Nufarm Limited 2005 Annual Report
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1 Facts in brief
2 Managing director’s review
8 Strong brands = added value
16 Business review
16 Health, safety and environment
18 Crop protection
24 Management team
26 Board of directors
28 Corporate governance
33 Directors’ report
43 Statement of financial performance
44 Statement of financial position
45 Statement of cash flows
46 Notes to financial statements
90 Directors’ declaration
91
93
Independent audit report
Trend statement
94 Shareholder and statutory information
97 Directory
directory
Directors
KM Hoggard – Chairman
DJ Rathbone – Managing Director
GDW Curlewis
Dr WB Goodfellow
GA Hounsell
DG McGauchie AO
GW McGregor AO (retired 31 July 2005)
Dr JW Stocker AO
RFE Warburton AO
Company Secretary
R Heath
Solicitors
Arnold Bloch Leibler & Co
333 Collins Street
Melbourne Victoria 3000 Australia
Sylvia Miller & Associates
131 Orrong Road
Elsternwick Victoria 3185 Australia
Auditors
KPMG
161 Collins Street
Melbourne Victoria 3000 Australia
Trustee for capital note holders
New Zealand Permanent Trustees Ltd
Share registrar
Australia
Computershare Investor Services Pty Ltd
GPO Box 2975EE
Melbourne Victoria 3001 Australia
Telephone: 1300 850 505
Outside Australia: 61 3 9415 4000
Capital notes registrar
New Zealand
Computershare Registry Services Limited
Private Bag 92119
Auckland NZ 1020
Telephone: 64 9 488 8777
Registered office
103-105 Pipe Road
Laverton North Victoria 3026 Australia
Telephone: 61 3 9282 1000
Facsimile: 61 3 9282 1001
NZ branch office
2 Sterling Avenue
Manurewa, Auckland NZ
Telephone: 64 9 268 2920
Facsimile: 64 9 267 8444
WEBSITE: http://www.nufarm.com
Nufarm Limited
ACN 091 323 312
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key events
Operating profit increases by 35% to $103.5 million
Crop protection revenues up by 9%, operating profit by 17%
Continued growth in major overseas markets
New Brazil acquisition delivers significant profit contribution
Divestment of non-core businesses complete
facts in brief
Trading results
Operating profit after tax
Sales revenue
Total equity
Total assets
Ratios
Earnings per ordinary share
(weighted average, excluding non-recurring item)
Net debt to equity (gearing ratio)
Net tangible assets per ordinary share
Distribution to shareholders
12 months
ended 31.7.05
12 months
ended 31.7.04
$000
103,474
1,671,029
616,645
1,548,422
61.2¢
78%
$2.66
$000
76,563
1,595,768
560,494
1,431,578
47.3¢
61%
$2.17
Annual dividend per ordinary share
26¢
23¢
People
Staff employed
2,279
2,613
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operating profit
+35.0%
group sales
+5.0%
ebitda*
+18.0%
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return on average
funds employed
17.4%
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net debt to equity
earnings per share
78.0%
61.2¢
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2
managing director’s review
The 2005 profit is another record result
for the company and reflects a year in
which Nufarm made substantial progress
towards establishing its position as a
leading growth-oriented player in the
global crop protection industry.
The company recorded a net profit of
$104.3 million for the year ended 31 July
2005. After allowing for non-operating
items, the tax-paid operating profit of
$103.5 million represents an increase of
35 per cent on the previous year’s net
operating profit of $76.5m.
Total group sales were $1.67 billion,
up almost five per cent on the 2004 year,
with core business crop protection revenues
increasing nine per cent year on year and
representing 95 per cent of total revenues.
Nufarm’s 49.9 per cent equity interest
in Brazilian crop protection company,
Agripec, generated a net contribution
after goodwill amortisation and funding
costs of $19.1 million. This contribution
is equity accounted and Agripec sales
are not included in Nufarm’s revenue line.
The remainder of the company’s crop
protection business achieved higher sales
and profits, with strong sales performances
in the United States, Germany and France.
Despite challenging seasonal conditions and
late winter rains, the Australian business
performed strongly, although higher input
costs and competitive pressures had an
adverse impact on margins.
Southern Europe and Brazil were also
affected by adverse seasonal conditions,
with other markets experiencing average
conditions for the reporting period.
Australasia accounted for 49 per cent of
total sales, the Americas 28 per cent and
Europe 23 per cent. A more detailed review
of specific regional operations is included
on pages 20 to 23 of this report.
Earnings per share were 61.2 cents,
an increase of 29 per cent on last year’s
47.3 cents.
Net debt to equity increased from
61 per cent at end July 2004 to
78 per cent at end July 2005. As forecast,
the increased use of borrowings associated
with the Agripec acquisition moved the
gearing level to 75 per cent. The additional
increase related to higher working capital,
driven by the late season in Australia and
a fungicide-stocking program in the US
business associated with the transition
to an alternative manufacturing source.
Cash flows from operations were
$62.6 million, down from $202.7 million
the year before. After allowing for
the $69 million impact of increased
securitisation in the 2004 period,
the remainder of the difference is
increased working capital utilisation,
as discussed above.
Return on funds employed increased from
15.7 per cent to 17.4 per cent at the EBIT
level and interest cover increased from
4.4 times to 4.6 times.
Nufarm Limited 2005 Annual Report 3
LV Estercide 600 marketed in Australia
managing director’s review continued
Changes at Belvedere support a
growing branded products business
Non-operating items
Final dividend
The company booked a net profit of
$0.8 million from the combination of the sale
of non-core businesses, costs associated
with various restructuring initiatives and
other non-operating items during the 2005
reporting period. These items are detailed
in the notes to the accounts.
A $15.4 million profit was realised on
the sale of several businesses. These
divestments included the Nufarm Specialty
Products business (based in the USA) and
the SEAC pharmaceutical intermediates
business (based in France).
There was an $11.2 million write down
of certain manufacturing assets in the
UK as part of ongoing efforts to ensure
maximum value is achieved on the capital
employed in the business. The transfer of
synthesis activity from the Belvedere plant
in the UK to the Botlek facility in Holland will
make more efficient use of the company’s
manufacturing assets and allows new
filling and packaging lines commissioned
at Belvedere to better support a growing
branded products business and provide
more flexibility in managing the local
supply chain.
There were also write-downs of intangible
assets and other restructuring costs,
mainly in France.
Directors have declared a fully franked final
dividend of 17 cents per share (last year
15 cents per share), which will be paid on
11 November to the holders of all fully paid
shares in the company as at the close of
business on 21 October.
The resulting full year dividend payment of
26 cents per share is an increase of 3 cents
(13 per cent) on the previous year.
For dividend payout calculations, the board
has elected to use operating profit from
controlled operations plus dividend returns
from associated entities such as Agripec.
Subsequent events
In August 2005 the company announced
that it had sold its Australian turf/speciality
business, Nuturf Pty Ltd, to Hong Kong-
based C K Life Sciences International
Holdings Inc for $7.2 million.
2005 financial year sales for Nuturf Pty Ltd
were some $21 million and the business
contributed net earnings of $1.1 million.
This small wholesale business was
not addressing a market where Nufarm
has core competencies and had not
achieved sufficient scale to justify
ongoing investment.
Nufarm Limited 2005 Annual Report 5
managing director’s review continued
Nufarm group revenues
by geography
$1.67 billion
Nufarm business split
28%
23%
Australasia
Americas
Europe
95%
Crop protection
Industrial chemicals
5%
31%
Crop protection
Industrial chemicals
Fertilisers
58%
11%
2005
49%
2005
1997
The 2005 results reflect a focused and robust
global business well positioned to achieve
additional growth in both revenues and earnings.
Our people
Outlook
Nufarm employees around the world have
again made a very significant contribution
to the strong results of the company in
the 2005 financial year. Shareholders are
fortunate that the company is served by
such a committed and capable group of
people, many of whom have been with
Nufarm for a long time.
The growth and success of Nufarm
has helped the company attract a higher
caliber of management, particularly in our
expanding overseas markets
As the organisation continues to grow and
Nufarm establishes a presence in additional
countries and regions, we must ensure that
programs are in place to help develop and
motivate employees as we bring together
those different business cultures and
welcome new people into the company.
Long-serving senior executive John Allen
retired from the company at the end of
the 2005 financial year. John, who was
responsible for the global commercial
operations, devoted more than 20 years
to Nufarm. On behalf of all shareholders,
I acknowledge his significant contribution
to the business.
The 2005 results reflect a focused and
robust global business well positioned to
achieve additional growth in both revenues
and earnings.
Having established a strong operational
presence in the major crop protection
markets around the world, the company
is now looking at accelerating the
expansion of its product portfolio to
take advantage of excellent growth
opportunities in markets such as North
and South America and Europe. The 2006
reporting period will see the introduction
of a number of new products.
While the company faces strong competitive
pressures in many of its key markets, it has
developed medium to long-term strategies
aimed at capturing business efficiencies
and growing margins.
The outlook for the Agripec business
over the key selling period in Brazil
(September – December) is one of
marginal sales growth in a flat to declining
market. Agripec’s growth will be driven
by further market penetration and
distributor/grower support.
The company aims to generate annual
net earnings growth of approximately
10 per cent. Given average seasonal
conditions in Nufarm’s major markets,
directors are very confident that this target
can be achieved in 2006 and that the
company is well positioned for strong,
ongoing growth in the medium to long term.
Doug Rathbone
Managing Director
4 October 2005
Nufarm Limited 2005 Annual Report 7
strong brands=added value
Chris Fazekas is global product
manager of Nufarm’s phenoxy
herbicides group, which includes
the products 2,4-D and MCPA.
In this role, Chris works with
the various regional Nufarm
businesses on the marketing of
the phenoxy herbicide product
range and associated product
development, customer relations,
supply and strategy issues.
Chris joined Nufarm in 1992.
Is Nufarm’s 2,4-D product
essentially the same in each
market around the world?
What determines the particular
formulation you will market in
different countries?
One of Nufarm’s major competitive strengths is our ability to position
and manage brands. The key objective is to establish and broaden
recognition of the core ‘Nufarm’ brand and the values associated with
that brand – quality, flexibility, innovation, strong customer relationships
and first class technical support.
Nufarm also uses branding to position and differentiate specific
products. In this year’s annual report, we are showcasing a cross
section of our 2,4-D brands to demonstrate how Nufarm evaluates and
exploits different product positioning opportunities in various markets
around the world.
Nufarm’s global product manager for phenoxy herbicides,
Chris Fazekas, outlines the value of using good branding.
2,4-D is what we refer to as a chemical
active or active ingredient. We use formulation
skills to develop different forms or mixtures
of the product to suit different needs or
market opportunities.
This involves adding special adjuvants,
presenting it in either a liquid or granule
form or even mixing 2,4-D with another
active ingredient so that the end product
has broader applications and can, for
example, control additional weeds.
We take a number of things into account.
We might be looking to differentiate Nufarm’s
2,4-D offering from other competitive
products or we might have received feedback
from the product’s end users that a particular
change will provide a specific benefit, such
as easier handling and application or a better
outcome in terms of weed control.
We also try to segment the market by having a
variety of formulations available. This enables
us to position premium brands that achieve
stronger margins in certain markets.
What constitutes the ‘brand’ ? The whole package. It’s a combination of how
we formulate the product, where we position
it and what we call it. And, of course, it’s the
association these specific brands have with
the core ‘Nufarm’ brand. In essence, it’s all
about meeting customers’ needs.
10
Nufarm Limited 2005 Annual Report
Navajo marketed in Argentina
U 46 M Fluid 40
marketed in Spain
How are these brands marketed? It varies from market to market. In Australia –
where Nufarm has a clear leadership position
– we use a combination of ‘push’ marketing
by promoting the quality, technical support
and benefits of the product to our distribution
customers and ‘pull’ marketing by working
closely with growers so that they specifically
request Nufarm product.
Is this approach proving
to be effective?
Where Nufarm is a smaller player in some of
our growth markets, such as the USA and
Europe, we have concentrated on the ‘push’
approach – building excellent relationships
with distributors and selling the benefits of
stocking the Nufarm brands.
Yes. Nufarm’s 2,4-D products continue to win
market share and Nufarm is now the world’s
leading supplier of branded 2,4-D.
Our ability to develop innovative formulations
and to consistently deliver on quality and
technical support is winning Nufarm business
– and it’s an approach we can continue to
roll-out in new markets for the company, such
as South America and Eastern Europe.
Our customers recognise and expect certain
values and standards when they see the
Nufarm brand. Our aim is to always meet
those expectations – and exceed them
whenever we can.
12
Nufarm Limited 2005 Annual Report
Bimaster marketed in Indonesia
U 46 D Fluid
marketed in Brazil
2,4-D – a mainstay of crop protection
Nufarm is the world’s leading supplier of branded phenoxy herbicides.
The most commonly used phenoxy herbicide is a product called 2,4-D,
used to control broad leaf weeds in a wide variety of crops. 2,4-D has
been used for more than 50 years and is approved for use in more
than 70 countries worldwide.
The herbicide, which is absorbed by plant leaves, stems and roots and
moves through the plant to accumulate in growing tips, is a plant-
growth regulator that targets enzymes in plant cells and disrupts their
normal chemical processes.
Like all crop protection products, 2,4-D is subjected to stringent
regulatory controls and approval processes. Regulatory bodies review
the extensive data generated on health, safety and the environmental
profile of the product before approving it for use in specific crops.
2,4-D is the most thoroughly researched herbicide in the world and,
in August 2005, the United Stated Environmental Protection Authority
(EPA) announced that it had completed a comprehensive 17-year
assessment of 2,4-D to facilitate the re-registration of the product.
This included a review of more than 300 studies on the safety of 2,4-D
and concluded that the product does not pose a risk when users
follow label instructions.
EPA’s findings are consistent with decisions of other authorities
such as the World Health Organization, Health Canada, and the
European Commission.
14
Nufarm Limited 2005 Annual Report
U 46 D Fluid
marketed in Brazil
Desormon marketed in Kazakhstan
Weedar/Weedone (USA) As the first commercially branded phenoxy
products in the United States, Weedar and Weedone pioneered the
growth and development of the 2,4-D market. These current Nufarm
brands have maintained their position as leaders through formulation
innovation, label expansion and unfaltering performance in the field.
U 46 D Fluid (Brazil) In 2004, Nufarm acquired from BASF its global
phenoxy herbicides brands. The U 46 2,4-D brand is a long-standing
and recognised market leader in many parts of the world and has
generated strong sales in Brazil. Nufarm has now transferred this
brand to Agripec.
Bimaster (Indonesia) Nufarm successfully developed and introduced
a combination 2,4-D and glyphosate formulation under the Bimaster
brand in Indonesia. Plantation managers and growers were quick to
recognise the benefits of this mixture product, including the innovative
packaging, which promotes safe handling and easy storage.
Navajo (Argentina) Navajo is uniquely positioned in Argentina as the
only dry formulation of 2,4-D amine. This odourless, high concentration
provides faster knockdown of weeds. Packaging innovations
associated with the product have promoted more convenient
warehousing, transportation and disposal.
Desormon (Kazakhstan) Product stewardship is an important aspect
of brand management. The Desormon brand is marketed in Kazakhstan,
with formulation and packaging undertaken in Nufarm’s Linz facility in
Austria. This ensures consistent quality in production. Desormon has
been aligned with an exclusive distribution arrangement in Kazakhstan
and is winning market share against competitive products.
U 46 M Fluid 40 (Spain) Used to control broadleaf weeds in cereals,
‘U 46’ is again a market leader in this important segment in Spain.
Under Nufarm’s management, the brand has been positioned to
leverage the company’s recognised strengths in phenoxy herbicide
synthesis and formulation.
LV Estercide 600 (Australia) The ‘LV Estercide 600’ formulation
provides farmers with the improved performance of an ester
formulation along with a reduced risk of vapour drift. Low volatile
ester formulations are used when environmental conditions favour
vapour drift.
16
Nufarm Limited 2005 Annual Report
Weedar/Weedone marketed in the USA
ltifr1
mtifr2
severity3
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1 LTIFR or lost time injury frequency rate is the
number of lost time injuries per million hours
worked that need one or more day’s absence
from work.
2 MTIFR or medical treatment injury rate is the
number of lost time and medical treatment
injuries per million hours worked.
3 Severity rate is the number of days lost per
thousand hours worked.
global ltifr trend
global mtifr trend
global severity trend
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business review
HEALTH, SAFETY AND ENVIRONMENT
Nufarm aspires to carry out its business
with no adverse effect on its people, the
community and the environment, and to
strive for sustainable development and
continuous improvement. The company
operates in accordance with its health, safety
and environment management system.
Each location has active committees working
to continuously improve performance.
Progress is monitored and a formal report
on health, safety and environment matters
is high on the agenda at each meeting of
Nufarm Limited’s board of directors.
Nufarm publishes its annual health, safety
and environment report, which covers the
company’s overall progress in the calendar
year. Most manufacturing locations also
publish annual site specific information and
these, together with the Health, Safety and
Environment Report 2005, are available for
download from www.nufarm.com.
The current report shows that while
overall production volumes are relatively
stable, Nufarm’s use of energy and water
are declining steadily, as are emissions
to air. The company conducts just below
20,000 environmental tests each year and
has been in compliance with all relevant
environmental regulations within the
reporting period.
Some of the health and safety data is
reproduced here, showing the marked
progress Nufarm has made in improving its
rates for lost time injury frequency, severity
and medical treatment injuries since 1999,
as well as benchmarking data against
Australian, French, UK and European
chemical industries.
While our company principles, policies and
targets are global, Nufarm also recognises
that it operates in countries with differing
cultures, history and attitudes and that
not all its plants are at the same stage of
development. Nufarm management in
each country or region is responsible for its
own activities and measures local success
by establishing key performance indicators,
setting targets and measuring performance
against them.
Benchmarking against European and UK chemical industries,
based on lost time injury being three day absence or greater.
Severity data not available
LTIFR
Nufarm Americas
Nufarm Australia
Nufarm Europe
Nufarm New Zealand
Nufarm South East Asia
Nufarm Global
Europe CEFIC
UK CIA
2004
0
1.30
9.23
0
0
3.59
2003
0
3.36
8.19
2.43
0
4.13
no data
no data
no data
2.5
2002
1.72
2.46
7.70
1.59
0
4.03
6.18
3.1
Benchmarking against Australian and French chemical industries,
based on lost time injury being one day absence or greater.
LTIFR
Nufarm Americas
Nufarm Australia
Nufarm Europe
Nufarm New Zealand
Nufarm South East Asia
Nufarm Global
Australia PACIA
France UIC
Severity
Nufarm Americas
Nufarm Australia
Nufarm Europe
Nufarm New Zealand
Nufarm South East Asia
Nufarm Global
Australia PACIA
France UIC
2004
0
2.6
10.9
2.5
0
4.5
no data
no data
2004
0
0.010
0.274
0.002
0
0.098
no data
no data
2003
0
3.4
8.7
2.4
0
4.3
5.5
7.9
2003
0
0.048
0.190
0.017
0
0.084
0.055
0.380
2002
1.7
3.3
11.6
3.2
0
6.0
4.9
9.7
2002
0.052
0.047
0.112
0.008
0
0.069
0.060
0.370
Management – at all levels – will continue to
focus on our European operations until they
meet the same high standards expected of
the company across the board.
2001
3.78
2.73
15.63
0
0
7.34
7.12
3.1
2001
7.6
4.6
25.1
1.5
2.6
12.5
8.7
10.2
2001
0.072
0.031
0.246
0.001
0.123
0.125
0.099
0.360
Nufarm Limited 2005 Annual Report 19
2005 Nufarm crop
protection sales
– regional split
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Nufarm crop protection sales – category split
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Branded sales
Technical sales
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Herbicides
Fungicides
Insecticides
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Growth strategy firmly in place
2005 crop protection global sales – $1,581 million
2005 crop protection global operating profit – $191.9 million
(before tax, interest and head office charges)
Building the platform
Expanding the portfolio
Driving margin improvement
Establishing the brand
People/management structures
business review continued
The company achieved
higher sales of branded products
in all of its major markets.
CROP PROTECTION
Australasia
Americas
Total crop protection sales increased
by nine per cent to $1,581 million, with
operating profit before tax, interest and
head office charges up by 17 per cent
at $191.9 million.
The overall crop protection gross margin
fell from 41 per cent to 38 per cent, due
principally to increased sales in lower margin
markets, such as Argentina and some of
the Asian countries, and to increased costs
of some key inputs such as glyphosate
technical active. The margin decline was
offset by a reduction in business expenses
as the company continued to focus on
increased efficiencies. Taking into account
one-off items and expenses associated with
discontinued businesses, the cost base of
the core ongoing business was reduced by
some five per cent.
The company achieved higher sales of
branded products in all of its major markets.
This financial year covered a generally
strong period for the global crop protection
industry and Nufarm was – and remains
– well placed to take advantage of positive
industry trading conditions.
Nufarm’s core products, including the
phenoxy herbicides and glyphosate,
continue to gain market share and provide
a solid platform for the company’s growth
in various markets around the world.
Additional resources were employed to
strengthen the company’s operational
presence in key markets, and a number
of new products were introduced as part
of an ongoing program to broaden the
product portfolio.
The Australian season was generally
characterised by a very good spring and
early summer in late calendar year 2004,
followed by a prolonged dry period (other
than in Western Australia) and late-breaking
rains in mid-June. This contributed to an
excellent first half, slow sales throughout
most of the second half and a record sales
month in July.
Sales were slightly up year on year, assisted
by an initial full 12 months contribution
from the BASF product range (licensed to
Nufarm in March of 2004,) and very good
seasonal conditions in Western Australia.
Total sales for the Australian businesses
were $657 million.
While the Australian market remains
very competitive and there were limited
opportunities to pass through higher raw
material costs, management succeeded
in reducing total expenses.
Competition increased in the domestic
glyphosate business and a dry autumn
in the Eastern states provided limited
sales opportunities during that period.
Nufarm, however, was able to grow sales
of its premium-branded products over
the course of the financial year, with the
total glyphosate market recording similar
volumes to the previous 12-month period.
The Crop Care business benefited from
an improved product mix and achieved
strong sales of grass herbicides and early
protection fungicides.
New Zealand sales ($69 million) were
approximately the same as in the previous
reporting period, reflecting a wet spring
and dry autumn, which restricted farmer
spending on pasture renewal programs.
Asian-based sales were up by almost
6 per cent to $55 million but the earnings
contribution from these businesses was
affected by changes to the regulatory
system in Indonesia that have the effect
of facilitating increased competition from
Chinese sourced generics.
North American sales totaled $399 million
for the period.
Nufarm’s position in the USA – the world’s
largest crop protection market – continued
to strengthen during the 2005 financial year.
Sales were up some 15 per cent in local
currency and this helped drive a stronger
earnings contribution.
The company achieved higher shares in
an expanded market for both phenoxy
herbicides and glyphosate, as well
as increased sales of other products,
including the herbicide bromoxynil, which is
manufactured by Nufarm in a joint venture
with Bayer CropScience. An expanded
product range helped secure additional
opportunities and stronger support from
key distribution customers.
While seasonal conditions were not ideal
for the turf and specialty market, Nufarm
sales grew strongly, driven by excellent
results in the formulator (over-the-counter
sales to consumers) and vegetation
management segments.
The Nufarm brand continues to gain
support in Canada, where a better product
mix, improved pricing and attention to cost
controls resulted in a stronger performance.
In South America, Nufarm invested in
strengthening its operational presence
in Argentina, Chile and a number of the
Andean countries. Sales in Argentina
were up by more than 50 per cent but the
current low regulatory barriers make this
a lower margin market and the company
is adopting a long-term view on improved
earnings opportunities.
Nufarm’s branded sales business in Brazil
was integrated into the Agripec business
late in the reporting period. Sales of the
former BASF phenoxy herbicide brands
(transferred in Brazil in November 2004)
helped drive a strong increase in sales
and significant improvement in the
performance of this business.
Nufarm Limited 2005 Annual Report 21
business review continued
Agripec – Brazil
Europe
Nufarm completed a debt funded
US$120 million acquisition of 49.9 per
cent of Brazilian crop protection company,
Agripec, in the first half of the reporting
period. The terms relating to this acquisition
allowed Nufarm to capture a full 12 months
of contributions from this investment.
The equity accounted profit of $19.1 million
is Nufarm’s share of Agripec’s net profit
after tax and funding costs. This is below
the contribution forecast at the half year
($22 to 24 million) and reflects deterioration
in seasonal conditions and measures
taken to ensure the collection of
outstanding receivables.
Drought conditions developed in the major
soybean-growing region of southern Brazil,
leading to an estimated 10 to 15 per cent
reduction in industry sales for the first half
of calendar year 2005. The appreciation
of the Real against the US dollar also
had an impact on returns to farmers and
contributed to higher levels of farmer
debt. Like other crop protection suppliers,
Agripec opted to retrieve or buy back
product from those areas of the market
where concerns existed about the
collection of proceeds.
The key European markets of France,
Germany and the UK experienced varied/
average seasonal conditions. Drought
conditions in Southern Europe had an
impact on growth opportunities in Spain
and Portugal.
