Nufarm Limited
Annual Report 2008
robust and
sustainable
growth
contents
01 Key events
01 Facts in brief
33 Directors’ report
43
Lead auditor’s independence declaration
03 Managing director’s review
44
Income statements
09 Business review
45 Balance sheets
14
Health, safety and
environment
18 Management team
46 Statements of cash flows
47
Statements of recognised income
and expense
20 Board of directors
48 Notes to the financial statements
24 Corporate governance
117 Directors’ declaration
118 Independent audit report
120 Shareholder and statutory information
124 Directory
key events
– Record operating result
– Improved climatic conditions in Australia
– Strong margin gains in Europe
– Product portfolio expansion across all regions
– One-off inventory build in glyphosate
– Board approves dividend reinvestment plan
facts in brief
Trading results
Profit attributable to shareholders
Abnormal gain/(loss)
Operating profit after tax
Sales revenue
Total equity
Total assets
Ratios
Earnings per ordinary share
Net debt to equity
Net tangible assets per ordinary share
Distribution to shareholders
Annual dividend per ordinary share
People
Staff employed
12 months ended
31 July 2008
$000
12 months ended
31 July 2007
$000
137,915
(25,961)
163,876
2,492,458
1,305,218
3,213,880
69.7¢
69%
$2.60
148,796
28,528
120,268
1,764,384
1,029,151
2,438,911
59.2¢
36%
$2.61
35¢
32¢
3,112
2,488
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managing director’s review
A record operating profit for the company reflects strong performances from all
of Nufarm’s regional crop protection businesses against a background of positive
business conditions for the company and for agriculture in general.
Doug Rathbone AM
Managing director and chief executive
The tax paid operating profit
was $163.9 million for the year
ended 31 July 2008, an increase
of 36 per cent on the previous
year. Reported profit for the
period was $137.9 million, after
the $26 million after tax impact
of non-operating losses.
Group revenues increased
41 per cent to $2.49 billion
and operating earnings before
interest and tax (EBIT) was up
53 per cent, to $308.9 million,
over the previous year.
Earnings per share (on an operating
basis, excluding discontinued
operations,) were 69.7 cents,
compared with last year’s
59.2 cents, an increase of
18 per cent.
Non-operating items
The company’s total net profit
of $137.9 million included a
$26 million after tax loss associated
with non-operating items.
The major non-operating item
was associated with a previously
disclosed barter trade contract
in Brazil that was terminated at
an after tax cost of $22.6 million.
A thorough review of the
company’s barter trade practices
in Brazil has subsequently resulted
in new risk management policies
and head office authorisation
requirements.
There was also a net non-cash
foreign exchange loss of
$2.8 million at 31 July relating
to the Nufarm Step-up Securities
(NSS). The foreign exchange
exposure on the funding utilisation
from the NSS has been hedged
over the term of the securities
andwill guarantee a cash gain
of $19.6 million on maturity
in the 2012 financial year.
Final dividend increases
Directors declared a fully franked
final dividend of 23 cents per
share, resulting in a full year
dividend of 35 cents. This is
nine per cent, or three cents,
higher than the dividend paid
in the previous year.
The final dividend will be paid
on 17 November 2008 to the
holders of all fully paid shares
in the company as at the close
of business on 24 October 2008.
The company has previously
advised the market that the
growth of the its business outside
of Australia – combined with an
increase in dividend payments
and a higher number of shares
on issue – will result in lower
franking credit capacity in the
future. This dividend is likely
to be the final fully franked
dividend the company will
be in a position to pay.
The level of franking credits
on future dividends will depend
on the amount of future taxation
paid in Australia.
The directors intend to review
the company dividend distribution
policy before payment of the
next dividend.
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managing director’s review continued
Dividend reinvestment plan
Directors also approved a dividend
reinvestment plan (DRP), whereby
shareholders will be given the
opportunity to reinvest dividend
proceeds in Nufarm shares,
offered at a 2.5 per cent discount
to the volume weighted average
price calculated over a period
and on a basis to be determined
by the board. The DRP will be
fully underwritten and details
of the plan have been mailed
to all shareholders.
Subsequent events
Acquisition of Lefroy Seeds
On 24 September 2008, Nufarm
signed an agreement to acquire
Lefroy Seeds Pty Ltd, based in
Toowoomba, Queensland.
Lefroy Seeds specialises
in hybrid breeding, production
and commercialisation activities
in sunflower and sorghum.
The company has established
registrations, sales and commercial
partnerships in Australia, Argentina,
South Africa, China, Pakistan,
Thailand and various countries
in Europe.
The acquisition of Lefroy Seeds
further supports the Nuseed
strategy of building genetic
strength in key crops, developing
global partnerships, and creating
value from crop outputs.
Combined with the advancement
of Monola™ germplasm, the
addition of the Lefroy business
means Nuseed is now well
positioned as a global partner
to produce healthy vegetable oils
in multiple countries. High oleic
canola and sunflower oils are quickly
becoming the world standard for
food companies and restaurants
committed to the reduction of
transfat and saturated fats from
their food labels and menus.
The acquisition involves total
consideration of $11.5 million,
the majority of which will be
paid in Nufarm equity.
UK Commerce Commission
As announced by the company
on 1 September 2008, the UK
Competition Commission has
initiated an investigation into
possible competition concerns
that might arise as a result of
the AH Marks acquisition.
The review is expected to be
complete by mid February 2009.
Combined Nufarm and AH Marks
UK annual sales of the main
products under investigation
amount to £4 million, with AH
Marks sales of those products
totalling less than £1.5 million.
Nufarm is cooperating fully with
the Competition Commission in
an effort to clarify and address
any such concerns.
Regulators in other jurisdictions
are also reviewing aspects of the
acquisition. Certain restructuring
proposals for the business have
been delayed pending completion
of the UK review.
International financial crisis
No company will be immune from
the current international financial
crisis. There is the potential for
increased interest costs and
widely fluctuating exchange rates,
which could have a detrimental
impact on the future performance
of a broad range of businesses.
The instability in global finance
markets is causing difficulties
for several significant overseas
financial institutions. Nufarm has
no facilities with any of these
financial institutions.
Nufarm is involved in a highly
seasonal business and, as such,
maintains significant short term
financing lines with its relationship
banks. Many of these lines have
annual review points, primarily in
the October to December period.
Discussions with key relationship
banks have reaffirmed their support
of Nufarm and, subsequent to
balance date, Nufarm has increased
its facilities with some financiers.
