declared a dividend of $0.01 per ordinary share to be paid on 10 May
2024. This is in line with our dividend policy which aims to pay dividends in average and above
average seasons.
OUR INVESTMENT IN KIMBERLEY COTTON COMPANY (“KCC”)
Throughout the year our investment in KCC has continued. During the year Namoi has invested a
further $2.6m in KCC to support the construction of the gin at Kununurra. Construction of the new
cotton gin at Kununurra commenced in August 2023. Namoi Cotton is supporting the project by
providing project management resources, some ancillary equipment and, later in 2024, skilled
ginning staff to install the ginning equipment. Commissioning is planned for mid 2025.
NAMOI IS A GREAT PLACE TO WORK
The labour market remains extremely competitive across Australia, but particularly so in the rural
and regional areas in which we operate. The tight talent market has required us to be innovative in
the way we make Namoi Cotton “the employer of choice” to support retention rates across our sites.
A key retention strategy has been to establish our ginning mechanical program with TAFE NSW to
deliver formal training and a recognised qualification for Cotton Ginners. This year will see 11 current
employees enter the 3-year Engineering - Mechanical program. We are proud to be able to offer
future generations formally recognised and transferable qualifications, aimed at attracting regional
talent into the industry.
Due to a shortage of experienced ginning staff in Australia, we continued to secure supplementary
labour through our International Ginner pipeline. Namoi currently engages 13 international staff,
many of whom have completed their second season with us. These employees have integrated well
Financial Statement FY2024 |4
and provide a diverse high-quality workforce to complement our local team. On top of our full-time
workforce, we employ between 300 – 500 casual employees during a season.
Managing variability in volume has involved simplifying and de-risking the business. This included
finalising the development of our variable cost base. The work we have undertaken to re-build our
execution capacity through the 2022 and 2023 seasons has enhanced our preparedness for the 2024
season. We have developed a smarter, more agile workforce with skills to improve work systems.
Across the Group, 26% of our full-time positions comprised of contract roles helping us to manage
volume variability in the future.
THE NAMOI COTTON BRAND IS STRONG
The focus of the Board and Executive’s has been on simplifying and strengthening our business
whilst pursuing a strategy to create valued services for growers and returns to shareholders through
the cycle. The Namoi Cotton brand is strong and reflects the years of experience and a culture that is
unique to Namoi Cotton. But we will never forget that our business is built on the strong relationship
that we have with our growers and the expectation of delivering a premium service in good times
and bad.
On behalf of our Board and the Executive Team, thank you to the entire Namoi Cotton team who
continue to demonstrate our values despite the challenges. Also, thank you to my fellow Namoi
Cotton Directors who continue to guide and support the business. Importantly, we thank you, our
shareholders, for your continued support and investment in Namoi Cotton.
Tim Watson
Executive Chair
1 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from
NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value).
2 Gearing ratio is a non-IFRS and unaudited measure defined as Net Debt/ (Net Debt plus Equity) where Net debt refers to total interest bearing liabilities less cash and cash equivalents.
5| Namoi Cotton
DIRECTORS’ REPORT
Your directors present their report on the consolidated entity consisting of Namoi Cotton Limited
(‘the Company’ or ‘Namoi Cotton’) and the entities it controlled (collectively ‘the Group’) at the end
of or during the year ended 29 February 2024 (‘FY2024’).
1.
Directors
The directors that held office throughout the financial year and up to the date of this report, unless
otherwise indicated, are as follows:
Name, qualifications and
independence status
Experience, special responsibilities and other directorships
Mr Tim Watson GAICD
Executive Chair
Mr Watson was appointed to the Board on 18 December 2014 and appointed as Chair
for Namoi Cotton Limited from 29 August 2018. Mr Watson was appointed Executive
Chair on 1 July 2023.
Mr Watson is a member of the People, Culture and Nominations Committee. Until early
2022, Mr Watson grew cotton in the Hillston Region and has been involved in the cotton
industry since 2000 and as a member of the Hillston District Irrigators Association, the
Lachlan River Customer Service Committee and the Lachlan Valley Water Users
Association. Mr Watson was re-elected as a Non-Executive Director at the 2022 annual
general meeting. 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.
Robert L Green B.Bus. (QAC)
MAICD
Independent Non-executive
Director
Mr Green joined the Namoi Cotton Board in May 2013. He is Chair of the Safety, Health
and Environment Committee, a member of the Trading Risk 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 and Chair of the Board of Boomaroo Nurseries Pty Ltd.
Juanita Hamparsum B.Bus.
(UTS), CA, FPCT, FAICD
Independent Non-executive
Director
Mrs Hamparsum was appointed to the Board on 7 June 2018 to fill a casual vacancy and
was elected at the 2018 general meeting. She is Chair of the Audit, Risk and Compliance
Committee, Chair of the Due Diligence Committee, a member of the Safety Committee
and the Trading Risk 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 accounting, financial, agricultural and natural resource management
experience. Mrs Hamparsum is a chartered accountant and currently a Director and
Chair of the audit committee of Cotton Seed Distributors Ltd and End Food Waste
Australia Limited.
Ian Wilton MSc, FCCA, FCPA,
FAICD, CA
Mr Wilton was appointed to the Board on 17 June 2020 to fill a casual vacancy and was
elected at the 2020 annual general meeting. On 1 July 2023 following the appointment of
Mr Watson as Executive Chair, Mr Wilton was appointed as Deputy Chair. He is also Chair
Financial Statement FY2024 |6
Independent Non-executive
Director
of the People, Culture and Nomination Committee, a member of the Audit, Risk and
Compliance Committee and a member of the Due Diligence Committee. Mr Wilton is an
experienced Non-Executive Director, having served on the boards of both listed and
unlisted companies. He also has significant executive experience in the agribusiness
sector. Mr Wilton is currently Chair of the Board of Elders Limited.
James Davies BCompSC, MBA,
GAICD
Independent Non-executive
Director
Mr Davies was appointed to the Board on 28 November 2022. Mr Davies has over 35
years’ experience in investment management across timberland, economic
infrastructure, real estate, and private equity. Mr Davies is a member of the People,
Culture, Nomination Committee and the Safety, Health and Environment Committee. He
holds a Bachelor of Computer Science from the University of New England, a Master of
Business Administration from the London Business School and is a Graduate of the
Australian Institute of Company Directors. Mr Davies is also Chair of the boards of Kiland
Limited, Eildon Capital Limited and Nobrac Limited.
Sarah Scales B. BSc (Ag,),
GAICD
Non-Executive Director
Ms Scales joined the Namoi Cotton Board on 22 May 2023. She is Chair of the Trading
Risk Committee and is a member of the of the Audit, Risk, and Compliance Committee.
Ms Scales has extensive Non-Executive and Executive experience in the international and
Australian agribusiness sectors. Her experience spans across the broad-acre cropping,
horticulture, sugar, plant technology, meat production, food processing and water
industries. Ms Scales is currently Non-Executive Director for Agracom Pty Ltd, AustOn
Corporation and related entities, Tarac Australia Limited, Mitolo Family Farms Pty Ltd
and Chair of Pace Farms Pty Ltd.
Ms Scales is considered not to be Independent due to her association with LDC.
2.
Company Secretary
Mr Andrew Baldwin was appointed joint Company Secretary on 25 October 2023. Mr Baldwin (BEng.
Hons, CA, GAICD) is the current Chief Financial Officer of the Company.
Mr Andrew Metcalfe was appointed joint Company Secretary on 31 July 2023. Mr Metcalfe (CPA,
FGIS, GAICD) is an experienced company secretary to ASX listed companies and was previously
Company Secretary for Namoi from November 2019 to December 2021. Mr Metcalfe is engaged
under contract through a service provider and is not part of the Key Management Personnel.
Ms Sonya Ryan and Mr John Stevenson previously held the roles of joint Company Secretaries. Both
Ms Ryan and Mr Stevenson ceased to act in the role of joint Company Secretaries upon their
respective resignations that occurred during the year.
3.
Directors’ Meetings
The number of Directors’ meetings (including meetings of Committees of Directors) held and
attended by each of the directors (as a 'Member’ of the Committee) of the Company during the
financial year are listed below:
7| Namoi Cotton
Director
Board
Meetings
Audit,
Risk & Compliance
People, Culture &
Nomination
Safety, Health &
Environment
Current
Attended
Held 1
Attended
Held
Attended
Held
Attended
Held
Tim Watson
12
12
-
-
4
4
-
-
Robert L
Green
12
12
3
4
-
-
2
2
Juanita
Hamparsum
12
12
6
6
-
-
2
2
Ian Wilton
12
12
6
6
4
4
-
-
James Davies
12
12
-
-
4
4
2
2
Sarah Scales
8
8
2
2
-
-
-
-
Director
Trading Risk Committee
Strategic Review
Committee
Due Diligence
Committee
Current
Attended
Held
Attended
Held
Attended
Held
Tim Watson
-
-
13
13
2
2
Robert L
Green
3
4
11
112
-
-
Juanita
Hamparsum
4
4
12
13
2
2
Ian Wilton
-
-
13
13
2
2
James Davies
-
-
5
72
-
-
Sarah Scales
4
4
-
-
-
-
1 ‘Held’ is noted as the number of meetings that were held at the time the Director was a Member of the Committee.
2 Mr Green and Mr Davies joined the Strategic review committee subsequent to its formation and therefore did not attend the meetings before joining the committee.
All board members are invited to attend Directors’ meetings and committee meetings. The Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) are invited to attend all meetings.
4.
Directors’ interests in share capital
The relevant interest of each Director in the share capital of the Company is disclosed in the
Remuneration Report.
5.
About Namoi Cotton and Principal activities
Namoi Cotton is an Australian domiciled public Company listed on the Australian Securities
Exchange. The principal activities of the entities in the Namoi Cotton consolidated group in FY2024
Financial Statement FY2024 |8
were the ginning and marketing of cotton including its by products such as cottonseed and
moss/mote.
Namoi Cotton Limited, a pioneer in Australian cotton since 1962, started as a cooperative of
visionary cotton growers who aimed to gain more control over how their cotton was processed and
marketed. Over the years, the Company has grown into one of Australia’s leading cotton processing
and supply chain businesses, with a ginning capacity of 1.6 million bales annually and an extensive
network of origination and logistics operations across major cotton growing regions.
6.
Operations and Financial Review
Financial performance
The following table summarises EBITDA3 financial indicators used by Management to monitor and
manage the Company.
2024
2023
Movement
Ginning services
$28.8m
$21.0m
$7.8m
Supply chain and marketing
$6.6m
$4.5m
$2.1m
Corporate (net costs)
$(12.5)m
$(7.5)m
$(5.0)m
Group EBITDA3
$22.9m
$18.0m
$4.9m
3 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from
NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value).
Operating financial review
Namoi Cotton experienced another above average ginning volume year of 1.16m bales (FY2023
1.17m bales). However, none of the climatic and supply chain challenges that were experienced in
FY2023 occurred and therefore, from comparable volumes the financial performance was improved.
EBITDA from Ginning Services was $28.8m (FY2023 $21.0m). Although the volume of bales ginned
was comparable with FY2023, this performance reflects the higher margins generated by increased
throughput and higher efficiency achieved at the gins.
EBITDA from Supply Chain and Marketing was $6.6m (FY2023 $4.5m). This result reflects the higher
volumes of cotton and grain handled and packed through our warehouses. This was a result of the
large cotton and grain crop and was possible because of better supply chain conditions and
additional storage income.
Unallocated corporate and support costs were $12.5m (FY2023 $7.5m). The increase is explained by
the additional costs associated with the Strategic Review process (announced on 29 June 2023) and
transaction costs related to the scheme of arrangement (“SIA”)4 (entered into on 18 January 2024).
4 On 19 January 2024, Namoi Cotton Limited (‘Namoi’) announced it had entered into a Scheme Implementation Agreement (‘SIA’) with Louis Dreyfus Company Asia Pte. Ltd. (‘LDC’) to
acquire the remaining 83% of issued shares in Namoi that it does not currently own, by way of a scheme of arrangement (‘Scheme’).
9| Namoi Cotton
Operating Review
During FY2024, the Group capitalised on better weather conditions and cotton quality to deliver
strong ginning volumes whilst optimising the Group’s production efficiency and supply chain.
Ginning services
Namoi ginned 1.16 million bales of cotton in the 2023 season, similar to the 1.17m bales of cotton
ginned in the 2022 season representing a market share of 36% of the cotton production in our
catchment valleys.
We operated 9 of our 10 gins this year. Our North Bourke site did not operate this season, with most
of the cotton relocated to our Trangie and Moomin Gins.
The completed 4PP gin upgrades at Merah North and Trangie delivered increased operational
efficiency and contribution. Our overall gin productivity increased by approximately 10% at both
gins, reducing operating costs and reducing ginning time for growers.
•
Merah North ginned a record volume, exceeding its past record by more than 10%.
•
Trangie ginned its second highest volume, enabling cotton from our North Bourke gin to be
consolidated.
We executed the sale of 302,000 tonnes of cottonseed in FY2024 (FY2023: 360,000 tonnes)
representing a decrease of approximately 16% from the prior year. Drier weather conditions drove
increased demand in the domestic market for cottonseed throughout the year on which we were
able to capitalise on and enhance our cottonseed margins. However, the overall performance of
cottonseed marketing for the year was reduced by the impact of FY2023 inventory that was carried
into the current financial year.
We shipped 13,000 moss cotton bales in FY2024 (FY2023: 6,000 bales) whilst also improving our
overall moss production efficiency at our Yarraman site.
Supply Chain and Marketing
In FY2024, NCA shipped 1.04m bales of cotton lint representing an increase of approximately 30%
from the prior year (FY2023: 0.8m).
Domestic and export supply chains returned to normal in the 2023 season with little disruption in
transportation and good container availability allowing the packing and logistics operations to be
streamlined.
NCA warehouses received a record volume 1.01m bales of cotton lint driven by strong demand by
merchants for strategically located up-country storage with a more reliable supply chain with few rail
and road disruptions. This record volume led to record earnings in the NCA joint venture.
Corporate
The Group’s corporate cost base increased by $5.0m in FY2024 because of additional costs related to
the strategic review and the SIA. Adjusted for these one-off costs, the corporate cost remained
reasonably in line with the prior year. The Group remains committed to improving the efficiency of
the businesses corporate cost structure.
Financial Statement FY2024 |10
Investments for future performance
During the year Namoi Cotton has continued to invest in the Kimberley Cotton Company(“KCC”). The
investment in KCC, which is building a cotton gin in Kununurra, is a strategy to diversify Namoi
Cotton’s geographic exposure to variable growing conditions. More information about the
investment in KCC is included in Note 4.3 to the financial statements.
Some capital investment projects under the 4PP program was paused in FY2024 as a result of the
Strategic Review.
Review of financial condition
After a prolonged drought affected period (FY2020 - FY2022) it has been our focus to rebuild our
core strength and hence our capital allocation has been heavily weighted to reducing our debt levels.
At 29 February 2024 our term debt is $24.5m (FY2023 $32.6m).
Namoi Cotton renewed its banking facilities with Commonwealth Bank of Australia until 30 October
2026. The debt facilities provide headroom and flexibility to cost effectively manage variable
seasons and to fund our 4PP initiatives.
Our FY2024 gearing ratio5 of 14% (FY2023 26%) is at the lowest level in the last 10 years.
7. Business strategies and prospects for future financial years
The short term outlook for cotton production remains positive as a result of favourable weather
conditions and good water availability. Forecast cotton production of 4.5m6 to 4.9m7 bales for the
2024 season (FY2025), with above average production in our central and southern valleys and
average to above average production expected in our northern valleys.
Based on forecast cotton production and using our historic market share of 33% (last five year
average), we are expecting another above average ginning volume of 0.9 to 1.1 million bales in the
2024 season.