The benefits of ongoing restructuring
initiatives in France – aimed at transitioning
Nufarm from a third-party sales business
to a branded products business and
reducing head office costs – continue to be
reflected in an improved sales performance.
A stronger position in the important cereals
segment complemented higher sales into
vines and horticulture with the former BASF
herbicide brands being strong contributors.
Nufarm also consolidated its position in
the non-crop business in France, with
an expanded product range generating
improved margins. The French business
recorded total sales of $103 million,
an 18 per cent increase on 2004 sales.
Sales in Germany were $58 million and up
by some 30 per cent year on year. The sales
increase helped offset reduced margins on
the company’s proprietary Ralon herbicide,
which faced increased competition from
alternative products. Sales of fungicides
were up strongly aided by an estimated
10 per cent expansion of Germany’s
cereal fungicides market. This business
has developed excellent selling capabilities
and strong technical support, contributing
to improved access to the market.
Higher branded sales in the UK
($52 million) were driven by the introduction
of new products, with improved pricing
power helping to achieve a solid earnings
contribution. This was in spite of a dry
spring and a resulting reduction in weed
germination and fungal disease.
The company increased its market
share in glyphosate.
Drought conditions in Spain saw industry
sales contract by more than 15 per cent
during the reporting period. Despite this,
Nufarm managed to grow its business in
Spain on both a sales (up three per cent
to $38 million) and earnings contribution
basis. Sales in the smaller adjoining market
of Portugal – also badly affected by drought
– were down on the previous year.
Sales in other European regional markets
were stronger, driven by new product
registrations and more effective sales
and distribution arrangements. Austria,
Poland, Hungary, and the Nordic countries
all made positive contributions and Nufarm
is well positioned to take advantage of
additional opportunities in these and other
European markets.
Industrial chemicals
Industrial and specialty chemicals generated
revenues of $90.2 million, some $52 million
(36 per cent) less than in the previous
period. The division generated a segment
profit of $9.5 million ($14.9m in 2004).
The lower sales were attributable to the
divestment of two non-core businesses:
the Nufarm Specialty Products business
(sale effective 31 December 2004); and
the SEAC pharmaceutical intermediates
business (sale effective 1 February 2005).
These businesses were engaged in markets
that did not exploit Nufarm’s core strengths
and the capital tied up in those businesses
has been redeployed into our crop
protection activities where it will generate
additional long-term value for shareholders.
The company’s 80 per cent owned chlor
alkali plants in Western Australia recorded
an improved earnings contribution on
slightly higher sales. These plants use
similar synthesis technology as in our
phenoxy herbicide manufacturing.
Nufarm Limited 2005 Annual Report 23
management team
Doug Rathbone
Brian Benson
Rodney Heath
Kevin Martin
Dale Mellody
Managing Director and
Chief Executive
For background,
see page 26
Group General Manager
Agriculture
Brian Benson joined
Nufarm in 2000,
bringing with him
extensive experience
in the crop protection
industry in the areas of
international marketing
and strategy. He has
degrees in agricultural
science and business
administration. Brian is
responsible for Nufarm’s
regional sales operations
and commercial strategy.
Group General Manager
Corporate Services and
Company Secretary
Rod Heath is a bachelor
of law and joined the
company in 1980,
initially as legal offi cer,
later becoming assistant
company secretary.
In 1989, Rod moved
from New Zealand to
Australia to become
company secretary of
Nufarm Australia
Limited. In 2000,
Rod was appointed
company secretary of
Nufarm Limited.
Chief Financial Offi cer
Kevin Martin is a
chartered accountant
with over 25 years
of experience in the
professional and
commercial arena. After
joining Nufarm in 1994,
he was responsible
initially for the fi nancial
control of the crop
protection business.
Since 2000, Kevin has
been responsible for
all fi nancial, treasury
and taxtation matters
for the group.
Group General Manager
Global Marketing
Dale Mellody joined
Nufarm as a territory
manager in 1995 having
completed his bachelor
of agricultural science.
Promoted to head
offi ce in 1997, he has
had various roles in the
global marketing group
and has assisted with
a number of company
acquisitions. Dale was
promoted to the senior
management group in
July 2005 and is now
responsible for Nufarm’s
global marketing
and product strategy
development.
24
Nufarm Limited 2005 Annual Report
Nufarm has an experienced
hands-on management team
Bob Ooms
David Pullan
Robert Reis
Group General Manager
Chemicals
Bob Ooms joined the
company in 1999. An
industrial chemist by
training, he has more
than 40 years experience
in the chemical industry
in a variety of positions,
including many years
in senior management.
Bob is responsible
for the company’s
industrial chemicals
business and has
executive management
responsibility for global
supply chain issues.
Group General Manager
Operations
David Pullan joined
the company in
1985. A mechanical
engineer, David has
extensive experience
in chemical synthesis
and manufacturing,
having held a variety
of operational and
management positions
in the oil and chemical
industries. He is
responsible for all
of Nufarm’s global
manufacturing and
production sites.
Group General Manager
Corporate Affairs
A former journalist,
political adviser and
lobbyist, Robert joined
Nufarm in 1991 and is
responsible for global
issues management,
investor relations,
media, government and
stakeholder relations.
Robert also has
executive management
responsibility for
human resources
and organisational
development.
John Allen
Group General Manager
Crop Protection
(Retired 31 August 2005)
John Allen trained as
an agronomist and then
gained a post-graduate
degree in marketing.
He joined Nufarm in
1984 and has more than
30 years experience
in the industry. John
has held a variety
of positions in the
commercial side of the
business, starting as
a sales representative.
Until his retirement,
he was responsible
for the commercial
side of Nufarm’s Crop
Protection activities.
Nufarm Limited 2005 Annual Report 25
board of directors
Kerry Hoggard
Doug Rathbone
Doug Curlewis
Bruce Goodfellow
Garry Hounsell
Managing Director and
Chief Executive
Doug Rathbone, 59,
joined the board in
1987. His background
is chemical engineering
and commerce and he
has worked for Nufarm
Australia Limited for
32 years. Doug was
appointed managing
director of Nufarm
Australia in 1982 and
managing director
of Nufarm Limited in
October 1999.
Chairman
Kerry Hoggard, 64,
joined the board in
1987. He has a fi nancial
background, beginning
his career with the
company in 1957 as
offi ce junior and rising
through a number of
accounting, fi nancial and
commercial promotions
to be chief executive
offi cer in 1987. On his
retirement in October
1999, he was appointed
chairman of the board.
Kerry is a member of the
audit and remuneration
committees.
GDW (Doug) Curlewis,
64, joined the board in
January 2000. He has
a master of business
administration and was
formerly managing
director of National
Consolidated Ltd. He
is also a director of
Pacifi ca Group Ltd,
GUD Holdings Ltd,
Graincorp Limited and
Remunerator Australia
Pty Ltd. In the past three
years Doug has been
a director of National
Foods Ltd (six years)
and Hamilton Island Ltd
(fi ve years).
Doug is chairman of the
nomination committee
and a member of the
audit and remuneration
committees.
Dr WB (Bruce)
Goodfellow, 53,
joined the board
representing the holders
of the ‘C’ shares in
1991. Following the
conversion of the ‘C’
shares into ordinary
shares, he was elected
a director in 1999.
He has a doctorate in
chemical engineering
and experience in
the chemical trading
business and fi nancial
and commercial
business management
experience. He is a
director of Sulkem
Co Ltd, Refrigeration
Engineering Co Ltd,
SH Lock (NZ) Ltd
and Cambridge Clothing
Co. Ltd.
Bruce was a member
of the scientifi c review
committee until it was
discontinued.
GA (Garry) Hounsell,
50, joined the board in
October 2004. He has
a bachelor of business
(accounting) and is a
former senior partner
with Ernst & Young and a
former Australian country
managing partner with
Arthur Andersen. He has
extensive experience
across a range of areas,
relating to management
and corporate fi nance
and has worked with
some of Australia’s
leading companies in
consulting and audit
roles, with a particular
emphasis in the
manufacturing sector.
He is also a director of
Qantas Airways Limited
and Orica Ltd.
Garry became chairman
of the audit committee
after the retirement of
Graeme McGregor,
having been a member
of the audit committee
since his appointment
as a director of
the company.
26
Nufarm Limited 2005 Annual Report
Don McGauchie
John Stocker
Dick Warburton
Dr JW (John) Stocker
AO, 60, joined the
board in 1998. He has
a medical, scientifi c
and management
background and was
formerly chief scientist
of the Commonwealth
of Australia. He is a
principal of Foursight
Associates Pty Ltd and
chairman of Sigma
Company Ltd. He is
a director of Telstra
Corporation Ltd,
Cambridge Antibody
Technology Group
plc and Circadian
Technologies Ltd.
John is a member of
both the remuneration
and nomination
committees and
previously chaired
the scientifi c review
committee until it
was discontinued.
DG (Donald) McGauchie
AO, 55, joined the
board in 2003. He has
a farming background
and has been extensively
involved in agricultural
trade, policy and market
reform. He is currently
chairman of Telstra
Limited; a member of
the board of the Reserve
Bank of Australia;
chairman of Australian
Wool Testing Authority
Limited and a director
of James Hardie
Industries NV.
In the past three
years Donald has
been a director of
Ridley Corporation
(seven years), National
Foods Ltd (fi ve years),
Woolstock Australia
Limited (three years),
Graincorp Limited (three
years) and Rural Finance
Corporation (two years).
Donald is a member of
both the remuneration
and nomination
committees.
RFE (Dick) Warburton
AO, 64, joined the
board in 1993. He has a
business management
background and is
chairman of Caltex
Australia Ltd, and
Tandou Ltd. He is a
director of Tabcorp
Holdings Ltd, Note
Printing Australia Ltd
and Citibank Pty Ltd.
Dick is chairman of the
board of Taxation and a
past national president
of the Australian Institute
of Company Directors.
In the past three years
Dick has been a director
of Reserve Bank of
Australia (10 years),
Southcorp Ltd (10
years), David Jones Ltd
(eight years), Goldfi elds
Ltd (six years), and
Aurion Gold Ltd
(one year).
Dick is chairman of the
remuneration committee
and a member of the
nomination committee.
Graeme McGregor
Graeme McGregor AO,
retired from the Nufarm
Board in July 2005 after
more than fi ve years of
service to the company
and shareholders.
Graeme made a
signifi cant contribution at
board level, in particular
in his role as chairman of
the audit committee. The
company acknowledges
that contribution and
wishes Graeme well in
the future.
Nufarm Limited 2005 Annual Report 27
corporate governance statement
Introduction
Nufarm’s approach to corporate governance has been to implement
systems to protect the interests of all stakeholders.
Our recent history, including the relocation of the head office
from New Zealand to Australia in 2000, has meant that our board
processes have been under constant review in accordance with
best Australian practice.
We have also taken into account the ‘Principles of Good Corporate
Governance and Best Practice Recommendations‘ (‘the ASX
principles‘) published in March 2003 by the Australian Stock
Exchange Limited’s Corporate Governance Council and the
amendments to the Corporations Act 2001 known as CLERP 9.
In relation to both the ASX principles and CLERP 9 the
company has practiced ‘early adoption‘ in advance of actual
compliance dates.
In accordance with the ASX principles we have posted copies of
our corporate governance practices to the corporate governance
section of our website at www.nufarm.com.
Compliance with ASX Principles
The ASX Listing Rules require us to include in our annual report a
statement disclosing the extent to which we have adopted the 28
best practice recommendations during our reporting period and,
where there is not compliance, to explain why not.
We believe that we comply with all the ASX principles save
the following:
Recommendation 2.2 recommends that the chairman should
be an independent director.
Our chairman is elected annually at the directors’ meeting
immediately following the annual general meeting (AGM).
Kerry Hoggard is board chairman and will not be deemed an
independent director in accordance with the tests set out in
principle 2 of the ASX principles.
This corporate governance report reaffirms the statements
contained in our 2003 and 2004 governance reports that the
board unanimously continues to support Kerry as chairman,
believing this to be clearly in the best interest of all stakeholders.
We believe:
– Kerry’s history with the company, including his detailed
knowledge of the industry within which the company operates,
and his extensive accounting, financial and commercial
background, provide him with unique skills and experience
which are invaluable to Nufarm; and
– Kerry continues to apply judgment independent of management
in all decision making and that he discharges his role with a
strong commitment to considerations of governance
and disclosure.
Recommendation 9.4 recommends that companies seek
shareholder approval of equity-based reward schemes
for executives.
We currently have one equity-based reward plan which was
introduced in 2000, prior to the release of the ASX principles.
The plan did not require shareholder approval under the
Corporations Act or the Listing Rules and therefore was not put to
shareholders for approval. However shareholders’ approval was
sought to offers of shares to the managing director under the plan
in each of 2000, 2001 and 2002. The notices of annual meeting
and the annual reports for those years set out in some detail the
nature of the plan and in each instance the issue of shares to the
managing director under the plan was approved.
Management and oversight of Nufarm
The board
The board is the governing body of the company and is responsible
for overseeing the company’s operations, ensuring that Nufarm’s
business is carried out in the best interests of all shareholders and
with proper regard to the interests of all other stakeholders. The
board charter has clearly defined policies detailing the board’s
individual and collective responsibilities and describing those
responsibilities delegated to senior management.
The board has set specific limits to management’s ability to incur
expenditure, enter contracts or acquire or dispose of assets or
businesses without full board approval.
The board’s specific responsibility is to:
ratify strategic plans for the company and its business units;
review the company’s accounts;
approve and review operating budgets;
approve major capital expenditure, acquisitions, divestments
and corporate funding;
oversee risk management and internal compliance; and
control codes of conduct and legal compliance.
The board is also responsible for:
the appointment and remuneration of the managing director;
ratifying the appointment of the chief financial officer and the
company secretary; and
reviewing remuneration policy for senior executives and Nufarm’s
general remuneration policy framework.
Each year the board reviews board composition and terms of
reference for the board, chairman, board committees and
managing director.
The board has seven scheduled meetings each year. When
necessary, additional meetings will be convened to deal with
specific issues that require attention before the next scheduled
meeting. Each year the board will meet to review the strategic plan,
which sets the strategic direction of the company.
At 31 July 2005, the board had three committees: audit;
remuneration; and nomination. All directors are entitled to attend
any committee meeting.
28
Nufarm Limited 2005 Annual Report
corporate governance statement continued
Details of the attendances at meetings of board and committees are
detailed on page 34 of this report.
At the date of this report, the board has determined that the status
of directors is characterised as follows:
The manner in which the company is managed is consistent with
the recommendations of ASX Principle 1.
A summary of the board charter has been posted to the corporate
governance section of the company’s website.
Board of directors
Composition
The board has a majority of independent non-executive directors
with an appropriate range of proficiencies, experience and skills to
ensure that its responsibilities are discharged in a manner consistent
with the best possible management of the company.
The company’s constitution specifies that the number of directors
may be not less than three, nor more than 11.
Following the retirement of Graeme McGregor on 31 July 2005
there are seven non-executive directors and one executive director.
The board has currently determined that, apart from the incumbent
managing director, no other company executive will be invited to
join the board.
Independence
Directors are expected to bring independent views and judgment to
the board. In determining the independence of directors, the board
applies the tests set out in ASX Principle 2 and, in considering
whether a director has a material relationship with the company
that may compromise independence, the board considers all
relevant circumstances. Having reviewed the ASX principles and the
circumstances of individual directors, the board does not believe
it necessary to define any specific materiality limits, other than
defining a substantial shareholder as one who holds or is associated
directly with a shareholder controlling in excess of five per cent of
the company’s equity.
Tenure
Having considered commentary on the relationship between
length of service and independence, the board considers that the
independence of directors, and justification for their positions in
general, is determined by the manner in which they discharge
their responsibilities and their contribution to the success of
the company.
However, the board has determined that any director who has
served as a non-executive director on the board for a continuous
10 year period should seek only one further re-election and then
voluntarily retire before the date scheduled for any subsequent
re-election. Any variation to this policy would involve exceptional
circumstances and require the unanimous support of the full board.
Directors seeking to offer themselves for re-election at a company
AGM are subject to a performance review by the nomination
committee, which will then make a recommendation to the board as
to whether the board should continue to support the nomination of
the retiring directors.
Independent non-executive directors
GDW Curlewis
GA Hounsell
GW McGregor (retired 31 July 2005)
DG McGauchie
Dr JW Stocker
RFE Warburton
Non-independent non-executive directors
KM Hoggard
Dr WB Goodfellow
Executive director
DJ Rathbone
Profiles of each board member are set out on pages 26–27 of this
report, including their terms in office.
Access to independent advice
With the prior approval of the chairman, which may not be
unreasonably withheld, or by resolution of the board, any director
can appoint legal, financial or other professional consultants, at
the expense of the company, to assist directors in discharging
their responsibilities.
The board charter provides that non-executive directors may meet
without management present.
Conflicts of interest
Board members are required to identify any conflict of interest they
may have in dealing with the company’s affairs and subsequently
to refrain from participating in any discussion or voting on these
matters. Directors and senior executives are required to disclose in
writing any related party transactions.
Chairman of the board
The chairman is elected annually at the directors’ meeting
immediately following the company’s AGM.
Our chairman, Kerry Hoggard, is not deemed an independent
director in accordance with the tests set out in ASX Principle 2.
The reasons why we unanimously support Kerry’s appointment
are set out earlier in this statement.
The board has stipulated that the same person will not exercise the
role of the chairman and chief executive officer.
Save as to the independence of the chairman referred to above, the
structure of the board is consistent with ASX Principle 2.
The nomination committee
The members of the nomination committee are Doug Curlewis,
chairman (appointed effective 1 January 2005); Donald McGauchie,
Dr John Stocker (appointed effective 1 January 2005) and Dick
Warburton, and as such, comprises independent directors.
Kerry Hoggard retired as a member of the committee effective
1 January 2005.
Nufarm Limited 2005 Annual Report 29
corporate governance statement continued
The committee has a formal charter setting out its membership
requirements and responsibilities. These responsibilities include:
The company’s code of conduct and share trading policy is
consistent with ASX Principle 3.
the assessment of competencies of board members;
review of board succession plans;
evaluation of board performance; and
recommendations for appointment of new directors
when appropriate.
A copy of the nomination committee charter and a summary of the
policy and procedure for appointment of directors has been posted
to the corporate governance section of the company’s website.
Ethical and responsible decision-making
Ethical standards
We require directors and employees to adopt standards of business
conduct that are ethical and comply with all legislation. Where
there are no legislative requirements, the company endeavours to
ensure appropriate standards by policy statements as they relate to
stakeholders in the business and by careful selection and promotion
of employees.
Safeguard integrity in financial reporting
Financial reports
The board procedures to safeguard the integrity of the company’s
financial reporting require the chief executive officer and the chief
financial officer to state, in writing to the board, that:
the company’s financial reports present a true and fair view, in
all material respects, of the company’s financial condition and
operational results and are in accordance with relevant accounting
standards, and
the statement is founded on a sound system of risk management
and internal compliance and control, which is operating effectively.
Audit committee
Members of the board audit committee are: Graeme McGregor,
(chairman until his retirement on 31 July 2005); Garry Hounsell
(chairman from 31 July 2005); Doug Curlewis; and Kerry Hoggard.
The committee has a majority of independent non-executive
directors and is chaired by an independent director.
The board endorses the principles of the Code of Conduct for
Directors, issued by the Australian Institute of Company Directors.
Details of attendances at meetings of the audit committee are set
out on page 34.
Our formal code of conduct has been posted to the corporate
governance section of the company’s website.
Purchase and sale of company shares
We have had longstanding policies about the purchase and sale of
company shares by directors and key executives.
The current share trading policy prohibits directors and
management from dealing in the company’s shares at any
time the directors or employees are aware of unpublished,
price-sensitive information.
Subject to this prohibition, directors and senior executives may buy
or sell shares at any time except during the following periods:
six weeks before the release of the company’s half year results to
the ASX, ending 24 hours after such release;
six weeks before the release of the company’s year end results to
the ASX, ending 24 hours after such release; and
two weeks before the company’s AGM, ending 24 hours after
the AGM.
Before any trading activity in company shares, directors and key
executives must complete an application form, which contains a
declaration confirming they have no relevant knowledge pertaining
to the company that is not available to the public. On receipt of the
application form the company secretary will discuss the application
with the chairman to obtain approval to trade. No trading can be
undertaken before the application receives the written approval of
the company secretary.
A copy of the trading policy has been posted to the corporate
governance section of the company’s website.
Graeme McGregor is a bachelor of economics and former chief
financial officer and executive director of BHP Co Ltd. He is a past
national president of CPA Australia and is a member of the financial
reporting council. In that capacity, Graeme has been closely
associated with best practice recommendations relating to the
provision of audit services, including CLERP 9.
Garry Hounsell is a bachelor of business (accounting) and is a
former senior partner with Ernst & Young and a former Australian
country managing partner with Arthur Andersen. He has extensive
experience across a range of areas, relating to management and
corporate finance and has worked with some of Australia’s leading
companies in consulting and audit roles, with a particular emphasis
in the manufacturing sector. He is also a director of Qantas Airways
Limited and Orica Limited.
Kerry Hoggard has extensive accounting and financial experience.
Kerry began his career with the company in 1957 and, after a
number of accounting, financial and commercial promotions,
became chief executive officer in 1987.
Doug Curlewis is a bachelor of arts and MBA and former managing
director of National Consolidated Limited, chief executive (Europe)
of ICI Paints and managing director of Dulux Australia. Doug is
currently a director of GUD Holdings Limited, Graincorp Limited
and Pacifica Group Ltd. Doug is chairman of The Pacifica
Audit Committee.
The committee reviews the audit committee charter annually.
The charter sets out membership requirements for the committee,
its responsibilities and provides that the committee shall annually
assess the external auditor’s actual or perceived independence by
reviewing the services provided by the auditor. The charter
30
Nufarm Limited 2005 Annual Report
corporate governance statement continued
identifies those services that the external auditor may provide,
those that may not be supplied and those that require specific
audit committee approval.
The committee has recommended that any former lead
engagement partner of the firm involved in the company’s external
audit should not be invited to fill a vacancy on the board and the
lead engagement audit partners will be required to rotate off the
audit after a maximum five years involvement and it will be at
least three years before that partner can again be involved in the
company’s audit.
A copy of the audit committee charter, which includes procedures
for the selection and appointment of the external auditors, has been
posted to the corporate governance section of the
company’s website.
The financial reporting system of the company is consistent with
ASX Principle 4.
Disclosure
The company has a detailed written policy and procedure to ensure
compliance with both the ASX Listing Rules and Corporations Act.
This policy is reviewed regularly with the company’s legal advisers,
in line with contemporary best practice.
The company secretary prepares a schedule of compliance and
disclosure matters for directors to consider at each board meeting.
A copy of the disclosure policy is posted to the corporate
governance section of the company’s website.
The company’s disclosure policy is consistent with ASX Principle 5.
Rights of shareholders
Communication
We are committed to timely, open and effective communications
with our shareholders and the general investment community.
Our communications policy is aimed at:
ensuring that shareholders and the financial markets are provided
with full and timely information about our activities;
complying with our continuous disclosure obligations;
ensuring equality of access to briefings, presentations and
meetings for shareholders, analysts and media; and
encouraging attendance and voting at shareholder meetings.
Information is communicated to shareholders:
through the distribution of half year and annual reports, notices
of annual general meeting, and a summary of annual general
meeting proceedings including the chairman’s and chief executive
officer’s addresses and voting results; and
whenever there are other significant developments to report,
by electronic means as well as by post.
Our formal communications policy is posted to the corporate
governance section of the company’s website.
External auditor
We require the external auditor to attend the company’s AGM so
shareholders may question the auditor about the conduct of the
audit and the preparation and content of the auditor’s report.
The company’s policy in relation to the rights of shareholders is
consistent with ASX Principle 6.
Identifying and managing risk
The board is committed to identifying, assessing, monitoring, and
managing its major business risks at a level appropriate to its global
business activities. To support and maintain this objective, the
audit committee has established detailed policies on risk oversight
and management by approving a global risk management charter
that specifies the responsibilities of the general manager, global
risk management (which includes responsibility for the internal
audit function). This charter also provides comprehensive global
authority to conduct internal audits, risk reviews, and systems-
based analyses of the internal controls in major business systems
operating within all significant company entities worldwide.
The general manager global risk management reports directly to the
chief executive officer and provides a written report of his activities
at each meeting of the audit committee. In doing so he has direct
and continual access to the chairman and members of the
audit committee.
In addition, the company has implemented a range of global
systems, programs, and policies with the objective of risk
identification and management, which include the following:
a comprehensive occupational health, safety and environmental
(HSE) program. The company publishes an annual HSE report
on its performance across a range of environment, health and
safety parameters, including specific targets for continuous
improvement;
a comprehensive annual insurance program including external
risk management surveys;
a board-approved treasury policy to manage exposure to foreign
policy and exchange rate risks;
guidelines and limits for approval of capital expenditure and
investments;
annual budgeting and monthly reporting systems for all business
units which monitor performance against budget targets;
a planning process involving the preparation of five year
strategic plans;
appropriate due diligence systems for acquisitions and
divestments; and
risk self-assessment surveys of all major business units worldwide.