The directors believe that
the business fundamentals in
agriculture remain very strong
and the current instability in
financial markets is not anticipated
to have any material impact on
the company’s performance
or projected guidance.
Treasury
Net debt to equity was 69 per cent
at 31 July 2008. This compares
with a gearing level of 57 per cent
the previous year, calculated on
a pro-forma basis and inclusive of
the debt associated with acquiring
the balance of Agripec late in the
2007 financial year.
In the 2007 accounts, trade
and other payables included
$219 million related to the final
payment in the acquisition of
Agripec (Brazil). Adjusting for this
amount, net working capital has
increased by $215 million on the
previous year. Higher inventory
levels and the working capital
associated with the two acquisitions
completed late in the 2008 year
were the major contributors
to this increase.
Given the strong demand outlook
for glyphosate and a tightening in
availability of supply, the company
took measures to secure additional
supplies of glyphosate late in the
financial year. Glyphosate is the
company’s largest selling product
and management is forecasting
strong volume related growth in
glyphosate sales over the medium
term as Nufarm consolidates
its position as the second
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managing director’s review continued
* 2007: the pro-forma calculation includes
Agripec-related debt.
Note: in the above graphs, data for the years 2005 to 2008 is reported using AIFRS, with AGAAP for 2004.
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managing director’s review continued
largest global supplier of this key
product. The value of glyphosate
intermediate increased
substantially over the 12 months
to 31 July 2008 and this is reflected
in the high inventory costs at
that date.
Lower than forecast sales in
the US in June/July, due to the
impact of widespread flooding,
also contributed to higher than
expected stock levels at year end.
The higher working capital
requirements affected cash flows,
with cash flow from operations at
$57 million and total net operating
cash flow at 31 July being a
negative $127.4 million.
People: underpin our
performance
The strength of our results is
underpinned by the commitment
and performance of Nufarm
management and employees.
Shareholders are fortunate that
the company is served by a
talented and experienced group
of people who have helped build
a robust business that continues
to win admiration within the global
crop protection industry.
The company is strongly
committed to attracting, retaining
and developing the best possible
people to ensure we continue
to grow value and maintain the
systems and safeguards necessary
to manage a geographically diverse
and challenging business.
Outlook: positive growth
momentum
The company remains strongly
focused on its geographic and
product portfolio expansion
strategy and is in an excellent
position to again achieve strong
revenue and earnings growth
in the current 2009 financial
year. The company is forecasting
an after tax operating profit
of between $220 million and
$230 million in the current year.
Additional sales of existing core
products, including glyphosate
and phenoxy herbicides, will result
from both demand driven volume
expansion and market share
growth, particularly in Nufarm’s
businesses in the Americas and
Europe. The company expects
to strengthen its position in
distribution in markets such as
the US, Canada, Brazil, France
and Germany and continue to
build on relatively new market
positions such as those in Italy
and eastern Europe.
A significant number of new
products are scheduled for
regulatory approval and launch
in the current financial year.
These product introductions
will strengthen Nufarm’s position
in the valuable cereal fungicide
and herbicide segments in Europe
and will facilitate entry to the
global seed treatment market,
the industry’s fastest growing
segment.
The current year will also be the
first full year where the company
has had product portfolio offerings
in segments such as pasture and
cotton in the US and Brazil, as
well as a new citrus position in
Brazil, which is the world’s largest
producer of orange juice.
Volume growth in existing products
and new product introductions
will contribute to strong underlying
growth in the Nufarm business
over the course of the year.
In addition, structural changes
to Nufarm’s glyphosate supply
position is expected to result
in improved profitability. The
company recently entered into
a new global supply contract
with Monsanto and established
partnerships with several
glyphosate producers in China.
These partnerships will allow
Nufarm, for the first time, to
share in manufacturing margin.
Acquisitions completed in
the 2008 financial year are also
expected to contribute strongly
to earnings growth in 2009 and
beyond. Consistent with previous
guidance provided by the company,
those acquisitions (the Etigra
business and AH Marks,) are
expected to contribute some
$24 million on a net profit after
tax basis.
Nufarm’s forecast profit growth
for the current year assumes
average seasonal conditions in
the company’s major markets.
Global demand for agricultural
produce is expected to remain
strong, although commodity
prices may well soften below
the highs achieved over the
past 12 months.
In general, Nufarm sees continued
changes to farming practices that
facilitate yield improvement,
particularly in developing agricultural
markets. Those changes will
see the use of a range of farm
inputs optimised, including crop
protection products.
Directors believe the company
is very well positioned to continue
its positive growth momentum
over the medium term and is
ideally placed to capitalise on
new expansion opportunities
as they arise.
Doug Rathbone AM
Managing Director
25 September 2008
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business review
Nufarm achieved significant progress on its strategic growth plan in the 2008
financial year. Nufarm strengthened its position in existing markets and continued
its expansion into new markets, securing volume and market share growth and
broadening the company’s product portfolio.
This progress was achieved
against a background of very
positive business conditions
in the agriculture sector, with
farmers securing high prices
for their crops and strong
demand for agricultural inputs.
While raw material and labour
costs increased during the period,
the company was able to recover
the impact of those cost increases
and achieve margin expansion
with continued changes to
product mix and improved
supply chain efficiencies.
Australasia generated $875 million
in sales (35 per cent of total sales)
but, as a proportion of total sales,
continues to decline due to the
increasing importance of other
regional businesses. North America
recorded $631 million in sales
(26 per cent of total); South
America generated total sales
of $431 million (17 per cent); and
Europe $555 million (22 per cent).
Australasia: water concerns
continue
The Australasian business
generated $875 million in sales
and a segment profit (segment
earnings before interest and tax)
of $147.6 million in the 2008
financial year. This represents
revenue growth of some 28 per
cent on the previous year and
44 per cent growth in segment
profit over last year’s somewhat
depressed results due to
the prevailing dry conditions
that affected most parts
of rural Australia.
After several years of severe
drought, seasonal conditions
in many cropping regions of
Australia improved over the course
of the financial year. After a slow
first quarter, widespread rains in
Queensland and New South Wales
during December and January
saw demand for crop protection
products increase sharply in
response to favourable summer
cropping conditions.
While autumn rainfall varied from
region to region, the major winter
crop plantings were up on last
year and growing conditions in
many regions remained positive,
driving strong sales of crop
protection products. However,
water storages in Australia
remained at very low levels and
this continued to have a negative
impact on Nufarm’s sales into
a number of market segments,
particularly horticultural crops
in the Murray Darling basin.