Business Strategies – 4PP Update
Benefits have started accruing from Namoi’s 4PP Strategy in FY2024. The 4PP Strategy is targeting to
increase through the cycle EBITDA by $6m from $26m investment, including our expansion into
northern Australia.
Completed 4PP initiatives are estimated to have contributed an incremental EBITDA of $1.5m in
FY2024 from:
•
Over 10% increase in gin productivity at the upgraded Merah North and Trangie gins, reducing
operating costs and ginning time for growers.
•
New cottonseed shed at Boggabri increased cottonseed earnings by avoiding external storage
cost and reducing transport costs with 90% of cottonseed sold to nearby consumers and
packers.
4PP related capital expenditure was paused after the announcement of the Strategic Review on 29
June 2023 other than our investment in Kimberley Cotton Company (KCC).
5 Gearing Ratio is a non IFRS & unaudited measure defined as net debt divided by net debt plus total equity
6 Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 5 March 2024.
7 Cotton Compass 4 March 2024
11| Namoi Cotton
Risk management
Namoi Cotton, as an Australian agricultural company with an integrated supply chain, encounters a
range of risks that could significantly impact its future strategy and financial performance. These
risks are dynamic, influenced by the Company’s ability to manage and mitigate them. While some
risks can be anticipated and controlled, others may unexpectedly converge into new material risks.
The Company faces significant risks that cannot be fully mitigated through preventive strategies. In
such instances, the Company’s approach is to acknowledge these risks and establish action plans to
respond effectively when they materialize. Some risks may transform into opportunities, presenting
favourable prospects for the Company.
A robust balance sheet serves as a foundational element, equipping the Company to manage risks
and capitalize on potential advantages.
As outlined in the Board Charter, the Board assumes overall accountability for risk management. The
Group’s Risk Management Framework and risk appetite undergo annual review and approval by the
Board. The Audit, Risk and Compliance Committee provides oversight in this area. Responsibility for
establishing and implementing the risk management framework, as well as internal controls and
processes, is delegated to the Executive Chair and the Executive Leadership Team. Management
continuously monitors the strategic and tactical environment for new and emerging risks. For
additional details on risk management, please refer to the Risk Management Policy and the Audit,
Risk and Compliance Committee Charter on the Company website (Governance - Namoi Cotton).
Below is an outline of material business risks which Namoi faces with the execution of its strategy
and its operations; this outline is not exhaustive, and risks are not presented in order of materiality.
Business Risks
Description
Mitigation/ Management
Water availability, adverse
weather events, climate
change and seasonal risk
Namoi Cotton, operating within
the agricultural sector, faces
variability due to adverse
weather conditions. These
conditions include events such as
droughts, floods, fires, and
extreme heat. The occurrence of
extreme weather events can lead
to changes in cotton production
and disrupt Namoi Cotton’s
supply chains. Consequently, the
Company may experience
significant variability in ginning
volumes and increased
production and supply chain
costs.
The Group is conscious of these climatic
risks and related variability and invests
in mitigation strategies where possible.
Examples of this include the
restructuring of our joint ventures,
reducing our debt commitments and
developing a variable cost base.
Additionally, our investment in the gin at
KCC is a primary example of investment
to geographically diversify across the
country to potentially reduced the
impacts of localised adverse weather
conditions.
Financial Statement FY2024 |12
Business Risks cont’d
Description
Mitigation/ Management
Health and safety
The well-being and safety of our
personnel remain paramount to
the Company. However, our
employees and contractors
operate in a dynamic
environment where inherent
safety risks exist. The Company
acknowledges the potential for
serious injuries or fatalities,
understanding the profound
impact such events would have
on the affected employee and
their family. Moreover, the
Company recognizes that such
incidents could adversely affect
its reputation, operations, and
financial stability.
To mitigate the safety risk in our
dynamic work environment, we
implement rigorous safety protocols,
conduct regular training sessions, and
maintain open communication channels.
Additionally, we proactively identify
potential hazards and promptly address
any safety concerns to minimize the
likelihood of serious incidents
Trading risk in commodities
Transactional commodity price
risks exist in the sale of
cottonseed and moss.
Other commodity price risks
exposures include operational
costs such as energy and fuel.
These risks are driven by external
factors including climatic
conditions and geopolitics.
We mitigate our cottonseed price risks
by compliance with our board approved
Cottonseed Risk Management Policy
which prescribes risk limits for all
aspects of our cottonseed related
exposure.
We mitigate risks in relation to moss
through managing our internal
production of this co-product and taking
advantage of market prices when
advantageous.
Operational price risks are managed
through internal production efficiencies
and long term agreements with core
suppliers.
Cyber risk
Namoi cotton relies on internal
resources and third party
technology providers to support
its IT operations.
A cyber attack could disrupt
operations and or result in
unauthorised exposure of
commercial and personal data,
potentially causing financial and
reputational damage.
A robust IT monitoring and security
program is in place to proactively
manage and mitigate threats from
malicious and unintended breaches of
the Group’s information, infrastructure
and systems.
13| Namoi Cotton
8.
Likely Developments
Above average rain across most of Australia, and above average dam water storage levels, that
supported above average cotton production in the 2023 season, continued for the 2024 season.
Current dam water storage levels in our catchment areas, at around 66%8, could potentially support
average to above average cotton planting for the 2025 season.
9.
Changes In the State of Affairs
There were no significant changes in the state of affairs of the Group during the year ended 29
February 2024 other than as disclosed elsewhere in this report.
10. Dividends
On 25 October 2023, the Directors declared and subsequently paid an unfranked ordinary dividend
of $0.005 per ordinary share. This was the only dividend paid or declared since the end of the last
financial year.
On 16 April 2024 the directors declared a dividend of $0.01 per ordinary share to be paid on 10 May
2024.
8 Bureau of Meteorology (BOM) as at 10 April 2024 – weighted average water capacity in rural system public dams in Namoi Cotton catchment valleys (BOM rural systems of Border
Rivers, Macintyre, Gwydir, Namoi, Macquarie, Lachlan).
Business Risks cont’d
Description
Mitigation/ Management
Debt obligations
The Group’s debt facilities are
subject to financial covenants. If
the Group fails to maintain these
covenants this will constitute a
Review Event which may result in
its debt becoming due and
payable.
The Group routinely monitors its
performance against its covenants and
forecasts whether or not a breach may
occur in the future.
Decisions regarding the Group’s strategy
are considered with regard to
implications on the Group’s financial
covenants to mitigate the risk of
breaches in both the short and long
term.
Labour
Labour availability in regional
Australia can be restrictive
impacting our ability to operate.
The Group routinely reviews our
material labour risks and develop
strategies to ensure continuity of
business.
Financial Statement FY2024 |14
11. Events Subsequent to Balance Date
On 21 March 2024 Namoi Cotton Limited (‘Namoi’) announced that its Board of Directors had
received a non-binding, indicative and conditional offer (‘NBIO’) from Olam Agri Holdings Limited.
The Directors have not become aware of any other significant matter or circumstance that has arisen
since 29 February 2024, that has affected or may affect the operations of the Group, the results of
those operations, or the state of affairs of the Group in subsequent years, which has not been
covered in this report.
12. 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.
Our commitment to compliance with relevant laws is executed at the operational level by our sites.
Oversight and guidance are provided by our Safety, Health, and Environment Committee. We
diligently manage environmental risks and hazards in alignment with our Risk Framework.
During the reporting period, Namoi Cotton’s performance in environmental management adhered to
the applicable regulations across our business operations. We remain vigilant in monitoring
legislative developments, particularly with respect to the proposed disclosures of the Australian
Sustainability and Reporting Standards.
13. 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) 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.
14. 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. The date of the AGM is yet to be determined and will depend on
the progress of the scheme of arrangement discussed above. It will also be available on Namoi
Cotton’s public website (www.namoicotton.com.au) at that time.
15. Non-audit services
Any non-audit services provided by the entity’s auditor, KPMG, are described in Note 5.1 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
15| Namoi Cotton
nature and scope of each type of non-audit service provided means that auditor independence was
not compromised.
16. Auditor’s independence declaration
The auditor’s independence declaration is included on page 27 of this report.
Financial Statement FY2024 |16
REMUNERATION REPORT
Remuneration Report (audited)
This remuneration report outlines the non-executive director and executive KMP remuneration
arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and
its Regulations. For the purposes of this report, 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 Group, including any Director of the Company.
1. Key Management Personnel (KMP)
In FY2024, KMP comprised the Non-executive Directors (NED), the Executive Chair, Chief Executive
Officer and Chief Financial Officer who were responsible for key business decisions, as consistent
with the Australian Accounting Standards Board 124 Related Party Disclosures (AASB124) definition.
The table below outlines the KMP for FY2024.
Name
Role in FY2024
Commencement date in role
Executive KMP
T Watson1
Executive Chair
1 July 2023
A Baldwin2
CFO
25 October 2023
J Stevenson
CEO & Company Secretary
7 June 2021 (resigned 1 July 2023)
S Ryan
CFO & Company Secretary
7 January 2022 (resigned 25 October 2023)
Non-Executive Directors
T Watson
Chair
18 December 2014 non-executive director
On 1 July 2023 became Executive Chair
R Green
Director
27 May 2013
J Hamparsum
Director
7 June 2018
I Wilton
Director
17 June 2020
J Davies
Director
28 November 2022
S Scales
Director
22 May 2023
1 On 1 July 2023 Tim Watson was appointed to the role of Executive Chair, transitioning from Non-executive Director and Chair of the Board. Remuneration includes fixed annual chair
fees of $130,000 (excluding superannuation), fixed salary of $70,833 (including superannuation) per month and a retention payment of $255,000 (including superannuation) on
completion of an agreed employment term. A one month notice period is required to be given by employer or employee in relation to termination of employment.
2 Andrew Baldwin was appointed to the position of CFO on 25 October 2023, with fixed remuneration equivalent to $350,000 (inclusive of superannuation) per annum. Mr Baldwin is
employed on a contract basis with a contract termination date of 2 August 2024. A one month notice period is required to be given by employer or employee in relation to termination
of employment.
2. Remuneration Framework
2.1 Principles of compensation
Our remuneration policy considers the Company’s overall business plan, external market conditions,
individual employee performance and industry benchmark data and is designed to align individual
and department/site accountabilities with the Company’s key objectives and strategy.
In structuring remuneration, the Board aims to find an appropriate balance between fixed and
variable remuneration (i.e. performance linked and at-risk), the way it is delivered (cash versus
deferred), and balanced deferral time-frames (short, medium and long-term). Total remuneration is
designed to be fair, reasonable, responsible, transparent, consistent, and competitive for each level
of our workforce.
17| Namoi Cotton
The remuneration elements offered include fixed remuneration, which consists of a base salary plus
superannuation, a variable “at risk” remuneration component provided through a short-term
incentive (STI) program, plus a long-term incentive (LTI) program for Executives.
2.2 Compensation Structure
Fixed remuneration
Short Term Incentive (STI)
Long Term Incentive (LTI)
Executive KMP1
Purpose
Attract and retain high quality
executives through market
competitive and fair remuneration
Ensure a portion of remuneration is
variable, at-risk, and linked to the
delivery of agreed targets for
financial and non-financial measures
that support Namoi Cotton’s
strategic priorities.
STI outcomes have historically
ranged from 0% to 100% of payout,
equating to a maximum of 44% of
base salary depending on
performance relative to agreed
targets.
Align executive accountability and
remuneration with the long-term
interests of shareholders by rewarding
the delivery of sustained Group
performance and the creation of
shareholder value over the long term.
Delivery
Comprises cash salary, salary
sacrificed items and superannuation
contributions
Awarded in cash based on an
assessment of performance over the
preceding year.
Awarded in performance rights which
vest after 3 years subject to the
achievement of Total Shareholder Return
(TSR) and workplace safety hurdles.
Alignment to performance
Set with reference to market
benchmarks in the agricultural and
processing industries in Australia as
well as the size, responsibilities and
complexity of the role, and the skills
and experience of the executive.
Individual performance impacts
fixed remuneration adjustments.
Performance is assessed using a
scorecard comprising a mix of
financial and non-financial targets,
varied across roles and levels
including, but not limited to:
•
Safety outcomes and
environment
•
Financial results
•
Strategic plans
•
Customer & Employee
engagement
•
Personal development
Performance is assessed based on TSR
relative to an absolute hurdle equal to a
set compound annual growth rate (CAGR)
in the value of Namoi Cotton shares over
the 3-year performance period.
Performance rights will not vest if a
workplace fatality has occurred during
the performance period.
Alignment to shareholders & other stakeholders
•
Drives maximum financial
returns.
•
Encourages equitable
allocation of capital amongst
all stakeholders.
•
Promotes engagement with
customers and employees.
•
Develops employee skills
and experience
Promotes growth in TSR based on market
price.
Encourages a safe workplace
environment.
Financial Statement FY2024 |18
Directors
Alignment to shareholders
The Company’s Minimum
Shareholding Policy requires
Directors to own a minimum
number of Namoi Cotton shares
equivalent to the value of their
annual Director base fee which
must be acquired within 3 years
after the date of the Director’s first
appointment.
Non-executive Directors are not
eligible to participate in STI’s.
Non-executive Directors are not eligible
to participate in LTI’s.
1 These arrangements applied to the previous CEO and CFO until their resignation. The current Executive Chair and CFO are not eligible to participate in the Group's LTI program. The
current CFO is also not eligible to participate in the Group's STI program with the Executive Chair receiving an STI in the form of a retention payment which is detailed in sections 2.3
to 2.5
2.3 Split of Executive KMP remuneration
The table below represents the remuneration mix, guaranteed up to a potential maximum, for
executive KMP in the current year. The STI is quoted at the maximum potential level and the LTI is
quoted on the value awarded, not vested, in the current year.
Remuneration
Fixed
At Risk
Total Entitlement
Remuneration1
STI2
LTI3
Guaranteed
Potential4
Executive Chair
(T Watson)
75%
25%
-%
75%
100%
CFO (A Baldwin)
100%
-%
-%
100%
100%
1 Base salary plus superannuation.
2 % of total potential remuneration paid annually.
3 The Executive Chair and CFO are not eligible to participate in the Group’s LTI program.
4 Potential maximum entitlement comprising cash and non-cash elements.
The previous CEO, John Stevenson, has historically been entitled to STI opportunities up to 44% of
fixed remuneration and LTI opportunities up to 44% of fixed remuneration. Upon Mr Stevenson’s
resignation, he forfeited his entitlements under all STI and LTI plans and received no remuneration
under these plans in the current financial year.
The previous CFO, Sonya Ryan, has historically been entitled to STI opportunities up to 25% of fixed
remuneration and LTI opportunities up to 25% of fixed remuneration. Upon Ms Ryan’s resignation,
she forfeited her entitlements under all STI and LTI plans. The Board made a discretionary payment
of $25,000 (including superannuation) under Ms Ryan’s STI plan upon her resignation which is below
the potential STI opportunity that would have been paid had she continued employment for the full
financial year.
2.4 Fixed remuneration
Fixed remuneration is reviewed periodically to ensure it is market competitive, reflecting the
required responsibilities, performance, qualifications, and experience of the individual. 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.
There are no guaranteed increases as these are assessed based on the overall Company and
individual performance for the year as well as the external environment and are at the absolute
discretion of management and the Board.
19| Namoi Cotton
2.5 Short Term Incentive
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.
Executive KMP STI payments are an ‘at-risk’ bonus and ultimately are subject to the discretion of the
Board after review of achievement and recommendation by the People, Culture and Nomination
Committee (PCNC).