Nufarm Limited 2005 Annual Report 31
corporate governance statement continued
Integrity of financial statements
The procedures to safeguard the integrity of financial statements are
set out on page 30 of this statement.
A summary of the company’s risk management policy and internal
compliance system has been posted to the corporate governance
section of the company’s website.
The management of risk is consistent with ASX Principle 7
Board and management performance
The board
The performance of the board, individual directors and key
executives is reviewed annually.
The board has adopted a process to facilitate its performance
assessment. In 2003–2004 this process included the completion by
directors of a detailed questionnaire, an individual interview of each
director by an external consultant and discussion by the board. In
the current period the performance evaluation was conducted by
the chairman.
The board ensures that new directors are introduced to the
company appropriately and acquainted with relevant industry
knowledge, including visits to specific company operations and
briefings by key executives.
All directors may obtain independent professional advice
(refer page 29) and have direct access to the company secretary.
The manner in which the performance of the board is assessed
is consistent with ASX Principle 8.
A summary of the process for performance evaluation has
been posted to the corporate governance section of the
company’s website.
Remuneration
The board has procedures to ensure that the level and structure
of remuneration for executives and directors is appropriate.
Remuneration of executives
The board’s policy for determining the nature and amount of the
remuneration of executives is set out in the remuneration report
on page 35.
Under the company’s executive and employee share plans the
number of shares provided to employees and executives in the
preceding five years will not exceed five per cent of the company’s
issued capital.
The company has an employment contract with the chief executive
officer and this formalises the terms and conditions of appointment,
including termination payments.
Remuneration committee
The members of the remuneration committee are Dick Warburton
(chairman), Doug Curlewis (appointed effective 1 January 2005),
Kerry Hoggard, Donald McGauchie and Dr John Stocker (appointed
effective 1 January 2005) and as such is comprised of a majority of
independent directors.
The committee’s formal charter includes responsibility to review and
recommend to the board the remuneration packages and policies
applicable to key executives and directors.
The committee reports to the board on all matters and the board
makes all decisions, except when power to act is delegated
expressly to the committee.
A copy of the remuneration committee charter has been posted to
the company’s website.
Remuneration of non-executive directors
The board’s policy with regard to non-executive directors’
remuneration is set out in the remuneration report on
pages 35 to 40.
Save as to compliance with recommendation 9.4, which is
discussed on page 28, our remuneration policies are consistent
with ASX Principle 9.
Interests of stakeholders
Code of conduct
Nufarm seeks to conduct its business in a manner which recognises
and adheres to all relevant laws and regulations and meets high
standards with respect to honesty and integrity.
In order to meet this commitment, we require all Nufarm directors,
employees, contractors and consultants to be familiar with and
uphold the company’s code of conduct in all business dealings.
The company is politically impartial except when, because
of a perceived major impact on the company, its business
or any of its stakeholders, it is deemed to be obliged to make
political statements.
Nufarm operates in accordance with the social and cultural
beliefs appropriate in each country of operation.
Our formal code of conduct which has been posted to the
corporate governance section of the company’s website.
The manner in which the company recognises the interests
of shareholders is consistent with ASX Principle 10.
32
Nufarm Limited 2005 Annual Report
directors’ report
The board of directors of Nufarm Limited (Nufarm) submits its report
for the period ended 31 July 2005.
Directors’ interests in shares and capital notes
Relevant interests of the directors in the shares or capital notes of
the company and related bodies corporate are:
Names of directors
The names of the directors of the company in office during the
period are:
KM Hoggard (Chairman)
DJ Rathbone (Managing Director)
GDW Curlewis
Dr WB Goodfellow
GA Hounsell (appointed 1 October 2004)
DG McGauchie AO
GW McGregor AO (retired 31 July 2005)
Dr JW Stocker AO
RFE Warburton AO
Unless otherwise indicated, all directors held their position as
a director throughout the entire period and up to the date of
this report.
The company secretary is R Heath.
Details of the qualifications, experience and responsibilities and
other directorships of the directors are set out on pages 26
and 27. Details of the qualifications and experience of the
Company Secretary are set out on page 24.
Nufarm Ltd
Ordinary shares
Fernz Corporation
(NZ) Ltd
Capital notes
KM Hoggard 1 2
DJ Rathbone 2
GDW Curlewis
Dr WB Goodfellow 1 3
G A Hounsell 1
DG McGauchie 1
GW McGregor 1
Dr JW Stocker 1
RFE Warburton 1
2,374,749
29,912,610
40,787
1,466,446
11,452
8,269
33,879
28,464
63,431
2,270,000
1 The shareholdings of KM Hoggard, Dr WB Goodfellow, GA Hounsell, DG McGauchie, GW
McGregor, Dr JW Stocker and RFE Warburton include shares issued under the company’s
non-executive director share plan and held by ASX Perpetual Registrars Limited as trustee of
the plan.
2 Messrs Hoggard and Rathbone also have a non-beneficial interest in 218,725 fully paid
shares as trustees of the Nufarm Limited Share Plan.
3 The shareholding of Dr WB Goodfellow includes his relevant interest in:
(i) St Kentigern Trust Board (429,855 shares and 2,270,000 capital notes) – Dr Goodfellow
is chairman of the trust board. Dr Goodfellow does not have a beneficial interest in these
shares or capital notes;
(ii) three trusts of which he is a non-beneficial trustee (807,039 shares); and
(iii) Waikato Investment Company Limited (113,616 shares).
Nufarm Limited 2005 Annual Report 33
directors’ report continued
Directors’ meetings
The number of directors’ meetings and meetings of committees
of directors held in the financial year and the number of meetings
attended by each director are shown in the table of directors’
meetings.
Director
KM Hoggard 1
DJ Rathbone
GDW Curlewis 2
Dr WB Goodfellow 5
GA Hounsell 3
DG McGauchie
GW McGregor
Dr JW Stocker 4
RFE Warburton
Board
A
9
9
9
9
7
9
9
9
9
B
9
9
9
9
6
9
8
8
9
Audit
A
5
5
4
5
B
5
5
2
4
4
Committees
Remuneration
B
A
Nomination
B
A
2
2
2
2
2
2
1
2
2
2
1
2
Column A: indicates the number of meetings held during the period the director was a member of the board and/or committee.
Column B: indicates the number of meetings attended during the period the director was a member of the board and/or committee.
1 KM Hoggard retired as a member of the nomination committee effective 1 January 2005.
2 GDW Curlewis was appointed chairman of the nomination committee and a member of the remuneration committee effective 1 January 2005.
3 GA Hounsell became a member of the audit committee effective 1 October 2004.
4 Dr JW Stocker became a member of both the remuneration and nomination committees effective 1 January 2005.
5 All non-executive directors are entitled to attend any committee meetings.
Principal activities and changes
Nufarm Limited manufactures and supplies a range of agricultural
chemicals used by farmers to protect crops from damage caused
by weeds, pests and disease.
Nufarm employs 2,279 people at its various locations in Australasia,
Africa, the Americas and Europe.
The company is listed on the Australian Stock Exchange (symbol
NUF). Its head office is located at Laverton in Melbourne.
The company has production and marketing operations throughout
the world and sells products in more than 100 countries.
Results
Nufarm’s crop protection products enjoy a reputation for high quality
and reliability and are supported by strong brands, a commitment to
innovation and a focus on close customer relationships.
The net profit attributable to members of the consolidated entity for
the 12 months to 31 July 2005 is $104.3 million. The comparable
figure for the 12 months to 31 July 2004 was $76.2 million.
Nufarm also operates two chlor alkali plants in an 80 per cent
owned joint venture and produces a small range of industrial
chemicals, mostly by-products of the company’s core crop
protection manufacturing activity.
34
Nufarm Limited 2005 Annual Report
directors’ report continued
Dividends
Environmental performance
The following dividends have been paid, declared or recommended
since the end of the preceding financial year.
Details of Nufarm’s performance in relation to environmental
regulations are set out on page 19.
The final dividend for 2003–2004
of 15 cents paid 12 November 2004
The interim dividend for 2004–2005
of 9 cents paid 29 April 2005
The final dividend for 2004–2005
of 17 cents as declared and recommended
by the directors is payable 11 November 2005
$000
$25,293
$15,255
$28,844
Review of operations
The review of the operations during the financial year and the results
of those operations, are set out in the managing director’s review on
pages 2 to 7 and the business review on pages 18 to 23.
State of affairs
The state of the company’s affairs are set out in the managing
director’s review on pages 2 to 7 and the business review on
pages 18 to 23.
Operations, financial position, business strategies
and prospects
The directors believe that information on the company, which
enables an informed assessment of its operations, financial position,
strategies and prospects, is contained in the managing director’s
review and the business review.
Events after end of financial year
The company announced in August 2005 that it had sold its
Australian turf/specialty business, Nuturf Pty Ltd, to Hong Kong
based C K Life Sciences International Holdings Inc for $7.2 million.
2005 financial year sales for Nuturf Pty Ltd were some $21 million
and the business contributed net earnings of $1.1 million. The
directors believe that the business had not achieved sufficient scale
in the Australian market to justify ongoing investment.
Future developments and results
The directors believe that likely developments in the
company’s operations and the expected results of those
operations are contained in the managing director’s review
and the business review.
The company did not incur any prosecutions or fines in the financial
period relating to environmental performance.
The company publishes annually a health, safety and environment
report. This report can be viewed on the company’s website or a
copy made available upon request to the company secretary.
Non-audit services
During the year KPMG, the Company’s auditor, performed certain
other services in addition to its statutory duties.
Details of the audit fee and non-audit services are set out on
page 84 of the financial report.
The Board has considered the non-audit services provided during
the year by the auditor and in accordance with written advice
provided by resolution of the Audit Committee, is satisfied that the
provision of those non-audit services is compatible with, and does
not compromise, the auditor independence requirements of the
Corporations Act 2001 for the reason that all non-audit services
were subject to the corporate governance procedures adopted by
the Company and have been reviewed by the Audit Committee to
ensure they do not impact the integrity and objectivity of the auditor.
The auditor’s independence declaration as required under Section
307C of the Corporations Act forms part of the directors’ report and
is included at page 41.
Remuneration report
Remuneration committee
The remuneration committee reviews and makes recommendations
to the board on remuneration policies and packages applicable
to group executives and directors and ensures that remuneration
policies and packages retain and motivate high calibre executives
and that remuneration policies demonstrate a clear relationship
between key executive remuneration and company performance.
The remuneration levels of the managing director and other group
executives are recommended by the remuneration committee and
approved by the board, having taken advice from independent
external advisors.
Remuneration policy
Group executive
The Nufarm remuneration policy has been developed to ensure
the company attracts and retains the highly skilled people required
to successfully manage and create shareholder value from a large
diversified internationally based company.
The company has adopted a remuneration policy based on total
target reward (TTR), which comprises two components:
Nufarm Limited 2005 Annual Report 35
Whilst it believes ROFE is an appropriate performance condition
for the company’s incentive program, the board also reviews
the company’s total shareholder return (TSR) with relevant
comparator groups.
Each year, the board reviews and establishes the performance
hurdles for each part of the incentive program. The hurdles reflect
targets for specific objectives and increasing company value,
consistent with the company’s business and investment strategies.
Since migration of the company to Australia in January 2000,
the ROFE hurdles (Target ROFE) for the first part of the incentive
program have been progressively increased from 12 per cent to
14 per cent and, for the second part of the incentive, from
13.5 per cent to 14.75 per cent for the 2005 financial year.
At the end of each financial year the board:
assesses company performance against the ROFE hurdles to
determine the percentage of any offer to be made under each
part of the incentive program; and
reviews Target ROFE for each part of the incentive program for
the following financial period.
For both parts of the incentives, 25 per cent of the incentives will
be payable on achievement of 90 per cent of Target ROFE with a
linear progression to 100 per cent of the incentives on achievement
of Target ROFE and a maximum of 175 per cent of the incentives
on achievement of 110 per cent of Target ROFE. If less than 90 per
cent of Target ROFE is achieved, no incentives will be paid.
The following table shows the proportion of incentives as a
percentage of TTR.
Managing director
Group executive
% target ROFE achieved
<90
0
0
90
20
14
100
110 >110
50
40
64
54
64
54
directors’ report continued
fixed reward (TEC) – cash and benefits that reflect local market
conditions and individual contribution. The reward level is set
relative to pertinent and prevailing executive employment market
conditions for high calibre talent in the geographies where
Nufarm operates. The company’s policy position for TEC for
Australian executives is at the 50th percentile of the Mercer
Survey of Australian Major Corporates; and
an incentive program -– the first part of the incentive program
reflects performance of specific business objectives over six
monthly periods and is paid in cash. The second part of the
incentive program is linked to meeting predetermined financial
objectives for the full year and is delivered in a mixture of shares
or shares and options. The exception is the current managing
director who is paid in cash because of the very substantial
shareholding he currently controls in the company. For the
remaining group executives this payment is made in
equity, which ensures a longer-term focus to achieve
benefits consistent with the delivery of sustained growth of
shareholder value.
If the financial objectives are achieved and each part of the incentive
program is paid at 100 per cent, the TTR will meet the company’s
TTR policy position of the upper quartile of the Mercer Survey
of Australian Major Corporates. Set out below are details of the
maximum payment for each part of the incentive program where
there has been above-target achievement of the incentive program
performance condition.
The performance condition for the incentive program is based
on return on funds employed (ROFE) in the business. Return is
calculated on the group’s earnings before interest and taxation
and adjusted for any non-operating items. Funds employed are
represented by shareholders funds plus total interest bearing debt.
The company believes ROFE is an appropriate performance
condition for the following reasons.
For many years the board has measured the company’s
performance using ‘economic value added’ methodology. It is
believed that if the company can consistently add economic value
(a satisfactory margin above the cost of capital), then this will be
recognised in share value.
ROFE ensures management is focused on the efficient use of
capital and the measure remains effective regardless of the mix of
equity and debt, which may change from time to time.
The remuneration committee and the board review the choice of
the performance condition on an annual basis.
36
Nufarm Limited 2005 Annual Report
directors’ report continued
directors’ report continued
Whilst it believes ROFE is an appropriate performance condition
for the company’s incentive program, the board also reviews
the company’s total shareholder return (TSR) with relevant
comparator groups.
Each year, the board reviews and establishes the performance
hurdles for each part of the incentive program. The hurdles refl ect
targets for specifi c objectives and increasing company value,
consistent with the company’s business and investment strategies.
Since migration of the company to Australia in January 2000,
the ROFE hurdles (Target ROFE) for the fi rst part of the incentive
program have been progressively increased from 12 per cent to
14 per cent and, for the second part of the incentive, from
13.5 per cent to 14.75 per cent for the 2005 fi nancial year.
At the end of each fi nancial year the board:
assesses company performance against the ROFE hurdles to
determine the percentage of any offer to be made under each
part of the incentive program; and
reviews Target ROFE for each part of the incentive program for
the following fi nancial period.
For both parts of the incentives, 25 per cent of the incentives will
be payable on achievement of 90 per cent of Target ROFE with a
linear progression to 100 per cent of the incentives on achievement
of Target ROFE and a maximum of 175 per cent of the incentives
on achievement of 110 per cent of Target ROFE. If less than 90 per
cent of Target ROFE is achieved, no incentives will be paid.
The following table shows the proportion of incentives as a
percentage of TTR.
Managing director
Group executive
% target ROFE achieved
<90
0
0
90
20
14
100
110 >110
50
40
64
54
64
54
fi xed reward (TEC) – cash and benefi ts that refl ect local market
conditions and individual contribution. The reward level is set
relative to pertinent and prevailing executive employment market
conditions for high calibre talent in the geographies where
Nufarm operates. The company’s policy position for TEC for
Australian executives is at the 50th percentile of the Mercer
Survey of Australian Major Corporates; and
an incentive program -– the fi rst part of the incentive program
refl ects performance of specifi c business objectives over six
monthly periods and is paid in cash. The second part of the
incentive program is linked to meeting predetermined fi nancial
objectives for the full year and is delivered in a mixture of shares
or shares and options. The exception is the current managing
director who is paid in cash because of the very substantial
shareholding he currently controls in the company. For the
remaining group executives this payment is made in
equity, which ensures a longer-term focus to achieve
benefi ts consistent with the delivery of sustained growth of
shareholder value.
If the fi nancial objectives are achieved and each part of the incentive
program is paid at 100 per cent, the TTR will meet the company’s
TTR policy position of the upper quartile of the Mercer Survey
of Australian Major Corporates. Set out below are details of the
maximum payment for each part of the incentive program where
there has been above-target achievement of the incentive program
performance condition.
The performance condition for the incentive program is based
on return on funds employed (ROFE) in the business. Return is
calculated on the group’s earnings before interest and taxation
and adjusted for any non-operating items. Funds employed are
represented by shareholders funds plus total interest bearing debt.
The company believes ROFE is an appropriate performance
condition for the following reasons.
For many years the board has measured the company’s
performance using ‘economic value added’ methodology. It is
believed that if the company can consistently add economic value
(a satisfactory margin above the cost of capital), then this will be
recognised in share value.
ROFE ensures management is focused on the effi cient use of
capital and the measure remains effective regardless of the mix of
equity and debt, which may change from time to time.
The remuneration committee and the board review the choice of
the performance condition on an annual basis.
The board believes the following table demonstrates:
the consequences of the company’s performance on shareholder wealth; and
the remuneration policy is generating the desired increase in shareholder wealth.
Operating
EBIT
ROFE
achieved
EPS
Dividend
rate
Share price
Total
31 July shareholder
return*
$000
113,765
123,621
131,977
142,235
174,638
%
13.5
13.5
14.0
15.7
17.4
cents
per share
18
18
20
23
26
33.1
36.7
41.3
47.1
61.7
$
2.85
3.35
4.39
6.09
10.15
%
(4)
32
21
54
63
2001
2002
2003
2004
2005
*Source: Goldman Sachs JB Were.
The company has an employment contract with the managing director. This contract formalises the terms and conditions of employment.
The contract is for an indefi nite term.
The company may terminate the contract upon 12 months notice, in which case a termination payment equivalent to 24 months total
employment cost (base salary plus value of benefi ts such as motor vehicle and superannuation and any fringe benefi ts tax in relation to
those benefi ts,) will be paid. The company may terminate the contract immediately for serious misconduct.
Non-executive directors
The board’s policy with regard to non-executive directors’ remuneration is to position board remuneration at the market median with
comparable sized listed entities.
The board determines the fees payable to non-executive directors within the aggregate amount approved from time to time
by shareholders. At the company’s 2003 annual general meeting, shareholders approved an aggregate of $900,000 per year
(excluding superannuation costs).
Set out below are details of the annual fees payable at 31 July 2005.
Chairman1
Director board fee
Chairman audit committee
Chairman other board committees
Member audit committee
Member other board committees 2
$ 240,000
$ 95,000
$ 15,000
$ 10,000
$ 5,000
$ 2,500
1 The chairman, KM Hoggard, receives no fees as a member of any committee.
2 There is some common membership on the remuneration committee and nomination committee. Only one fee is paid where a director is a member of both committees.
The board has created a non-executive directors’ share plan whereby a director can elect to commit a proportion of director fees to acquire
company shares. The number of shares available in the plan will be calculated quarterly, using the weighted average of the price at which
shares were traded on the ASX in the fi ve days up to and including the day when shares are allocated to a director. Shares in the plan will
not vest until the earlier of three years or retirement. Other than in this respect, non-executive director remuneration is paid in cash. No
element of remuneration is performance related, i.e. linked to short-term or long-term incentives.
On 31 October 2003, directors unanimously resolved to discontinue the directors retirement benefi t plan, and benefi ts accrued under the
plan were calculated and, at the option of the relevant director, converted into shares or paid to the director’s superannuation fund.
Remuneration of specifi ed directors and specifi ed executives
Details of the nature and amount of each element of the emoluments of each director of Nufarm Limited and each of the fi ve offi cers of the
company and the consolidated entity receiving the highest emoluments are set out in the following tables.
36
Nufarm Limited 2005 Annual Report
AR FINS 8.0.indd 36-37
Nufarm Limited 2005 Annual Report 37
19/10/05 11:33:32 AM
directors’ report continued
Primary
Post
employment
Equity 1
Other
Total
Salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Retirement
benefit plan2
$
$
$
182,400
155,200
–
–
–
–
22,800
16,560
45,600
28,800
–
155,550
250,800
356,110
–
–
–
–
–
–
2,284,205
1,867,979
–
50,360
110,091
131,020
890,011
832,769
1,322,500
953,140
58,834
69,995
12,860
12,075
82,233
63,200
71,400
58,825
67,166
–
77,500
45,763
91,150
73,200
77,025
68,200
81,400
68,200
–
25,177
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27,858
17,460
9,175
4,119
10,425
7,560
9,487
7,110
9,925
7,110
–
2,266
8,925
6,266
17,850
10,800
–
150,588
98,175
226,479
8,141
–
14,250
–
–
–
–
–
–
48,190
89,557
–
100,925
49,882
114,675
139,750
–
68,500
104,362
154,610
–
150,500
109,175
236,610
14,250
–
13,100
10,800
17,850
10,800
17,850
10,800
–
–
–
149,792
–
177,235
Specified directors
KM Hoggard
2005
2004
DJ Rathbone
2005
2004
GDW Curlewis
2005
2004
Dr WB Goodfellow
2005
2004
GA Hounsell
2005
2004
DG McGauchie
2005
2004
GW McGregor
2005
2004
Dr JW Stocker
2005
2004
RFE Warburton
2005
2004
Sir Dryden Spring3
2005
2004
Total remuneration: specified directors
2005
2004
1,620,285
1,390,534
1,322,500
953,140
58,834
69,995
119,596
80,526
140,750
72,000
–
773,480
3,261,965
3,339,675
1 In 2003 the company created a non-executive directors share plan, which enables directors to elect to sacrifice 20 per cent of base director fees for the acquisition of company shares. The value
of such shares is disclosed as equity.
2 On 31 October 2003, directors resolved to discontinue its retirement benefit plan. Accrued benefits under the plan were calculated and paid to directors as set out below:
KM Hoggard
GDW Curlewis
Dr WB Goodfellow
GW McGregor
Dr JW Stocker
RFE Warburton
Base
fee
73,109
–
–
–
–
–
Super-
annuation
–
50,360
–
–
–
–
Equity
82,441
–
Total
155,550
50,360
150,588
150,588
48,190
68,500
48,190
68,500
150,500
150,500
3 Upon his retirement as a director on 11 December 2003, Sir Dryden Spring was paid a retirement benefit of $149,792. This was the amount accrued under the retirement benefit plan, which was
discontinued on 31 October 2003.
38
Nufarm Limited 2005 Annual Report
directors’ report continued
Primary
Post
employment
Equity 1
Other
Total
Salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
$
$
$
Specified executives
DA Pullan
Group General Manager Operations
2005
2004
374,990
351,219
JA Allen
Group General Manager Crop Protection
2005
2004
280,446
318,394
RF Ooms
Group General Manager Chemicals
2005
2004
369,943
349,717
294,576
159,000
27,930
46,331
73,649
65,373
159,000
151,200
294,291
92,832
16,715
21,758
169,078
102,000
158,833
150,000
277,076
149,000
8,109
11,716
70,973
63,574
149,000
141,736
KP Martin
Chief Financial Officer
2005
2004
380,852
346,140
277,076
146,468
12,767
25,327
38,702
38,318
149,000
141,736
B Benson
Group General Manager Agriculture
2005
2004
320,462
311,865
227,500
119,999
19,435
15,529
38,702
38,676
120,000
109,989
Total remuneration: specified executives
2005
2004
1,726,693
1,677,335
1,370,519
667,299
84,956
120,661
391,104
307,941
735,833
694,661
1 Shares issued under the incentive programme referred to on page 36.
930,145
773,123
919,363
684,984
875,101
715,743
858,397
697,989
726,099
596,058
4,309,105
3,467,897
–
–
–
–
–
–
Nufarm Limited 2005 Annual Report 39
directors’ report continued
Remuneration options: granted and vested
during the year
During the year there were no options granted to directors or
executives. Details of options vested and exercised by specified
executives are set out in Note 31 on page 79 of the financial
statements. The value of options exercised by specified directors
and specified executives are set out in the following table.
Options
exercised
in the period
Dollar value
of options
exercised in
the period
Specified directors
Indemnities and insurance for directors and officers
The company has entered into insurance contracts, which indemnify
directors and officers of the company, and its controlled entities
against liabilities. In accordance with normal commercial practices
under the terms of the insurance contracts, the nature of the
liabilities insured against and the amount of premiums paid
are confidential.
An indemnity agreement has been entered into between the
company and each of the directors named earlier in this report.
Under the agreement, the company has agreed to indemnify the
directors against any claim or for any expenses or costs, which
may arise as a result of the performance of their duties as directors.
There are no monetary limits to the extent of this indemnity.