Cotton and rice plantings
also remained down.
Glyphosate prices in Australia –
and in other world markets –
increased substantially on
the back of higher input costs
and very strong global demand.
Nufarm’s leadership position in
the Australian glyphosate market
ensured the company was well
positioned to meet increased
demand, particularly in the early
part of the season before broader
global supply constraints
became apparent.
New Zealand crop protection sales
were up by some 20 per cent on
the previous year, reflecting good
volume growth and market share
gains. Following a dry autumn,
winter conditions were relatively
wet and disrupted farming
operations including winter weed
control in a number of regions.
Sales in Malaysia and Indonesia
were also higher than in the
previous year, with a corresponding
increase in profitability. During
the period, Nufarm concluded
an agreement with Monsanto
to assume management of the
Roundup® glyphosate brand
in Indonesia.
North America:
strengthening growth
North American sales –
at $631 million for the year – were
up by 22 per cent in Australian
dollars but, when measured in
local currencies, increased by just
over 30 per cent. This continued
a very positive trend of revenue
growth in this region over a
number of years. Segment profit
in North America improved by
32 per cent to $84.5 million.
Nufarm’s position in the US
market – where sales increased
by approximately 25 per cent
in local currency – continues
to strengthen with improved
customer relationships; a high
level of regulatory activity and
new product introductions;
and market share growth
in core chemistries.
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business review continued
Seasonal conditions were varied
leading to timing impacts in some
market segments. Widespread
flooding through the Midwest
late in the reporting period meant
sales of both glyphosate and post
emergent herbicides were either
delayed or lost, resulting in higher
year end inventory levels.
Despite this, the company
generated strong volume
growth and saw stronger pricing
across most of its US product
range. The insecticide portfolio
was expanded and a new seed
treatment team was established,
with initial sales commencing
in this high growth segment.
The acquisition of the Etigra
business, announced in
March 2008, has substantially
strengthened Nufarm’s position
in specialty crop markets such
as turf and ornamentals. The
integration of this business is
now complete and target earnings
contributions for the balance
of the 2008 financial year
were achieved.
In Canada, higher crop prices
led to increased wheat and
canola plantings helping to
drive strong sales growth for
the Nufarm business. A cool,
wet spring depressed pre-plant
glyphosate volumes, however
total glyphosate sales were
up as growers planted additional
Roundup Ready® crops. New
co-distribution arrangements
with other major suppliers gave
the Canadian business access
to an expanded product portfolio.
Colombia (also reported as part
of the North American segment)
saw increased sales and margin
expansion during the year.
South America:
new geographic segment
South American sales totalled
$431 million for the 12 months
to the end of July. This is the
first year South America has been
reported as a separate geographic
segment. Segment profit was
$59.3 million. On a pro-forma
basis – assuming the company’s
Brazil operations were 100 per cent
owned and fully consolidated for
the full 12 months of the previous
year – this compares with 2007
South American sales of $337
million and a segment profit
of $49.2 million.
In its first full year as a fully
owned and consolidated business,
Nufarm’s operations in Brazil
performed well, achieving some
25 per cent growth in revenue
(local currency) and strong
growth in operating EBIT.
Total EBIT contribution from
Brazil was $51 million. This
compares with a contribution
of $22.4 million in the previous
year. This was $14.6 million in
earnings for the final two months
of the year when the business
was consolidated and equity
accounted earnings of $7.8 million
for the balance of the year. On a
pro-forma basis, the comparable
2007 EBIT contribution from Brazil
in 2007 (assuming 100 per cent
ownership for the full 12 months)
was $39.9 million.
The Brazilian crop protection
market has recovered strongly
from the farm credit crisis that
had a negative impact on growers
and agricultural input suppliers
during the previous two years.
A more stable currency and
higher crop prices, particularly
for soybeans, improved the
profitability and trading terms
for Brazilian growers. Payment
collections have been achieved
on schedule as a result of the
better market conditions.
Nufarm has increased its market
share in Brazil, with a stronger
position in local distribution,
and new product introductions
into important crop segments,
including sugar and pasture.
Despite some general market
disruptions, Argentina sales
increased by almost 40 per cent
(local currency), driven by stronger
volumes and prices. Margins
were also higher, with both
glyphosate and several new
product introductions contributing
to improved profitability. However,
political unrest and farmer
demonstrations in Argentina
had a negative impact on the
last quarter of the financial year.
Drought conditions in Chile
depressed total industry sales
in that market. Nufarm saw
a small increase in revenues
but higher sales of stronger
margin products such as ‘Nuprid’
(imidacloprid) led to a substantial
improvement in gross margins
and profit contribution.
Europe: sales and profit
contributions up
European sales were up by
26 per cent year on year to
$555 million, with segment
profit improving substantially
($56.2 million versus
$36.8 million in 2007).
Sales and profit contributions
were up in all of Nufarm’s
European businesses. Seasonal
conditions were generally
positive, with a recovery
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business review continued
from drought in Spain and
Portugal helping drive overall
growth in crop protection sales
in those markets.
Farmer confidence was also
aided by higher crop prices and
this encouraged stronger demand
for farm inputs. Changes to the
European Union’s ‘set-aside’
policy saw additional acreage
come into production during
the year.
Nufarm’s businesses in France,
Spain and Portugal saw more
than 30 per cent increases
in sales of branded products.
Higher value glyphosate sales,
new product introductions, and
improvements in logistics/supply
chain all combined to boost both
revenues and profit.
In Italy, Nufarm completed its
first full year of ownership of the
former Agrosol business (acquired
October 2006). Annual revenues
at the time of acquisition were
some €6 million. In the year just
completed, Italy generated more
than €17 million in sales.
Strong profit growth in Germany
(EBIT up 25 per cent in local
currency) and in the UK (EBIT
growth of almost 50 per cent)
reflected successful launches
of new cereal fungicides
and herbicides.
The company continued its
expansion into central and eastern
European markets. Sales growth
was again strong in Romania
and Nufarm established a direct
operating presence in Hungary
with excellent first year results.
These markets continue to see
increased investment in farming
technology, leading to significant
growth in crop protection sales.
Nufarm’s European based
manufacturing facilities operated
to near full capacity with improved
efficiencies during the year,
enhancing overhead recoveries
and contributing to gross
margin expansion.