The Executive Chair, Tim Watson, is entitled to an STI in the form of a retention amount of $255,000
(including superannuation) earned on completion of an agreed initial employment term which ended
on 30 September 2023 and payable at the completion of his full term.
The current CFO, Andrew Baldwin, is not a participant in the Group’s STI program.
The previous CEO, John Stevenson, and previous CFO, Sonya Ryan, participated in STI programs
linked to the achievement of the Company’s operational and financial targets. Upon his resignation,
Mr Stevenson forfeited his entitlements under all STI plans and received no remuneration under STI
plans in the current financial year. Upon her resignation, Ms Ryan forfeited her entitlements under
all STI plans. The Board made a discretionary payment of $25,000 (including superannuation) under
Ms Ryan’s STI plan upon her resignation which is below the potential STI opportunity that would
have been paid had she continued employment for the full financial year.
2.6 Long Term Incentive – Namoi Equity Plan
The LTI program is designed to attract, motivate, and retain Executives aligning them to the interests
of the Company and shareholders.
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.
LTI compensation under the Namoi Cotton Limited Equity Plan (the “Plan”), in the form of
performance rights in Namoi Cotton Limited, 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 ‘at risk’ remuneration arrangements,
to acquire shares in the Company. The granting of rights to employees of the Company is conditional
upon the absolute discretion of the Board.
All LTI’s provided to management and outlined in the remuneration report have been issued under
this plan.
The previous CEO, John Stevenson, and previous CFO, Sonya Ryan, participated in LTI plans through
the granting of performance rights which vested after a three year period subject to the
achievement of performance hurdles, based on Total Shareholder Return (TSR), and continued
service. Upon their resignations, Mr Stevenson and Ms Ryan forfeited their rights under existing LTI
plans.
The Executive Chair, Tim Watson, and current CFO, Andrew Baldwin, are not participants in the
Group’s LTI plan and have received no remuneration under these plans in the current year.
Financial Statement FY2024 |20
2.7 Non-executive director compensation
The Board seeks to set aggregate compensation at a level that provides the Company with the ability
to attract and retain Directors with the appropriate qualifications, experience and skills and
compensate Directors for the time required to exercise their duties as a Director.
The Constitution of the Company provides for aggregate Directors’ fees of up to $850,000 per annum
to be paid to Directors. For FY2024 the aggregate Directors’ fees paid was $472,808 (inclusive of
superannuation).
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.
Non-executive directors do not receive performance-related compensation and are not provided
with retirement benefits apart from statutory superannuation.
The compensation of non-executive Directors for the period ending 29 February 2024 is detailed in
section 3.1 of this report.
Non-executive Directors Fees (exclusive of superannuation)
Chair
Director
$
$
Board
130,000
75,000
Deputy chair
-
10,000
Due Diligence Committee
-
30,000
2.8 Services of Remuneration consultants
The Board elected not to engage external remuneration consultants in FY2024.
2.9 Remuneration Governance
The role and responsibility of the PCNC of the Board of Directors of Namoi Cotton is to assist and
advise the Board 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 CEO and
executives;
•
policies relating to remuneration, incentives, superannuation, evaluation, and
termination, affecting all staff;
•
remuneration of the Directors of the Board and Chair of the Board.
Activities of the PCNC are governed by its Terms of Reference, which is available in the Investor
section of our website (Governance - Namoi Cotton).
2.10 Consequences of performance on shareholder wealth
As highlighted above, when determining variable remuneration outcomes for the Executive KMP, a
range of financial and non-financial indicators are considered. The Group uses EBITDA1 as a measure
21| Namoi Cotton
of performance for the Group’s ongoing business activities, as this provides a basis to assess Group
and Divisional performance against prior periods.
The table below provides Namoi Cotton Limited’s financial performance, including EBITDA, for the
current year and preceding 4 financial years.
2024
2023
2022
2021
2020
EBITDA 1
$22.9m
18.0m
2.6m
(11.6m)
(8.0m)
Earnings per Ordinary Share (diluted)(cents)
3.3
2.1
(3.3)
(10.3)
(7.8)
Dividend per Ordinary Share (cents/share) 2
0.5
-
-
-
-
Share price at year end (cents)
49.0
47.9
43.5
35.5
30.0
1 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from
NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value). Refer to note 1.1 of the financial statements for a
reconciliation of EBITDA to net profit after tax.
2 Represents amounts paid during the financial year
3. Statutory Remuneration
3.1 KMP Remuneration Table
The following table outlines the statutory remuneration disclosed in accordance with Australian
Accounting Standards. While it shows the fixed remuneration awarded (cash and superannuation
contributions) and the cash component of the FY2024 short term incentive (STI), it does not show
the actual variable long term incentive (LTI) remuneration awarded or received in 2024, but instead
shows the amortised accounting value of long term deferred remuneration for this financial year.
Financial Statement FY2024 |22
The table below sets out the remuneration paid or payable to the KMP for the financial year ended
29 February 2024.
Year ended
29-Feb-24
Short-term Employee
benefits
Post-employment
Benefits
Long-term Benefits
Salary &
Fees 1
STI
Bonus 6
Superannuation
LTI –
Performan
ce Rights 2
Long
Service
Leave 3
Termination
Benefits
Total
% At Risk 4
Non- Executive
Directors
R Green
75,865
-
8,230
-
-
-
84,095
0%
J Hamparsum
82,558
-
8,966
-
-
-
91,524
0%
I Wilton
88,442
-
9,613
-
-
-
98,055
0%
J Davies
75,865
-
8,230
-
-
-
84,095
0%
S Scales8
58,846
-
6,443
-
-
-
65,289
0%
Executive KMP
T Watson9
623,825
229,730
82,044
-
-
-
935,599
24.55%
A Baldwin10
111,687
-
12,163
-
-
-
123,850
0%
J Stevenson 5
141,125
-
49,717
(43,615)
-
211,302
358,529
0%
S Ryan 7
207,569
22,523
26,186
(10,304)
-
-
245,974
9.16%
1,465,782
252,253
211,592
(53,919)
-
211,302
2,087,010
1 Salary & Fees plus expense associated with accrued annual leave for the period.
2 Upon their resignation, the previous CEO and CFO forfeited their rights under existing LTI plans. In accordance with the requirements of the accounting standards, the expense
previously recognised for accounting purposes has been reversed in the current period.
3 Expense associated with long service leave entitlement accrued during the period.
4 The proportion of remuneration that is performance based at-risk including STI’s and LTI’s.
5 Mr Stevenson resigned on 1 July 2023 and forfeited his entitlements under existing STI and LTI plans. Mr Stevenson was provided a termination payment of $234,545 (inclusive of
superannuation) representing payment in lieu of notice of $204,545 and an ex-gratia payment of $30,000 which was made at the Board’s discretion.
6 The short-term incentive bonus is for performance during the respective financial year.
7 Ms Ryan resigned on 25 October 2023 and forfeited her entitlements under existing STI and LTI plans. The Board made a discretionary payment of $25,000 (including
superannuation) under Ms Ryan’s STI plan upon her resignation.
8 S Scales was appointed on 22 May 2023.
9 T Watson transitioned from Non-executive Director to Executive Chair on 1 July 2023. During the period in which he was a Non-executive Director he received salary and fees of
$45,000 and superannuation benefits of $4,750. The remaining remuneration in the table above was received in his capacity as Executive Chair. Mr Watson has received an STI in the
form of a retention payment of $255,000 (including superannuation) on completion of an agreed employment term which ended on 30 September 2023. Given Mr Watson remains
employed in the position of Executive Chair, the full entitlement under the STI has vested. Mr Watson is not entitled to participate in the Group’s LTI plan.
10 A Baldwin was appointed to the role of CFO on 25 October 2023 receiving annual fixed remuneration of $350,000 (inclusive of superannuation). Mr Baldwin is not entitled to
participate in the Group’s STI or LTI plans and is not entitled to any termination benefits.
23| Namoi Cotton
The table below sets out the remuneration paid or payable to the KMP for the financial year ended
28 February 2023.
Year ended
28-Feb-23
Short-term Employee
benefits
Post-
employment
Benefits
Long-term Benefits
Salary &
Fees 1
STI
Bonus 6
Superannuation
LTI –
Performance
Rights 2
Long
Service
Leave 3
Termination
Benefits
Total
% At Risk 4
Directors
T Watson
128,731
-
13,326
-
-
-
142,057
0%
R Green
74,846
-
7,746
-
-
-
82,592
0%
J Hamparsum
74,846
-
7,746
-
-
-
82,592
0%
J Di Leo 5
32,154
-
3,263
-
-
-
35,417
0%
I Wilton
74,846
-
7,746
-
-
-
82,592
0%
J Davies 7
19,327
-
788
20,115
0%
Executive KMP
J Stevenson
432,749
88,000
31,587
37,368
262
-
589,966
21.3%
S Ryan
287,991
20,250
30,927
10,304
-
-
349,472
8.7%
1,125,490
108,250
103,129
47,672
262
-
1,384,803
1 Salary & Fees plus expense associated with accrued annual leave for the period.
2 Long Term Incentive (LTI) Share Based Payment – Value of Rights to take up shares under the Namoi Cotton Limited Equity Plan amortised equally over the relevant performance
period.
3 Expense associated with long service leave entitlement accrued during the period.
4 The proportion of remuneration that is performance based at-risk including STI’s and LTI’s.
5 Resigned 4 August 2022.
6 The short-term incentive bonus is for performance during the respective financial year. The amount was approved on 27 March 2023 after performance reviews were completed and
approved by the PCNC and the Board.
7 J Davies was appointed on 28 November 2022.
3.2 Analysis of bonuses included in remuneration
Details of the vesting profile of the FY2024 short-term incentive cash bonuses awarded as
remuneration to each executive KMP are detailed below. No short-term incentive cash bonuses were
awarded to non-executive directors of the Company in FY2024.
Short-term incentive bonus (inclusive of superannuation)
FY2024
Included in
% vested in year
% forfeited in year
remuneration
Executive KMP
T Watson
$255,000
100%
-
A Baldwin
-
-
-
J Stevenson
-
-
100%
S Ryan
$25,000
33%
67%
Financial Statement FY2024 |24
3.3 Rights over equity instruments
The table below sets out the details of the long-term incentive performance rights that were granted
to the KMP.
•
During FY2024 relating to 2024 performance and remuneration outcomes; or
•
In prior years which have now vested, were exercised/sold or which lapsed or were forfeited
during FY2024.
LTI is awarded in performance rights which vest after a three-year period subject to the achievement
of performance hurdles and continued service. One performance right entitles the holder to one
ordinary share at the time of vesting with no exercise cost. Dividends are not accumulated on
performance rights.
No long-term incentive performance rights were granted to non-executive directors of the Company
in FY2024.
The Executive Chair, Tim Watson, and current CFO, Andrew Baldwin, were not invited to participate
in the Group’s LTI program and are therefore excluded from the table below.
Performance
Rights
Balance
held
Granted as
Vested
Vested and
exercised
Balance held
Vested and
exercisable at
01-Mar-23
Remun-
eration
Exercised
Lapsed
Forfeited
during
the
year
during the year
29-Feb-24
29-Feb-24
Executives
J Stevenson1
1,015,437
-
-
-
1,015,437
-
-
-
-
S Ryan2
155,957
-
-
-
155,957
-
-
-
-
1,171,394
-
-
-
1,171,394
-
-
-
-
1 Upon his resignation, Mr Stevenson forfeited his remaining performance rights under the LTI plans granted on 1 March 2020 and 5 August 2022. No new performance rights were
granted in the current financial year.
2 Upon her resignation, Ms Ryan forfeited her remaining performance rights under the LTI plan granted on 5 August 2022. No new performance rights were granted in the current
financial year.
25| Namoi Cotton
3.4 KMP Equity Holdings
The table below sets out details of equity held directly, indirectly, or beneficially held by each KMP,
including their related parties.
Balance held 1
On Exercise
Net Change
Balance held 3
1-Mar-23
of Rights
Other 2
29-Feb-24
FY2024
Ordinary Shares
Ordinary
Shares
Ordinary
Shares
Ordinary Shares
Non-Executive Directors
R Green
178,415
-
-
178,415
J Hamparsum
490,018
-
-
490,018
I Wilton
1,025,873
-
-
1,025,873
J Davies
-
-
-
-
S Scales
-
-
-
-
Executives
T Watson (Chair)
3,171,232
-
3,171,232
A Baldwin4
-
-
-
-
J Stevenson5
-
-
-
-
S Ryan6
-
-
-
-
4,865,538
-
-
4,865,538
1 Includes ordinary shares that are held directly, indirectly, and beneficially by KMP.
2 Net Change Other includes shares held at appointment and retirement as well as on and off market shares purchased.
3 Note that there were no movements in shareholdings between year end and the date the Directors Report was signed.
4 Appointed 25 October 2023.
5 Resigned 1 July 2023.
6 Resigned 25 October 2023.
All shares above are held in the parent entity, Namoi Cotton Limited.
All ordinary share transactions by the Company with KMP are made through the ASX on normal
commercial terms.
4. Transactions with Key Management Personnel
A number of KMP, or their related parties, hold positions in other entities that result in them having
control, or joint control, over the financial or operating policies of those entities.
A number of these entities transacted with the Group during the year. The terms and conditions of
the transactions with KMP and their related parties were no more favourable than those available,
or which might reasonably be expected to be available, on similar transactions to non-key
management personnel related entities on an arm’s length basis.
No loans are provided to KMP.
End of Remuneration Report
Financial Statement FY2024 |26
Rounding
The amounts contained in this report and in the financial statements have been rounded to the
nearest thousand dollars (where rounding is applicable) in accordance with ASIC Corporations
(Rounding in Financial Directors Reports) Instrument 2016/191. The Company is an entity to which
this legislative instrument applies.
Signed in accordance with a resolution of the Directors on behalf of the board.
On behalf of the board
T WATSON
Executive Chair
Brisbane
16 April 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
27| Namoi Cotton
Lead Auditor’s Independence Declaration under Section 307C
of the Corporations Act 2001
To the Directors of Namoi Cotton Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Namoi Cotton Limited for the
financial year ended 29 February 2024 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Simon Crane
Partner
Brisbane
16 April 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.
Financial Statement FY2024 |28
Independent Auditor’s Report
To the shareholders of Namoi Cotton Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Namoi
Cotton Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
•
giving a true and fair view of the Group’s
financial position as at 29 February 2024 and
of its financial performance for the year
ended on that date; and
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
•
Consolidated statement of financial position as at 29
February 2024;
•
Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity and Consolidated statement of cash
flows for the year then ended;
•
Notes, including material accounting policies; and
•
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
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 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 fulfilled our other ethical responsibilities in accordance with these requirements.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of
the Financial Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this matter.
29| Namoi Cotton
Valuation of ginning infrastructure assets $126.0 million
Refer to Note 3.3 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The valuation of ginning infrastructure assets is
considered a key audit matter due to:
•
the size of the balance, being 65.8% of total
assets; and
•
the level of audit effort and judgement
required by us in evaluating the Group’s
assessment of the fair value of ginning
infrastructure assets.
The Group engaged an independent, external
valuation expert to complete the valuation of
ginning infrastructure assets in the current
period. The valuation method and assessment of
the fair value of ginning infrastructure assets
performed by the external expert involves
significant judgement for key valuation
assumptions as there is inherent estimation
uncertainty. We focused on the significant
forward-looking assumptions the external
valuation expert applied, in particular:
•
forecast sustainable ginning bales, revenues
and expenses due to seasonality in the
cotton industry driven by changing climate
patterns;
•
the discount rate given the Group’s
modelling is highly sensitivity to small
changes in this assumption.
In assessing this key audit matter, in particular
the complex inputs involved, we involved senior
audit team members, including valuation
specialists.