DJ Rathbone
566,443
1,529,396
Rounding of amounts
Specified executives
B Benson
DA Pullan
JA Allen
KP Martin
RF Ooms
Total
98,345
153,091
153,091
143,406
143,406
265,531
413,346
413,346
387,196
387,196
The parent entity is a company of the kind specified in Australian
Securities and Investment Commission Class Order 98/0100.
In accordance with that class order, amounts in the financial
statements and the directors’ report have been rounded to the
nearest thousand dollars unless specifically stated to be otherwise.
This report has been made in accordance with a resolution
of directors.
1,257,782
3,396,011
Shares issued as a result of the exercise of options
Details of shares issued as a result of the exercise of options during
the financial year are as follows:
(a) 1,437,692 shares issued to group executives at an exercise price
of $2.70, which includes 1,257,782 shares issue to specified
executives as set out in Note 31 of page 79 of the financial
statements; and
(b) 61,336 shares issued to participants in the UK Savings Related
Share Options Scheme (1997) at an exercise price of $3.66.
Unissued shares under option
There are no unissued shares under option.
KM Hoggard
Director
DJ Rathbone
Director
Melbourne
4 October 2005
40
Nufarm Limited 2005 Annual Report
Nufarm Limited 2005 Annual Report 41
international financial reporting standards
Companies listed on the Australian Stock Exchange will formally adopt International Financial Reporting Standards (IFRS) for reporting
periods commencing on or after 1 January 2005. All Australian entities preparing financial reports under the Corporations Act 2001 must
comply with the Australian equivalents to IFRS.
Nufarm will adopt the Australian equivalent of International Financial Reporting Standards (AIFRS) for the year ending 31 July 2006.
The change is aimed at introducing a greater degree of harmony in the reporting of company financials in different countries. In particular,
the implementation of the new standards will change the accounting treatment of intangible assets, stock options and superannuation.
While the change will not have an impact on the underlying performance or cashflows of the company, it will have an effect on the value of
certain assets on the balance sheet and on the reported profit.
The implications of the change are addressed in note 37 (pages 86 to 89) to the financial statements.
For the purpose of providing a comparative 2005 profit estimate under the new standards, the company has reviewed its accounts and
made a best estimate of the quantitative impact of the changes as at the time the 31 July 2005 financial report was prepared.
The actual effects of the transition to AIFRS may differ to these estimates due to potential amendments; interpretations and emerging
accepted practice.
The major estimated impacts can be summarised as follows:
$ million
Total equity at July 2005
Operating profit after tax 2005
Reported net profit 2005
(inc. non operating items)
AGAAP
$000
616.6
103.5
104.3
AIFRS
$000
617.0
121.4
124.8
The major differential in the 2005 profit is attributable to a greatly reduced amortisation of intangible assets and goodwill, which amounts to
some $18.4 million in additional reported profit under the new standards.
42
Nufarm Limited 2005 Annual Report
statement of financial performance
12 MONTHS ENDED 31 JULY 2005
Revenue from ordinary activities
Cost of sales
Gross profit
Interest income
Other revenue
Expenses
Depreciation and amortisation
Borrowing costs
Operating expenses
Total expenses
Share of net profits of associates
Profit from ordinary activities before income tax expense
Income tax expense relating to ordinary activities
Consolidated
Parent
Notes
31.7.2005
$000
31.7.2004
$000
31.7.2005
$000
31.7.2004
$000
1,671,029
(1,019,105)
651,924
1,501
106,570
759,995
1,595,768
(908,956)
686,812
1,265
37,828
725,905
(61,199)
(40,011)
(545,222)
(646,432)
113,563
25,617
139,180
(33,333)
(64,807)
(33,603)
(521,013)
(619,423)
106,482
3,415
109,897
(31,621)
2
2
2
2
2
9
6(a)
64,664
(32,972)
31,692
20,748
47,052
99,492
(2,140)
(22,542)
(22,077)
(46,759)
52,733
–
52,733
(2,664)
70,085
(35,173)
34,912
20,645
40,871
96,428
(2,444)
(21,451)
(22,696)
(46,591)
49,837
–
49,837
(3,691)
Net profit
Net profit attributable to outside equity interest
105,847
(1,550)
78,276
(2,074)
50,069
–
46,146
–
23
Net profit attributable to members of the parent entity
104,297
76,202
50,069
46,146
Non-profit related changes in equity
Net exchange differences arising on translation of
opening net investment in foreign operations, net of related hedges
Share issue costs
Capital profit reserve decrease
Total revenues, expenses and valuation
adjustments attributable to members of the
parent entity and recognised directly in equity
Total changes in equity other than
those resulting from transactions with owners as owners
Earnings per share
Statutory earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Operating earnings per share
after excluding the non-operating profit detailed in note 5.
Basic operating earnings per share (cents per share)
Diluted operating earnings per share (cents per share)
20(a)
(11,983)
–
–
(6,749)
(450)
(6)
(77)
–
–
–
(450)
–
(11,983)
(7,205)
(77)
(450)
92,314
68,997
49,992
45,696
3
3
61.7
61.7
61.2
61.2
47.1
46.7
47.3
46.9
The accompanying notes form an integral part of these financial statements
Nufarm Limited 2005 Annual Report 43
statement of financial position
AT 31 JULY 2005
Current assets
Cash assets
Receivables
Inventories
Tax assets
Prepayments
Total current assets
Non-current assets
Receivables
Equity accounted investments
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other
Total non-current assets
TOTAL ASSETS
Current liabilities
Payables
Interest bearing liabilities
Tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Retained profits
Equity attributable to members of the parent entity
Outside equity interest
TOTAL EQUITY
Consolidated
Parent
Notes
31.7.2005
$000
31.7.2004
$000
31.7.2005
$000
31.7.2004
$000
56,233
225,268
423,946
8,138
12,780
726,365
56,826
232,518
432,139
6,858
7,951
736,292
66,409
210,420
1,943
313,535
44,836
164,605
20,309
822,057
1,548,422
38,535
24,953
3,713
376,632
34,302
196,021
21,130
695,286
1,431,578
333,183
260,404
12,349
19,947
625,883
280,155
14,420
11,319
305,894
931,777
616,645
216,827
5,871
388,150
610,848
5,797
616,645
397,939
112,411
15,401
25,111
550,862
287,180
22,673
10,369
320,222
871,084
560,494
210,530
17,854
324,401
552,785
7,709
560,494
7
8
6(b)
7
9
10
11
6(b)
12
13
14
15
16
15
6(c)
16
19
20
21
23
24
4,265
212,830
15,924
–
307
233,326
207,390
–
253,355
20,733
22,648
–
–
504,126
737,452
67,162
24,762
3,226
521
95,671
211,655
1,731
55
213,441
309,112
428,340
216,827
39,997
171,516
428,340
–
428,340
654
197,963
15,610
1,583
388
216,198
208,435
–
253,553
19,310
21,374
–
–
502,672
718,870
71,045
19,645
–
544
91,234
212,969
2,018
50
215,037
306,271
412,599
210,530
40,074
161,995
412,599
–
412,599
The accompanying notes form an integral part of these financial statements
44
Nufarm Limited 2005 Annual Report
statement of cash flows
12 MONTHS ENDED 31 JULY 2005
Inflows/(outflows)
Cash flows from operating activities
Receipts from customers
Dividends received
Interest received
Payments to suppliers and employees
Borrowing costs paid
Income tax paid
Net operating cash flows
Cash flows from investing activities
Proceeds from sale of non-current assets
Proceeds from sale of businesses
Payments for plant and equipment
Payments for investments
Payments for major project development expenditure,
trademarks and technology rights
Proceeds from foreign currency investment hedges (net)
Purchase of businesses, net of cash acquired
Net investing cash flows
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from call on partly paid shares
Proceeds from borrowings (net)
Advances to controlled entities (net)
Repayment of short term debt (net)
Repayment of borrowings (net)
Repayment of finance lease principal
Dividends paid
Net financing cash flows
Net increase (decrease) in cash held
Cash at the beginning of the period
Exchange rate fluctuations on foreign cash balances
Cash at the end of the period
Consolidated
Parent
Notes
31.7.2005
$000
31.7.2004
$000
31.7.2005
$000
31.7.2004
$000
1,836,426
2,964
2,680
(1,684,532)
(40,011)
(54,915)
62,612
1,747,974
3,099
1,182
(1,471,392)
(33,603)
(44,586)
202,674
772
75,066
(58,505)
(162,469)
(5,482)
–
(22,056)
(172,674)
226
44
212,141
–
–
–
(1,578)
(41,044)
169,789
59,727
(15,472)
1,580
45,835
18,399
6,692
(46,693)
(6,399)
(4,617)
4,894
(86,309)
(114,033)
57,759
93
–
–
(41,089)
(68,626)
(1,080)
(34,457)
(87,400)
1,241
(15,880)
(833)
(15,472)
25(b)
25(c)
25(d)
25(a)
84,506
40,713
14,802
(72,677)
(15,417)
(1,634)
50,293
238
247
(3,848)
–
–
–
–
(3,363)
226
44
–
(8,278)
–
–
–
(40,548)
(48,556)
(1,626)
(18,991)
120
(20,497)
87,956
34,699
16,271
(68,807)
(15,834)
(5,509)
48,776
154
724
(1,626)
(6,341)
–
–
–
(7,089)
57,759
93
–
(69,257)
–
–
–
(33,656)
(45,061)
(3,374)
(15,456)
(161)
(18,991)
The accompanying notes form an integral part of these financial statements
Nufarm Limited 2005 Annual Report 45
notes
NOTES TO THE FINANCIAL STATEMENTS
Basis of accounting
The financial statements have been prepared as general-purpose
financial reports, which comply with the requirements of the
Corporations Act 2001, Australian Accounting Standards and
Urgent Issues Group Consensus Views and other authoritative
pronouncements. The financial statements have also been prepared
on an historical cost basis.
Changes in accounting policies
The accounting policies adopted are consistent with those of the
previous year.
Principles of consolidation.
The consolidated financial statements include the financial
statements of the parent entity, Nufarm Limited, and its controlled
entities, referred to collectively throughout these financial statements
as the ‘Consolidated Entity’.
All inter-entity balances and transactions have been eliminated.
Where an entity either began or ceased to be controlled during the
year, the results are included only from the date control commenced
or up to the date control ceased.
Financial statements of foreign controlled entities presented
in accordance with overseas accounting principles are, for
consolidation purposes, adjusted to comply with group policy and
generally accepted accounting principles in Australia.
Taxes
Income tax
Tax-effect accounting is applied using the liability method whereby
income tax is regarded as an expense and is calculated on the
accounting profit after allowing for permanent differences. To
the extent timing differences occur between the time items are
recognised in the financial statements and when items are taken
into account in determining taxable income, the net related
taxation benefit or liability, calculated at current rates, is disclosed
as a deferred tax asset or deferred tax liability.
The benefits arising from estimated carry forward tax losses are
recorded as a deferred tax asset where realisation of such benefits
is considered to be virtually certain.
Indirect taxes (GST and VAT)
Revenues, expenses and assets are recognised net of the amount
of GST or VAT except:
where the indirect tax incurred on a purchase of goods and
services is not recoverable from the taxation authority, in
which case the indirect tax 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 indirect
tax included.
Foreign currency transactions
Foreign currency items are translated to Australian currency on the
following bases:
The net amount of indirect tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables in
the Statement of Financial Position.
transactions are converted at exchange rates approximating those
in effect at the date of each transaction;
amounts payable and receivable are translated at the exchange
rates at the close of business at balance date. Revaluation gains
and losses are brought to account as they occur;
the financial statements of all foreign operations are translated
using the current rate method, as they are considered
self-sustaining.
Exchange differences relating to monetary items are included in the
Statement of Financial Performance, as exchange gains or losses,
in the period when the exchange rates change, except where:
the exchange difference relates to hedging part of the net
investment in a self-sustaining foreign operation, in which case
the exchange difference is transferred to the foreign currency
translation reserve on consolidation;
the exchange difference relates to a transaction intended to
hedge the purchase or sale of goods or services, in which case
the exchange difference is included in the measurement of the
purchase or sale.
The practice of hedging net investments in self-sustaining foreign
operations was discontinued in June 2004.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the entity and the revenue can be
reliably measured. Sale of goods, net of rebates, returns, discounts
and other allowances occurs when economic control of the goods
has passed to the buyer. Interest income is recognised when the
entity acquires control of the right to receive the interest payment.
Dividend income is recognised when the entity acquires control of
the right to receive the dividend payment.
Cash flows are included in the Statement of Cash Flows on a
gross basis and the indirect taxes component of cash flows arising
from investing and financing activities are classified as operating
cash flows.
Tax consolidation
The parent company is the head entity in the tax-consolidated
group comprising all Australian wholly owned subsidiaries set
out in note 26. The head entity recognises all of the current and
deferred tax assets and liabilities of the tax-consolidated group
(after elimination of intra-group transactions).
The tax-consolidated group has entered into a tax funding
agreement that requires wholly owned subsidiaries to make
contributions to the head entity for current tax assets and liabilities
and movements in deferred tax balances arising from external
transactions during the year.
Under the tax funding agreement, the contributions are calculated
on a ‘stand-alone basis’. This means the contributions are
equivalent to the tax balances generated by external transactions
entered into by the wholly owned subsidiaries. The contributions are
payable as set out in the agreement and they reflect the timing of
the head entity’s obligations to make payments for tax liabilities to
the relevant tax authorities.
Cash and cash equivalents
Cash on hand, in banks and short-term deposits are stated at
nominal values.
For the purposes of the Statement of Cash Flows, cash includes
cash on hand and in banks, and money market investments on call,
net of outstanding bank overdrafts.
46
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
Receivables
Trade receivables are recognised and carried at original invoice
amount less provisions for rebates and any other uncollectible
debts. An estimate for doubtful debts is made when collection
of the full amount is no longer probable. Bad debts are charged
against profit as incurred. Receivables from related parties are
recognised and carried at the invoiced amount.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Raw material cost is direct acquisition cost and is assigned
on a first-in, first-out basis. For manufactured inventories, full
absorption costing is used, taking into account raw material
costs, direct manufacturing costs and all factory overheads,
including depreciation.
Due allowance is also provided for obsolete and slow moving
inventories.
In the Statement of Financial Performance, the cost of sales is
shown as a direct cost. Overhead expenses are included in the
operating expenses on a gross basis in the financial performance
disclosures note.
Recoverable amounts of non-current assets
The book value of all non-current assets is reviewed at least
annually. To the extent that it exceeds the recoverable amount, the
difference is charged against profit in the Statement of Financial
Performance. In determining the recoverable amount, the expected
net cash flows have been discounted to their present value using a
market determined, risk adjusted, discount rate of 9.0 per cent.
Equity accounted investments
Interests in associated entities are included in non-current
equity investments and brought to account using the equity
method. Under this method the investment in associates is
initially recognised at its cost of acquisition. Its carrying value is
subsequently adjusted for increases or decreases in the investor’s
share of post-acquisition results and reserves of the associate. The
investment in associated entities is decreased by the amount of
dividends received or receivable.
Joint ventures
Interests in joint venture operations are brought to account by
including in the respective financial statement categories:
the consolidated entity’s share in each of the individual assets
employed in the joint venture;
liabilities incurred by the consolidated entity in relation to the joint
venture including the consolidated entity’s share of any liabilities
for which the consolidated entity is jointly and/or severally liable;
the consolidated entity’s share of revenues and expenses of the
joint venture.
Interests in joint venture entities are carried at either the lower of
the equity-accounted amount or the recoverable amount in the
consolidated financial report.
Other financial assets
Interests in non-subsidiary, non-associated corporations are
included in other financial assets at the lower of cost or
recoverable amount.
Leased assets
Assets acquired under finance leases are capitalised and amortised
over the life of the relevant lease or, where ownership is likely to be
obtained on expiration of the lease, over the expected useful life of
the asset. Lease payments are allocated between interest expense
and reduction in the lease liability.
Operating lease assets are not capitalised. Rental payments are
charged against profit in the period in which they are incurred.
Property, plant and equipment
Land and buildings are carried at cost.
Property, plant and equipment, excluding freehold land, are
depreciated over their useful economic lives using the straight-line
methods as follows:
buildings
years leasehold improvements
owned plant and equipment
leased plant and equipment
Life
15–20
5 years
3–20 years
term of the lease
These depreciation rates are the same as the rates used in the
previous year.
Goodwill on acquisition
On acquisition of a controlled entity, the difference between the
purchase consideration plus related expenses, and the fair value
of identifiable net assets acquired, is initially brought to account as
goodwill on acquisition.
Acquired goodwill is amortised on a straight-line basis over the
period in which the benefits are expected to arise, which can be
up to 15 years. The unamortised balance of goodwill is reviewed at
each balance date, and is charged against profit to the extent that
applicable future benefits are no longer probable.
Patents and trademarks
Costs associated with patents and trademarks, which provide a
benefit for more than one financial year, are deferred and amortised
over the period of expected benefits, which can be up to 15 years.
The unamortised balance is reviewed each balance date, and is
charged against profit to the extent that future benefits are no
longer probable.
Other non-current assets
Deferred expenditure is included in other non current assets. This
expenditure is primarily of two categories:
Product development costs
Product development costs are charged against profit as incurred,
except where they relate to the development of significant new
products, formulations or registrations. Such development costs
are deferred to subsequent periods to the extent that future
benefits are expected, beyond any reasonable doubt, to equal or
exceed those costs and any future costs necessary to give rise to
the benefits.
Such deferred costs are amortised over future accounting periods
not exceeding five years. This is done in order to match the
costs with related benefits on the basis of expected future sales,
commencing with the initial commercialisation of the product.
The written down value is reviewed at each balance date and, to
the extent that it exceeds the recoverable amount, the difference
is charged against profit.
Nufarm Limited 2005 Annual Report 47
notes
NOTES TO THE FINANCIAL STATEMENTS
Borrowing costs
Borrowing costs are charged against profit as incurred,
except where:
(i) they relate to the financing of major projects under construction,
in which case they are capitalised to property, plant and
equipment up to the date of commissioning; or
(ii) they relate to large structured finance transactions, in which
case the costs are accounted for in deferred expenditure and
amortised over the period of the structured finance, not exceeding
five years.
Payables
Liabilities for trade payables and other amounts are carried at
cost, which is the fair value of the consideration to be paid in the
future for goods or services received, whether or not billed to the
consolidated entity. Payables to related parties are also carried
at cost.
Interest bearing liabilities
All loans are recorded at the principal amount, or in the case of
the capital notes, at the face value of the note. Borrowing costs,
including interest, are charged against profit as they accrue.
Provisions
Provision for employee benefits
Provision is made in the financial statements for benefits accruing
to employees in relation to annual leave and long service leave.
No provision is made for non-vesting sick leave as the anticipated
pattern of future sick leave taken indicates that accumulated
non-vesting leave will never be paid.
All on-costs are included in the determination of provisions. Vested
sick leave, annual leave, the current portion of long service leave
and workers’ compensation provisions are measured at their
nominal amounts, based on remuneration rates that are expected to
be paid when the liability is settled.
The non-current portion of the long service leave provision is
measured at the present value of estimated future cash flows.
In respect of defined benefit superannuation plans, all contributions
are expensed when made.
Other provisions include amounts for royalties, indirect taxes, real
estate taxes, social costs and other miscellaneous provisions.
Provisions for restructuring or termination benefits are only
recognised when a detailed plan has been approved and the
restructuring or termination has either commenced or been
publicly announced, or firm contracts related to the restructuring or
termination benefits have been entered into.
Contributed equity
Issued and paid up capital is recognised at the fair value of the
consideration received by the company. Any transaction costs
arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the share proceeds received. Ordinary
share capital bears no special terms or conditions affecting the
income or capital entitlements of the shareholders.
Earnings per share
Basic earnings per share is calculated as net profit attributable
to members, divided by the weighted average number of
ordinary shares.
48
Nufarm Limited 2005 Annual Report
Diluted earnings per share is calculated as net profit attributable
to members, divided by the weighted average number of ordinary
shares, and the number of ordinary shares that may be issued upon
the future exercising of options that have been granted.
Employee share and option ownership schemes
All employees are entitled to participate in share and option
ownership schemes after a qualifying period. The remuneration
costs associated with the new share plans (see note 32) are
expensed as incurred.
Derivative financial instruments
The company uses financial instruments with ‘off balance sheet’
risks to reduce exposure to fluctuations in foreign exchange and
interest rates.
Forward foreign exchange contracts, foreign currency swaps and
option contracts are arranged to hedge major foreign currency
sales and purchases, foreign currency loans and the translation of
foreign currency earnings and investments.
Interest rate swap agreements, options and forward rate
agreements (FRAs) are arranged to hedge against adverse
movements in interest rates on both long term and short
term loans.
Cross currency interest rate swap agreements hedge the foreign
currency, interest rate and cash flow exposures between the
capital notes issued in New Zealand and the group funding to
several jurisdictions to which the funds were advanced. Under
the terms of the swap agreement, the company agrees with
the counterparty banks to exchange the difference between the
fixed interest rates of various currencies of advances made and
to exchange the principal at an agreed rate of foreign currency
conversion. Amounts receivable under the cross currency interest
rate swap agreement are netted against interest expense as
they accrue.
Financial instruments are used to hedge specific underlying
positions only and are accounted for using the same basis as the
underlying position.
Counter-parties to financial instruments are major international
financial institutions with excellent credit ratings. The company
does not request security to support financial instruments entered
into. Possible losses arising from non-performance by these
counter-parties are adequately provided for.
For interest rate swap agreements entered into in connection with
the management of interest rate exposure, the differential to be
paid or received quarterly is accrued as interest rates change, and
is recognised as a component of interest income or expense over
the pricing period. Premiums paid for interest rate options and net
settlement on maturity of forward rate agreements, futures and
options are amortised over the period of the underlying liability
hedged by the instrument.
Comparatives
Where necessary, comparatives have been reclassified and
repositioned for consistency with current year disclosures.
notes
NOTES TO THE FINANCIAL STATEMENTS
2 Financial performance disclosures
Profit from ordinary activities is after crediting the following revenues
Interest income
Interest
Wholly owned controlled entities
Other unrelated parties
Total interest income
Other revenue
Dividends from wholly owned controlled entities
Management fees from controlled entities
Sundry income
Gross proceeds from sale of businesses (refer note 25)
Gross proceeds from sale of non-current assets
Total other revenue
Profit from ordinary activities is after charging the following expenses
Depreciation and amortisation
Amortisation of
Goodwill
Technology rights and trademarks
Plant and equipment under lease
Deferred expenditure
Depreciation of Buildings and improvements
Plant and equipment
Total depreciation and amortisation
Borrowing costs
Interest paid or payable to
Wholly owned controlled entities
Other unrelated parties
Costs of securitisation program
Finance lease charges
Total borrowing costs
Notes
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
–
1,501
1,501
–
1,265
1,265
13,623
7,125
20,748
–
–
10,573
95,225
772
106,570
–
–
5,138
11,672
21,018
37,828
40,592
4,463
1,512
247
238
47,052
(7,890)
(11,054)
(245)
(3,911)
(3,265)
(34,834)
(61,199)
(10,173)
(6,692)
(274)
(3,884)
(3,771)
(40,013)
(64,807)
–
–
–
–
(387)
(1,753)
(2,140)
14,544
6,101
20,645
34,699
4,125
1,893
–
154
40,871
–
–
–
–
(364)
(2,080)
(2,444)
–
(36,461)
(3,422)
(128)
(40,011)
–
(29,766)
(3,593)
(244)
(33,603)
(22,542)
–
–
–
(22,542)
(21,451)
–
–
–
(21,451)
Nufarm Limited 2005 Annual Report 49
notes
NOTES TO THE FINANCIAL STATEMENTS
2 Financial performance disclosures continued
Operating expenses
Staff expenses
Sales and distribution expenses
Carrying cost of disposed businesses
Plant related expenses
Other operating expenses
Occupancy expenses
Insurance
Write-down of non-current assets (refer note 5)
Travel
Research and development costs
Operating lease expenses
Other costs associated with disposal of non-current assets
Provision for doubtful debts expense
Carrying cost of disposed non-current assets
Total operating expenses
Operating expenses include
Net foreign exchange gains (losses) from
Hedges on foreign currency earnings for year
Unhedged receivables and payables
Customer bad debts written off
Net charge to provision for stock obsolescence
Donations
Other disclosures
Gain (loss) on disposal of non-current assets
Gain (loss) on sale of businesses (see note 36)
Superannuation contributions – defined benefit fund
Redundancy Costs (see note 5)
3 Earnings per share
Net profit
Net profit attributable to outside equity interest
Earnings used in the calculations of basic and diluted earnings per share
Add/subtract non-operating profit/(loss) (refer note 5)
Earnings excluding non-operating items used in the calculations of operating
earnings per share
50
Nufarm Limited 2005 Annual Report
Notes
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
(203,611)
(70,476)
(66,946)
(56,473)
(33,863)
(25,871)
(20,184)
(19,059)
(16,576)
(15,812)
(10,062)
(5,219)
(709)
(361)
(545,222)
(223,032)
(88,775)
(10,321)
(61,992)
(34,722)
(24,984)
(22,872)
–
(16,701)
(14,132)
(9,992)
(3,566)
(4,060)
(5,864)
(521,013)
–
5,394
(92)
(270)
(263)
1,419
884
(724)
961
(92)
411
23,060
(3,169)
(2,761)
11,588
1,351
(2,913)
(10,750)
(9,723)
(4,033)
(4)
(1,754)
(2,767)
(776)
(1,146)
–
(647)
(1,014)
(8)
–
–
(205)
(22,077)
–
330
1
(105)
–
33
243
–
–
(8,788)
(5,229)
–
(1,900)
(2,681)
(929)
(1,181)
–
(702)
(1,038)
–
–
–
(248)
(22,696)
–
(444)
32
(80)
–
(94)
–
–
–
Consolidated
2005
$000
2004
$000
105,847
(1,550)
104,297
78,276
(2,074)
76,202
823
(361)
103,474
76,563
notes
NOTES TO THE FINANCIAL STATEMENTS
Number of Shares
2005
2004
3 Earnings per share continued
Weighted average number of ordinary shares used in calculation of basic earnings per share
Weighted average number of share options used in calculation of diluted earnings per share
Weighted average number of ordinary shares used in calculation of diluted earnings per share
169,043,745 161,842,546
1,437,692
–
169,043,745 163,280,238
There have been no conversions to, calls of, or subscriptions for ordinary shares or issues
of ordinary shares since the reporting date and before the completion of this financial report.