Nufarm announced in March
that it had acquired UK based
AH Marks, a phenoxy herbicide
manufacturer and third party
supplier. The acquisition will
consolidate Nufarm’s position
as the leading global supplier
of phenoxy herbicides and
delivers important synergies
in the areas of manufacturing
efficiency; product development;
regulatory resources and product
distribution.
Seeds: strategic position
develops
Nufarm continued to develop
its strategic position in seeds
and this business remains
in a development phase.
Improved seasonal conditions
in Australia resulted in an increase
in sales from Nufarm’s seed
businesses. As Australia’s leading
breeder and supplier of canola
seed, the company capitalised
on stronger plantings of canola
throughout the country.
A number of new varieties
were successfully launched,
including Nuseed’s Roundup
Ready® canola.
This technology was enthusiastically
received by growers in a limited
initial commercial release and
indications to date are that it is
performing strongly at this stage
of the growing season. Other
conventional varieties also
established strong positions.
The specialty Monola™ canola
crop – a variety bred to produce
oil with improved cooking and
health properties and produced
under a closed loop marketing
system – is also looking positive.
Seed breeding and development
work continued in relation to
several crop varieties. Two new
canola varieties were commercially
launched in Argentina based on
genetics developed in Nuseed’s
Australian pipeline.
The seeds business generated
a small loss for the financial year,
in line with forecast.
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health, safety and environment
In recent years, Nufarm has made important progress across a range of health, safety
and environment measures. The resurgence in global agriculture means our plants
are manufacturing record levels of crop protection products. This pressure to produce
more sooner means we need to be more diligent than ever in maintaining a safe
working environment.
In the 2007 calendar year we
missed two important targets
in the frequency rates for lost
time and medical treatment
injuries while achieving the
severity target. Regrettably,
a contract salesman was killed
in an Indonesian road accident.
We are determined that this
is only a temporary trend reversal
and have rolled out across our
European operations the safety
behaviour and culture courses
that were trialled successfully
in Australia. Existing programmes
are constantly revised and
updated and ‘Take 5’ has been
extended to all new locations.
As our operating base
expands we are decreasing
the environmental impact of
our operations with continuing
improvements in energy and
water usage.
Despite the substantial
reduction in total water and
energy consumption and the
equivalent CO2 emissions with
the July 2007 divestment of our
interest in two West Australian
chlor-alkali plants, other plants
continue to increase production
while improving resource use
and reducing CO2 emissions.
Water consumption reduced
a further 10 per cent per tonne
of product and total waste
(excluding salt) came down by
14 per cent per tonne production.
Nufarm’s ninth annual health,
safety and environment report
may be downloaded from the
corporate website, together
with separate reports from
manufacturing sites.
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health, safety and environment continued
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management team
Doug Rathbone AM
Managing director and chief executive
Brian Benson
Group general manager agriculture
Rodney Heath
Group general manager corporate
services and company secretary
Kevin Martin
Chief financial officer
Dale Mellody
Group general manager marketing
and president North America
Bob Ooms
Group general manager chemicals
Mike Pointon
Group general manager innovation
and development
David Pullan
Group general manager operations
Robert Reis
Group general manager corporate
strategy and external affairs
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management team continued
Doug Rathbone AM
Kevin Martin
Mike Pointon
Managing director and
chief executive
Doug Rathbone’s background
is chemical engineering and
commerce and he has worked
for Nufarm Australia Limited
for 35 years. Doug was appointed
managing director of Nufarm
Australia in 1982 and managing
director of Nufarm Limited in
October 1999. He joined the
board of directors in 1987.
He was appointed to the
board of the Commonwealth
Scientific and Industrial Research
Organisation (CSIRO) in 2007.
Brian Benson
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.
Rodney Heath
Group general manager
corporate services and
company secretary
Rod Heath is a bachelor of
law and joined the company
in 1980, initially as legal officer,
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 officer
Kevin Martin is a chartered
accountant with over 26 years
of experience in the professional
and commercial arena. After
joining Nufarm in 1994, he
was responsible initially for
the financial control of the crop
protection business. Since 2000,
Kevin has been responsible for
all financial, treasury and taxation
matters for the group.
Dale Mellody
Group general manager
marketing and president
North America
Dale Mellody joined Nufarm
as a territory manager in 1995,
having completed his bachelor
of agricultural science. Promoted
to head office 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 responsible for Nufarm’s
global marketing. Now based
in the US, Dale also heads
Nufarm’s North American
regional operations.
Group general manager
innovation and development
Mike Pointon joined Nufarm
in 2001 and was responsible
for Nufarm’s southern European
business based in France. He
has a degree in agricultural
science and over 25 years
experience in the crop protection
industry. Most recently based
in Melbourne with responsibility
for Nufarm’s global glyphosate
business. Mike, appointed
to the executive team in July
2008, is responsible for the
group’s product development
and regulatory affairs activities.
David Pullan
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. David
is responsible for all of Nufarm’s
global manufacturing and
production sites.
Bob Ooms
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 has executive
management responsibility for
global supply chain issues.
Group general manager
corporate strategy and
external affairs
A former journalist, political
adviser and lobbyist, Robert
joined Nufarm in 1991. Robert
is responsible for global issues
management, investor relations,
media, government and
stakeholder relations. Robert
also has executive management
responsibility for corporate
strategy, human resources
and organisational development.
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board of directors
Kerry Hoggard
Chairman
Doug Curlewis
Deputy chairman
Doug Rathbone AM
Managing director and
chief executive
Bruce Goodfellow
Director
Garry Hounsell
Director
Donald McGauchie AO
Director
John Stocker AO
Director
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board of directors continued
Kerry Hoggard
Chairman
Kerry Hoggard, 67, joined
the board in 1987.
He has a financial background,
beginning his career with the
company in 1957 as office junior
and rising, through a number
of accounting, financial and
commercial promotions to be
chief executive officer 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.
Doug Curlewis
Deputy chairman
GDW (Doug) Curlewis, 67,
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 GUD Holdings Ltd,
Graincorp Limited and Sigma
Pharmaceuticals Limited.
In the past three years Doug
has been a director of Pacifica
Group Ltd (nine years) and
Remunerator Australia Pty Ltd
(seven years).
Doug is deputy chairman
of the board, chairman of the
remuneration and nomination
committees and a member
of the audit committee.