Our procedures included:
•
We assessed the objectivity, competence and scope of
the Group’s external valuation expert;
•
Working with our valuation specialists we assessed the
Group’s external valuation expert report and:
-
considered the appropriateness of the valuation
methodology applied against our understanding of the
Group’s ginning assets and the requirements of the
accounting standards;
-
considered the sensitivity of the valuation by varying
key assumptions, such as sustainable ginning bales,
forecast revenue, forecast expenses and the discount
rate. We did this to identify those assumptions at
higher risk of bias or inconsistency in application and
to focus our further procedures;
-
assessed the discount rate applied in the discounted
cash flow model against publicly available market data
of a group of comparable entities;
-
challenged the independent expert’s assumptions of
forecast sustainable ginning bales, ginning revenues
and expenses against average production over an
extended historical period. We did this to understand
the independent expert’s consideration of seasonal
variations in the cotton industry. We used our
knowledge of the Group, their past performance and
our industry understanding in assessing the
assumptions;
•
We assessed the adequacy of associated disclosures in
the financial report using our understanding obtained from
our testing, against the requirements of the accounting
standard.
Other Information
Other Information is financial and non-financial information in Namoi Cotton Limited’s annual report which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other
Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an
audit opinion or 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. In doing
so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error; and
•
assessing the Group and Company’s ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate the Group and
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial
Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This
description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
Namoi Cotton Limited for the year ended 29
February 2024, complies with Section 300A of
the Corporations Act 2001.
Directors’ 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 responsibilities
We have audited the Remuneration Report included in pages
16 to 25 of the Directors’ Report for the year ended 29
February 2024.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Simon Crane
Partner
Brisbane
16 April 2024
Financial Statement FY2024 |30
31| Namoi Cotton
Directors’ Declaration
In the opinion of the directors of Namoi Cotton Limited (the Company):
a)
the consolidated financial statements and notes that are set out on pages 34 to 77 and the
Remuneration report included on pages 16 to 25 of the directors’ report, are in accordance with
the Corporations Act 2001, including:
i)
giving a true and fair view of the Group’s financial position as at 29 February 2024 and of its
performance for the financial year ended on that date; and
ii)
complying with Australian Accounting Standards and Corporations Regulations 2001; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
The directors draw attention to note “(a) Basis of preparation” which includes a statement of
compliance with International Financial Reporting Standards.
This declaration has been made after receiving the declarations required to be made to the directors
by the chief executive officer and chief financial officer in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 29 February 2024.
Signed in accordance with a resolution of the directors:
T WATSON
Executive Chair
Brisbane
16 April 2024
Financial Statement FY2024 |32
Namoi Cotton Limited
Consolidated financial report
For the year ended 29 February 2024
33 | Namoi Cotton
Financial Statements
Consolidated financial report for the year ended 29
February 2024
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
34
STATEMENT OF FINANCIAL POSITION
35
STATEMENT OF CASH FLOWS
36
STATEMENT OF CHANGES IN EQUITY
37
NOTES TO THE FINANCIAL STATEMENTS
38
ABOUT OUR FINANCIAL STATEMENTS
38
GROUP FINANCIAL PERFORMANCE
41
1.1 SEGMENT RESULTS
41
1.2 REVENUE AND OTHER INCOME
44
1.3 EXPENSES
46
1.4 TAXATION
47
1.5 EARNINGS PER SHARE
49
CAPITAL MANAGEMENT
50
2.1 BORROWINGS
50
2.2 CASH AND CASH EQUIVALENTS
52
2.3 CONTRIBUTED EQUITY
54
2.4 COMMITMENTS AND CONTINGENCIES
55
2.5 FINANCIAL RISK MANAGEMENT
55
OPERATING ASSETS AND LIABILITIES
62
3.1 TRADE AND OTHER RECEIVABLES
62
3.2 INVENTORIES
63
3.3 PROPERTY, PLANT AND EQUIPMENT
63
3.4 TRADE AND OTHER PAYABLES
65
3.5 PROVISIONS
66
GROUP
67
4.1 INFORMATION RELATING TO NAMOI
COTTON LIMITED (THE PARENT)
67
4.2 INVESTMENTS IN NAMOI COTTON
MARKETING ALLIANCE
67
4.3 INVESTMENTS IN ASSOCIATES AND JOINT
VENTURES USING THE EQUITY METHOD
69
4.4 INTEREST IN JOINT OPERATIONS
70
4.5 INTEREST IN JOINTLY CONTROLLED ASSETS 71
4.6 RELATED PARTY TRANSACTIONS
71
ADDITIONAL NOTES
75
5.1 REMUNERATION OF AUDITORS
75
5.2 SHARE BASED PAYMENTS
75
5.3 SIGNIFICANT EVENTS AFTER BALANCE DATE
77
Financial Statement FY2024 |34
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 FEBRUARY 2024
Consolidated
$’000
Note
29 Feb 2024
28 Feb 2023
Revenue from customers
1.2
244,007
256,947
Other income/(loss)
1.2
(5)
110
Share of profit/(loss) from investment in Namoi Cotton Marketing
Alliance
4.2
1,500
1,488
Share of profit/(loss) of associates and joint ventures
4.3
1,478
(1)
Cottonseed and other goods purchased for resale
(122,934)
(122,948)
Raw materials and consumables used
(15,417)
(19,938)
Distribution costs
(28,222)
(47,921)
Employee benefit expenses
1.3
(37,475)
(34,700)
Repairs and maintenance
(6,813)
(5,661)
Depreciation
(11,249)
(11,094)
Finance costs
1.3
(2,367)
(2,896)
Derivatives recorded at fair value through profit or loss
(1,077)
(3,277)
Net foreign exchange gains/(losses)
(85)
2,943
Other expenses
1.3
(12,081)
(9,079)
Profit /(loss) before income tax
9,260
3,973
Income tax (expense)/benefit
1.4
(2,360)
(10)
Profit/(loss) attributable to the shareholders
6,900
3,963
Other comprehensive income items that will not be reclassified
subsequently to profit and loss:
Increment/(decrement) to asset revaluation reserve (net of tax)
3.3
3,773
3,287
Total comprehensive income attributable to Shareholders of Namoi
Cotton Limited
10,673
7,250
Cents
Note
29 Feb 2024
28 Feb 2023
Earnings per Ordinary Share
Basic earnings per share
1.5
3.4
2.2
Diluted earnings per share
1.5
3.3
2.1
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
35 | Namoi Cotton
STATEMENT OF FINANCIAL POSITION
AS AT 29 FEBRUARY 2024
Consolidated
$’000
Note
29 Feb 2024
28 Feb 2023
Current assets
Cash and cash equivalents
2.2
7,531
4,877
Trade and other receivables
3.1
6,879
14,296
Inventories
3.2
14,091
24,304
Prepayments
924
1,044
Derivative financial instruments
-
277
Total current assets
29,425
44,798
Non-current assets
Investment in Namoi Cotton Marketing Alliance
4.2
728
255
Investments in associates and joint ventures
4.3
203
(1,285)
Investments in convertible notes in Kimberley Cotton Company Limited
(KCC)
2.5
4,006
1,386
Property, plant and equipment
3.3
157,227
158,151
Total non-current assets
162,164
158,507
Total assets
191,589
203,305
Current liabilities
Trade and other payables
3.4
7,030
13,077
Interest bearing liabilities
2.1
2,024
13,717
Provisions
3.5
4,444
2,523
Derivative financial instruments
112
405
Total current liabilities
13,610
29,722
Non-current liabilities
Interest bearing liabilities
2.1
29,184
38,326
Provisions
3.5
61
167
Deferred tax liabilities
1.4
5,396
1,419
Total non-current liabilities
34,641
39,912
Total liabilities
48,251
69,634
NET ASSETS
143,338
133,671
Equity
Contributed equity
2.3
61,142
61,142
Reserves
80,068
76,338
Retained earnings / (deficit)
2,128
(3,809)
TOTAL EQUITY
143,338
133,671
The above statement of financial position should be read in conjunction with the accompanying notes.
Financial Statement FY2024 |36
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 FEBRUARY 2024
Consolidated
$’000
Note
29 Feb 2024
28 Feb 2023
Cash flows from operating activities
Receipts from customers1
659,815
817,258
Realised gains/(losses) on derivatives
(1,093)
(3,208)
Payments to suppliers and employees
(193,791)
(194,073)
Payments to growers1
(431,244)
(619,272)
Interest received
376
36
Interest paid
(2,760)
(3,108)
Net cash (outflow)/inflow from operating activities
31,303
(2,367)
Cash flows from investing activities
Payments for property, plant and equipment
(5,277)
(9,823)
Proceeds from sale of property, plant and equipment
30
62
Investment in KCC
(11)
(28)
Investment in convertible notes in KCC
(2,620)
(1,386)
Distributions from NCMA
1,027
1,385
Net cash (outflow)/inflow from investing activities
(6,851)
(9,790)
Cash flows from financing activities
Proceeds from issuing of ordinary shares
-
13,158
Dividends paid
(963)
-
Proceeds from borrowings
12,600
30,000
Repayment of borrowings
(33,478)
(27,175)
Proceeds from equipment loans
1,388
2,211
Repayment of equipment loans
(1,150)
(812)
Repayment of other loans
(16)
(426)
Payment of principal portion of lease liabilities
(179)
(416)
Net cash (outflow)/inflow from financing activities
(21,798)
16,540
Net increase/(decrease) in cash
2,654
4,383
Add cash at the beginning of the financial year
4,877
494
Cash at end of the financial year
7,531
4,877
1 Includes cash inflows and outflows associated with the purchase and sale of lint cotton where Namoi Cotton Limited acts as marketing agent.
The above statement of cash flows should be read in conjunction with the accompanying notes.
37 | Namoi Cotton
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2024
Consolidated $’000
Issued
Capital
Asset
Revaluation
Reserve
Performance
Rights Reserve
Retained
Earnings
Total
Equity
Total equity at 1 March 2023
61,142
76,241
97
(3,809)
133,671
Ordinary shares issued
-
-
-
-
-
Net profit for the period
-
-
-
6,900
6,900
Share based payment transactions
-
-
(43)
-
(43)
Other comprehensive income/(loss)
-
3,773
-
-
3,773
Equity dividends
-
-
-
(963)
(963)
Total equity at 29 February 2024
61,142
80,014
54
2,128
143,338
Consolidated $’000
Issued
Capital
Asset
Revaluation
Reserve
Performance
Rights Reserve
Retained
Earnings
Total
Equity
Total equity at 1 March 2022
47,984
72,954
37
(7,772)
113,203
Ordinary shares issued
13,158
-
-
-
13,158
Net profit for the period
-
-
-
3,963
3,963
Share based payment transactions
-
-
60
-
60
Other comprehensive income/(loss)
-
3,287
-
-
3,287
Equity dividends
-
-
-
-
-
Total equity at 28 February 2023
61,142
76,241
97
(3,809)
133,671
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Financial Statement FY2024 |38
NOTES TO THE FINANCIAL STATEMENTS
ABOUT OUR FINANCIAL STATEMENTS
These are the financial statements for Namoi Cotton Limited (the Company) and its controlled entities (together, the
Group), and its interests in associates, joint ventures and other investments. The Company is a publicly listed Company
domiciled in Australia. The Group is a for profit entity primarily involved in the provision of Cotton ginning, warehousing
and logistics services to cotton growers and cotton merchants in Australia and sells co-products and by-products from the
ginning process to both domestic and international customers.
On 16 April 2024, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it significant and relevant to the
understanding of the financial statements. A disclosure is considered material and relevant if, for example:
•
the amount is significant in size (quantitative factor);
•
the information is significant by nature (qualitative factor);
•
the user cannot understand the Group’s results without the specific disclosure (qualitative factor);
•
the information is critical to a user’s understanding of the impact of significant changes in the Group’s business
during the period – for example, business acquisitions or disposals (qualitative factor);
•
the information relates to an aspect of the Group’s operations that is important to its future performance
(qualitative factor); and
•
the information is required under legislative requirements of the Corporations Act 2001 or by the Group’s
principal regulators including the Australian Securities and Investments Commission (ASIC).
This section of the financial statements:
•
outlines the basis upon which the Group’s financial statements have been prepared; and
•
discusses any new accounting standards or regulations that directly impact the financial statements.
a)
Basis of preparation
The financial report is a general purpose (Tier 1) financial report prepared in accordance with Australian Accounting
Standards (AASs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The
financial statements comply with International Financial Reporting Standards adopted by the International Accounting
Standards Board.
We present the financial statements of the Group in Australian dollars, which is the Company’s functional and presentation
currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/ Director’s report) Instrument
2016/191 and in accordance with that instrument, amounts within the financial statements and directors’ report have been
rounded to the nearest thousand dollars ($’000), unless otherwise stated.
b) Basis of measurement and presentation
We have prepared the financial statements on the historical cost basis – except the following assets and liabilities
which we have stated at their fair value:
•
Ginning infrastructure assets held at fair value; and
•
Financial assets and liabilities designated at fair value through profit or loss.
KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied
estimates and assumptions about past and future events over the following primary areas:
•
Recognition of deferred tax assets relating to historical tax losses – note 1.4
•
Fair value of investment in convertible notes issued by Kimberley Cotton Company Limited – note 2.5
•
Fair value of ginning infrastructure assets - note 3.3
39 | Namoi Cotton
•
Accounting for investment in Namoi Cotton Marketing Alliance - note 4.2
Further information of the key judgements and estimates that we consider material to the financial statements are
contained within each relevant note to the financial statements.
MATERIAL ACCOUNTING POLICIES
The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial
statements, except if stated otherwise.
In addition, the Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
from 1 March 2023. The amendments require the disclosure of ‘material’, rather than ‘significant’, accounting policies. The
amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities
to provide useful, entity-specific accounting policy information that users need to understand other information in the
financial statements. Although the amendments did not result in any changes to the accounting policies themselves,
Management reviewed the accounting policies and made updates to the information disclosed in the Material accounting
policies note (2023: Significant accounting policies) in certain instances in line with the amendments.
Seasonality of operations
The Group’s Ginning segment operates on a seasonal basis whereby ginning services normally occur during the first half of
each financial year. Delivery of cottonseed from growers also aligns with the ginning season, largely occurring in the first
half of the financial year with revenues from the sale of cottonseed being recognised throughout the financial year as
cottonseed is sold to customers. Accordingly, the Ginning segment traditionally generates net income in the first half of the
financial year and incurs net expenditure in the second half of the financial year during the ensuing maintenance period.
a) 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.
b) Foreign currency translation
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.
c) 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.
Financial Statement FY2024 |40
d) Accounting standards adopted in the period
There were no new accounting standards or interpretations adopted during the year that had a significant effect on the
Group.
e) Accounting standards issued but not yet effective
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for
the financial statements for the year ended 29 February 2024 and have not been applied by the Group in preparing these
financial statements. Further details of these are set out below:
•
Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current and Non-current Liabilities with
Covenants
•
Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements
•
Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
f) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases.
Loss of control
The Group re-assesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one
or more of the elements of control. When the Group loses control over a subsidiary, it derecognises the assets and
liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or
loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is
lost.
Joint operations
A joint operation is an arrangement in which the Group shares joint control, primarily via contractual arrangements with
other parties. In a joint operation, the Group has rights to the underlying assets and obligations for the liabilities relating to
the arrangement. In relation to the Group’s interest in a joint operation, the Group recognises: its share of any assets and
liabilities held or incurred jointly; its share of any revenue generated from the sale of the output by the joint operation; and
expenses its share of expenses incurred jointly. All such amounts are allocated in accordance with the terms of the
arrangement, which is usually in proportion to the Group’s interest in the joint operation.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction
gains or losses) arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with
equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
41 | Namoi Cotton
1 GROUP FINANCIAL PERFORMANCE
1.1. Segment results
a) Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the CEO/
Executive Chair (the chief operating decision maker) in assessing performance and in determining the allocation of
resources.