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Operating earnings per share
Basic earnings per share excluding non-operating items (cents per share)
Diluted earnings per share excluding non-operating items (cents per share)
61.7
61.7
61.2
61.2
47.1
46.7
47.3
46.9
4 Segments
Business segments
Revenue
Sales to outside customers
Inter segment sales
Sales revenue
Other revenue
Total segment revenue
Unallocated revenue
Total consolidated revenue
Results
Segment result – operating
Segment result – non operating
Segment result – total
Unallocated expenses
Profit from ordinary activities before taxation
Income tax expense
Net profit
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Equity accounted investments included in segment assets
Acquisition of property, plant and equipment,
intangible assets and other non-current assets
Depreciation
Amortisation
Other non-cash expenses
Crop
protection
$000
Industrial
chemicals
$000
Corporate Eliminations Consolidated
$000
$000
$000
1,580,789
1,216
1,582,005
31,271
1,613,276
90,240
2,979
93,219
73,138
166,357
2005
–
–
–
2,161
2,161
–
(4,195)
(4,195)
–
(4,195)
191,915
(13,100)
178,815
9,453
17,072
26,525
(1,854)
(920)
(2,774)
–
–
–
1,307,283
71,616
14,723
–
335,366
18,425
5,567
–
209,399
1,021
–
227,097
31,946
21,467
7,789
7,645
5,879
308
1,340
30
274
1,325
805
–
–
–
–
–
1,671,029
–
1,671,029
106,570
1,777,599
1,501
1,779,100
199,514
3,052
202,566
(63,386)
139,180
(33,333)
105,847
1,393,622
154,800
1,548,422
359,358
572,419
931,777
210,420
234,772
38,099
23,100
9,934
The operating result shown in this note is operating profit before tax, interest and corporate cost allocations.
Nufarm Limited 2005 Annual Report 51
notes
NOTES TO THE FINANCIAL STATEMENTS
4 Segments continued
Geographic segments
Revenue
Sales to outside customers
Other revenue
Total segment revenue
Assets
Segment assets
Other segment information
Acquisition of property, plant and equipiment,
intangible assets and other non-current assets
Business segments
Revenue
Sales to outside customers
Inter segment sales
Sales revenue
Other revenue
Total segment revenue
Unallocated revenue
Total consolidated revenue
Results
Segment result – operating
Segment result – non operating
Segment result – total
Unallocated expenses
Profit from ordinary activities before taxation
Income tax expense
Net profit
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Equity accounted investments included in
segment assets
Acquisition of property, plant and equipment,
intangible assets and other non-current assets
Depreciation
Amortisation
Other non-cash expenses
52
Nufarm Limited 2005 Annual Report
Australasia
$000
Europe
$000
Americas Consolidated
$000
$000
2005
822,159
17,120
839,279
389,680
49,438
439,118
459,190
40,012
499,202
1,671,029
106,570
1,777,599
625,588
504,454
418,380
1,548,422
44,277
24,190
166,305
234,772
Crop
protection
$000
Industrial
chemicals
$000
Corporate Eliminations Consolidated
$000
$000
$000
1,452,861
2,026
1,454,887
25,634
1,480,521
142,445
3,045
145,490
1,367
146,857
2004
462
–
462
10,827
11,289
–
(5,071)
(5,071)
–
(5,071)
163,468
(1,546)
161,922
14,936
339
15,275
(7,092)
(190)
(7,282)
–
–
–
1,121,169
158,079
21,927
–
385,472
37,482
5,354
–
1,595,768
–
1,595,768
37,828
1,633,596
1,265
1,634,861
171,312
(1,397)
169,915
(60,018)
109,897
(31,621)
78,276
1,301,175
130,403
1,431,578
428,308
442,776
871,084
24,000
953
–
122,223
34,732
18,851
9,918
15,898
8,844
488
1,930
318
208
1,684
4,070
–
–
–
–
–
24,953
138,439
43,784
21,023
15,918
notes
NOTES TO THE FINANCIAL STATEMENTS
4 Segments continued
Geographic segments
Revenue
Sales to outside customers
Other revenue
Total segment revenue
Assets
Segment assets
Other segment information
Acquisition of property, plant and equipiment,
intangible assets and other non-current assets
Australasia
$000
Europe
$000
Americas Consolidated
$000
$000
2004
762,437
15,866
778,303
392,981
21,719
414,700
440,350
243
440,593
1,595,768
37,828
1,633,596
582,723
610,338
238,517
1,431,578
31,938
85,502
20,999
138,439
The consolidated entity’s operating companies are largely organised and managed according to the nature of the products and services
they provide, with each business segment offering different products and serving different markets.
The crop protection segment manufactures and distributes a range of herbicides, fungicides, insecticides and other products that are sold
into the agricultural, turf and specialty markets.
The industrial chemicals segment manufactures and distributes a range of industrial, fine and performance chemicals, which draw on
Nufarm’s core strengths in chemical synthesis and formulation.
The other segment includes other minor businesses and investments, which are separately managed from the above segments.
Geographically the group operates globally with operations in many countries and sales being made in over 100 countries, which are
split into three segments. Australasia covers Australia, New Zealand and Asia. The Americas covers North, South and Latin America.
Europe covers United Kingdom, continental Europe and Africa. The geographic sales reflect the domicile of the company’s customers.
All inter segment sales are at market prices. The operating result shown in this note is operating profit before tax, interest and corporate
cost allocations.
Segment accounting policies are consistent with the consolidated entity’s policies described in note 1.
5 Non-operating income and expenses
Gain on sale of businesses (refer note 36)
Gain on sale of building – France
Write down of UK fixed assets and remediation costs
Write down of intangibles
Restructuring costs – Europe
Plant closure costs – France
Net proceeds from insurance claim
Non-operating profit (loss) before tax
Tax thereon
Non-operating profit (loss) after tax
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
23,060
–
(15,967)
(2,709)
(2,761)
–
1,429
3,052
(2,229)
823
2,008
14,801
–
(2,930)
(11,540)
(3,736)
–
(1,397)
(1,036)
(361)
243
–
–
–
–
–
–
243
–
243
–
–
–
–
–
–
–
–
–
–
The UK asset write down ($14.6 million pre-tax), has assumed a zero recoverable amount for the assets.
Nufarm Limited 2005 Annual Report 53
notes
NOTES TO THE FINANCIAL STATEMENTS
6 Taxation
a) Income tax expense
Reconciliation to income tax expense
provided in the financial statements
Profit from ordinary activities
Prima facie tax thereon at 30%
Tax effect of permanent and other differences
Depreciation and amortisation not deductible
Other items not deductible
Exempt dividends received
Share of results of associates (net of tax)
Non-assessable gain on assets disposed
Other non assessible income
Research and development allowances
Amounts over-provided in prior years
Unrecognised tax losses utilised
Unrecognised capital allowances utilised
Income tax expense related to current and deferred tax
transactions of wholly-owned subsidiaries in the tax-consolidated group
Recovery of income tax expense under a tax funding agreement
Restatement of deferred tax balances due to income tax rate changes
Effect of different rates of tax on overseas income
Income tax expense relating to ordinary activities
b) Tax assets
Attributable to carry forward tax losses that have
accumulated in several tax jurisdictions. These losses will
be utilised against future profits in those jurisdictions.
Tax losses offset against current tax liabilities and deferred
tax liabilities
Attributable to timing differences
Depreciation
Provision for employee entitlements
Provision for doubtful debts
Provision for stock obsolescence
Balances of tax consolidation group entities transferred to parent entity
Other
Current portion
Non-current portion
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
139,180
41,754
109,897
32,969
52,733
15,820
49,837
14,951
1,808
2,325
(674)
(7,599)
(1,388)
(257)
(198)
9
(3,018)
(2,413)
–
–
(10)
2,994
33,333
1,668
3,802
–
(1,025)
–
(5)
(138)
(2,085)
(3,767)
–
–
–
(815)
1,017
31,621
11
–
(12,178)
–
(80)
(110)
–
(1,069)
–
–
25,029
(25,029)
–
270
2,664
–
454
(10,410)
–
–
–
–
(1,575)
–
–
7,637
(7,637)
–
271
3,691
32,600
25,607
1,265
3,791
(8,323)
24,277
15,092
5,525
1,198
792
–
6,090
52,974
8,138
44,836
(9,718)
15,889
10,713
4,936
1,342
548
–
7,732
41,160
6,858
34,302
–
1,265
855
190
–
155
20,218
(35)
22,648
–
22,648
–
3,791
835
196
27
121
18,022
(35)
22,957
1,583
21,374
54
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
6 Taxation continued
b) Tax assets continued
Income tax losses
Deferred tax benefits arising from tax losses of a controlled
entity have not been recognised as realisation of the
benefit is not considered virtually certain.
The potential tax losses will only be utilised if:
(a) the relevant company derives future assessable income of a nature and
amount sufficient to enable the benefit to be realised;
(b) the relevant company continues to comply with the conditions for
deductibility imposed by the law; and
(c) no changes in tax legislation adversely affect the relevant company
in realising the benefit.
c) Deferred tax
Attributable to timing differences
Depreciation and amortisation
Prepayments and deferred expenses
Balances of tax consolidation group entities
transferred to parent entity
Other
Tax asset offset
Total deferred tax
7 Receivables
Trade debtors and other receivables are non-interest
bearing and are generally for less than 90 day terms
Trade debtors
Provision for doubtful debts
Other amounts owing by wholly owned controlled entities
Current
Non current
Hedge receivables
Other receivables owing by associated entities
Other
Proceeds receivable from sale of businesses and
non-current assets
Provision for non-collectibility of sale proceeds
Total receivables
Current portion
Non-current portion
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
7,156
12,128
–
–
20,111
378
–
2,254
(8,323)
14,420
31,010
(70)
–
1,451
(9,718)
22,673
–
–
1,731
–
–
1,731
–
–
2,018
–
–
2,018
130,680
(2,423)
128,257
146,438
(3,237)
143,201
–
–
45,592
49,868
42,903
–
–
32,417
56,202
31,551
9,180
–
9,180
202,974
161,798
45,592
–
676
8,670
(82)
8,588
188,750
174,255
34,180
–
625
28,262
10,895
–
–
(3,205)
291,677
225,268
66,409
(3,213)
271,053
232,518
38,535
–
420,220
212,830
207,390
–
406,398
197,963
208,435
Nufarm Limited 2005 Annual Report 55
notes
NOTES TO THE FINANCIAL STATEMENTS
8 Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence of finished goods
Total inventories
9 Equity accounted investments
Aggregate carrying amount of associates
Balance at the beginning of the year
Exchange adjustment
Share of net profit
New investment
Elimination of profit in transaction with associate
Dividends received
Balance at the end of the year
Balance at the beginning of the year
Exchange adjustment
Share of net profit
New investment
Dividends received
Balance at the end of the year
Share of associates profits
Operating profits before income tax
Income tax expense
Share of net profits of associates
Share of profit by major associate
Agripec Quimica e Farmaceutica SA
Bayer CropScience Nufarm Ltd
Excel Crop Care Ltd
Others
Share of net profits of associates
56
Nufarm Limited 2005 Annual Report
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
105,062
6,492
318,005
429,559
(5,613)
423,946
111,851
11,906
314,706
438,463
(6,324)
432,139
3,464
708
12,220
16,392
(468)
15,924
2,332
728
12,916
15,976
(366)
15,610
Cost
$000
Retained
earnings
$000
Carrying
value
$000
9,190
2,348
–
162,469
(2,812)
–
171,195
2,916
(67)
–
6,341
–
9,190
2005
15,763
809
25,617
–
–
(2,964)
39,225
2004
15,365
452
3,415
–
(3,469)
15,763
24,953
3,157
25,617
162,469
(2,812)
(2,964)
210,420
18,281
385
3,415
6,341
(3,469)
24,953
Consolidated
2005
$000
34,362
(8,745)
25,617
22,611
2,001
997
8
25,617
2004
$000
5,075
(1,660)
3,415
–
3,001
–
414
3,415
notes
NOTES TO THE FINANCIAL STATEMENTS
9 Equity accounted investments continued
Financial summary of material associates
Agripec Quimica e Farmaceutica SA
During the year the group acquired 49.9% of Agripec Quimica
e Farmaceutica SA, a crop protection company based in Brazil.
Acquisition cost of this investment was $161 million.
Agripec’s contribution to profit for the period is as follows:
Group’s share of profit from ordinary activities before tax
Notional goodwill amortisation
Income tax on ordinary activities
Profit share of associate in equity income
Financing expense (after tax)
Profit share of associate in net profit after tax
Total assets
Total liabilities
Bayer CropScience Nufarm Limited
Total assets
Total liabilities
Share of profits of associate
Agchem Receivables Corp
Total assets
Total liabilities
Share of profits of associate
Consolidated
2005
$000
2004
$000
37,524
(7,814)
(7,099)
22,611
(3,519)
19,092
136,533
64,608
18,644
3,967
2,001
20,266
20,147
29
–
–
–
–
–
–
–
–
27,814
10,289
3,001
21,270
21,178
35
Balance date
of associate
Ownership and
voting interest
2005
2004
Carrying amount
2005
$000
2004
$000
Details of material interests in associated entities are as follows:
Agripec Quimica e Farmaceutica SA
Brazilian crop protection company
Bayer CropScience Nufarm Limited
(formerly Aventis Nufarm Limited)
UK agricultural chemical manufacturer
Excel Crop Care Ltd
Indian agricultural chemical manufacturer
31.12.2004
49.9%
0%
185,906
–
31.12.2004
25%
25%
14,509
17,158
31.3.2005
14%
14%
7,140
6,341
Nugrain Pty Ltd
Plant breeding and seed commercialisation company
31.7.2005
50%
40%
1,348
–
Associated entities have the following commitments. Nufarm’s share of capital commitments is $533,100 (2004: $nil) and share of finance lease
commitments is $nil (2004: $nil). A contingent liability exists in Agripec relating to income tax. Nufarm’s share of the contingent liability is $954,000.
Nufarm Limited 2005 Annual Report 57
notes
NOTES TO THE FINANCIAL STATEMENTS
10 Other financial assets
Investment in controlled entities
Balance at the beginning of the year
Reinstatement to parent entity
Balance at the end of the year
Investment in other companies (at cost)
Balance at the beginning of the year
Exchange adjustment
Pre-acquisition dividend
Balance at the end of the year
The investment above consists of three 50% joint ventures
with FMC Corporation in Poland, Slovakia and the Czech
Republic for the distribution of crop protection products.
Other loans including loans to the staff
share purchase schemes (refer note 32).
Balance at the beginning of the year
Exchange adjustment
New investments during the year
Disposals
Loans repaid during the year
Balance at the end of the year
Total other financial assets
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
–
–
–
1,073
(60)
–
1,013
–
–
–
247,212
–
247,212
245,210
2,002
247,212
1,083
(10)
–
1,073
6,341
(77)
(121)
6,143
6,341
–
–
6,341
2,640
(46)
15
(481)
(1,198)
930
1,943
5,089
(44)
58
–
(2,463)
2,640
3,713
–
–
–
–
–
–
253,355
–
–
–
–
–
–
253,553
58
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Freehold
land and
improvements
$000
Buildings
Plant and
machinery
$000
$000
Leased
plant and
machinery
$000
Capital
work in
progess
$000
Total
$000
2005
574,370
(24,517)
11,098
621
(47,990)
(66,595)
28,507
475,494
(344,054)
15,164
(34,834)
31,679
31,006
2,225
(298,814)
176,680
2004
556,312
(3,952)
11,907
(9,900)
(4,030)
24,033
574,370
(319,436)
2,161
(39,819)
9,282
3,803
(45)
(344,054)
230,316
5,206
(333)
261
–
(34)
–
(22)
5,078
(2,289)
146
(245)
20
–
2
(2,366)
2,712
5,404
(64)
15
(81)
–
(68)
5,206
(2,086)
26
(274)
–
–
45
(2,289)
2,917
140,319
(6,506)
1,033
–
(6,553)
(16,548)
12,120
123,865
(49,573)
2,923
(3,095)
4,738
7,959
(7,542)
(44,590)
79,275
143,715
(3,042)
1,926
(16,823)
(127)
14,670
140,319
(61,503)
1,044
(3,771)
14,626
31
–
(49,573)
90,746
35,038
(1,881)
557
–
(2,377)
(3,819)
5,049
32,567
(1,598)
169
(170)
–
316
–
(1,283)
31,284
35,153
(270)
182
(803)
–
776
35,038
(1,381)
(23)
(194)
–
–
–
(1,598)
33,440
19,213
(838)
45,556
–
(8)
–
(40,339)
23,584
–
–
–
–
–
–
–
23,584
26,088
(127)
32,663
–
–
(39,411)
19,213
–
–
–
–
–
–
–
19,213
774,146
(34,075)
58,505
621
(56,962)
(86,962)
5,315
660,588
(397,514)
18,402
(38,344)
36,437
39,281
(5,315)
(347,053)
313,535
766,672
(7,455)
46,693
(27,607)
(4,157)
–
774,146
(384,406)
3,208
(44,058)
23,908
3,834
–
(397,514)
376,632
11 Property, plant and equipment
Cost
Balance at the beginning of the year
Exchange adjustment
Additions
Additions through acquisition of entities
Disposals
Disposals through sale of entities
Transfers
Balance at the end of the year
Accumulated depreciation
Balance at the beginning of the year
Exchange adjustment
Depreciated during the year
Disposals
Disposals through sale of entities
Transfers
Balance at the end of the year
Total property, plant and equipment, net
Cost
Balance at the beginning of the year
Exchange adjustment
Additions
Disposals
Disposals through sale of entities
Transfers
Balance at the end of the year
Accumulated depreciation
Balance at the beginning of the year
Exchange adjustment
Depreciated during the year
Disposals
Disposals through sale of entities
Transfers
Balance at the end of the year
Total property, plant and equipment, net
Jones Lang LaSalle valued the land and buildings portfolio on an existing use valuation at $127.4 million at 31 July 2004.
Assets pledged as security for finance leases $4.1 million (2004: $2.9 million).
Nufarm Limited 2005 Annual Report 59
notes
NOTES TO THE FINANCIAL STATEMENTS
11 Property, plant and equipment continued
Cost
Balance at the beginning of the year
Exchange adjustment
Additions
Disposals
Disposals through sale of entities
Transfers
Balance at the end of the year
Accumulated depreciation
Balance at the beginning of the year
Exchange adjustment
Depreciated during the year
Disposals
Disposals through sale of entities
Balance at the end of the year
Total property, plant and equipment, net
Cost
Balance at the beginning of the year
Exchange adjustment
Additions
Disposals
Transfers
Balance at the end of the year
Accumulated depreciation
Balance at the beginning of the year
Exchange adjustment
Depreciated during the year
Disposals
Balance at the end of the year
Total property, plant and equipment, net
Freehold
land and
improvements
$000
Buildings
Parent
Plant and
machinery
$000
$000
Capital
work in
progess
$000
Total
$000
2005
13,367
(84)
33
–
–
–
13,316
(1,781)
15
(359)
–
–
(2,125)
11,191
2004
12,870
134
363
–
–
13,367
(1,420)
(15)
(346)
–
(1,781)
11,586
12,183
(74)
893
(478)
(8)
10
12,526
(6,398)
80
(1,753)
273
4
(7,794)
4,732
11,175
116
1,263
(431)
60
12,183
(4,455)
(46)
(2,080)
183
(6,398)
5,785
1,828
(12)
–
–
–
–
1,816
(31)
–
(28)
–
–
(59)
1,757
1,809
19
–
–
1,828
(13)
–
(18)
–
(31)
1,797
142
(1)
2,922
–
–
(10)
3,053
–
–
–
–
–
–
3,053
200
2
–
–
(60)
142
–
–
–
–
–
142
27,520
(171)
3,848
(478)
(8)
–
30,711
(8,210)
95
(2,140)
273
4
(9,978)
20,733
26,054
271
1,626
(431)
–
27,520
(5,888)
(61)
(2,444)
183
(8,210)
19,310
60
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
12
Intangible assets
Goodwill
Balance at the beginning of the year
Exchange adjustment
Acquired during the year
Disposals during the year
Transferred to intellectual property
Amortised during the year
Balance at the end of the period
Intellectual property
Balance at the beginning of the year
Exchange adjustment
Acquired during the year
Disposals during the year
Transferred from goodwill
Transferred to deferred costs
Amortised during the year
Balance at the end of the year
Major projects development expenditure
Balance at the beginning of the year
Expenditure capitalised during the year
Disposals during the year
Balance at the end of the year
Total intangible assets
13 Other non-current assets
Deferred product development expenditure
Balance at the beginning of the year
Exchange adjustment
Expenditure capitalised during the year
Transferred from intangibles
Disposals during the year
Written-off during the year
Amortised during the year
Balance at the end of the year
Borrowing costs
Balance at the beginning of the year
Exchange adjustment
Expenditure capitalised during the year
Amortised during the year
Balance at the end of the year
Total other non-current assets
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
85,406
(4,952)
5,448
(1,443)
(14,944)
(7,890)
61,625
110,615
(5,910)
3,717
(8,576)
14,944
(756)
(11,054)
102,980
–
–
–
–
164,605
18,248
(714)
5,482
756
(1,854)
(575)
(2,601)
18,742
2,882
(5)
–
(1,310)
1,567
20,309
103,835
(3,873)
–
(4,383)
–
(10,173)
85,406
37,023
(163)
80,490
(43)
–
–
(6,692)
110,615
3,693
240
(3,933)
–
196,021
16,285
(283)
4,539
–
(38)
–
(2,255)
18,248
4,396
37
78
(1,629)
2,882
21,130
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Nufarm Limited 2005 Annual Report 61
notes
NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
14 Payables
Trade creditors and other accruals are non–interest
bearing and are generally for less than 90 day terms
Trade creditors and accruals – unsecured
Amounts owing to wholly owned controlled entities
Associated entities
Total payables
15
Interest bearing liabilities
Capital notes
Face value NZD 225,000,000 (2004: NZD 225,000,000)
Long term unsecured subordinated fixed interest debt security with an election
date of 15 October 2006. On the election date, noteholders may elect to
retain their capital notes for a further five year period on the terms and
conditions, which will be advised, or to convert some or all of their capital
notes to ordinary shares in Nufarm Limited at 97.5% of the then current price
of ordinary shares. Immediately prior to the election date, the group may at its
option purchase some or all of the capital notes for cash at their principal
amount plus any accrued interest.
Bank loans – unsecured
Other loans – unsecured
Subordinated loans from wholly owned controlled entities
Finance lease liabilities – secured
Less current portion
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
Total current interest bearing liabilities
Total non-current interest bearing liabilities
Repayment of borrowings (excluding finance leases)
Period ending 31 July, 2006
Period ending 31 July, 2007
Period ending 31 July, 2008
No specified repayment date
The obligations with no specified repayment date are repayable upon
certain contingent events, which the directors believe will not occur in the
foreseeable future.
Average interest rates
Capital notes coupon
Bank loans
Other loans
Subordinated loans from wholly owned controlled entities
Finance lease liabilities – secured
331,896
–
1,287
333,183
396,262
–
1,677
397,939
7,816
59,346
–
67,162
9,866
61,179
–
71,045
202,338
203,620
–
–
336,405
188
–
1,628
540,559
259,889
9
506
260,404
280,155
189,627
2,355
–
3,989
399,591
111,099
23
1,289
112,411
287,180
24,762
–
211,655
–
236,417
24,762
–
–
24,762
211,655
19,645
–
212,969
–
232,614
19,645
–
–
19,645
212,969
259,898
216,308
62,546
179
78,528
203,620
–
2,332
24,762
211,655
–
–
19,645
212,969
–
–
%
8.6
4.8
3.2
–
5.8
%
8.6
3.5
3.1
–
7.7
%
–
–
–
9.2
–
%
–
–
–
9.2
–
All unsecured bank borrowings are provided by banks that are parties to the group negative pledge deed. The assets of all the entities included
in the negative pledge deed (note 26) are in excess of their related borrowings. Finance lease liabilities are secured over relevant leased plant.