Doug Rathbone AM
Managing director and
chief executive
Doug Rathbone AM, 62,
joined the board in 1987.
His background is chemical
engineering and commerce
and he has worked for Nufarm
Australia Limited for 35 years.
Doug was appointed managing
director of Nufarm Australia in
1982 and managing director of
Nufarm Limited in October 1999.
He was appointed to the board
of the CSIRO in 2007.
Bruce Goodfellow
Dr WB (Bruce) Goodfellow, 56,
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 financial and commercial
business management experience.
Bruce is chairman of Refrigeration
Engineering Co Ltd and a director
of Sanford Ltd, Sulkem Co Ltd,
and Cambridge Clothing Co Ltd.
Bruce is a member of the
nomination committee.
Garry Hounsell
GA (Garry) Hounsell, 53, 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
finance and has worked with
some of Australia’s leading
companies in consulting and audit
roles, with a particular emphasis
in the manufacturing sector.
Garry is chairman of Pan Aust Ltd
and deputy chairman of Mitchell
Communication Group Ltd and
a director of Qantas Airways
Limited and Orica Ltd.
Garry is chairman of the audit
committee.
Donald McGauchie AO
DG (Donald) McGauchie AO,
58, joined the board in 2003.
He has wide commercial
experience within the food
processing, commodity trading,
finance and telecommunication
sectors. He also has extensive
public policy experience, having
previously held several high-level
advisory positions to the
government including the
Prime Minister’s Supermarket
to Asia Council, the Foreign
Affairs Council and the Trade
Policy Advisory Council.
He is currently chairman of Telstra
Limited, a member of the board
of the Reserve Bank of Australia
and a director of James Hardie
Industries NV.
In the past three years Donald
has been a director of National
Foods Ltd (five years) and Ridley
Corporation Limited (six years).
Donald is a member of both the
remuneration and nomination
committees.
John Stocker AO
Dr JW (John) Stocker AO,
63, joined the board in 1998.
He has a medical, scientific
and management background
and was formerly chief scientist
of the Commonwealth of
Australia and is now the
chairman of CSIRO.
He is a principal of Foursight
Associates Pty Ltd and Chairman
of Sigma Pharmaceuticals Ltd.
He is a director of Telstra
Corporation Ltd and Circadian
Technologies Ltd.
In the past three years John
has been a director of Sigma
Company Limited (eight years)
and Cambridge Antibody
Technology Group plc (11 years).
John is a member of the audit
committee.
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corporate governance
Introduction
Nufarm’s board processes are
under constant review to ensure
our systems protect the interests
of all stakeholders.
As part of this review, we consider
the Corporate Governance
Principles and Recommendations
(‘the ASX principles’) 2nd Edition,
published by the Australian
Securities Exchange Limited’s
(ASX) Corporate Governance
Council.
Copies of our corporate governance
practices are publicly available on
the corporate governance section
of our website: www.nufarm.com
Compliance with ASX
Principles
The ASX Listing Rules require
Nufarm to disclose in our annual
report the extent to which we
have adopted the 27 best practice
recommendations during our
reporting period and, where
we do not comply, to explain
why not.
Nufarm believes it complies
with all the ASX principles
with the following exception:
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 is not 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 governance
reports since 2003 that the board
unanimously continues to support
Kerry as chairman, believing this to
be clearly in the best interest of all
stakeholders.
Kerry’s history with the company,
including his detailed knowledge
of the industry where the
company operates and his
extensive accounting, financial
and commercial background,
bring invaluable experience
and unique skills to Nufarm.
Kerry continues to apply judgment
independent of management in
all decision making. He discharges
his role with a strong commitment
to considerations of governance
and disclosure.
Doug Curlewis, an independent
director, is deputy chairman
of the board.
Management and oversight
of Nufarm
The board
The governing body of the
company is the board of
directors. Its clear responsibility
is to oversee the company’s
operations and ensure that
Nufarm carries out its business
in the best interests of all
shareholders and with proper
regard to the interests of all
other stakeholders.
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, monitor and review
strategic plans for the company
and its business units;
• approve financial and dividend
policy;
• 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.
The board charter clearly defines
the board’s individual and collective
responsibilities and describes
those delegated to the managing
director and senior executives.
The board annually reviews
its composition and terms
of reference for the board,
chairman, board committees
and managing director.
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corporate governance continued
There are seven scheduled
board meetings each year. When
necessary, additional meetings
are convened to deal with specific
issues that require attention
before the next scheduled
meeting. Each year the board
also reviews the strategic plan
and direction of the company.
At 31 July 2008, there are
three board committees: audit;
remuneration; and nomination.
All directors are entitled to attend
any committee meeting.
Details of the attendances
at meetings of board and
committees during the reporting
period appear on page 34
of this report.
Evaluating the performance
of senior executives
Nufarm’s senior executive team
comprises a group of long serving
career Nufarm or crop protection
executives. The performance
of the senior executive team
is reviewed by the managing
director, and then the remuneration
committee and the board, as part
of the annual remuneration review.
In the case of the managing
director, the remuneration
committee and the board
conduct his review.
A key consideration for the board
is the company’s return on funds
employed (ROFE) performance.
ROFE is, and has been for
some 20 years, a core feature of
Nufarm’s culture, involving many
aspects of the company’s financial
management. ROFE provides the
senior executive with guidance as
to how shareholder value can be
increased by improving operating
income and using capital more
efficiently. We believe that if
management concentrates on
improving ROFE, then sustained
shareholder value will result.
For this reason, and the profile
of the senior executive described
on page 19, the board believes
ROFE is the appropriate
performance condition for the
company’s senior executive
incentive programme. However,
the board also reviews the
company’s total shareholder
return (TSR) performance
with that of other peer group
companies.
In the reporting period,
a performance evaluation of
senior executive was undertaken
in accordance with this process.
The company is managed
according to the recommendations
of ASX Principle 1.
A summary of the board charter
is available on the corporate
governance section of the
company’s website.
Board of directors
Composition
There are seven members
of the board with a majority
of independent non-executive
directors who have an appropriate
range of proficiencies, experience
and skills to ensure that it
discharges its responsibilities
with the best possible
management of the
company in mind.
The company’s constitution
specifies that the number
of directors may be neither
less than three, nor more than
11. At present there are six
non-executive directors and
one executive director, namely
the managing director, and the
board has decided at this time
that no other company executive
will be invited to join the board.
Independence
Directors are expected to bring
independent views and judgment
to the board. The board applies
the framework set out in ASX
Principle 2 to determine the
independence of directors.