The operating segments are identified by management based on the nature of products and services provided. Discrete
financial information about each of these operating businesses is reported to the CEO/ Executive Chair on at least a
monthly basis.
b) Performance of segments
Operating Segment
Products and services
Ginning
The ginning business operates 10 cotton gins (incorporating 2 joint venture gins, referred to
in note 4.4) 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 co-products resulting in the conversion of cotton in module form to
bale form.
Grower customers are also able to sell the cottonseed co-product to Namoi Cotton or elect
to retain their cotton seed.
Namoi Cotton buys and sells cottonseed from and to third parties.
The mechanical process of ginning produces a number of marketable co-products including
cottonseed and moss. The costs to which are unable to be separated from the cost of
ginning and as such are reported as part of the ginning segment.
The ginning segment also includes the investment in Kimberley Cotton Company
Supply Chain &
Marketing
The supply chain and marketing business involves warehousing and logistics services of
cotton lint bales through Namoi Cotton Alliance, as well as the purchase and sale of lint
cotton from Australian growers to Namoi Cotton Marketing Alliance.
Bales procured by Namoi Cotton Limited as an agent for Namoi Cotton Marketing Alliance
are all sold to export markets.
This segment includes the results of Namoi Cotton’s Joint Ventures in NC Packing Services
Pty Ltd and investment in Namoi Cotton Marketing Alliance.
Corporate
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 income;
•
Rental income;
•
Finance costs;
•
Corporate employee benefits expense;
•
Corporate depreciation; and
•
Other corporate administrative expenses.
Financial Statement FY2024 |42
Segment balance sheet and cashflow is not reported to the chief operating decision maker and are, therefore, not disclosed
as part of this report.
Business Segments
Ginning
Supply Chain &
Marketing
Corporate
Consolidated
Year ended 29 February 2024
$’000
$’000
$’000
$’000
Ginning services
72,622
-
-
72,622
Sales of cottonseed
143,753
-
-
143,753
Sales of moss
6,362
-
-
6,362
Classing services
1,383
-
-
1,383
Warehousing and logistics services
-
17,130
-
17,130
Lint handling
287
-
-
287
Other service revenue
552
267
-
819
Management fees
-
1,540
-
1,540
Other
25
86
-
111
Total consolidated revenue
224,984
19,023
-
244,007
Other income
-
-
(5)
(5)
Share of profit from Investment in NCMA,
associates and joint ventures
(39)
3,017
-
2,978
EBITDA1
28,825
6,573
(12,522)
22,876
Depreciation
(9,428)
(1,420)
(401)
(11,249)
Finance costs
(2,367)
(2,367)
Net profit before tax
9,260
Income tax expense
(2,360)
Net profit after tax
6,900
1 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit before tax
from NCMA and profit after tax from NCPS, excluding impairments and revaluation decrements on property, plant and equipment held at fair value).
43 | Namoi Cotton
Business Segments
Ginning
Supply Chain &
Marketing
Corporate
Consolidated
Year ended 28 February 2023
$’000
$’000
$’000
$’000
Ginning services
69,596
-
69,596
Sales of cottonseed
160,823
-
160,823
Sales of moss
2,542
-
2,542
Classing services
1,382
-
1,382
Warehousing and logistics services
-
18,093
-
18,093
Lint handling
344
-
-
344
Other service revenue
700
521
-
1,221
Management fees
-
1,415
-
1,415
Other
91
1,440
-
1,531
Total consolidated revenue
235,478
21,469
-
256,947
Other income
110
110
Share of profit from Investment in NCMA,
associates and joint ventures
-
1,487
-
1,487
EBITDA1
20,971
4,504
(7,512)
17,963
Depreciation
(9,347)
(1,443)
(304)
(11,094)
Finance costs2
-
-
(2,896)
(2,896)
Net profit before tax
3,973
Income tax expense
(10)
Net profit after tax
3,963
1 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from
NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value).
2 Comparative has been updated to align with current period presentation.
c) Geographical information
The Group provides cotton ginning services to growers located solely within Australia. A portion of cottonseed
and moss sales are made to a variety of countries in Asia, including China, Japan, South Korea, and Thailand.
As such for the purposes of this note the Group’s geographic areas are considered to be Australia and China,
Japan, South Korea and Thailand with consolidated revenues as follows:
Geographic Areas
Australia
China
Japan
South
Korea
Thailand
Consolidated
Year ended 29 February
2024
$’000
$’000
$’000
$’000
$’000
$’000
Ginning services
72,622
-
-
-
-
72,622
Sales of cottonseed
111,619
26,542
4,818
774
143,753
Sales of moss
108
-
-
-
6,254
6,362
Classing services
1,383
-
-
-
-
1,383
Warehousing and logistics
services
17,130
-
-
-
-
17,130
Lint handling
287
-
-
-
-
287
Other service revenue
819
-
-
-
-
819
Management fees
1,540
-
-
-
-
1,540
Other
111
-
-
-
-
111
Total consolidated revenue
205,619
26,542
4,818
774
6,254
244,007
Financial Statement FY2024 |44
Geographic Areas
Australia
China
Japan
South
Korea
Thailand
Consolidated
Year ended 28 February
2023
$’000
$’000
$’000
$’000
$’000
$’000
Ginning services
69,596
-
-
-
-
69,596
Sales of cottonseed
97,714
44,040
9,613
9,456
-
160,823
Sales of moss
-
2,542
2,542
Classing services
1,382
-
-
-
-
1,382
Warehousing and logistics
services
18,093
-
-
-
-
18,093
Lint handling
344
-
-
-
-
344
Other service revenue
1,221
-
-
-
-
1,221
Management fees
1,415
-
-
-
-
1,415
Other
1,531
-
-
-
-
1,531
Total consolidated revenue
191,296
44,040
9,613
9,456
2,542
256,947
Accounting policy
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/ Executive Chair 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.
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.
1.2. Revenue and other income
Consolidated
$’000
29 Feb 2024
28 Feb 2023
Revenue from customers
by type of goods and services
Ginning services
72,622
69,596
Sales of cottonseed
143,753
160,823
Sales of moss
6,362
2,542
Classing services
1,383
1,382
Warehousing and logistics services
17,130
18,093
Lint handling
287
344
Other service revenue
819
1,221
Management fees
1,540
1,415
Other
111
1,531
244,007
256,947
Other income
Rental Income
87
107
Net gain/(loss) on disposal of property, plant and equipment
(92)
3
(5)
110
45 | Namoi Cotton
Accounting policy
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue
when it transfers control over a good or service to a customer.
The following table provides information about the nature and timing of the satisfaction of the performance obligations
in contracts with customers, including significant payment terms, and related revenue recognition policies.
The Group does not typically provide discounts or incorporate other forms of variable consideration in contracts with
customers. The Group does not permit for the return of goods or provide warranties to customers.
Type of product or service
Nature and timing of
satisfaction of performance
obligations, including payment
terms
Revenue recognition policies
Ginning services
Ginning services incorporates the
mechanical process of separating raw
cotton into resultant lint cotton bales,
cottonseed and mote. Invoices are
issued upon completion of the service
and are usually payable within 7 to 14
business days.
Revenue from ginning services is
recognised upon the completion of
the processing of raw cotton into the
associated products. Given the nature
of ginning services and associated
processing timeframes, this is akin to
point-in-time revenue recognition.
Sales of cottonseed and moss
Customers obtain control of
cottonseed when the goods have
been delivered to the customer,
subject to the conditions of the
contract under which the goods were
sold. These conditions differ between
domestic sales and export sales based
on associated shipping terms. Invoices
are issued at that point in time and
are usually payable within 7 to 14
business days.
Domestic cottonseed sales are
typically recognised upon dispatch
from the Group’s warehouses where
the customer arranges for
transportation of the goods.
Export cottonseed and moss sales are
typically recognised upon delivery of
the goods to either the port of
departure or destination port,
depending on the associated shipping
terms.
Classing revenue
Classing is the process of mechanically
and visually inspecting cotton to
determine grade characteristics.
Invoices are issued upon completion
of the service and are usually payable
within 7 to 14 business days.
Revenue is recognised upon
completion of the inspection process
and provision of results to the lint
marketer or customer.
Warehousing and logistics
Warehousing and logistics revenue is
generated through the provision of
storage, handling, logistics and other
services. Invoices are issued as the
services are performed and are
usually payable within 7 days.
Revenue is recognised over time as
the services are performed. Given the
nature of these services and
associated contractual arrangements
with customers, the timeframe over
which these services is provided is
typically short and no estimation or
judgement is required to determine
the stage of completion.
Lint handling
The Group acts as an agent in
facilitating the sale of lint cotton
between growers and a related party,
NCMA. The Group receives a handling
fee for facilitating this transaction,
including processing the settlement of
proceeds between each party.
Revenue is recognised at a point in
time, as the associated sale of cotton
lint occurs.
Financial Statement FY2024 |46
1.3. Expenses
Consolidated
$’000
29 Feb 2024
28 Feb 2023
Employee benefit expenses
Salaries, wages, on-costs and other employee benefits
35,177
32,710
Contributions to defined contribution plans
2,341
1,931
Share based payments
(43)
59
37,475
34,700
Finance costs
Interest on bank loans and overdrafts
2,027
2,672
Interest expense – leases
163
108
Finance charges payable under equipment loans
177
113
Interest rate derivatives recorded at fair value through profit or loss
-
3
2,367
2,896
Other expenses
Audit fees and consulting
3,475
1,628
Business travel
854
758
Information technology
1,818
1,334
Insurance
1,965
1,734
Rental property expenses
592
458
Safety
1,076
662
Staff related costs
560
823
Other expenses
1,741
1,682
12,081
9,079
Accounting policy
Employee benefits expense includes salaries and wages, superannuation contributions, share-based payments and
other entitlements. The accounting policies for liabilities associated with employee benefits and share-based payments
is contained in note 3.5 and 5.2 respectively.
Finance costs comprise interest paid or payable on borrowings calculated using the effective interest method,
amortisation of borrowing costs, losses arising on interest rate and foreign currency derivatives recognised at fair value
through profit or loss, and the unwinding of the discount on provisions and other liabilities.
47 | Namoi Cotton
1.4. Taxation
a) Income tax expense
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Reconciliation of effective tax rate
Profit before income tax
9,260
3,973
Income tax expense calculated at 30% (2023: 30%)
2,778
1,192
Tax effect of amounts which are not deductible/ (taxable) in calculating
taxable income
Non-deductible / non-assessable items
(569)
(42)
Recognition of previously unrecognised tax losses
-
(1,140)
Tax losses over/(under) provided in prior years
151
-
Income tax expense
2,360
10
Represented by:
Current tax
3,086
1,650
Deferred tax: Temporary differences
(877)
(500)
Deferred tax: De-recognition/(recognition) of tax losses
-
(1,140)
Tax losses over/(under) provided in prior years
151
-
2,360
10
b) Deferred tax assets and liabilities
Consolidated
statement of financial
position
Consolidated statement
of profit or loss or
retained earnings
Consolidated
statement of other
comprehensive
income
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
$’000
$’000
$’000
$’000
$’000
$’000
Deferred tax assets
Deferred costs
498
439
(59)
(118)
-
-
Provisions and accruals
1,274
781
(493)
38
-
-
Tax losses carried forward1
24,504
27,741
151
(1,140)
-
-
Total deferred tax assets
26,276
28,961
(401)
(1,220)
-
-
Deferred tax liabilities
Property, plant and equipment
(30,932)
(30,020)
(705)
(552)
1,617
1,409
Other assets
(740)
(360)
380
132
-
-
Total deferred tax liabilities
(31,672)
(30,380)
(325)
(420)
1,617
1,409
Net deferred tax liability
(5,396)
(1,419)
(726)
(1,640)
1,617
1,409
1 This excludes unrecognised deferred tax assets related to entities that sit outside of the tax consolidated group. These losses total $1,592,058 on a gross basis (2023: $1,515,345
gross). Australian tax losses do not expire, however, any losses carried forward to future years are subject to Australia’s loss integrity provisions.
Recognition of deferred tax assets relating to historical tax losses
The recognition of deferred tax assets involves significant judgement given the need to consider whether it is probable that
the associated tax benefits will not be realised through generating sufficient future taxable profits or due to other
circumstances, such as continued satisfaction of Australian tax requirements. This inherently involves making judgements
around future events and circumstances impacting the Group’s operations based on information available at the balance
date.
At 29 February 2024, the Group is relying upon the Continuity of Ownership test under Australian tax requirements in order
to recognise the deferred tax asset of $24,504,000 associated with historical tax losses outlined in the table above. Future
changes in the Group’s shareholder composition, whether it be through the completion of LDC’s proposed scheme of
arrangement or other means, may impact on the ability of the Group to meet the requirements of the Continuity of
Ownership Test. In these circumstances the Same/Similar Business Test is required to be relied upon which involves
Financial Statement FY2024 |48
judgement given the need to assess changes in the Group’s operations over an extended time period. Given the
timeframes in which the historical tax losses were incurred, and in the absence of a detailed assessment of compliance with
the Same/Similar Business Test, there is a risk that tax losses could cease to be available to the Group and may need to be
derecognised.
As at 29 February 2024, the Directors were of the view that there was not sufficient evidence available to conclude that it
was probable that the proposed acquisition of the Group by Louis Dreyfus Company Asia Pte Ltd (LDC) would complete as it
remained subject to various regulatory approvals as well as final approval from shareholders, noting that under the
Corporations Act 2001, a scheme of arrangement requires support from 50% of members in number and 75% of voting
interests.
Tax consolidated group and tax sharing arrangements
The Company and its wholly owned subsidiaries are part of a tax consolidated group (TCG) under Australian Taxation law.
The Company is the head entity of the TCG. Each entity in the TCG measures its current and deferred taxes as if it is a
standalone taxable entity. In addition to its own current and deferred tax amounts, the head entity in the tax consolidated
group recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused
tax credits assumed from controlled entities in the TCG, subject to the satisfaction of the recognition requirements in AASB
112 Income Taxes.
The Company and each of the subsidiaries in the TCG enter into tax funding and tax sharing arrangements. Under the terms
of the agreement, the subsidiaries have agreed to pay (or receive) an amount to (or from) the head entity, based on the
current tax liability or current tax asset of the relevant entity.
Accounting policy
Income Tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or in OCI.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary
differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able
to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future.
Temporary differences in relation to a right-of-use asset and a lease liability for a specific lease are regarded as a net
package (the lease) for the purpose of recognising deferred tax.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be used. Future taxable
profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable
temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for
reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the
Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised; such reductions are reversed when the probability of future
taxable profits improves.
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.
49 | Namoi Cotton
1.5. Earnings per share
Basic earnings per share is calculated by dividing the consolidated net profit after tax for the year by the number of
ordinary shares at year end.
The following reflects the income and equity data used in the basic and diluted earnings per share computations below the
statement of profit and loss and other comprehensive income:
Consolidated
$’000
29 Feb 2024
28 Feb 2023
Consolidated profit/(loss) attributable to ordinary shares
6,900
3,963
Earnings per share – basic (cents)
3.4
2.2
Earnings per share – diluted (cents)
3.3
2.1
Weighted average number of ordinary shares for basic EPS
204,996,853
182,524,724
Weighted number unconverted residual capital stock
1,836,029
1,841,273
Weighted average of performance rights on issue
1,428,025
2,047,423
Weighted average number of ordinary shares adjusted for the effect
of dilution
208,260,907
186,413,420
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.
Accounting policy
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.
Financial Statement FY2024 |50
2 CAPITAL MANAGEMENT
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Group 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:
•
the liquidity of the Group including total cash balances;
•
maturity of existing borrowings and future financing requirements; and
•
compliance with debt covenants.