62
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
16 Provisions
Employee entitlements
Restructuring
Other
Less current portion
Employee entitlements
Restructuring
Other
Total current provisions
Total non-current provisions
Other provisions
Balance at the beginning of the year
Exchange adjustment
Additional provision
Amounts utilised during the year
Balance at the end of the year
Provision for redundancy and restructuring costs
Balance at the beginning of the year
Exchange adjustment
Additional provision
Amounts utilised during the year
Balance at the end of the year
Employee benefits
The present values of employee entitlements not expected
to be settled within twelve months of reporting date have
been calculated using the following weighted averages:
Assumed rate of increase in wage and salary rates
Discount rate
Settlement term (years)
Number of employees at year end
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
25,969
3,014
2,283
31,266
15,196
3,014
1,737
19,947
11,319
2,103
(123)
2,076
(1,773)
2,283
7,025
(368)
3,346
(6,989)
3,014
26,352
7,025
2,103
35,480
15,983
7,025
2,103
25,111
10,369
3,148
(9)
1,843
(2,879)
2,103
–
–
11,789
(4,764)
7,025
4%
4%
5
2,279
4%
4%
5
2,613
576
–
–
576
521
–
–
521
55
–
–
–
–
–
–
–
–
–
–
–
–
–
–
594
–
–
594
544
–
–
544
50
107
(1)
–
(106)
–
–
–
–
–
–
–
–
–
–
Nufarm Limited 2005 Annual Report 63
notes
NOTES TO THE FINANCIAL STATEMENTS
17 Contingent liabilities
The parent entity has entered into a deed of cross guarantee
(refer note 26) in accordance with a class order issued by the
Australian Securities and Investments Commission. The parent
entity and all the Australian controlled entities, which are a party
to the deed, have guaranteed the repayment of all current and
future creditors in the event any of these companies are wound up.
The parent entity together with all the material wholly owned
controlled entities have entered into a negative pledge deed
with the group’s lenders whereby all group entities, which are a
party to the deed, have guaranteed the repayment of all
liabilities in the event that any of these companies are wound up.
Guarantee facility for Eastern European joint ventures
with FMC Corporation.
Receivables sold to financiers for which there is either partial or
full recourse to the company in the event that the debt is not
collected from the customer. (Receivables sold that have come
due for payment since year end have been collected by the financiers.)
The parent entity has guaranteed with the noteholders the
issuers’ obligations under the capital notes.
Environmental claim warranty
Environmental guarantee given to the purchaser of land and
buildings at Genneviliers for EUR 8.5 million. The guarantee
will end 18 months after the expiry of the business tenancy
contract. The directors do not believe that any material costs
will be incurred as a result of this guarantee.
Guarantee upon sale of a business limited to EUR 4.57 million on
account of possible remediation costs for soil and groundwater
contamination. This guarantee decreases from 2004
progressively to nil in 2011. The directors do not believe that
any material costs will be incurred as a result of this guarantee.
Nufarm Limited has been named as one of 15 parties in proceedings
filed by the New Zealand Commerce Commission (NZCC) relating to
alleged business practices in the timber treatment industry. The
company is cooperating with this investigation and currently does
not believe a material potential liability attaches to this issue. The
company divested its timber treatment business in 2001.
64
Nufarm Limited 2005 Annual Report
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
7,827
5,379
16,241
5,490
–
–
–
–
–
–
202,338
203,620
13,578
14,552
–
–
7,300
9,142
–
–
–
44,946
–
34,563
–
202,338
–
203,620
notes
NOTES TO THE FINANCIAL STATEMENTS
18 Commitments
Capital expenditure
Estimated cost of capital work covering buildings and plant
authorised by the board of directors and contracted for but
not yet provided for in the financial statements, together
with capital work required to meet regulatory consents. All
commitments are expected to be completed within 12 months.
Investments
The company owns 70% of the Australian and Malaysian
chemical formulating businesses of Mastra Holdings, which
are controlled entities. The company has a commitment to
acquire the remaining shares by December 2007. The cost
will be between USD 2.7 million and USD 4.5 million.
Leases
Operating leases are generally entered to access the use of
shorter term assets such as motor vehicles, mobile plant and
some office equipment. Rentals are fixed for the duration of
these leases. There are also a small number of leases for
office properties. These rentals have regular reviews based
on market rentals at the time of review. Lease commitments
for non-cancellable operating leases are payable as follows:
Not later than one year
Later than one year but not later than two years
Later than two years but not later than five years
Later than five years
Finance leases are entered to fund the acquisition of minor
items of plant and equipment, mainly by partly-owned
entities of the group. Rentals are fixed for the duration of
these leases. Lease commitments for capitalised finance
leases are payable as follows:
Not later than one year
Later than one year but not later than two years
Later than two years but not later than five years
Later than five years
Less future finance charges
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
17,027
17,224
922
–
min 3,553
min 3,845
max 5,921 max 6,408
–
–
7,538
6,660
10,146
5,365
29,709
7,195
6,306
11,073
6,936
31,510
355
192
120
–
667
330
301
280
–
911
535
616
571
–
1,722
(94)
1,628
1,392
1,736
1,180
–
4,308
(319)
3,989
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Nufarm Limited 2005 Annual Report 65
notes
NOTES TO THE FINANCIAL STATEMENTS
19 Contributed equity
Ordinary shares issued and fully paid
Balance at the beginning of the year
Issue of shares
Partly paid shares fully paid up during the year
Balance at the end of the year
Ordinary shares issued and partly paid to 1.0 cent
Balance at the beginning of the year
Partly paid shares fully paid up during the year
Balance at the end of the year
Total contributed equity
Number
of shares
2005
$000
2004
$000
167,735,767
1,702,782
233,325
169,671,874
210,528
5,571
728
216,827
149,216
60,662
650
210,528
233,325
(233,325)
–
169,671,874
2
(2)
–
216,827
3
(1)
2
210,530
Issues totaling 203,754 fully paid ordinary shares at an average price of $7.19 per share were made to the Nufarm executive share plan (2000),
the trustee of the employee global share plan and the trustee of the non- executive directors share plan. 1,437,692 shares were issued to group
executives at an exercise price of $2.70 per share under the executive share plan. 61,336 shares were issued to participants in the UK Savings
Related Share Options Scheme (1997) at an exercise prce of $3.66.
On 21 January 2004, 7,692,308 ordinary shares were placed with institutional investors at $5.20 per share. On 25 February 2004, 3,501,712
ordinary shares were placed with existing shareholders at $5.20 per share. Other issues, totaling 564,979 fully paid ordinary shares at an average
price of $5.14 per share, were made in accordance with the Nufarm executive share plan (2000) and the employee global share plan.
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
20 Reserves
a) Foreign currency translation
This reserve records exchange differences arising from the translation of the
financial statements of self-sustaining foreign operations together with the
net result of hedging the foreign currency exposures arising from the net
investment in those foreign operations.
Balance at the beginning of the year
Exchange fluctuation on opening net investment in overseas controlled entities
Hedging of net investment in overseas controlled entities
Balance at the end of the year
(16,339)
(11,983)
–
(28,322)
(9,590)
(5,478)
(1,271)
(16,339)
b) Asset revaluation
This reserve records increments in the value of land and buildings that were
revalued prior to 1992 when the company implemented a policy of recording
assets at cost unless there is a permanent diminution in carrying values.
Balance at the beginning of the year
Transferred to retained profits
Balance at the end of the year
348
–
348
1,409
(1,061)
348
–
(77)
–
(77)
–
–
–
–
–
–
–
–
–
–
c) Capital profits reserve
This reserve is used to accumulate realised capital profits
Balance at the beginning of the year
Adjustment
Balance at the end of the year
Total reserves
66
Nufarm Limited 2005 Annual Report
33,845
–
33,845
5,871
33,852
(7)
33,845
17,854
40,074
–
40,074
39,997
40,074
–
40,074
40,074
notes
NOTES TO THE FINANCIAL STATEMENTS
21 Retained profits
Balance at the beginning of the year
Net profit attributable to members of the parent entity
Aggregate amounts transferred from reserves
Dividends paid
Balance at the end of the year
22 Dividends
Dividends recognised in the current year by the company are:
Final 2004 ordinary
Interim 2005 ordinary
Total amount
Final 2003 ordinary
Interim 2004 ordinary
Total amount
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
324,401
104,297
–
(40,548)
388,150
280,793
76,202
1,062
(33,656)
324,401
161,995
50,069
–
(40,548)
171,516
149,505
46,146
–
(33,656)
161,995
Cents
per
share
15.0
9.0
13.0
8.0
Total
amount
$000
2005
25,293
15,255
40,548
2004
20,470
13,186
33,656
Franked/
unfranked
Payment
date
Franked
Franked
15-Nov-04
29-Apr-05
Franked
Franked
7-Nov-03
28-Apr-04
Dividends paid during the year were franked at the tax rate of 30%.
Subsequent events
On 29 September 2005, the directors declared a final dividend of 17 cents per share, fully franked, payable 11 November 2005.
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 31 July 2005 and will be
recognised in subsequent financial reports.
Franking credit balance
The amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the year at 30% (2004: 30%)
Franking credits that will arise from the payment of income
tax payable as at the end of the year
Balance at the end of the year
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
19,647
17,436
19,647
17,436
5,881
25,528
(2,048)
15,388
5,881
25,528
(2,048)
15,388
23 Outside equity interests
Balance at the beginning of the year
Exchange adjustment
Investments in which a minority interest was acquired
Share of operating profit
Dividends paid
Balance at the end of the year
7,709
(559)
(2,407)
1,550
(496)
5,797
6,638
(557)
356
2,074
(802)
7,709
–
–
–
–
–
–
–
–
–
–
–
–
Nufarm Limited 2005 Annual Report 67
notes
NOTES TO THE FINANCIAL STATEMENTS
24 Equity
Balance at the beginning of the year
Total changes in equity recognised in the statement
of financial performance
Transactions with owners as owners
Contributed equity
Dividends
Movement in outside equity interest
Balance at the end of the year
25 Statement of cash flows
a) Reconciliation of cash
For the purposes of the statement of cash flows, cash
includes cash on hand and in banks and deposits at call,
net of outstanding overdrafts.
The statements of cash flows are reconciled to respective
items in the statement of financial position as follows:
Cash assets
Bank overdrafts
b) Reconciliation of net profit (loss) after income tax
to net operating cash flows
Net profit (loss) after income tax
Dividend from associated company
Non-cash items:
Amortisation
Depreciation
Losses on disposal of fixed assets
Write-down in non current assets
Share of profits of associates net of tax
Movement in provisions for:
Deferred tax
Tax assets
Deferred product development expenses
Exchange rate change on foreign controlled entities provisions
Movements in working capital items:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
Increase/(decrease) in payables
Increase/(decrease) in income tax payable
Exchange rate change on foreign controlled
entities working capital items
Group tax setoff
Movements in intercompany balances relating
to cash transactions
Net operating cash flows
68
Nufarm Limited 2005 Annual Report
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
560,494
462,321
412,599
338,798
92,314
68,997
49,992
45,696
6,297
(40,548)
(1,912)
616,645
61,761
(33,656)
1,071
560,494
6,297
(40,548)
–
428,340
61,761
(33,656)
–
412,599
56,233
(10,398)
45,835
56,826
(72,298)
(15,472)
4,265
(24,762)
(20,497)
654
(19,645)
(18,991)
105,847
2,964
22,855
38,344
(393)
19,059
(25,617)
(8,253)
(11,815)
–
432
34,612
(11,543)
(7,433)
(42,227)
(3,053)
(16,555)
–
–
(80,811)
62,612
78,276
3,099
20,749
44,058
(100)
–
(3,415)
(2,674)
119
72
(49)
58,760
63,228
(72,683)
88,007
(10,830)
(5,183)
–
–
62,539
202,674
50,069
–
46,146
–
–
2,140
(33)
–
–
(286)
5,241
–
(21)
7,041
(643)
(313)
(2,232)
(1,706)
(93)
–
–
2,444
95
–
–
2,018
(9,357)
–
83
(4,717)
2,361
(155)
(1,471)
5,437
169
–
(1,830)
(6,817)
50,293
1,006
7,347
48,776
notes
NOTES TO THE FINANCIAL STATEMENTS
25 Statement of cash flows continued
c) Businesses sold
Businesses sold during 2005 include the Nufarm Specialty
Products business, SEAC, Pacific Raw Materials and the
Nufarm Brazil business.
Businesses sold during 2004 include the Florigene group,
Agrow, MCFI, Pharma Pacific intangibles and the
Wettasoil trademark.
Net assets disposed of were
Receivables
Inventory
Property, plant and equipment
Intangibles
Cash assets
Tax assets
Payables
Borrowings
Other
Cash gain on disposal
Consideration
Cost of disposal
Total consideration
Cash deferred
Amounts settled for businesses sold in prior years
Cash consideration received
Cash included in assets sold
Net cash effect
d) Businesses acquired
The 2005 acquisitions include the Ag-Seed Research business
and the 30% minority shareholding in Nufarm Indonesia.
The 2004 acquisitions include the BASF global phenoxy
herbicide business, various cereal fungicides in Germany,
Australian distribution rights to BASF products and antibiotics
product rights from Syngenta for the USA.
The aggregate amounts of net assets acquired were
Inventory
Property, plant and equipment
Intangibles
Payables
Outside equity interests
Total consideration
Cash deferred
Cash consideration paid
Cash included in net assets acquired
Net cash effect
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
11,677
15,626
47,681
7,309
164
–
(8,181)
(7,517)
187
23,060
90,006
5,219
95,225
(25,057)
5,062
75,230
(164)
75,066
882
397
323
6,936
642
1,978
(1,724)
–
887
1,351
11,672
–
11,672
(5,062)
724
7,334
(642)
6,692
–
621
9,132
11,896
2,407
24,056
(2,000)
22,056
–
22,056
18,661
–
80,488
–
–
99,149
(12,840)
86,309
–
86,309
–
–
4
–
–
–
–
–
–
243
247
–
247
–
247
–
247
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
724
724
–
724
–
–
–
–
–
–
–
–
–
–
The deferred cash settlement represents the value of the remaining consideration payable.
Nufarm Limited 2005 Annual Report 69
notes
NOTES TO THE FINANCIAL STATEMENTS
Notes
Place of
incorporation
Percentage of shares held
2004
2005
25 Statement of cash flows continued
e) Non cash financing and investing activities
During the financial year plant and equipment with an aggregate value of $261,000 (2004: $15,000) was acquired by means of finance leases.
During the financial year 1,702,782 ordinary shares were issued under the executive share plan, the global share plan and the
non-executive directors share plan. The deemed fair value of the shares, $5,571,249 (2004: $2,902,636) was expensed in the statement
of financial performance.
26 Controlled entities
The consolidated financial statements at 31 July 2005 include the
following controlled entities. All controlled entities have the same
financial year end as the parent entity.
Abel Lemon and Company Pty Ltd
Agcare Biotech Pty Ltd
Agryl Holdings Limited
Ag-seed Research Pty Ltd
Artfern Pty Ltd
Australis Services Pty Ltd
Bioclip NZ Pty Limited (Sold)
Camper Vertriebs (Liquidated)
Captec (NZ) Limited
Captec Pty Ltd
CFPI GmbH
Chemicca Limited
Chemturf Pty Ltd
Chloral Investment Trust
Chloral Unit Trust No1
Chloral Unit Trust No2
Clama s.a.s (formerly Societe Civile Mobiliere Clama)
CNG Holdings BV
Compagnie d’Applications Chimiques a l’Industrie s.a.s
(formerly Compagnie D’Applications Chimiques a L’Industrie)
Crop Care Australasia Pty Ltd
Crop Care Holdings Limited
Croplands Equipment Limited
Croplands Equipment Pty Ltd
Danestoke Pty Ltd
Electronic Agriculture Limited
Fchem (Aust) Limited
Fchem Limited
Fernz Canada Limited
Fernz Corporation (NZ) Limited
Fernz Singapore Pte Ltd
Fidene Limited
Finotech BV
Framchem SA
Health & Science Limited
Inpar s.a.s (formerly Societe Civile Inpar)
Interferon Limited
Interferon NZ Limited
70
Nufarm Limited 2005 Annual Report
(a),(b)
(a)
(a)
(a)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Germany
(b) New Zealand
Australia
(a)
Germany
Australia
Australia
Australia
Australia
Australia
France
Netherlands
France
(a)
(a)
(a),(b)
(a),(b)
(a)
(a),(b)
Australia
New Zealand
(b) New Zealand
Australia
Australia
Australia
Australia
(b) New Zealand
(b)
Canada
(b) New Zealand
Singapore
(b)
New Zealand
Netherlands
(b)
Egypt
(b)
(b) New Zealand
France
(b)
(a)
Australia
(b) New Zealand
100
70
100
100
100
100
–
–
100
100
100
100
100
80
80
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
100
–
100
100
100
100
100
100
100
100
100
80
80
80
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
notes
NOTES TO THE FINANCIAL STATEMENTS
26 Controlled entities continued
Laboratoire Europeen de Biotechnologie s.a.s
(formerly Laboratoire Europeen de Biotechnologie)
Ladino NV (liquidated)
Le Moulin des Ecluses s.a (formerly Societe
d’Etudes et Applications Chimiques)
Les Ecluses de la Garenne s.a.s (formerly Societe
des Ecluses de la Garenne)
Manaus Holdings Sdn Bhd
Marman (Nufarm) Inc
Marman de Guatemala Sociedad Anomima
Marman de Mexico Sociedad Anomima De Capital Variable
Marman Holdings LLC
Mastra Corporation Pty Ltd
Mastra Corporation Sdn Bhd
Mastra Corporation USA Pty Ltd
Mastra Holdings Sdn Bhd
Mastra Industries Sdn Bhd
Medisup International NV
Medisup Securities Limited
Neuchatel Pty Ltd
Nufarm (Asia) Pte Ltd
Nufarm Agriculture (Pty) Ltd
Nufarm Agriculture Inc
Nufarm Agriculture Zimbabwe (Pvt) Ltd
Nufarm Americas Holding Company
Nufarm Americas Inc
Nufarm Asia Sdn Bhd
Nufarm Australia Limited
Nufarm BV
Nufarm Chile Limitada
Nufarm Columbia Ltda
Nufarm Coogee Pty Ltd
Nufarm Crop Products UK Limited
Nufarm de Costa Rica
Nufarm de Guatemala SA
Nufarm de Mexico Sa de CV
Nufarm de Panama SA
Nufarm de Venezuela SA
Nufarm del Ecuador SA
Nufarm Deutschland GmbH
Nufarm do Brazil LTDA
Nufarm Energy Pty Ltd
Nufarm Espana SA
Nufarm GmbH
Nufarm GmbH
Nufarm GmbH & Co KG
Nufarm Holdings (NZ) Limited
Nufarm Holdings BV
Nufarm Holdings s.a.s (formerly Nufarm SC)
Nufarm Inagro Manufacturing Sdn Bhd (liquidated)
Nufarm Inc.
Notes
Place of
incorporation
Percentage of shares held
2004
2005
France
100
(a),(b)
(a)
(b)
(a),(b)
(b)
N. Antilles
France
(b)
France
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
Malaysia
USA
Guatemala
Mexico
USA
Australia
Malaysia
Australia
Malaysia
Malaysia
N. Antillies
Australia
Australia
Singapore
South Africa
Canada
Zimbabwe
USA
USA
Malaysia
Australia
Netherlands
Chile
Columbia
Australia
UK
Costa Rica
Guatemala
Mexico
Panama
Venezuela
Ecuador
Germany
Brazil
Australia
(a)
Spain
(b)
Germany
(b)
Austria
(b)
(b)
Austria
(b) New Zealand
Netherlands
(b)
France
(b)
Malaysia
USA
(b)
(b)
–
100
100
100
70
70
70
100
70
70
70
70
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
70
70
70
100
70
70
70
70
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Nufarm Limited 2005 Annual Report 71
notes
NOTES TO THE FINANCIAL STATEMENTS
26 Controlled entities continued
Nufarm Insurance Pte Ltd
Nufarm Investments Cooperatie WA
Nufarm Ireland Limited
Nufarm KK
Nufarm Malaysia Sdn Bhd
Nufarm Materials Limited
Nufarm NZ Limited
Nufarm Platte Pty Ltd
Nufarm Portugal LDA
Nufarm s.a.s (formerly Nufarm SA)
Nufarm SA
Nufarm Specialty Products Inc
Nufarm Technologies (M) Sdn Bhd
Nufarm Technologies USA
Nufarm Technologies USA Pty Ltd
Nufarm Treasury Pty Ltd
Nufarm UK Limited
Nuturf Pty Ltd
Opti-Crop Systems Pty Ltd
Pacific Raw Materials Australia Pty Ltd
Pacific Raw Materials Limited
Pharma Pacific Pty Ltd
PT Nufarm Indonesia
Rockmere Pty Ltd
Safepak Industries Sdn Bhd
Selchem Pty Ltd
TPL Limited
Notes
Place of
incorporation
Percentage of shares held
2004
2005
(b)
(a),(b)
(b)
Singapore
Netherlands
Ireland
Japan
Malaysia
Australia
(b) New Zealand
Australia
Portugal
France
Argentina
USA
Malaysia
New Zealand
Australia
Australia
(b)
(b)
(b)
(a),(b)
(b) United Kingdom
(a),(b)
(b)
(a)
(a)
Australia
Australia
Australia
New Zealand
Australia
Indonesia
Australia
Malaysia
Australia
(a)
(b) New Zealand
(a)
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
75
100
100
100
100
100
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
75
100
100
100
70
100
70
100
100
Note (a). These entities have entered into a deed of cross guarantee dated 10 July 2000 with Nufarm Limited which provides that all parties to
the deed will guarantee to each creditor payment in full of any debt of each company participating in the deed on winding-up of that company.
As a result of a class order issued by the Australian Securities and Investment Commission (dated 14 July 2000), these companies are relieved
from the requirement to prepare financial statements.
Note (b). These entities have entered into a deed of negative pledge dated 26th October 1996 with the group lenders which provides that all
parties to the deed will guarantee to each creditor payment in full of any debt of each company participating in the deed.
72
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
27 Closed group
The class order closed group consists of Nufarm Limited and wholly-owned
Australian entities as designated with an (a) in note 26.
Statement of financial performance
Profit from ordinary activities before income tax expense
Income tax expense relating to ordinary activities
Net profit attributable to members of the closed group
Retained profits at the beginning of the period
Include new members to the closed group
Dividends paid
Retained profits at the end of the period
Statement of financial position
Current assets
Cash assets
Receivables
Inventories
Tax assets
Prepayments
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Related company investments
Other financial assets
Intangible assets
Deferred tax assets
Other
Total non-current assets
TOTAL ASSETS
Current liabilities
Payables
Interest bearing liabilities
ax liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Retained profits
TOTAL EQUITY
Consolidated
31.7.2005
$000
31.7.2004
$000
104,738
(28,039)
76,699
198,683
–
(40,548)
234,834
5,997
296,807
196,854
–
5,215
504,873
57,057
(17,993)
39,064
186,726
6,549
(33,656)
198,683
2,328
325,208
193,412
3,841
2,819
527,608
45,592
150,918
266,929
125,727
12,649
22,161
3,602
627,578
1,132,451
34,180
138,261
258,256
7,294
15,095
22,366
2,073
477,525
1,005,133
476,131
84,286
4,898
7,985
573,300
31,000
1,732
7,659
40,391
613,691
518,760
471,784
33,586
–
7,472
512,842
10,000
2,018
6,840
18,858
531,700
473,433
224,027
59,899
234,834
518,760
217,730
57,020
198,683
473,433
Nufarm Limited 2005 Annual Report 73
notes
NOTES TO THE FINANCIAL STATEMENTS
28
Interests in joint venture operations
The company has an 80% interest in the Nufarm-Coogee Joint Venture
representing its two chlor alkali plants in Western Australia.
Assets employed
Cash
Receivables
Inventory
Prepayments
Property, plant and equipment
Total assets employed
Capital expenditure commitments
Group’s share of joint venture operations profit:
Profit from ordinary activities before tax
Income tax on ordinary activities
Net profit after tax
29 Financing arrangements
The consolidated entity has access to the following
facilities with a number of financial institutions and
vendors of acquired businesses.