To decide whether a director
has a material relationship
with the company that may
compromise independence,
the board considers all relevant
circumstances.
The board reviewed the ASX
principles and the circumstances
of individual directors and believes
it is unnecessary to define any
specific materiality limits, except
that a substantial shareholder
is defined as one who holds
or is associated directly with a
shareholder controlling in excess
of five per cent of the
company’s equity.
Tenure
The board believes that the
way directors discharge their
responsibilities and their
contribution to the success
of the company determines
their independence and justifies
their positions. The nomination
committee reviews the
performance of directors who
seek to offer themselves for
re-election at a company AGM.
That committee then recommends
to the board whether or not
it should continue to support
the nomination of the
retiring directors.
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corporate governance continued
The board conducts an annual
review of the independence of
directors, and at the date of this
report, it has determined that the
status of directors is as follows:
Independent non-executive
directors
GDW Curlewis
GA Hounsell
DG McGauchie
Dr JW Stocker
Non-independent
non-executive directors
KM Hoggard
Dr WB Goodfellow
Executive director
DJ Rathbone
Profiles of each board member,
including terms in office, are
on page 21 of this report.
Access to independent advice
To help directors discharge their
responsibilities, any director can
appoint legal, financial or other
professional consultants, at the
expense of the company with
the chairman’s prior approval,
which may not be unreasonably
withheld.
The board charter provides that
non-executive directors may meet
without management present.
Conflicts of interest
Board members must identify
any conflict of interest they may
have in dealing with the company’s
affairs and then refrain from
participating in any discussion
or voting on these matters.
Directors and senior executives
must disclose any related party
transactions in writing.
Chairman of the board
The chairman is elected
annually at the directors’
meeting immediately following
the company’s annual general
meeting.
According to the tests set out
in ASX Principle 2, Nufarm’s
chairman, Kerry Hoggard, is not an
independent director. The reasons
why we unanimously support
Kerry’s appointment are set out
on page 24 of this report. Doug
Curlewis, an independent director,
is deputy chairman.
The Nufarm board has stipulated
that the role of the chairman and
chief executive officer may not
be filled by the same person.
With the exception of the
independence of the chairman,
the board structure is consistent
with ASX Principle 2.
The nomination committee
Doug Curlewis is chairman
of the nomination committee
and Donald McGauchie and
Bruce Goodfellow are members,
with a majority of independent
directors. The committee is
chaired by an independent
director.
The formal charter setting
out the committee’s membership
requirements includes the
responsibilities to:
• assess competencies
of board members;
• review board succession plans;
• evaluate board performance; and
• recommend the appointment
of new directors when
appropriate.
The performance of the board,
its committees and individual
directors is reviewed annually,
and the board has utilised a
variety of review processes.
In 2003-2004, directors completed
a detailed questionnaire, an external
consultant interviewed each
director individually and there
was a general board discussion.
The subsequent performance
evaluation was conducted by
the chairman, and for the last
two reporting periods, the board
completed a purpose designed
questionnaire, the results of
which were discussed with
the chairman, and the chairman
of the nomination committee
and then by the board as a team.
The board ensures that new
directors are introduced to the
company appropriately, including
relevant industry knowledge,
visits to specific company
operations and briefings by
key executives.
All directors may obtain
independent professional advice
and have direct access to the
company secretary, who is
appointed by, and accountable
to, the board on all governance
matters.
Save for the fact that the
chairman is not independent,
the operation of the board
is in accordance with the
recommendations of ASX
Principle 2.
A copy of the nomination
committee charter and a summary
of the policy and procedure for
appointment of directors is
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corporate governance continued
available on the corporate
governance section of the
company’s website.
Ethical and responsible
decision-making
Ethical standards
Nufarm operates in many countries
and does so in accordance with
the social and cultural beliefs
of each country.
It is politically impartial except
where the board believes it
is necessary to comment due
to any perceived major impact
on the company, its business
or any of its stakeholders.
We require directors, senior
executives and all employees
to adopt standards of business
conduct that are ethical and in
compliance with all legislation.
Where there are no legislative
requirements, the company
develops policy statements
relating to the business
stakeholders to ensure
appropriate standards and
carefully selects and promotes
employees.
The board endorses the principles
of the Code of Conduct for
Directors, issued by the Australian
Institute of Company Directors.
Our formal code of conduct
is available on the corporate
governance section of the
company’s website.
Purchase and sale of company
shares
The Nufarm board has 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 the release;
• six weeks before the release
of the company’s year end
results to the ASX, ending
24 hours after the release; and
• two weeks before the
company’s AGM, ending
24 hours after the AGM.
Before any trading activity
in company shares, directors
and senior 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 approval of the company
secretary.
A copy of the trading policy
is available on the corporate
governance section of the
company’s website.
The company’s code of conduct
and share trading policy is
consistent with ASX Principle 3.
Safeguard integrity
in financial reporting
Financial reports
The company has put in place
a structure of review and
authorisation to independently
verify and safeguard the integrity
of financial reporting.
The audit committee reviews
the company’s financial statements
and the independence of the
external auditors.
Audit committee
Garry Hounsell is chairman
of the board audit committee
with Doug Curlewis, John Stocker
and Kerry Hoggard as members.
The committee has a majority
of independent non-executive
directors and is chaired by an
independent director.
Details of attendances at
meetings of the audit committee
are set out on page 34.
Garry Hounsell 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
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 chairman of PanAust
Limited, deputy chairman of
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corporate governance continued
Mitchell Communication Group
Limited and a director of Qantas
Airways Limited and Orica Limited.
Garry is also chairman of the audit
committee at Qantas.
provided by the auditor.
The charter also identifies
those services that:
• the external auditor may
and may not provide; and
Doug Curlewis has an MBA
and is a 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 Sigma
Pharmaceuticals Ltd.
John Stocker has a medical,
scientific and management
background and was formerly
chief scientist of the
Commonwealth of Australia
and is now the chairman of
CSIRO. He is a principal of
Foursight Associates Pty Ltd
and chairman of Sigma
Pharmaceuticals Ltd. He is a
director of Telstra Corporation Ltd
and Circadian Technologies Ltd.
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,
was chief executive officer
from 1987 to 1999.
The committee reviews its 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
• 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 two 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, is available on 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 available on 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 communication
with our shareholders and the
general investment community.