2.1. Borrowings
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Current
Working capital finance1,5
-
12,675
Lease liabilities
194
180
Equipment finance2
1,015
862
Cargill Australia Ltd3
815
-
2,024
13,717
Non Current
Term debt4,5
24,500
32,602
Lease liabilities
3,210
3,403
Equipment finance2
1,474
1,490
Cargill Australia Ltd3
-
831
29,184
38,326
1 Working capital facilities are both committed and uncommitted, 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.
2 Equipment loans have an average term of 2.4 years (2023: 2.0) with the average interest rate implicit in the contracts of 6.41% (2023: 5.01%). These loans are secured against the
value of associated property, plant and equipment with a carrying value of $2,912,185 (2023: $2,603,344).
3 Cargill advance of $814,770 is the present value repayable by 31 August 2024 discounted at 6.5% pa.
4 Term debt facilities are committed, non-amortising lines utilised to fund capital projects relating to the plant, property and equipment of the business. As at 29 February 2024
$8,000,000 of the facility is available to draw.
5 In connection with the Working capital facility and Term debt, Namoi Cotton Limited’s assets and investments in joint ventures and associates are secured against these facilities.
Facility Limit $’000
Consolidated
Currency
Nominal
interest
rate
Financial
year of
maturity
29 Feb
2024
28 Feb
2023
AUD Facility Limit
Bank overdraft
AUD
8.73%
-
5,000
5,000
Equipment finance
AUD
6.21%
-
7,500
2,352
Working capital finance1
AUD
5.506%
2026
30,895
32,500
Term debt
AUD
5.506%
2026
32,500
32,500
75,895
72,352
1 Working capital facilities are both committed and uncommitted, 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.
51 | Namoi Cotton
A Deed of Amendment was executed by Namoi Cotton and CBA on 25 October 2023 extending the maturity date of the
working capital and term debt facilities to 30 October 2026.
Namoi Cotton and CBA have agreed to certain financial covenants at what are considered appropriate levels to meet the
needs of the business in relation to the Term debt and Working capital finance facilities. The Company forecasts the finance
facilities outlined above will be sufficient to fund operations in FY2025.
Namoi Cotton was in compliance with all financial covenants during FY2024.
Details of interest rate risk, foreign exchange risk and liquidity risk are disclosed in Note 2.5.
Accounting policy
Interest bearing liabilities
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. They are classified as current
liabilities unless the Group has the unconditional right to defer settlement of the liability for at least twelve months after
the balance date.
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease
term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-
of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as
those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the
discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, if the Group changes its assessment of
whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease
payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Financial Statement FY2024 |52
2.2. Cash and cash equivalents
Consolidated
$’000
29 Feb 2024
28 Feb 2023
Cash at bank
7,531
4,877
(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
7,531
4,877
7,531
4,877
(b) Reconciliation of net cash provided by operating
activities to operating profit/(loss) after income tax
Operating profit/(loss) after income tax
6,900
3,963
Adjustments for:
Depreciation
11,249
11,094
(Gain)/loss on sale of property, plant and equipment
92
(3)
Provision for expected credit losses
71
-
Foreign exchange (gain)/loss on equipment loans
(4)
(8)
Share-based payments expense
(43)
59
Share of (profits)/losses of associate, joint ventures and
investment in NCMA
(2,978)
(1,487)
15,287
13,618
Changes in:
(Increase)/decrease in trade and other receivables
7,344
(7,931)
(Increase)/decrease in inventories
10,213
(14,329)
(Increase)/decrease in other assets
400
(640)
Increase/(decrease) in trade and other payables
(5,824)
7,917
Increase/(decrease) in other liabilities
(293)
353
Increase/(decrease) in provisions
1,815
64
Increase/(decrease) in deferred tax asset
2,361
(1,419)
16,016
(15,985)
Net cash inflow/(outflow) from operating activities
31,303
(2,367)
53 | Namoi Cotton
Disclosure of non-cash financing activities
Liabilities
Equity
Bank overdrafts used
for cash
management
purposes
Other Loans
and
Borrowings
Lease
Liabilities
Share
capital
Total
Balance at 1 March 2023
-
48,460
3,583
61,142
113,185
Changes from Financing Cashflows
Proceeds from loans, borrowings, and
equipment finance
-
13,988
-
-
13,988
Proceeds from issue of share capital
-
-
-
-
-
Repayment of loans, borrowings, and
equipment finance
-
(34,644)
-
-
(34,644)
Payment of lease liabilities
-
-
(179)
-
(179)
Total changes from financing cash
flows
-
(20,656)
(179)
-
(20,835)
The effect of changes in foreign
exchange rates
-
-
-
-
Changes in fair value
-
-
-
-
-
Other Changes
Change in bank overdraft
-
-
-
-
-
New Leases
-
-
-
-
-
Total liability-related other changes
-
-
-
-
-
Total equity related other changes
-
-
-
-
-
Balance as 29 February 2024
-
27,804
3,404
61,142
92,350
Disclosure of non-cash financing activities
Liabilities
Equity
Bank overdrafts used
for cash
management
purposes
Other Loans
and
Borrowings
Lease
Liabilities
Share
capital
Total
Balance at 1 March 2022
2,361
44,654
2,608
47,984
97,607
Changes from Financing Cashflows
Proceeds from loans, borrowings, and
equipment finance
-
32,211
-
-
32,211
Proceeds from issue of share capital
-
-
-
13,158
13,158
Repayment of loans, borrowings, and
equipment finance
-
(28,413)
-
-
(28,413)
Payment of lease liabilities
-
-
(416)
-
(416)
Total changes from financing cash
flows
-
3,798
(416)
13,158
16,540
The effect of changes in foreign
exchange rates
-
8
-
8
Changes in fair value
-
-
-
-
-
Other Changes
Change in bank overdraft
(2,361)
-
-
-
(2,361)
New Leases
-
-
1,391
-
1,391
Total liability-related other changes
(2,361)
8
1,391
-
(962)
Total equity related other changes
-
-
-
-
-
Balance as 28 February 2023
-
48,460
3,583
61,142
113,185
Accounting policy
Cash and cash equivalents
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.
Financial Statement FY2024 |54
2.3. Contributed equity
Consolidated
No. ’000
$’000
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
1 cent Capital Stock (fully paid)
1 cent Residual Capital Stock (fully Paid)
Residual capital stock at the beginning of
the financial year
1,839
1,843
18
18
Residual capital stock converted to
ordinary shares
(3)
(4)
-
-
Residual capital stock at the end of the
financial year
1,836
1,839
18
18
Ordinary Shares (fully paid)
Ordinary Shares at the beginning of the
financial year
204,892
172,105
61,142
47,984
Ordinary shares issued during the financial
year
205
32,783
-
13,158
Residual capital stock converted to
ordinary shares
3
4
-
-
Ordinary shares at the end of the financial
year
205,100
204,892
61,142
61,142
At balance date, 1.8 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 being converted to Ordinary Shares or the 30th June 2018.
The value 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.
Residual capital stock terms and conditions:
• Residual capital stock holders are entitled to distributions as declared by the directors;
• Residual capital stock holders have no right to vote at any general meeting of Namoi Cotton;
• On winding up, residual capital stock holders are entitled to the proceeds from surplus assets after payment of 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.
Issue of ordinary shares
During the year the company issued shares upon the exercise of performance rights and conversion of residual capital
stock.
Dividends
On 25 October 2023, the Directors declared and subsequently paid an unfranked dividend of $0.005 per ordinary share,
totalling $0.963m (2023: $nil).
Subsequent to balance date, on 16 April 2024, the directors declared a dividend of $0.01 per ordinary share to be paid
on 10 May 2024.
55 | Namoi Cotton
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.
Performance rights reserve
The Group operates employee share based payment plans. The performance rights reserve is used to recognise the grant
date fair value of equity-settled share-based payments provided to employees with a corresponding entry in profit or loss.
Refer to note 5.2 for further information on share-based payments.
2.4. Commitments and contingencies
Commitments for capital expenditure
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Property, plant and equipment
Estimated capital expenditure contracted for at balance date but not provided
for:
Payable within one year
1,173
2,114
Payable after one year but no more than five years
-
-
1,173
2,114
2.5. Financial risk management
Objectives and policies
The nature of Namoi Cotton’s business involves the potential exposure to a number of risks, including:
•
Market risks, including fluctuation in cottonseed prices, foreign exchange rates and interest rates;
•
Credit risk; and
•
Liquidity risk.
The Company’s board of directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Group’s risk management policies are established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group,
through its training and management standards and procedures, aims to maintain a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The Group’s exposure to, and approach to managing, these risks is outlined below.
Market Risks
Market risk is the risk that changes in market prices – e.g. foreign exchange rates, interest rates and commodity prices –
will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the Group’s
return.
Cottonseed price risk
The Group is exposed to fluctuations in market prices for cottonseed. The Group manages this risk in accordance with the
Cottonseed Risk Management Policy. This requires the Group to enter into fixed price purchase and sale agreements
ahead of the growing season and by adhering to prescribed limits in respect of its open cottonseed positions.
Financial Statement FY2024 |56
Interest Rate Risk
The Group monitors its interest rate exposure with regard to existing and forecast working capital and term debt
requirements. At reporting date, the Group had the following financial assets and liabilities exposed to Australian variable
and fixed interest rate risk.
Consolidated
$’000
29 Feb
2024
28 Feb
2023
$
$
Fixed-Rate Instruments
Financial Assets
4,919
1,508
Financial Liabilities
(3,405)
(3,182)
Lease Liabilities
(3,403)
(3,583)
(1,889)
(5,257)
Variable-Rate Instruments
Financial Assets
7,672
5,038
Financial Liabilities
(24,500)
(45,326)
(16,828)
(40,288)
The following sensitivity analysis is based upon a reasonably possible change in variable interest rates at the reporting date,
showing the resulting increase or decrease in equity or profit or loss, with all other variables held constant.
The Group does not apply hedge accounting or participate in other transactions that may have an impact on equity.
Therefore, there are no movements in financial assets or liabilities recorded directly through equity resulting in nil impact
to the sensitivity analysis table below.
Post Tax Profit
Higher/(Lower)
$’000
29 Feb
2024
28 Feb
2023
Consolidated
+100 basis points
(168)
(403)
-100 basis points
168
403
57 | Namoi Cotton
Foreign exchange risk
Namoi Cotton has transactional currency exposures predominantly arising from some cottonseed sales being denominated
in United States dollars (USD) as opposed to the Group’s functional currency, being Australian dollars (AUD). Foreign
currency denominated financial assets and liabilities may be adversely affected by a change in 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
US dollar cottonseed sale commitment. At reporting date, the Group had the following financial assets and liabilities
exposed to changes in the USD foreign exchange rate.
Consolidated
$’000
Financial Assets
Cash and cash equivalents
656
1,020
Trade and other receivables
78
1,861
Derivatives
-
277
734
3,158
Financial Liabilities
Trade and other payables
-
(2,858)
Interest bearing loans and borrowings
(50)
(51)
Derivatives
(112)
(405)
(162)
(3,314)
Net Exposure
572
(156)
The following significant exchange rates have been applied.
Year end spot rate
Average exchange
rate
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
USD
0.66
0.67
0.66
0.68
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investments in convertible
notes issued by KCC. The carrying amounts of financial assets represent the maximum credit exposure. Refer to note 3.1 for
details of the Group’s exposure to credit losses relating to receivables from customers, together with a Group’s policy in
providing for expected credit losses.
The Group sells a portion of its cottonseed 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 the Group 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 cottonseed sales to
major domestic counterparties, Namoi Cotton has trade credit indemnity insurance policies for non-related parties. The
Group is normally entitled to recover amounts owed by growers through an offset to cottonseed proceeds and other
credits to a growers account (these amounts continue to be presented on a gross basis in the statement of financial
position).
The Group utilises only recognised and creditworthy third parties in respect to derivative transactions. These parties are
regularly reviewed by the Board.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. 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.
Financial Statement FY2024 |58
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted, and include contractual interest payments.
Year ended 29
February 2024
Consolidated
< 6 months
$’000
6-12 months
$’000
1-5 years
$’000
>5 years
$’000
Total
$’000
Carrying
Amount
$,000
Financial
assets1
Cash and cash
equivalents
7,531
-
-
-
7,531
7,531
Trade and
other
receivables
6,879
-
-
-
6,879
6,879
Derivatives
-
-
-
-
-
-
14,410
-
-
-
14,410
14,410
Financial
liabilities
Trade and
other
payables
(7,030)
-
-
-
(7,030)
(7,030)
Interest bearing
loans and
borrowings
(710)
(2,133)
(28,322)
(2,797)
(33,962)
(31,208)
Derivatives
(112)
-
-
-
(112)
(112)
(7,852)
(2,133)
(28,322)
(2,797)
(41,104)
(38,350)
1 The contractual cash flows relating to the Group's investments in convertible notes issued by KCC has not been included above on the basis that the issuer has the right to convert
outstanding amounts, including capitalised interest, to ordinary shares in KCC. Refer to fair value disclosures below for further details.
Year ended 28
February 2023
Consolidated
< 6 months
$’000
6-12 months
$’000
1-5 years
$’000
>5 years
$’000
Total
$’000
Carrying
Amount
$,000
Financial
assets1
Cash and cash
equivalents
4,877
-
-
-
4,877
4,877
Trade and
other
receivables
14,296
-
-
-
14,296
14,296
Derivatives
151
126
277
277
19,324
126
-
-
19,450
19,450
Financial
liabilities
Trade and
other
payables
(13,077)
-
-
-
(13,077)
(13,077)
Interest bearing
loans and
borrowings
(14,321)
(4,560)
(35,173)
(3,179)
(57,233)
(52,043)
Derivatives
(392)
(13)
-
-
(405)
(405)
(27,790)
(4,573)
(35,173)
(3,179)
(70,715)
(65,525)
1 The contractual cash flows relating to the Group's investments in convertible notes issued by KCC has not been included above on the basis that the issuer has the right to convert
outstanding amounts, including capitalised interest, to ordinary shares in KCC. Refer to fair value disclosures below for further details.
59 | Namoi Cotton
Accounting policy
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).
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.
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.
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.
Fair value hierarchy
The following table shows the carrying amounts and fair value of financial assets and liabilities, including their levels in the
fair value hierarchy. It does not include fair value information for financial assets and liabilities not measured at fair value if
the carrying amount is a reasonable approximation of fair value, which includes cash and cash equivalents, trade and other
receivables, trade and other payables and interest-bearing liabilities subject to variable rates.
Year ended 29 February
2024
Carrying Amount
$’000
Level 1
Quoted market
prices
$’000
Level 2
Market observable
inputs
$’000
Level 3
Non-market
observable
$’000
Consolidated
Current assets
Foreign exchange
contracts
-
-
-
-
-
-
-
-
Non-current assets
Investments in
convertible notes in
KCC
4,006
-
-
4,006
4,006
-
-
4,006
Current liabilities
Foreign exchange
contracts
112
-
112
-
112
-
112
-
Financial Statement FY2024 |60
Year ended 28
February 2023
Carrying Amount
$’000
Level 1
Quoted market
prices
$’000
Level 2
Market observable
inputs
$’000
Level 3
Non-market
observable
$’000
Consolidated
Current assets
Foreign exchange
contracts
277
-
277
-
277
-
277
-
Non-current assets
Investments in
convertible notes
in KCC
1,386
-
-
1,386
1,386
-
-
1,386
Current liabilities
Foreign exchange
contracts
(405)
-
(405)
-
(405)
-
(405)
-
Accounting policy
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial
and non-financial assets and liabilities.
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.