Bank loan facilities
Other facilities
Subordinated debt facility
On-balance sheet financing facilities
Off-balance sheet receivables securitisation-type facilities
Total financing facilities
Bank loan facilities
Other facilities
Subordinated debt facility
On-balance sheet financing facilities
Off-balance sheet receivables securitisation-type facilities
Total financing facilities
2005
$000
2004
$000
936
2,338
772
135
13,285
17,466
219
10,070
(3,177)
6,893
1,668
2,275
825
150
14,518
19,436
829
8,692
(2,608)
6,084
Consolidated
Parent
Accessible
$000
Drawn
down
$000
Accessible
$000
Drawn
down
$000
2005
857,685
188
202,338
1,060,211
161,579
1,221,790
336,405
188
202,338
538,931
133,130
672,061
2004
647,804
3,997
203,620
855,421
162,410
1,017,831
189,627
2,355
203,620
395,602
138,661
534,263
–
–
–
–
–
–
–
–
–
–
–
–
24,762
–
–
24,762
–
24,762
19,645
–
–
19,645
–
19,645
Receivables securitisation
Receivables from Nufarm Australia Limited, Crop Care Australasia Pty Ltd, Nufarm Americas Inc and Nufarm Agriculture Inc are sold to an
unrelated third party, in which the consolidated entity has no ownership interest. The consolidated entity does not have the capacity to control
the unrelated third party and accordingly does not consolidate the entity.
At 31 July 2005, $133.1 million of receivables sold to the third party remain uncollected (2004: $138.7 million).
74
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
30 Financial instruments
a) Objectives for holding derivative financial instruments
The consolidated entity uses derivative financial instruments to manage specifically identified interest rate and foreign currency risks. The
consolidated entity does not trade derivatives. The group is primarily exposed to the risk of movements in the value of the Australian dollar relative
to certain foreign currencies, including the US dollar, the Euro and the British Pound, and the movement in interest rates. The consolidated entity
hedges a portion of its anticipated sales and purchases. A comprehensive board-approved treasury policy sets limits for management to hedge
such exposures.
b) Credit risk exposure
The consolidated entity’s exposures to on balance sheet risk are as indicated by the carrying amounts of its financial assets as indicated in the
statement of financial position. It does not have a significant exposure to any individual counterparty, as transactions are undertaken with a large
number of customers in various markets. In relation to derivative financial instruments, whether recognised or unrecognised, credit risk arises
from the potential failure of counterparties to meet their obligations under the contract or arrangement. Total derivatives are disclosed in
note 30(d).
c) Foreign exchange
The following table summarises by currency the Australian dollar value of all forward foreign exchange agreements and foreign exchange options.
Foreign currency amounts are translated at rates current at the reporting date.
Currency
US dollars
Less than 12 months
Over 12 to 60 months
Canadian dollars
Less than 12 months
Over 12 to 60 months
Euros
Less than 12 months
Over 12 to 60 months
British pounds
Less than 12 months
Over 12 to 60 months
Others
Less than 12 months
Average
exchange rate
2005
2004
2005
Buy
$000
Sell
$000
2004
Buy
$000
Sell
$000
0.7656
0.7600
0.7046
0.7022
114,701
–
14,111
26,314
73,040
–
5,174
28,481
0.9385
0.9360
0.9234
0.9336
19
–
20,234
8,547
–
–
992
8,569
0.5998
0.6260
0.5811
0.5841
8,895
–
673
103,843
26,694
–
15,408
111,282
0.4141
0.4330
0.3919
0.3858
3,031
–
–
23,094
666
–
–
25,923
–
–
1,767
128,413
149
196,965
4,278
104,678
1,097
196,926
Nufarm Limited 2005 Annual Report 75
notes
NOTES TO THE FINANCIAL STATEMENTS
30 Financial instruments continued
d) Net fair value of financial assets and liabilities
The carrying amounts of financial assets and financial liabilities
(including derivatives) are considered to equate to their fair
values, except as disclosed in the table below. Net fair values
are determined using market rates that existed at the end of
the year for similar instruments with similar maturities.
Financial liabilities
Capital notes – one to five years
Derivatives
Forward exchange contracts are being used to hedge the
following foreign currency exposures.
Receivables – less than one year
Receivables – more than one year
Payables – less than one year
Forward exchange contracts, currency options and
cross currency interest rate swaps are being used to hedge
the following foreign currency exposures.
Foreign investments and advances – less than one year
– one to five years
Interest rate swaps are being used to hedge the following
interest rate exposures
Payable maturities – less than one year
– one to five years
Carrying
Amount
2005
Consolidated
Net fair
value
2005
Carrying
Amount
2004
Net fair
value
2004
$000
$000
$000
$000
202,338
201,681
203,620
203,156
35,167
–
71,834
35,230
–
71,360
7,262
–
101,150
7,242
–
100,816
56,579
161,798
56,865
170,551
15,408
174,255
15,408
187,600
147,508
20,000
147,495
19,784
–
178,481
–
177,253
76
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
30 Financial instruments continued
e) Interest rate risk exposures
The following table summarises interest rate
risk for the consolidated entity. Interest
rate swaps had an average effective
interest rate of 4.2% (2004: 4.2%).
Financial assets
Cash on deposit
Financial liabilities
Capital notes
Bank loans
Other loans
Finance leases
Interest rate swaps
Employee benefits
Financial assets
Cash on deposit
Financial liabilities
Capital notes
Bank loans
Other loans
Finance leases
Interest rate swaps
Employee benefits
Floating
interest rate
Fixed Interest
maturing in
Non-interest
bearing
$000
< 1 year
$000
1 to 5 years
$000
$000
Total
$000
2005
40,468
–
–
–
336,405
188
–
(167,508)
25,969
195,054
–
–
–
506
147,508
–
148,014
202,338
–
–
1,122
20,000
223,460
2004
31,534
–
–
–
189,627
2,355
–
(178,481)
26,352
39,853
–
–
–
1,289
–
1,289
203,620
–
–
2,700
178,481
–
384,801
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40,468
202,338
336,405
188
1,628
–
25,969
566,528
31,534
203,620
189,627
2,355
3,989
–
26,352
425,943
The weighted average interest rate for cash on deposit was 3.2% (2004: 2.6%) . All other assets and liabilities are non-interest bearing.
f) Hedges of anticipated future transactions
The following table summarises unrealised gains and losses on forward exchange contracts entered as hedges of future anticipated
sales and purchases.
Expected recognition period
Less than one year
More than one year
2005
2004
$000
Gains
$000
Losses
$000
Gains
$000
Losses
65
–
126
–
35
–
1
–
Nufarm Limited 2005 Annual Report 77
notes
NOTES TO THE FINANCIAL STATEMENTS
31 Director and executive disclosures
a) Details of specified directors and specified executives
(I) Specified directors
KM Hoggard
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow
GA Hounsell
DG Mc Gauchie
GW McGregor
Dr JW Stocker
RFE Warburton
(ii) Specified executives
B Benson
DA Pullan
JA Allen
KP Martin
RF Ooms
Chairman
Managing director and chief executive
(appointed 1 October 2004)
(retired 31 July 2005)
Group general manager agriculture
Group general manager operations
Group general manager crop protection
Chief financial officer
Group general manager chemicals
b) Remuneration of specified directors and specified executives
Disclosures of remuneration policies, service contracts and details of remuneration are included in the remuneration report in
the Director’s Report.
e) Loans to specified directors and specified executives
There were no loans to directors and specified executives at 31 July 2005.
78
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
Shares held
in Nufarm Ltd
Balance
at 1 Aug
2004
Granted
as remun-
eration
Exercise
of options
Net
change
other
Balance
at 31July
2005
31 Director and executive disclosures continued
d) Shareholdings of specified directors and specified executives
Specified directors
KM Hoggard
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow
GA Hounsell
DG Mc Gauchie
GW McGregor
Dr JW Stocker
RFE Warburton
1 3
1
1
1
1
1
1 2
2
5,869,837
30,696,167
24,787
1,464,528
–
3,817
32,418
26,546
61,513
4,912
–
–
1,918
1,452
1,452
1,461
1,918
1,918
–
566,443
–
–
–
–
–
–
–
(3,500,000)
(1,350,000)
16,000
–
10,000
3,000
–
–
–
2,374,749
29,912,610
40,787
1,466,446
11,452
8,269
33,879
28,464
63,431
Specified executives
JA Allen
B Benson
KP Martin
RF Ooms
DA Pullan
Total
196,317
83,374
229,338
155,485
186,095
39,030,222
22,094
16,692
20,726
20,726
22,117
117,386
153,091
98,345
143,406
143,406
153,091
1,257,782
(145,936)
(46,266)
(38,000)
–
(131,880)
(5,183,082)
225,566
152,145
355,470
319,617
229,423
35,222,308
All equity transactions with specified directors and executives other than those arising from the exercise of remuneration options have been
entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.
1 Messrs Hoggard, Goodfellow, Hounsell, McGauchie, McGregor, Stocker and Warburton are participants in the non-executive share plan, which enables participants to sacrifice 20% of their base
director fees to the acquisition of company shares. These shares do not vest until the earlier of three years or retirement.
2 Messrs Hoggard and Rathbone also have a beneficial interest in 218,725 fully paid shares as trustees of the Nufarm Limited Share Plan.
3 The shareholding of Dr WB Goodfellow includes his relevant interest in:
(i) St Kentigern Trust Board (429,855 shares) – Dr Goodfellow, whilst Chairman of the Trust Board, has no beneficial interest in the shares;
(ii) three trusts of which he is a non-beneficial trustee (807,039) shares; and
(iii) Waikato Investment Company Limited (113,616 shares).
St Kentigern Trust Board also hold 2,270,000 capital notes issued by Fernz Corporation (NZ) Ltd, a related body corporate.
Balance at
beginning
of period
1 Aug 2004
Granted
as
remuner-
ation
Options
exercised
Balance at
end of
period
31 July 2005
$ value of
options
exercised in
the period
e) Remuneration options: granted and vested during the year
Specified directors
DJ Rathbone
566,443
–
566,443
–
$1,529,396
Specified executives
B Benson
DA Pullan
JA Allen
KP Martin
RF Ooms
Total
98,345
153,091
153,091
143,406
143,406
1,257,782
–
–
–
–
–
–
98,345
153,091
153,091
143,406
143,406
1,257,782
–
–
–
–
–
–
$265,531
$413,346
$413,346
$387,196
$387,196
$3,396,011
Details of shares issued as a result of the exercise of options during the financial year are as follows:
a) 1,437,692 shares issued to group executives at an exercise price of $2.70, which includes 1,257,782 shares issued to specified directors and
executives as detailed above; and
b) 61,336 shares issued to participants in the UK Savings Related Share Option Scheme (1997) at an exercise price of $3.66.
There are no unissued shares under option.
Nufarm Limited 2005 Annual Report 79
The Nufarm Executive Share Plan (2000) offers shares at no cost
to executives. The executives may select an alternative mix of
shares (at no cost) and options at a cost determined under the
‘Black Scholes’ methodology. These benefits are only given when
a predetermined return on capital employed is achieved over the
relevant period. The shares and options are subject to forfeiture
and dealing restrictions. The executive cannot deal in the shares or
options for a period of between three and ten years without board
approval. An independent trustee holds the shares and options on
behalf of the executives. At 31 July 2005 there were 60 participants
(2004: 65 participants) in the scheme and 1,492,327 shares
(2004: 1,572,401) were allocated and held by the trustee on behalf
of the participants. A further 1,437,692 (2004: 1,437,692) options
had been granted under the plan, all of which were exercised during
the year at an exercise price of $2.70 per share. The cost of issuing
shares is expensed in the year of issue and the cost of granting
options is expensed in the year they are exercised.
The Global Share Plan commenced in 2001 and is available to all
permanent employees. Participants contribute a proportion of their
salary to purchase shares. The company will contribute an amount
equal to 10 % of the number of the ordinary shares acquired with a
participant’s contribution in the form of additional ordinary shares.
Amounts over 10 % of the participant’s salary can be contributed
but will not be matched. For each year the shares are held, up
to a maximum of five years, the company contributes a further
10 % of the value of the shares acquired with the participant’s
contrinution. An independent trustee holds the shares on behalf of
the participants. There are 769 participants at 31 July 2005
(2004: 761 participants). The cost of issuing shares is expensed
in the year of issue.
The power of appointment and removal of the trustees for the share
purchase schemes is vested in the company. All equity transactions
with specified directors and executives other than those arising from
the exercise of remuneration options have been entered into under
terms and conditions no more favourable than those the entity
would have adopted if dealing at arm’s length.
notes
NOTES TO THE FINANCIAL STATEMENTS
32 Employee share purchase schemes
The Nufarm Limited Staff Share Purchase Scheme No.2 (1990)
enabled the issue of partly paid ordinary shares to all staff who had
completed two years service with the company, issued at a 10 %
discount on market price at the date of the offer. The shares have
been issued partly paid with one cent per share paid on acceptance
and the balance payable over four calls, which are made at the end
of the second, third, fourth and fifth years. Once the call is paid
to the company, one quarter of the total shares allocated will vest
directly to the employee as fully paid shares. Partly paid shares do
not rank for dividends until fully paid and voting rights are exercised
by the trustees in proportion to the amount paid up on the shares,
while the shares remain partly paid. At 31 July 2005, all partly paid
shares had been fully paid and therefore, the trustee is holding no
partly paid shares. The comparative partly paid share for 2004 were
218,600 ordinary shares paid to one cent per share, with $684,218
remaining uncalled.
The Nufarm Limited Executive Share Purchase Scheme (1984)
enabled the issue of fully paid ordinary shares to executive directors
and senior executives, issued at a price equal to 70 % of the market
price at the date of the offer. There is an eight year restrictive period
during which time the allocated shares are held by the trustees
and the consideration will be paid over the restrictive period with all
dividends, net of tax, being applied in reduction of the advances by
the company to the trustees which total $149,748 at 31 July 2005
(2004: $2,027,657). Each executive is entitled to exercise voting
rights attached to the shares allocated. At 31 July 2005 the trustees
of the Executive Share Purchase Scheme (1984) held 100,000
(2004: 522,000) ordinary shares, all of which were allocated. There
are six remaining participants (2004: 72 participants) in the scheme.
A UK Savings Related Share Options Scheme (1997) enabled
the issue of ordinary share options to eligible staff in the United
Kingdom who had completed two years service with the company.
The scheme has two parts. Firstly, it is an agreement between the
employee and a savings institution to save a fixed amount every
month for five years. At the end of the period, the savings institution
adds a tax free interest bonus to the employee’s savings. Secondly,
the scheme provides the employee with an option to buy Nufarm’s
shares from the proceeds of the amount with the savings institution.
The share options are issued at a 10 % discount on market price
at the date of offer. Share options do not rank for dividends or carry
voting rights. No employee chose to exercise his/her option under
the first offer and the options granted under that offer have
now expired. At 31 July 2005, all share options outstanding at
31 July 2004 (77,514) had been exercised or had expired. The
shares exercised (61,336) were at a price of $3.66 per share.
The above plans have been replaced by the plans below.
80
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
32 Employee share purchase schemes continued
Summary of share movements in the global share plan
Balance at the beginning of the period
Matching shares allocated – current period
Matching shares allocated – prior period adjustment
Loyalty shares allocated
Shares held by trustee
Balance at the end of the period
The average issue price of the 444,366 shares to date is $5.88 per share.
Number
of shares
2005
275,169
41,213
(15,713)
85,521
58,176
444,366
Executive share option plan
Weighted
Weighted
Number
average
of options exercise price
2005
2005
Number
average
of options exercise price
2004
2004
Balance at the beginning of the period
Granted
Exercised
Expired
Balance at the end of the period
Number of options
All outstanding
options were exercised
during 2005.
77,514
871,249
566,443
1,515,206
–
(1,499,028)
(16,178)
–
2.72
–
2.72
3.66
–
1,528,279
–
–
(13,073)
1,515,206
2.72
–
–
3.56
2.72
Grant
date
Exercise
date
2005
Expiry
Weighted
average
date exercise price
–
–
–
–
2004
31.01.2000
26.10.2001
3.12.2001
28.02.2005
26.10.2004
13.12.2004
1.3.2005
26.10.2011
13.12.2011
3.56
2.70
2.70
Nufarm Limited 2005 Annual Report 81
notes
NOTES TO THE FINANCIAL STATEMENTS
33 Superannuation commitments
The company operates a defined benefit pension scheme in the United Kingdom, where the benefits are based on estimates of final
pensionable pay. Under this scheme, contributions to the scheme are charged to the statement of financial performance so as to spread
the cost of pensions over employees’ working lives with the company. The contributions are determined by the scheme’s qualified actuaries
on the basis of regular contributions. The pensions costs are determined with the advice of independent qualified actuaries using the
projected unit method.
Details of superannuation funds as extracted
from their most recent financial report
Accrued benefits
Net market value of plan assets
Deficit
Vested benefits
The above amounts were measured at 31 July 2005.
2005
$000
32,120
21,365
10,755
30,145
2004
$000
34,528
20,391
14,137
33,076
The company operates a defined benefit pension scheme in the Netherlands, where the benefits are based on pensionable salary. Under
this scheme, contributions to the scheme are charged to the statement of financial performance so as to spread the cost of pensions over
employees’ working lives with the company. The first full actuarial valuation of the scheme was completed as at 31 July 2004.
Liabilities have been calculated using the projected unit method with the advice of independent qualified actuaries.
Details of superannuation funds as extracted from
their most recent financial report
Accrued benefits
Net market value of plan assets
Deficit
Vested benefits
2005
$000
15,594
10,171
5,423
10,928
2004
$000
12,816
8,375
4,441
8,591
In France, a payments system exists whereby the employees receive a payment upon retirement based on their final salary and years of
service with their final employer. This system has some similarity to a defined benefit superannuation scheme.
At July 2005, an actuarial assessment of the future potential liability was EUR 6.4 million (AUD$10.2 million). The liability at July 2004 was
EUR 5.9 million (AUD$10.1 million).
82
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
34 Related party disclosures
a) Transactions with related parties in the wholly-owned group
In addition to those transactions disclosed in note 2, the parent entity entered into the following transactions during the year with related
parties in the wholly-owned group:
loans were advanced and repayments received on short term intercompany accounts
proceeds of the capital notes issue have been on-lent through the parent entity to fund group investments and working capital
market rates have been charged for these fixed term subordinated loans
management fees were received from several wholly-owned controlled entities
These transactions were undertaken on commercial terms and conditions.
There were transactions with directors of the entity or their director-related entities which are considered trivial, domestic in nature, and were
at market values. Therefore, the transactions have been excluded from the detailed related party disclosures.
b) Transactions with other related parties
Bayer CropScience Nufarm Limited
Agchem Receivables Corp
SRFA LLC
Agripec Quimica e Farmaceutica SA
sales to
purchases from
loan payable
loan receivable
interest paid
sales to
loan payable
interest payable
receivable
sales to
Consolidated
2005
$000
10,723
11,181
50,348
1,450
1,523
1,821
658
28
19,035
8,569
2004
$000
11,200
11,182
52,769
1,371
1,215
2,388
1,424
–
–
–
c) Ultimate controlling entity
The ultimate controlling entity of the consolidated entity is Nufarm Limited (ABN 37 091 323 312).
Nufarm Limited 2005 Annual Report 83
notes
NOTES TO THE FINANCIAL STATEMENTS
35 Auditors’ remuneration
Audit services
KPMG Australia (2004: Ernst & Young Australia)
Audit and review of financial reports
Review of IFRS disclosures
Overseas KPMG firms (2004: Overseas Ernst & Young firms)
Audit and review of financial reports
Other auditors
Audit and review of financial reports
Other services
KPMG Australia (2004: Ernst & Young Australia)
IFRS conversion advice
Tax compliance services
Tax – assistance
Tax consolidation advice
Accounting advice
Overseas KPMG firms (2004: Overseas Ernst & Young firms)
Tax compliance services
Corporate structure advice
Due diligence services
Other assurance services
Consolidated
Parent
2005
$000
2004
$000
2005
$000
2004
$000
321
25
601
947
148
1,095
25
–
–
–
20
–
–
31
–
76
394
–
705
1,099
148
1,247
43
315
178
176
–
208
120
–
21
1,061
49
–
–
49
–
49
–
–
–
–
–
–
–
–
–
–
58
–
–
58
–
58
–
–
–
–
–
–
–
–
–
–
84
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
36 Discontinuing operation
Businesses sold during 2005 include the Nufarm Specialty Products business (Dec 2004),
the SEAC business (Feb 2005), Pacific Raw Materials business in New Zealand (July 2005)
and the Nufarm Brazil business (July 2005).
Businesses sold during 2004 include the Florigene group (Oct 2003), Agrow (Mar 2004),
MCFI (Aug 2003), Pharma Pacific (July 2004) and the Wettasoil trademark (July 2004).
The Florigene business is included in the other product segment and Agrow and MCFI
are in the Crop Protection segment.
Financial performance information
Revenues from ordinary activitie
Expenses
Profit from ordinary activities before income tax expense
Income tax expense relating to ordinary activities
Net profit
Asset and liability disposals
Total assets
Total liabilities
Net assets
Proceeds from divestment of business
Carrying value of assets sold in divestment
Amortisation of intellectual property
Other costs of divestment
Profit on divestment
Related income tax
Profit on divestment (net of income tax expense)
Cash flows
Operating
Investing
Financing
Net cash flows
Consolidated
2005
$000
2004
$000
45,173
40,388
4,785
1,301
3,484
84,816
17,870
66,946
95,225
(66,946)
–
(5,219)
23,060
8,791
14,269
(8,669)
(4,042)
4,602
(8,109)
2,917
3,475
(558)
(71)
(487)
12,045
1,724
10,321
11,672
(10,321)
–
–
1,351
–
1,351
(411)
(23)
(1,310)
(1,744)
Nufarm Limited 2005 Annual Report 85
notes
NOTES TO THE FINANCIAL STATEMENTS
37
Impact of adopting AASB equivalents to IASB standards
Nufarm Limited is in the process of transitioning its accounting policies and financial reporting from current Australian Accounting Standards
(AGAAP) to Australian equivalents of International Financial Reporting Standards (AIFRS), which will be applicable for the financial year
ending 31 July 2006. In 2004, the company allocated internal resources and engaged external resources to conduct impact assessments
to identify key areas that would be impacted by the transition to AIFRS. As a result, Nufarm appointed an AIFRS manager to address each
of the areas in order of priority. The AIFRS manager has reviewed each of the key areas and discussed their impact with management,
external auditors and the audit committee. Priority has been given to the preparation of an opening balance sheet in accordance with AIFRS
as at 1 August 2004, Nufarm’s transition date to AIFRS. This forms the basis of accounting under AIFRS in the future and is required when
Nufarm prepares its first fully AIFRS compliant financial report for the year ending 31 July 2006.
Set out below are the key areas where accounting policies are expected to change on adoption of AIFRS and the best estimate of the
quantitative impact of the changes on total equity as at the date of transition and 31 July 2005 and on net profit for the year ended
31 July 2005.
The figures disclosed are management’s best estimates of the quantitative impact of the changes as at the date of preparing the 31 July financial
report based on AIFRS that are expected to be in place when completing the first AIFRS financial report. The actual effects of transition to AIFRS
may differ from the estimates disclosed due to:
(a) ongoing work being undertaken by the AIFRS manager; (b) potential amendments to AIFRS and interpretations thereof being issued by the
standard-setters and IFRIC; and (c) emerging accepted practice in the interpretation and application of AIFRS and UIG interpretations. This
note provides a summary of AIFRS impacts and further disclosure will be provided in the first complete AIFRS financial report for a true and
fair view to be presented under AIFRS.
(a) Reconciliation of equity as presented under AGAAP to that under AIFRS
Total equity under AGAAP
616,645
560,494
428,340
412,599
Consolidated
Notes
31.7.2005
$000
31.7.2004
$000
31.7.2005
$000
Parent
31.7.2004
$000
Adjustments to retained earnings (net of tax)
Recognition of defined benefit pension deficit
Impairment of assets including goodwill
Reversal of goodwill amortisation
Increase in equity investment – Agripec
Recognition of share-based payment expense
Reversal of foreign currency translation reserve
Reversal of asset revaluation reserve
Recognition of net deferred tax asset
Reversal of intangible amortisation
Recognition of minority interest
Adjustments to other reserves (net of tax)
Reversal of foreign currency translation reserve
Reversal of asset revaluation reserve
Foreign currency translation impact of above entries
Total equity under AIFRS
Total assets under AIFRS
Total liabilities under AIFRS
Total net assets under AIFRS
86
Nufarm Limited 2005 Annual Report
(i)
(ii)
(iii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(v)
(vi)
(17,945)
–
5,736
7,753
654
16,339
(348)
(517)
4,619
(178)
16,113
(16,339)
348
280
(15,711)
617,047
(19,569)
(2,844)
–
–
373
16,339
(348)
(511)
–
(143)
(6,703)
(16,339)
348
–
(15,991)
537,800
–
–
–
–
654
–
–
–
–
–
654
–
(732)
–
–
373
–
–
–
–
–
(359)
–
–
–
–
428,994
–
–
–
–
412,240
1,715,204
(1,098,157)
617,047
1,578,830
(1,041,030)
537,800
738,106
(309,112)
428,994
718,511
(306,271)
412,240
notes
NOTES TO THE FINANCIAL STATEMENTS
Impact of adopting AASB equivalents to
37
IASB standards continued
(i) Under AASB 119 Employee Benefits, the group would recognise
the net deficit in its employer sponsored defined benefit pension
funds as a liability. Under Australian GAAP, defined benefit plans are
accounted for on a cash basis, with no defined benefit obligation
or plan assets recognised in the balance sheet. At the date of
transition, an amount of $27.7 million ($19.6 million after-tax)
would be recognised as a liability of the consolidated entity with
a consequential decrease in retained earnings. For the financial
year ended 31 July 2005, the adjustment in the consolidated entity
to recognise the reduction in the pension liability for the year is
expected to be $1.4 million, which is mainly the result of currency
gains during the year.