Our communication policy
aims to:
• ensure that shareholders
and the financial markets are
provided with full and timely
information about our activities;
• comply with our continuous
disclosure obligations;
• ensure equality of access
to briefings, presentations
and meetings for shareholders,
analysts and media; and
• encourage attendance and
voting at shareholder meetings.
Postal and electronic
communication with shareholders
includes:
• half year and annual reports;
• proxy voting;
• notices of AGM;
• a summary of AGM proceedings,
including the chairman’s and
chief executive officer’s
addresses and voting results;
• relevant market announcements
and related information; and
• copies of webcasts and
teleconferences.
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insert statement
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corporate governance continued
Our formal communications
policy is available on the corporate
governance section of the
company’s website.
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 material business risks.
Nufarm’s policies and procedures
relating to the management and
oversight of risk provide effective
management of material risks
at a level appropriate to Nufarm’s
global business.
The board annually, at its
strategy review meeting,
reviews the material risks faced
by the company. In so doing,
it considers the interests
of all relevant stakeholders.
At each board meeting,
management report on specific
issues of risk and compliance,
including legal compliance,
health, safety and environmental
compliance and financial reporting.
The board has retained
responsibility for the oversight
of the company’s risk management
system. The board ensures that
appropriate policies are in place
to ensure compliance with risk
management controls, and
requires management to
monitor, manage and report
on business risks.
The board has delegated
the oversight of financial and
treasury risk, including credit,
liquidity and market risks to the
audit committee, which will refer
any relevant matters to the full
board. The year end exposure
to these risks is described in note
32 of the financial statements.
The audit committee has approved
a global risk management charter
that specifies the responsibilities
of the general manager global
risk management, (which
includes the internal audit
function). The charter provides
authority to conduct internal
audits, risk reviews and system-
based analyses of the internal
controls in major business
systems.
The general manager global
risk management reports directly
to the managing director and
provides a written report of his
activities at each meeting of
the audit committee. In so doing
he has continual access to the
chairman and members of the
audit committee. The internal
audit function is independent
of the external auditor.
All board committees report to the
board on risk management issues
within their areas of responsibility.
The company recognises a
number of operational risks
related to its crop protection
business including:
• climate conditions and
seasonality;
• regulatory, freedom to operate,
product registration, product
use and sustainability;
• relationships with key suppliers
and customers; and
• licences and operating permits
for manufacturing facilities.
The managing director and the
company’s senior management
(group general managers [GGMs]
who report directly to the
managing director) are responsible
for the management of material
risks in their respective areas
of responsibility. The managing
director’s and GGMs’ periodic
reports, submitted for review to
each board meeting, will include
relevant commentary on any
material risk. The board also
requires the managing director
and GGMs to provide the board,
for its annual strategy meeting,
with a report and assurance
that all material risks are being
effectively managed. Such
a report was received in the
current reporting period.
Local and regional financial
controllers complete half-yearly
certificates, which are reviewed
by the chief financial officer and
the audit committee as part of
the company’s half-year reporting
to the market and to achieve
compliance with section 295A
of the Corporations Act. In
accordance with Section 295A,
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
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corporate governance continued
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;
and
• ensure remuneration packages
and policies attract, retain and
motivate high calibre executives.
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.
Remuneration of
non-executive directors (NED)
The board’s policy with regard
to NED remuneration is set
out in the remuneration report
on pages 36 to 38.
A copy of the remuneration
committee charter and the
company policy on prohibiting
senior executives from hedging
any shares offered under the
executive share plan are available
on the corporate governance
section of the company’s website.
Nufarm’s remuneration policies
are consistent with ASX
Principle 8.
• the statement is founded
on a sound system of risk
management and internal
compliance and control,
which is operating effectively
in all material respects in
relation to financial reporting
risks.
The board received in the current
reporting period an assurance
from the chief executive officer
and chief financial officer that
the declaration relating to the
company’s financial reports has
been made with due regard to
appropriate risk management
controls.
A summary of the company’s
policies on risk oversight and
management of material business
risks is available on the corporate
governance section of the
company’s website. Nufarm’s
management of risk is consistent
with ASX Principle 7.
Remuneration
The board has procedures
to ensure that the level and
structure of remuneration for
executives and directors is
appropriate.
Remuneration committee
Doug Curlewis is chairman
of the remuneration committee
and Kerry Hoggard and Donald
McGauchie are members,
with a majority of independent
directors. The committee is
chaired by an independent
director.
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directors’ report
The directors present their report together with the financial report of Nufarm Limited (‘the company’) and of
the group, being the company and its subsidiaries and the group’s interests in associates and jointly controlled
entities, for the financial year ended 31 July 2008 and the auditor’s report thereon.
Directors
The directors of the company at any time during or since the end of the financial year are:
KM Hoggard (Chairman)
GDW Curlewis (Deputy Chairman)
DJ Rathbone AM (Managing Director)
Dr WB Goodfellow
GA Hounsell
DG McGauchie AO
Dr JW Stocker AO
RFE Warburton AO (retired 5 December 2007)
Unless otherwise indicated, all directors held their position as a director throughout the entire period and up to
the date of this report. Details of the qualifications, experience and responsibilities and other directorships of the
directors are set out on page 21.
Company secretary
The company secretary is R Heath.
Details of the qualifications and experience of the company secretary are set out on page 19.
Directors’ interests in shares and step-up securities
Relevant interests of the directors in the shares and step-up securities issued by the company and related bodies
corporate are, at the date of this report, as notified by the directors to the Australian Securities Exchange in
accordance with S205G(1) of the Corporations Act 2001, as follows:
KM Hoggard1
GDW Curlewis1
DJ Rathbone
Dr WB Goodfellow1, 2
GA Hounsell1
DG McGauchie1
Dr JW Stocker1
RFE Warburton3
Nufarm Ltd
Ordinary shares
Nufarm Finance
(NZ) Ltd
Step-up securities
2,383,614
44,533
25,912,610
665,846
45,170
17,038
41,522
67,600
–
–
–
45,289
–
–
–
–
1 The shareholdings of KM Hoggard, GDW Curlewis, Dr WB Goodfellow, GA Hounsell, DG McGauchie and Dr JW Stocker include
shares issued under the company’s non-executive director share plan and held by Pacific Custodians Pty Ltd as trustee of the plan.
2 The holding of Dr WB Goodfellow includes his relevant interest in:
(i)
St Kentigern Trust Board (430,186 shares and 19,727 step-up securities) – Dr Goodfellow is Chairman of the Trust Board.