When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair
values are categorised into different levels of the fair value hierarchy based on the inputs used in the valuation
techniques as follows:
•
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, the Group 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.
Derivatives
Foreign currency derivatives are classified by the Group as being measured at fair value through profit or loss (FVTPL)
and are initially recognised at fair value. These assets and liabilities are subsequently remeasured at fair value with net
gains and losses recognised in profit or loss within finance costs.
Fair value is determined using quoted forward exchange rates at the reporting date and are classified as level 2
valuation techniques within the fair value hierarchy.
Property, plant and equipment
Certain classes of property, plant and equipment held by the Group are re-measured at fair value under the revaluation
model in AASB 116 Property, plant and equipment. These fair value measurements use unobservable inputs and are
classified within level 3 of the fair value hierarchy. Refer to note 3.3 for details of the valuation techniques applied and
key assumptions used in the determination of fair value.
Investment in Kimberley Cotton Company Limited (KCC)
The Group holds convertible notes issued by its equity accounted associate, KCC. These notes attract a fixed annual
coupon payment and provide KCC with the ability to convert the face value of the notes together with any accrued or
capitalised coupon payments into ordinary shares over the period from 1 January 2026 to 31 December 2032. In the
event KCC does not exercise its discretion to convert the outstanding amount to ordinary shares by 31 December 2032,
these amounts must be repaid to the Group. The convertible notes are initially recognised at fair value and are
subsequently remeasured at fair value with any gains or losses recognised in the statement of profit or loss (FVTPL).
These fair value measurements use unobservable inputs and are classified within level 3 of the fair value hierarchy.
61 | Namoi Cotton
The fair value of the convertible notes was estimated using a discounted cash flow model combined with a Black-Scholes
pricing model given the terms and conditions of the convertible notes include an embedded put option sold to KCC. Key
inputs to the valuation included:
-
KCC share price of $1
-
Volatility of 35.29%
-
Risk free rate of 4.09%
The sensitivity of the valuation has been assessed against reasonably possible changes in the share price input. Keeping
all other inputs constant, a relative increase/decrease of 10% in the share price would result in an increase in the fair
value of $197,618 and decrease in the fair value of $257,909 respectively.
The sensitivity of the valuation has been assessed against reasonably possible changes in the volatility input. Keeping all
other inputs constant, an absolute increase/decrease of 5% in the volatility would result in a decrease in the fair value of
$226,045 and increase in the fair value of $231,028 respectively.
Financial Statement FY2024 |62
3 OPERATING ASSETS AND LIABILITIES
3.1. Trade and other receivables
Consolidated
$’000
29 Feb 2024
28 Feb 2023
Current
Trade receivables from contracts with
customers1
5,931
13,686
Less: allowance for impairment loss
(71)
-
Contract assets
736
-
Other receivables
283
610
6,879
14,296
1 Trade receivables from contracts with customers arise from sales of cottonseed, grain commodities, ginning co-products and cotton lint warehousing. 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 cottonseed debtors to
minimise credit risk, whilst export debtors are secured through irrevocable letters of credit.
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 balance date the ageing analysis of trade and other receivables is as follows:
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Unimpaired
Within terms
4,962
11,317
Past Due 1 – 30 days
1,452
1,348
Past Due 31 – 60 days
23
1,030
Past Due 60+ days
513
601
Impaired
Past Due 60+ days
(71)
-
Total outstanding
6,879
14,296
Details regarding foreign exchange and interest rate risk are disclosed in Note 2.5. The maximum exposure to credit risk is
the carrying amount of the receivables less insurance recoverable.
Accounting policy
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment for 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.
63 | Namoi Cotton
3.2. Inventories
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Seed cotton and moss (at cost)
-
222
Cottonseed (at cost)
3,131
13,447
Operating supplies and spares (at cost)
10,960
10,635
14,091
24,304
Inventories expensed during the current financial year totalled $134,183,000 (2023: $133,017,000)
Accounting policy
Inventory is 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.
3.3. Property plant and equipment
Consolidated
$’000s
Ginning
infrastructure1
Non-ginning
infrastructure
Warehouses
Plant &
equipment
Capital
works in
progress
Right of
use
assets
Total
28 February 2023
Fair value
122,673
-
-
-
-
-
122,673
Cost
-
7,320
13,634
30,366
8,726
3,358
63,404
Accumulated
depreciation and
impairment
-
(1,830)
(4,468)
(21,321)
-
(307)
(27,926)
Net book value
122,673
5,490
9,166
9,045
8,726
3,051
158,151
Movement
Transfer between
asset categories
5,958
658
-
4,939
(11,555)
-
-
Additions
-
-
-
-
5,154
-
5,154
Depreciation
(8,021)
(199)
(454)
(2,354)
-
(221)
(11,249)
Disposals
-
-
-
(29)
(189)
-
(218)
Revaluation
Increment
5,390
-
-
-
-
-
5,390
Total Movement
3,327
459
(454)
2,556
(6,590)
(221)
(923)
29 February 2024
Fair value
126,000
-
-
-
-
-
126,000
Cost
-
7,978
13,634
35,097
2,136
3,358
62,204
Accumulated
depreciation and
impairment
-
(2,029)
(4,922)
(23,497)
-
(528)
(30,976)
Net book value
126,000
5,949
8,712
11,601
2,136
2,830
157,227
1 The carrying value of ginning infrastructure that would have been recognised had these assets been held under the cost model is $62,272,000 (2022: $64,112,000).
Measurement of fair values
Revaluation of Ginning infrastructure
Effective 29 February 2012, the Group changed its accounting policy for the measurement of ginning infrastructure from
deemed cost to fair value.
The methodology used in determining the fair value of the relevant ginning assets was the Discounted Cash Flow (DCF)
approach. 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. Cash
flows included in the DCF model are intended to represent a market participants long term view of the margin to be
generated by the gin assets.
Financial Statement FY2024 |64
Effective 29 February 2024 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 a discounted cash flow model
that applied a pre-tax discount rate of 15.50% (implied multiple of 6.5).
The fair value measurement of ginning assets outlined above uses significant unobservable inputs and are classified as level
3 in the financial reporting fair value measurement hierarchy. Significant unobservable valuation inputs as at 29 February
2024 included:
• Sustainable bales - 790,000 bales p.a. (2023: 783,000 bales p.a.) The annual sustainable ginning bales have been included
following a gin by gin assessment of production areas, seasonal rotation, estimated yields and 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 forms the baseline of the discounted cashflow. The number approximates the average number of bales achieved
over the last 10 years, noting that individual seasons can fluctuate significantly dependent upon water availability;
• Growth rates of ginning revenues ranging from 2.18% to 2.90% (2023 - 2.00%)
• Growth rates of ginning expenses ranging from 2.18% to 2.90% (2023 - 2.00%)
• Terminal growth rate 2.27% (2023 - 2.00%);
• Pre-tax discount rate 15.50% (2023 - 14.64%).
The nature of the model makes it highly sensitive to small changes in underlying assumptions. 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.
Accounting policy
Cost and valuation
Ginning infrastructure
Ginning infrastructure assets are measured at fair value 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 recognised 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.
Non-ginning infrastructure, Warehouses, Plant & equipment
Other assets are carried at cost less accumulated depreciation and any accumulated impairment losses.
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 (2023: 20 years).
Non-ginning infrastructure, Warehouses, Plant & 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.
Major depreciation rates are:
Non-ginning infrastructure
and warehouse assets
20 years (2023: 20 years)
Other assets
3 to 44 years
65 | Namoi Cotton
Right of use assets
Right of use assets are recorded as part of property, plant and equipment. Refer to note 2.1 for details of the related
accounting policy for Leases and related right of use assets.
Impairment
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.
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.
3.4. Trade and other payables
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Current
Trade creditors and accruals
6,218
12,899
Customer deposits
155
103
Contract liabilities
657
75
7,030
13,077
Accounting policy
Liabilities for trade creditors and accruals are non-interest bearing and are measured at amortised cost, using the
effective interest method.
Financial Statement FY2024 |66
3.5. Provisions
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Current
Employee leave entitlements
2,063
1,968
Employee variable compensation
2,381
555
4,444
2,523
Non-current
61
167
Employee leave entitlements
61
167
Accounting policy
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting
date. These benefits include variable compensation arrangements, annual leave, sick leave and long service leave.
Liabilities which are 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.
67 | Namoi Cotton
4 GROUP
4.1. Information relating to Namoi Cotton Limited (the parent)
Parent
$’000
29 Feb
2024
28 Feb
2023
Current assets
24,024
76,495
Total assets
196,386
214,096
Current liabilities
9,687
26,977
Total liabilities
63,033
85,128
Issued capital
61,142
61,142
Retained losses
(7,858)
(8,512)
Asset revaluation surplus
80,015
76,242
Share rights reserve
54
96
133,353
128,968
Profit/(loss) of the Parent entity
1,617
888
Other comprehensive income of the Parent entity
3,773
3,287
Total comprehensive income of the Parent entity
5,390
4,175
4.2. Investments in Namoi Cotton Marketing Alliance
Namoi Cotton Marketing Alliance “NCMA” is an unincorporated joint arrangement, and its principal activities are the
marketing and trading of lint cotton bales to both domestic and export markets. NCMA’s principal place of business is Suite
1, 13 Kitchener Street Toowoomba, QLD 4350. The Group has a 15% interest in NCMA through its subsidiary, Namcott
Marketing Pty Ltd.
NCMA is structured as a partnership and the participants to the Joint Venture Agreement (the Agreement) own the assets
as tenants in common in proportion to their participating interest. However, in the event that NCMA requires additional
funding, the Group’s liability is limited to the lesser of 15% of the required funding; and $1.5m, in any one financial year.
The Group’s partner in NCMA has primary responsibility for ensuring NCMA’s operations are adequately funded and the
Group has not provided any security, guarantee or indemnity for NCMA’s funding.
In return for limiting the Group’s exposure to losses and funding in NCMA to $1.5m, the Group’s participation in the profits
of NCMA are restricted to the lesser of 15% and $1.5m in any one financial year.
In determining the accounting policy for the Group’s interest in NCMA, the following factors have been considered:
•
The Group has significant influence in the NCMA arrangement through its 33% voting rights on the governing
committee and its relationship with the cotton growers (no joint control exists).
•
The effect of the capping mechanism in the Agreement that limits the Group’s rights to profits and exposure to losses
to a maximum of $1.5m in any one financial year. This capping mechanism significantly restricts the Group’s right to
participate in the trading profits of NCMA (and limits exposure to trading losses), notwithstanding their 15%
participating interest.
•
In the event that NCMA’s assets are insufficient to meet NCMA’s obligations, the limitation of the Group’s exposure to
any additional funding in any one financial year is $1.5m.
•
On wind up of NCMA’s operations, if there are assets remaining after satisfaction of all remaining liabilities, the Group
has a right to its 15% participating interest in the remaining assets.
Based on the above, the Group’s rights to the net profits/losses of NCMA are presented separately in the Statement of
Profit or Loss and Other Comprehensive Income and the rights to net assets are presented separately on the Statement of
Financial Position.
The following table provides a summarised statement of profit or loss and statement of financial position for Namoi Cotton
Marketing Alliance reconciled to the amounts recognised by the Group:
Financial Statement FY2024 |68
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Revenue
422,408
676,488
Interest Expense
(4,410)
(6,958)
Profit/(loss) before income tax expense
41,706
42,950
Income tax expense1
-
-
Net profit/(loss)
41,706
42,950
Namoi Cotton Limited share of net profit/(loss) from
investment in NCMA
1,500
1,488
Distributions received from Namoi Cotton Marketing
Alliance
(1,027)
(1,481)
For the year ended 29 February 2024, the Group’s interest in the net profit of NCMA was capped at $1.5m (2023:
$1.5m).
Current assets
Cash and cash equivalents
5,311
9,446
Financial assets (Excl. trade receivables)
8,856
27,651
Inventory
22,559
29,084
Other assets
90,675
62,668
Current liabilities
Financial liabilities (excl. trade payables and provisions)
(22,370)
(63,009)
Other
(61,677)
(15,895)
Non-current liabilities
Financial liabilities (excl. trade payables and provisions)
-
(5,195)
Other
(194)
(25)
Net assets
43,160
44,725
1 The Joint arrangement is a partnership for tax purposes and accordingly is not a taxable entity.
The net assets of NCMA primarily represent undistributed profits due to the Group’s partner in NCMA. The NCMA
distribution of profits is finalised subsequent to the preparation of audited financial statements by NCMA.
Namoi Cotton Limited interest in NCMA
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Balance at beginning of year
255
248
Share of results in NCMA
1,500
1,488
Distribution received from NCMA
(1,027)
(1,481)
Balance at end of year
728
255
69 | Namoi Cotton
4.3. Investments in associates and joint ventures using the equity method
Consolidated
$’000
29 Feb
2024
28 Feb
2023
Investment in joint ventures – NC Packing Services Pty Ltd
203
(1,313)
Investment in associates – Kimberley Cotton Company Limited
-
28
Net investment in associates and joint ventures
203
(1,285)
(a) Ownership interest
Name
Balance Date
% Ownership interest held by
consolidated entity
29 Feb
2024
28 Feb
2023
Investments in associates and joint ventures
NC Packing Services Pty Ltd (NCPS)
28 February
51%
51%
Kimberley Cotton Company Limited (KCC)
28 February
17%
20%
NCPS is a joint venture in which the Group has a 51% ownership interest, however, the Group has joint control over NCPS
due to the terms of the Joint Venture Agreement which requires joint approval of the annual operating plan. NCPS is one of
the Group’s strategic supply chain managers and is principally engaged in containerised commodity packing of cottonseed,
coarse grains and pulses.
The 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.
KCC is an associate in which the Group holds a 17% ownership interest (FY2023: 20%). The Group has also entered into
agreements with KCC relating to the sale of equipment and for project managing construction and operations of a new
cotton gin at Kununurra, WA. The Group has determined that it holds significant influence over KCC, despite holding less
than 20% of its issued capital, given the Group’s ability to appoint a representative to KCC’s Board of Directors and through
the other contractual arrangements in place relating to the supply of equipment and provision of other project
management services. The investment has been reduced to nil at 29 February 2024 to reflect the Group’s recognition of its
share of losses generated by KCC in the current financial year. In accordance with the requirements of the accounting
standards, the Group’s share of KCC’s losses have not been recognised subsequent to the carrying value of the Group’s
investment in associate being reduced to nil as the Group has made no commitments to finance the losses of KCC and has
provided no guarantees over KCC’s obligations.
The country of incorporation and principal place of business for all joint ventures and associates is Australia.
Consolidated
$’000
29 Feb 2024
28 Feb 2023
(b) Share of Investments in associates and joint venture entities:
(i) Carrying amount of investments in joint ventures- NC Packing
Services Pty Ltd:
Balance at the beginning of the financial year
(1,313)
(1,312)
Share of profits/(losses) of joint venture
1,516
(1)
(ii) Carrying amount of investments in associates- Kimberley Cotton
Company Limited:
Balance at the beginning of the financial year
28
-
Capital contribution
11
28
Share of profits/ (losses) of associate
(39)
-
Carrying amount of investments in associates and joint ventures at the
end of financial year
203
(1,285)
Financial Statement FY2024 |70
Accounting policy
Investment in associates and joint ventures
An associate is an entity over which the Company 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. The Group’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 the Group’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 the Group’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 Group’s OCI. In addition, when there has been a change
recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the
Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the
statement of profit or loss within share of profit/(loss) of associates and joint ventures and represents profit or loss after
tax and non-controlling interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss
on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is
objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group
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, the Group 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.