There was an increase in employer cost in the income statement
of $0.1 million and actuarial losses direct to retained earnings of
$0.1 million.
(ii) AASB 136 Impairment of Assets prescribes requirements
for assessing whether an asset is impaired and the accounting
treatment for the recognition and measurement of impairment
losses. For assets other than goodwill and intangibles with an
indefinite useful life, AASB 136 requires that, at each reporting
date, the entity assesses whether there are any indicators that an
asset may be impaired. Where there is an indication of impairment
and for goodwill and intangibles with an indefinite life, the asset’s
recoverable amount must be calculated. Recoverable amount is
the higher of the fair value less costs to sell and value in use. Fair
value less costs to sell is best evidenced by a price in a binding sale
agreement but may be based on best estimates of the amount the
entity could obtain in disposing of the asset at the reporting date.
Value in use is based on management’s best estimate of the future
cash flows the entity expects to derive from continued use of the
asset in its current condition. The future cash flows would be based
on the individual asset or the cash generating unit level. Where
an asset’s recoverable amount is less than that asset’s carrying
amount, an impairment loss will be taken to the income statement
to reduce the carrying amount to recoverable amount. All assets,
including goodwill and intangibles with an indefinite useful life, have
been tested for impairment, based on their value in use, at transition
date and at year-end. For the consolidated entity, at transition an
impairment loss of $3.7 million has been taken against intangibles
and recognised as a reduction in retained earnings due to the more
rigorous impairment test under AIFRS.
(iii) Under AASB 3 Business Combinations, goodwill would not
be permitted to be amortised but instead is subject to impairment
testing on an annual basis and on the occurrence of triggers which
may indicate a potential impairment. Currently, the group amortises
goodwill over its useful life but not exceeding 15 years. The group
has not elected to apply AASB 3 retrospectively and hence, prior
year amortisation would not be written-back as at the date of
transition and the fair value of assets and liabilities acquired before
transition have not been restated.
(iv) Under AASB 2 Share Based Payments, the company would
recognise the fair value of shares or options granted to employees
as an expense on a pro-rata basis over the vesting period in the
income statement with a corresponding adjustment to equity.
Share-based payment costs are generally not recognised under
AGAAP. At transition date, the consolidated entity did not have
any options granted to employees that fall under the scope of
the standard. However, the entity does have an employee share
program whereby matching and loyalty shares are granted to
employees over five years after a one year qualifying period.
Under AIFRS, the expense of the matching and loyalty shares is
recognised over the respective vesting period, rather than as the
matching and loyalty shares are issued.
(v) The AASB 1 election to reset existing foreign currency
translation reserve balance to nil is expected to be adopted. The
balance of foreign currency translation reserve at transition of $16.3
million has been offset to retained earnings.
(vi) Property, plant and equipment will be measured at cost under
AIFRS. However, as permitted by the election available under AASB
1, at transition date certain items of property, plant and equipment
are expected to be recognised at deemed cost, being a revalued
amount prior to transition date that approximates the fair value as at
the date of transition. Any asset revaluation reserve balance relating
to these assets will be derecognised at transition date and adjusted
against retained earnings.
(vii) On transition to AIFRS the balance sheet method of tax
effect accounting will be adopted, rather than the liability method
applied currently under Australian GAAP. Under the balance sheet
approach, income tax in the profit and loss statement for the year
comprises current and deferred taxes. Current tax is the expected
tax payable on the taxable income for the year. Deferred tax is
provided using the balance sheet liability method, providing for
temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the amounts
used for tax purposes. A deferred tax asset will be recognised
only to the extent that future taxable profits are probable. The
expected impact on the consolidated entity at 1 August 2004 of the
change in basis and the transition adjustments on the net deferred
tax balances is an increase of $0.5 million and an adjustment to
retained earnings of $0.5 million.
(viii) Intangible assets acquired will be stated at cost less
accumulated amortisation and impairment losses. On transition
other intangible assets have been reviewed to ensure they are
capable of recognition under AASB 138 Intangible Assets and
tested for impairment. Amortisation will be recognised on a
straight-line basis over the estimated useful lives of the intangible
assets, unless such lives are indefinite. Intangible assets with an
indefinite useful life will not be subject to amortisation but tested for
impairment annually. The group is expected to have intangibles with
indefinite useful lives such as registrations, trade marks and brand
names, which were previously amortised under AGAAP.
Nufarm Limited 2005 Annual Report 87
notes
NOTES TO THE FINANCIAL STATEMENTS
Impact of adopting AASB equivalents to
37
IASB standards continued
(ix) Under AIFRS expenditure on research activities will be expensed
as incurred whereas under current AGAAP certain research costs
are included within development projects and therefore capitalised.
Under AIFRS, expenditure on development activities is capitalised
if the product or process is technically and commercially feasible
and the consolidated entity has sufficient resources to complete the
development. Capitalised development expenditure will be stated
at cost less accumulated amortisation and impairment losses. At
transition and at year-end, the group did not have any capitalised
research expenditure and has not identified significant development
expenditure not already capitalised under AGAAP.
(x) Under AIFRS, securitisation receivables and payables are
expected to be brought back onto the balance sheet as AIFRS
considers the probability of risks and benefits in determining control,
not just the possibility. This will apply to the group in the 31 July
2005 reporting year. At transition, the impact of this change will be
to increase receivables by $138.7 million and increase payables by
$138.7 million. At 31 July 2005 both receivables and payables will
increase by $133.1 million.
(xi) Under the AIFRS consolidation standard AASB127, the
securitisation receivable entity is consolidated on the balance sheet.
Previously, it had been equity accounted. This will apply for both the
transitional balance sheet and the 31 July reporting year. The impact
for the reporting period is an increase on total assets of $1.0 million,
an increase in total liabilities of $1.2 million and a reduction in equity
by $0.2 million.
(xii) Management have applied the exemption provided in AASB
1 First-time Adoption of Australian Equivalents to International
Financial Reporting Standards, which permits entities not to apply
the requirements of AASB 132 Financial Instruments: Presentation
and Disclosures and AASB 139 Financial Instruments: Recognition
and Measurement for the financial year ended 31 July 2005. The
standards will be applied from 1 August 2005. The AIFRS project
manager is in the process of determining the impact that adopting
the standards would have on the financial statements of the group.
The expected impact of adopting AASB 132 and AASB 139 is that
all derivatives will be recognised at fair value on the balance sheet
and cash flow hedge accounting can only be considered where
effectiveness test are met on a prospective and retrospective basis.
Ineffectiveness outside the prescribe range precludes the used of
hedge accounting and may result in amounts recognised in the
income statement which had not previously been recognised.
(xiii) Under AASB 138 Intangible Assets, computer software that
is not integral to the operation of a manufacturing faciity should
be classified as an intangible asset rather than property, plant
and equipment. At transition, $2.8 million of software has been
reclassified to intangibles from property, plant and equipment. At
year-end, $3.1 million has been reclassified.
(b) Reconciliation of net profit under AGAAP to that under AIFRS
Notes
(i)
(ii)
(ii)
(iii)
(iv)
(v)
(vi)
Consolidated
31.7.2005
$000
Parent
31.7.2005
$000
104,297
(53)
5,770
7,814
4,804
(656)
2,844
(33)
124,787
50,069
–
–
–
–
(656)
–
–
49,413
3,407
–
121,380
49,413
Net profit as reported under AGAAP
Movement in defined benefit pension deficit
Amortisation of goodwill
Equity income – Agripec
Amortisation of intangibles
Share-based payment expense
Reversal of impairment losses recognised in AGAAP
Adjustment to income tax expense
Net profit under AIFRS
Less non-operating profit
Operating net profit under AIFRS
88
Nufarm Limited 2005 Annual Report
notes
NOTES TO THE FINANCIAL STATEMENTS
Impact of adopting AASB equivalents to
37
IASB standards continued
(i) The defined benefit pension deficit for the group, which would
be recognised under AASB 119 as at 31 July 2005, has decreased
from 1 August 2004. However, an increase in employer costs of
$0.1 million resulted in a decrease in AIFRS profit for the year. Refer
also to note 37 (a) (i) above.
(ii) Under AASB 3 Business Combinations, goodwill is not
permitted to be amortised but instead is subject to annual
impairment testing. Currently, the group amortises goodwill over
its useful life but not exceeding 20 years. Under the new policy,
amortisation would no longer be charged but goodwill would be
written down to the extent it is impaired. This results in an increase
in AIFRS profit of $5.8 miilion for the year. See also note 37 (a)(iii)
above. The notional goodwill on the Agripec equity investment is no
longer amortised resulting in an increase in equity income of $7.8
million for the year.
(iii) Under AASB 138 Intangible Assets, intangible assets with
indefinite lives will no longer be amortised but instead is subject
to annual impairment testing. Currently, the group amortises
intangibles over their useful lives but not exceeding 15 years. Under
the new policy, intangibles with an indefinite life would be written
down to the extent they are impaired. Intangibles with a finite life will
continue to be amortised on a straight-line basis over their useful
lives. This results in an increase to AIFRS profit of $4.8 million for the
year. See also note 37 (a)(viii) above.
(iv) Under AASB 2 Share-based Payments, the company would
recognise the fair value of share entitlements granted to employees
as remuneration as an expense on a pro-rata basis in the income
statement over the vesting period. Share-based payments are
generally not recognised under AGAAP. This would result in a
decrease in profit from AGAAP to AIFRS.
(v) Under AASB 136 Impairment of Assets, the group’s assets,
including goodwill and intangible assets with indefinite lives, would
be tested for impairment as part of the cash generating unit to
which they belong. Any impairment losses are recognised in the
income statement.
(vi) The adjustment to income tax expense relates to the above
AIFRS adjustments as well as to the reversal of the deferred tax
liability, which would be recognised as at the transition date under
AIFRS in relation to revalued assets.
(vii) Under AIFRS, revenue from the disposal of assets is
recognised on a net basis as revenue or expense, rather than
separately recognising the consideration received as revenue.
Therefore, other revenue will no longer include the proceeds from
sale of assets (2005: $95.2 million) but will be disclosed as a net
gain on the sale of assets ($23.1 million).
(c) Restated AIFRS Statement of Cash Flows for the year
ended 31 July 2005
No material impacts are expected to the cash flows presented
under AGAAP on adoption of AIFRS.
38 Subsequent events
The company announced in August 2005 that it had sold its
Australian turf/specialty business, Nuturf Pty Ltd, to Hong Kong
based C K Life Sciences International Holdings inc. for $7.2 million.
2005 financial year sales for Nuturf Pty Ltd were some $21 million
and the business contributed net earnings of $1.1 million. This
small wholesale business had not achieved sufficient scale in the
Australian market to justify ongoing investment.
Nufarm Limited 2005 Annual Report 89
director’s declaration
1. In the opinion of the directors of Nufarm Limited:
(a) the financial statements and associated notes including the
remuneration disclosures that are contained in the attached
Remuneration Report in the Directors’ Report are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the
company and consolidated entity as at 31 July 2005 and
of their performance, as represented by the results of their
operations and their cash flows, for the year ended on that
date; and
(ii) complying with Accounting Standards in Australia, including
AASB 1046 Director and Executive Disclosures by Disclosing
Entities and the 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.
2. There are reasonable grounds to believe that the company and
the controlled entities identified in note 26 will be able to meet
any obligations or liabilities to which they are or may become
subject to by virtue of the deed of cross guarantee between the
companyand those controlled entities pursuant to ASIC Class
Order 98/ 1418.
3. The directors have been given the declarations required by
Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year
ended 31 July 2005.
Signed in accordance with a resolution of directors:
KM Hoggard
Director
DJ Rathbone
Director
Melbourne
4 October 2005
90
Nufarm Limited 2005 Annual Report
nnual Report 91
Nufarm Limited 2005 Annual Report 91
NNufarm Limited
2005 AAnnual Report
ufarm Limited 2005
92
Nufarm Limited 2005 Annual Report
trend statement
SUPPLEMENTARY INFORMATION
2005
$000
2004
$000
2003
$000
2002
$000
2001
$000
2000
$000
Operating results
Sales revenue
Operating profit after tax and minority interests
Non-recurring item after tax
Profit attributable to members of
the parent entity
Dividends paid and provided
Retained profits
Total equity
Contributed equity
Retained profits and reserves
Represented by
Current assets
Current liabilities
Net current assets
Non-current assets
Non-current liabilities
Capital notes
Net assets
1,671,029
103,474
823
1,595,768
76,563
(361)
1,458,811
64,269
12,824
1,429,275
56,834
–
1,323,232
51,138
(55,664)
1,213,042
51,984
4,206
104,297
40,548
63,749
76,202
33,656
42,546
77,093
10,894
66,199
56,834
27,952
28,882
(4,526)
27,808
(32,334)
56,190
26,818
29,372
216,827
399,818
616,645
210,530
349,964
560,494
149,219
313,102
462,321
147,333
243,706
391,039
145,593
207,208
352,801
145,066
243,446
388,512
726,365
625,883
100,482
822,057
922,539
103,556
202,338
305,894
616,645
736,292
550,862
185,430
695,286
880,716
116,602
203,620
320,222
560,494
711,456
506,925
204,531
646,358
850,889
187,045
201,523
388,568
462,321
710,976
590,050
120,926
615,246
736,172
152,248
192,885
345,133
391,039
618,179
454,309
163,870
573,702
737,572
246,323
138,448
384,771
352,801
560,170
420,088
140,082
578,766
718,848
197,524
132,812
330,33
388,512
Statistics
Operating earnings after tax to average equity
attributable to members of the parent entity
Dividend rate per share
Net tangible asset backing per share
17.8%
26.0c
$2.66
15.6%
23.0c
$2.17
15.3%
20.0c
$2.05
15.4%
18.0c
$1.57
13.8%
18.0c
$1.42
14.0%
17.2c
$1.62
Nufarm Limited 2005 Annual Report 93
shareholder and statutory information
Details of shareholders, shareholdings and top 20 shareholders
Listed securities
4 October 2005
Fully paid ordinary shares
Twenty largest shareholders
Falls Creek No 2 Pty Ltd
J P Morgan Nominees Australia Limited
Amalgamated Dairies Limited
ANZ Nominees Limited (Cash Income A/C)
National Nominees Limited
Westpac Custodian Nominees Limited
Cogent Nominees Pty Limited
Citicorp Nominees Pty Limited
Challenge Investment Company Limited
Grantali Pty Ltd
AMP Life Limited
The Avalon Investment Trust Limited
Lawrence Holdings Limited
Australian Foundation Investment Company Limited
ASX Perpetual Registrars Ltd
Citicorp Nominees Pty Limited (CFS Future Leaders Fund A/C)
CPU Share Plans Pty Ltd
Suncorp Custodian Services Pty Limited (AET)
Cogent Nominees Pty Limited (SMP Accounts)
Douglas Industries Limited
Distribution of shareholders
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number
of holders
of securities
Number Percentage
held by
top 20
67.46
10203 169,671,874
Ordinary
shares as at
4.10.05
25,680,987
18,069,172
15,110,737
12,325,881
7,161,529
5,840,999
3,744,492
3,602,540
2,982,868
2,887,403
2,512,124
2,491,448
2,243,750
1,910,785
1,761,454
1,494,177
1,382,352
1,337,297
996,440
916,565
Number of
Holders as at
4.10.05
3,420
4,996
1,037
667
83
Percentage of
issued capital
as at 4.10.05
15.14
10.65
8.91
7.26
4.22
3.44
2.21
2.12
1.76
1.70
1.48
1.47
1.32
1.13
1.04
0.88
0.81
0.79
0.59
0.54
Ordinary
shares held
as at 4.10.05
2,043,436
12,388,963
7,218,079
13,701,943
134,319,453
Of these, 55 shareholders held less than a marketable parcel of shares of $500 worth of shares (45 shares).
In accordance with the ASX Listing Rules, the last sale price of the company’s shares on the ASX on 4 October 2005 was used to determine the
number of shares in a marketable parcel.
Stock Exchanges on which securities are listed
Ordinary shares: Australian Stock Exchange Limited.
Substantial shareholders
In accordance with section 671B of the Corporations Act, as at 4 October 2005, the substantial shareholders set out below have notified the
company of their respective relevant interest in voting shares in the company shown adjacent to their respective names as follows:
94
Nufarm Limited 2005 Annual Report
shareholder and statutory information continued
Date of notice
Number
of shares
Interest %
Amalgamated Dairies Ltd
Khyber Pass Ltd 1
Glade Building Ltd 2
Hauraki Trading Ltd 3
Oxford Trustees (Paul Gerard Keeling
and Allan Cameron Rattray) 4
Douglas John Rathbone 5
Australia and New Zealand
Banking Group Limited (ANZ) 6
ING Australia Holdings Ltd
(and related companies)
24 August 2000
24 August 2000
24 August 2000
24 August 2000
24 August 2000
8 November 2004
6 December 2004
20 January 2005
14,950,815
14,968,110
15,329,898
15,685,712
15,347,193
29,346,867
12,057,012
16,844,059
9.69
9.70
9.93
10.16
9.94
17.38
7.14
9.94
1 Khyber Pass Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares held by Amalgamated Dairies Ltd.
2 Glade Building Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares held by Amalgamated Dairies Ltd.
3 Hauraki Trading Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares held by Amalgamated Dairies Ltd.
4 Oxford Trustees has a relevant interest in Glade Building Ltd, Khyber Pass Ltd and Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares
held by Glade Building Ltd, Khyber Pass Ltd and Amalgamated Dairies Ltd.
5 DJ Rathbone has a non-beneficial interest in 218,725 shares as trustee of the Nufarm Limited staff share plan.
6 ANZ is taken under section 608(3)(a) of the Corporations Act to have the same relevant interests as ING Australia Limited and consequently has acquired relevant interests in
the shares held by ING Australia Ltd.
Voting rights
On a show of hands, every shareholder present in person or
represented by a proxy or representative shall have one vote and
on a poll every shareholder who is present in person or represented
by a proxy or representative shall have one vote for every fully paid
share held by the shareholder.
Shareholder information
Annual general meeting
The annual general meeting of Nufarm Limited will be held on
Thursday 8 December 2005 at 10.00 am in the Ballroom at the
Duxton Hotel, 328 Flinders Street, Melbourne, Victoria.
Full details are contained in the Notice of Meeting sent to
all shareholders.
Voting rights
Shareholders are encouraged to attend the annual general meeting.
However, when this is not possible, they are encouraged to use the
form of proxy by which they can express their views.
Every shareholder, proxy or shareholder’s representative has one
vote on a show of hands. In the case of a poll, each share held by
every shareholder, proxy or representative is entitled to one vote for
each fully paid share.
Stock exchange listing
Nufarm shares are listed under the symbol NUF on the ASX. The
securities of the company are traded on the ASX under CHESS
(Clearing House Electronic Sub-register System), which allows
settlement of on-market transactions without having to reply on
paper documentation.
Shareholders seeking more information about CHESS should
contact their stockbroker or the ASX.
Electronic shareholder communication
You can choose to receive shareholder information electronically.
Register for this initiative at www.eTree.com.au/nufarm and a
donation of $2 will go to Landcare Australia to support urgent
reforestation projects in Australia and New Zealand.
Printing and posting paper publications such as annual reports are
costly. By electing to receive this information electronically you will
help the environment and reduce our costs.
This initiative is being run in conjunction with Computershare
Investor Services.
Share register and other enquiries
Gain access to your shareholding information in a number of ways.
The details are managed via our registrar, Computershare Investor
Services and can be accessed as outlined below.
Please note: Your shareholder reference number (SRN) or holder
identification number (HIN) is required for access.
Internet account access
Shareholders have been requesting the opportunity to have access
to their details via the Internet. We have been able to provide two
levels of access: read only and online portfolio updating capability.
View shareholding (read only access)
Step 1 Go to www.computershare.com/au/investors
Step 2
Click on “Access a single holding” under the Non Member
Access heading
Step 3 Enter NUF or Nufarm Limited
Step 3
Enter shareholder reference number (SRN) or holder
identification number (HIN), postcode or country if outside
Australia, and submit
Step 4
Read only access to:
– Account balance – Transaction history – Payment
instructions – Payment history – Sign up for electronic
securityholder communications
Nufarm Limited 2005 Annual Report 95
shareholder and statutory information continued
Investor Centre (online portfolio updating capability)
Dividends
Step 1 Go to www.computershare.com/au/investors
Step 2
Step 3
Enter User ID and PIN or access the
‘Register here’ button
Follow the prompts to register. For security purposes,
Computershare will generate a PIN and mail it to your
registered address.
Step 4
Enjoy the access to Investor Centre to view, evaluate and
manage your portfolio
A final dividend of 17 cents per share will be paid on 11 November
2005 to shareholders registered on 21 October 2005. For Australian
tax purposes, the dividend will be 100 per cent franked at the 30
per cent tax rate.
Australian and New Zealand shareholders can elect to have
dividends paid directly into a bank account anywhere in Australia
or New Zealand.
Forms for this purpose are available on request from the
share registry.
User you PIN and user ID to:
Manage
Key dates
View portfolio of all securities managed by Computershare
Add securities not managed by Computershare to your portfolio
21 October 2005
Record date (books closing) for 2004/2005 final dividend
11 November 2005
Final dividend for 2004/2005 payable
31 October 2005 *
Annual report sent to shareholders
8 December 2005
Annual general meeting
23 March 2006*
Announcement of profit result for half year ending
31 January 2006
31 July 2006
End of financial year
* Subject to confirmation
For enquiries relating to the operations of the company, please
contact the Nufarm Corporate Affairs Office on:
Telephone: (61) 3 9282 1177
Facsimile: (61) 3 9282 1111
email: robert.reis@au.nufarm.com
Written correspondence should be directed to:
Corporate Affairs Office
Nufarm Limited
PO Box 103
Laverton Victoria 3028 Australia
Nufarm Limited
View and set up payment instructions
Sign up for electronic securityholder communications
Retrieve holding statement
Request statements
Update
Change of address (company or portfolio)
Add/change Tax File Reference Number *
View
View account balances and transaction history
View payment history
Evaluate
Company news, profiles and charts
* Australian taxpayers who do not provide details of their tax
file number will have dividends subjected to the top marginal
personal tax rate plus Medicare levy. It may be in the interests of
shareholders to ensure that tax file numbers have been supplied to
the share registry.
InvestorPhone (Australian shareholders only)
InvestorPhone provides telephone access 24 hours a day
7 days a week.
Step 1 Call 1300 85 05 05
Step 2 Enter the company (ASX) code – NUF
Step 3
Step 4
Enter your securityholder reference number (SRN) or
holder identification number (HIN)
Follow the prompts to gain secure, immediate
access to your:
– holding details
– registration details
– payment information
96
Nufarm Limited 2005 Annual Report
1 Facts in brief
2 Managing director’s review
8 Strong brands = added value
16 Business review
16 Health, safety and environment
18 Crop protection
24 Management team
26 Board of directors
28 Corporate governance
33 Directors’ report
43 Statement of financial performance
44 Statement of financial position
45 Statement of cash flows
46 Notes to financial statements
90 Directors’ declaration
91
93
Independent audit report
Trend statement
94 Shareholder and statutory information
97 Directory
directory
Directors
KM Hoggard – Chairman
DJ Rathbone – Managing Director
GDW Curlewis
Dr WB Goodfellow
GA Hounsell
DG McGauchie AO
GW McGregor AO (retired 31 July 2005)
Dr JW Stocker AO
RFE Warburton AO
Company Secretary
R Heath
Solicitors
Arnold Bloch Leibler & Co
333 Collins Street
Melbourne Victoria 3000 Australia
Sylvia Miller & Associates
131 Orrong Road
Elsternwick Victoria 3185 Australia
Auditors
KPMG
161 Collins Street
Melbourne Victoria 3000 Australia
Trustee for capital note holders
New Zealand Permanent Trustees Ltd
Share registrar
Australia
Computershare Investor Services Pty Ltd
GPO Box 2975EE
Melbourne Victoria 3001 Australia
Telephone: 1300 850 505
Outside Australia: 61 3 9415 4000
Capital notes registrar
New Zealand
Computershare Registry Services Limited
Private Bag 92119
Auckland NZ 1020
Telephone: 64 9 488 8777
Registered office
103-105 Pipe Road
Laverton North Victoria 3026 Australia
Telephone: 61 3 9282 1000
Facsimile: 61 3 9282 1001
NZ branch office
2 Sterling Avenue
Manurewa, Auckland NZ
Telephone: 64 9 268 2920
Facsimile: 64 9 267 8444
WEBSITE: http://www.nufarm.com
Nufarm Limited
ACN 091 323 312
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