4.4. Interest in joint operations
(a) Ownership interest
Name
Balance
Date
% Ownership interest held by
consolidated entity
29 Feb
2024
28 Feb
2023
Namoi Cotton Alliance (NCA)
28 February
51%
51%
Wathagar Ginning Company (WGC)
30 June
50%
50%
Moomin Ginning Company (MGC)
30 June
75%
75%
The Group has joint control over the above entities due to the requirement for unanimous decision making over the
relevant activities of these operations under the terms of the respective joint venture agreements.
71 | Namoi Cotton
(b) Principal activities
The joint operations of WGC and MGC provide ginning services to cotton growers in their respective catchment areas.
NCA provides warehousing and logistics services to support cotton lint marketing customers.
The principal place of business for all joint operations is Australia.
(c) Impairment
No assets employed in the jointly controlled operation were impaired during the year (2023: $nil).
Accounting policy
The Group consolidates its share of joint operations as disclosed in the consolidation accounting policy. Refer to the
summary of material accounting policies within this report.
4.5. Interest in jointly controlled assets
The Group holds a 40% joint ownership interest in the cottonseed handling and storage facilities at Mungindi, NSW with a
book carrying value of $2.18m at 29 February 2024 (2023: $2.23m).
The Group 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.
4.6. Related party transactions
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.
Financial Statement FY2024 |72
Ownership and investment
Equity Interest
%
Name of entity
29 Feb
2024
28 Feb
2023
Australian Classing Services Pty Ltd
100%
100%
Australian Raw Cotton Marketing Corp. Pty Ltd
100%
100%
Namcott Investments Pty Limited
100%
100%
Namcott Marketing Pty Ltd
100%
100%
Namoi Cotton Commodities Pty Ltd
96%
96%
Namoi Cotton Finance Pty Ltd
100%
100%
Cotton Trading Corporation Pty Limited
100%
100%
Principal activities:
Namcott Investments Pty Ltd, a subsidiary of Namoi Cotton, was the beneficial owner of the interests in previous
partnerships. This entity is now non-trading. Namcott Investments Pty Ltd is incorporated in Australia.
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. Namcott Marketing Pty Ltd is incorporated in Australia.
Namoi Cotton Finance Pty Ltd holds funding for the Group. Namcott Finance Pty Ltd is incorporated in Australia.
Namoi Cotton Commodities Pty Ltd is a dormant entity and, as a result, no non-controlling interests have been recognised.
Namoi Cotton Commodities Pty Ltd is incorporated in Australia.
Cotton Trading Corporation Pty Limited is controlled by Namcott Investments Pty Ltd. Cotton Trading Corporation Pty
Limited is incorporated in Australia.
Australian Raw Cotton Marketing Corp Pty Ltd is a non-trading Company. Australian Raw Cotton Marketing Corp Pty Ltd is
incorporated in Australia.
Australian Classing Services Pty Ltd trading activities are mainly the provision of classing services. Australian Classing
Services Pty Ltd is incorporated in Australia.
Related party transactions and balances
(a) Transactions with related parties
Consolidated
29 Feb
2024
28 Feb
2023
$
$
Management fees received from NCMA inclusive of lint handling
fees
980,842
1,092,573
Payments to NC Packing Services Pty Ltd in relation to cottonseed
logistics services
8,773,370
8,602,010
Revenues derived by NCA in relation to cotton lint warehousing and
logistics from NCMA
9,250,632
12,172,982
Project management fees received from KCC
399,353
-
73 | Namoi Cotton
(b) Balances outstanding from related parties
Consolidated
29 Feb
2024
28 Feb
2023
$
$
Current receivables from NCMA
858,440
10,931
Current payables to NCMA
408,740
572,008
Current receivables from NC Packing Services Pty Ltd
482,265
-
Current payables to NC Packing Services Pty Ltd
44,969
105,322
Current receivables owed to NCA from NCMA
30,197
614,093
Current receivables from KCC1
762,956
-
Current liabilities to KCC2
656,956
-
1 This includes contract assets of $736,000 (2023: nil) reflecting the costs incurred by the Group in constructing ancillary ginning equipment under arrangements with KCC.
2 This represents contract liabilities for payments from KCC received in advance for the provision of ancillary ginning equipment.
Transactions with KCC, NCMA, NCPS and NCA are on a cost-plus margin basis and are subject to the Group’s normal credit
terms.
No provisions or expenses relating to doubtful debts have been recorded in relation to related parties. The Group has no
commitments with related parties.
Transactions with Key Management Personnel
(a) Key Management Personnel Compensation
Consolidated
29 Feb
2024
28 Feb
2023
$
$
Short-term
1,718,035
1,233,740
Post employment
211,592
103,129
Other long-term benefits including share-based
payments
(53,919)
47,934
Termination benefits
211,302
-
2,087,010
1,384,803
Compensation of the Group’s Key Management Personnel includes salaries and non-cash benefits and contributions to the
employee’s superannuation fund.
Refer to note 5.2 for details of the treatment of these share-based payments.
(b) Marketing and ginning transactions and balances with Key Management Personnel
A number of Key Management Personnel (KMP), or their related parties, hold positions in other entities that result in them
having control, or joint control, over the financial or operating policies of those entities.
A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with
KMP and their related parties were no more favourable than those available, or which might reasonably be expected to be
available, on similar transactions to non-key management personnel related entities on an arm’s length basis.
Amounts paid/received or payable/receivable from/to directors and their respective related parties were as follows:
Financial Statement FY2024 |74
Consolidated
Cotton Purchases
(From)
Other Services (to)
Ginning Charges
Levied (to)
Seed sales (to)
Grain & Seed
Purchases (from)
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
29 Feb
2024
28 Feb
2023
$
$
$
$
$
$
$
$
$
$
-
542,752
4,411
11,958
79,406
189,334
-
70,100
97,253
273,451
There were no outstanding balances at the beginning or end of the period.
No expense has been recognised in the current year or prior year for bad or doubtful debts in respect of amounts owed by
related parties.
75 | Namoi Cotton
5 ADDITIONAL NOTES
5.1. Remuneration of auditors
Consolidated
29 Feb
2024
28 Feb
2023
$
$
Audit and review services
Fees for auditing and reviewing the statutory financial reports of the
Group
351,675
245,000
Fees for auditing the financial report of joint operations
24,582
19,125
376,257
264,125
Other non-audit services
Vendor Assistance Report
90,000
-
90,000
-
5.2. 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 on 29 September 2020, performance 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 performance rights is a price determined by the directors in their absolute discretion. The performance rights
vest if and when the conditions (market and non-market) set out at the time of granting are met and are within the rules of
the Plan.
Performance rights are considered to be equity-settled share based payments as the Group’s intention is to settle these
arrangements through the issue of ordinary shares in the Company. Upon vesting, performance rights can be exercised on
a one-for-one basis with ordinary shares.
Performance rights were issued under the Plan during the 2021, 2022, 2023 and 2024 financial years. These rights issues
were each subject to a three year service period as well as non-market vesting conditions associated with workplace
related injuries and market vesting conditions based on achievement of Total Shareholder Return (TSR) against an absolute
hurdle level determined by the Board. Market and non-market vesting conditions are tested over a specified performance
period.
Movements during the year
The following table illustrates the number of, and movements in, performance rights during the year:
2024 Number
2023 Number
Outstanding at 1 March
2,192,223
1,563,257
Granted during the year
679,362
853,247
Forfeited during the year2
(1,527,367)
-
Exercised during the year
(205,838)
-
Lapsed during the year1
-
(224,551)
Outstanding at 29 February
1,138,380
2,192,223
Vested and exercisable at 29 February 1
219,200
205,838
1 Performance rights awarded in FY2021 to the CEO and one other Executive reached their vesting date on 28 February 2023. The performance hurdle rate for Total Shareholder Return
(TSR) was not met and the CEO’s performance rights did not vest and hence lapsed. The Directors exercised their discretion to confirm that the FY2021 performance rights issued to
the other Executive did vest on 28 February 2023, despite the performance hurdle rate not being met
2 During the year, key executives resigned from their respective positions. In accordance with the terms and conditions of the Company’s Performance Rights Plan, the performance
rights granted to these executives were forfeited upon their resignation.
Financial Statement FY2024 |76
The weighted average remaining contractual life for the performance rights outstanding as at 29 February 2024 was 2.49
years (2023: 1.5 years).
The weighted average fair value of rights granted during the year was $0.0509 (2023: $0.1982).
The weighted average exercise price on vesting for rights outstanding at the end of the year was $nil (2023: nil).
The following tables list the inputs to the models used for determining the fair value of performance rights issued during
the current and prior financial years which are those that remain on issue at 29 February 2024:
Performance
rights issued
FY2024
Performance
rights issued
FY2023
Performance
rights issued
FY2022
Grant date
31 August 2023
5 August 2022
28 February 2022
Rights granted
679,362
853,247
968,467
Fair value at grant date
$0.0509
$0.1982
$0.0360
Share price on grant date
$0.40
$0.4625
$0.3750
Dividend yield (%)
1.1%
1.1%
0%
Annualised volatility (%)
43.0%
47.5%
11%
Risk-free interest rate (%)
3.80%
2.83%
2.94%
Expected life of performance rights (years)
2.49
2.57
3.00
TSR Hurdle (CAGR)
5%
15%
15%
Conclusion of performance period
28 February 2026
28 February 2025
28 February 2024
Model used
Monte Carlo
Monte Carlo
Black Scholes
The expected life of the performance rights is based on the time between the grant date and 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 options is indicative of future trends, which may not necessarily be the
actual outcome.
Accounting policy
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally
recognised as an expense, with a corresponding increase in the performance rights reserve, over the vesting period
of the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and
non-market performance conditions are expected to be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with market performance conditions, the grant-date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected and actual
outcomes.
77 | Namoi Cotton
5.3. Significant events after balance date
On 21 March 2024 Namoi Cotton Limited (‘Namoi’) announced that its Board of Directors had
received a non-binding, indicative and conditional offer (‘NBIO’) from Olam Agri Holdings Limited.
The Directors have not become aware of any other significant matter or circumstance that has arisen
since 29 February 2024, that has affected or may affect the operations of the Group, the results of
those operations, or the state of affairs of the Group in subsequent years, which has not been
covered in this report.
Financial Statement FY2024 |78
ADDITIONAL INFORMATION
For the year ended 29 February 2024:
The shareholder information set out below was applicable as at 10 April 2024.
Distribution of Equitable Securities
Analysis of number of equitable security holders by size of holding.
Quoted Equity Securities
Namoi Cotton Limited
Range of Units as of 10/04/2024
Fully paid ordinary
shares (Total)
Range
Total Holders
Units
% of Units
1-1000
314
67,251
0.03
1001-5000
366
1,033,133
0.50
5001-10000
180
1,423,107
0.69
10001-100000
400
14,416,307
7.02
100001 and over
315
188,371,016
91.75
Rounding
0.01
Total
1,575
205,310,814
100.00
Unmarketable parcels
Minimum parcel size
Holders
Units
Minimum $500.00 parcel at
$0.4850 per unit
848
291
44,92
8
Unquoted Equity Securities
Namoi Cotton Limited
Range of Units as of
10/04/2024
Conversion Group – RCS and RCE
Compositions: RCE, RCS
Range
Total Holders
Units
% of Units
1-1000
65
28,718
1.77
1001-5000
146
406,029
24.98
5001-10000
38
296,769
18.26
10001-100000
44
894,033
55.00
100001 and over
-
-
-
Rounding
-0.01
Total
293
1,625,549
100.00
Unmarketable parcels
Minimum parcel
size
Holders
Units
Minimum $500.00 parcel cannot be calculated due to no price attached to unquoted securities.
79 | Namoi Cotton
Equity Security Holders
Twenty largest quoted security holders as of 10/04/2024
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 10/04/2024
Composition: FP
Rank
Name
Units
% Units
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
47,968,809
23.36%
2
LOUIS DREYFUS COMPANY ASIA PTE LTD
20,277,438
9.88%
3
LOUIS DREYFUS COMPANY ASIA PTE LTD
14,611,540
7.12%
4
JVH COTTON PTY LIMITED
5,068,087
2.47%
5
NATIONAL NOMINEES LIMITED
4,335,296
2.11%
6
CITICORP NOMINEES PTY LIMITED
2,972,614
1.45%
7
RED PEPPERCORNS PTY LTD
2,100,485
1.02%
8
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
2,079,147
1.01%
9
PALM BEACH NOMINEES PTY LIMITED
1,790,957
0.87%
10
RATHVALE PTY LIMITED
1,734,719
0.84%
11
BOND STREET CUSTODIANS LIMITED
1,656,039
0.81%
12
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,638,306
0.80%
13
G CHAN PENSION PTY LIMITED
1,482,634
0.72%
14
PRIME GRAIN PTY LTD
1,433,134
0.70%
15
MR ALBERT JOHN PANIZZA + MS KIM DIANNA BROADFOOT
1,335,350
0.65%
16
RNT ENTERPRISES PTY LTD
1,260,244
0.61%
17
AGRICO INVESTMENTS PTY LIMITED
1,167,565
0.57%
18
INVIA CUSTODIAN PTY LIMITED
1,025,873
0.50%
19
AVENUE 8 PTY LIMITED
1,022,148
0.50%
20
DR EWAN RODERICK NIXON
1,001,000
0.49%
Totals: Top 20 holders of FULLY PAID ORDINARY SHARES (total)
115,961,385
56.48%
Total remaining holders balance
89,349,429
43.52%
The number of shares held by substantial shareholders in the Company, as disclosed in substantial holding notices given to
the Company at 10 April 2024:
Shareholder
No. of shares
Percentage of shares
held at date of notice
Date of notice
Samuel Terry Asset
Management Pty Ltd
47,531,463
23.15%
22 March 2024
Louis Dreyfus Company Asia Pte.
Ltd
33,610,721
16.40%
2 February 2023
Voting Rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at the meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Holders of unquoted equity securities do not hold voting rights.
There are no other classes of equity securities.
Financial Statement FY2024 |80
CORPORATE OFFICE
259 Ruthven Street Toowoomba QLD 4350 (07) 4631 6100
NAMOI COTTON GINS
North Bourke Cotton Gin Wanaaring Road Bourke NSW 2380 (02) 6872 1453
Wathagar Cotton Gin (Namoi Cotton/Sundown Pastoral Co Pty Ltd Joint Venture) Collarenebri Road Moree NSW 2400 (02)
67 525 200
MacIntyre Cotton Gin Kildonan Road Goondiwindi QLD 4390 (07) 4671 2277
Mungindi Cotton Gin Bruxner Road Mungindi NSW 2406 (02) 6753 2145
Moomin Cotton Gin (Namoi Cotton/Harris Joint Venture) Merrywinebone Via Rowena NSW 2387 (02) 6796 5102
Boggabri Cotton Gin Blairmore Road Boggabri NSW 2382 (02) 6743 4084
Merah North Cotton Gin Middle Route Merah North NSW 2385 (02) 67 955 124
Yarraman Cotton Gin Kamilaroi Highway Wee Waa NSW 2388 (02) 67955 196
Trangie Cotton Gin Old Warren Road Trangie NSW 2823 (02) 68 889 729
Hillston Cotton Gin Roto Road Hillston NSW 2675 (02)69 672 951
OTHER JOINT VENTURES
Namoi Cotton Alliance
MacIntyre Warehouse Kildonan Road Goondiwindi QLD 4390 (07) 46 711 449
Wee Waa Warehouse Pilliga Road Wee Waa NSW 2388 (02) 67 903 139
Namoi Cotton Marketing Alliance
Corporate Office Suite 1 13 Kitchener Street Toowoomba QLD 4350 AU-NCMA-COTTON@namoicma.com.au
www.namoicotton.com.au
www.facebook.com/namoi.cotton.ltd
www.instagram.com/namoicottonlimited
81 | Namoi Cotton