Dr Goodfellow does not have a beneficial interest in these shares or step-up securities;
(ii) Sulkem Company Limited (113,947 shares); and
(iii) Auckland Medical Research Foundation (25,462 step-up securities). Dr Goodfellow does not have a beneficial interest in these
step-up securities.
3 RFE Warburton retired on 5 December 2007.
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directors’ report continued
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and number of meetings
attended by each of the directors of the company during the financial year are:
Director
Board
Audit
Remuneration
Nomination
Committees
KM Hoggard
GDW Curlewis
DJ Rathbone1
Dr WB Goodfellow1,3
GA Hounsell
DG McGauchie
Dr JW Stocker3
RFE Warburton2
A
8
8
8
8
8
8
8
3
B
8
8
8
8
8
6
6
3
A
3
3
–
–
3
–
2
–
B
3
3
3
1
3
–
2
–
A
3
3
–
–
–
3
3
3
B
3
3
3
3
1
2
2
3
A
–
2
–
2
–
2
2
2
B
2
2
2
2
1
1
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.
Other meetings of committees of directors are convened as required to discuss specific issues or projects.
1 All directors are entitled to attend any committee meetings.
2 RFE Warburton retired on 5 December 2007.
3 Dr WB Goodfellow became a member of the nomination committee effective 1 November 2007. Dr JW Stocker retired as a member
of the remuneration and nomination committees and became a member of the audit committee effective 1 November 2007.
Principal activities and changes
Nufarm manufactures and supplies a range of agricultural chemicals used by farmers to protect crops from damage
caused by weeds, pests and disease. The company has production and marketing operations throughout the
world and sells products in more than 100 countries. 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.
Nufarm employs 3,112 people at its various locations in Australasia, Asia, Africa, the Americas and Europe.
The company is listed on the Australian Securities Exchange (symbol NUF). Its head office is located at Laverton
North in Melbourne.
Results
The net profit attributable to members of the consolidated entity for the 12 months to 31 July 2008 is $137.9 million.
The comparable figure for the 12 months to 31 July 2007 was $148.8 million.
Dividends
The following dividends have been paid, declared or recommended since the end of the preceding financial year:
The final dividend for 2006–07 of 21 cents paid 9 November 2007
The interim dividend for 2007–08 of 12 cents paid 2 May 2008
The final dividend for 2007–08 of 23 cents as declared and recommended by the directors
is payable 17 November 2008
$000
36,043
22,279
42,753
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directors’ report continued
Nufarm Step-up Securities distribution payment
The following Nufarm Step-up Securities distribution payment has been paid since the end of the preceding
financial year:
Distribution payment for the period 15 April 2007 – 15 October 2007
at the rate of 8.56 per cent per annum paid 15 October 2007
Distribution payment for the period 16 October 2007 – 15 April 2008
at the rate of 8.95 per cent per annum paid 15 April 2008
Review of operations
$000
10,772
11,263
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 3 to 6 and the business review on pages 9 to 12.
State of affairs
The state of the company’s affairs are set out in the managing director’s review on pages 3 to 6 and the business
review on pages 9 to 12.
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 financial accounts, managing director’s review
and the business review.
Events subsequent to reporting date
On 25 September 2008 the directors declared a final dividend of 23 cents per share, fully franked, payable
17 November 2008. The directors have also approved a dividend reinvestment plan. For the final dividend,
shareholders will be given the opportunity to reinvest dividends in Nufarm shares at a 2.5 per cent discount
to the volume weighted average share price calculated over a period and on a basis to be determined by
the board. Details of the plan and election notices will be mailed to all shareholders.
As announced by the company on 1 September 2008, the UK Competition Commission has initiated an investigation
into possible competition concerns that might arise as a result of the acquisition of AH Marks. The review is
expected to be complete by mid February, 2009. Combined Nufarm and AH Marks UK annual sales of the main
products under investigation amount to £4 million, with AH Marks sales of those products totaling less than
£1.5 million. Nufarm is cooperating fully with the Competition Commission in an effort to clarify and address any
such concerns. Regulators in other jurisdictions are also reviewing aspects of the acquisition. Certain restructuring
proposals for the business have been delayed pending completion of this review.
On 24 September, 2008 Nufarm signed an agreement to acquire Lefroy Seeds Pty Ltd, based in Toowoomba,
Queensland. Lefroy Seeds specialises in hybrid breeding, production and commercialisation activities in sunflower
and sorghum. The company has established registrations, sales and commercial partnerships in Australia, Argentina,
South Africa, China, Pakistan, Thailand and various countries in Europe. The acquisition involves total consideration
of $11.5 million, the majority of which will be paid in Nufarm equity.
International financial crisis
The instability in global finance markets is causing difficulties for several significant overseas financial institutions.
Nufarm has no facilities with any of these financial institutions.
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directors’ report continued
Nufarm maintains significant short term financing lines with its relationship banks. Many of these lines have annual
review points primarily in the October to December period. Discussions with key relationship banks have reaffirmed
their support of Nufarm and, subsequent to balance date, Nufarm has increased its facilities with some financiers.
The directors believe that the business fundamentals in agriculture remain very strong and the current instability
in financial markets is not anticipated to have any material impact on the company’s performance or projected
guidance.
Likely developments
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.
Environmental performance
Details of Nufarm’s performance in relation to environmental regulations are set out on pages 14 to 15. 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 will be made available upon request to the company secretary.
Non-audit services
During the year KPMG, the company’s auditor, has performed certain other services in addition to their statutory
duties. Details of the audit fee and non-audit services are set out in note 42 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
during the year by the auditor is compatible with, and did 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.
Remuneration report – audited
Remuneration committee
The remuneration committee reviews and makes recommendations to the board on remuneration policies and
packages applicable to key management personnel and directors and ensures that remuneration policies and packages
retain and motivate high calibre executives and that remuneration policies demonstrate a clear relationship between
executive remuneration and company performance.
Key management personnel include the five most highly remunerated executives in accordance with S300A
of the Corporations Act.
The remuneration levels of the managing director and key management personnel are recommended by the
remuneration committee and approved by the board, having taken advice from independent external advisors.
Principles of compensation
Executives
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.
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directors’ report continued
The company has adopted a remuneration policy based on total target reward (TTR), which comprises two
components:
• 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 determined with reference to the median of similar sized companies within Mercer’s executive remuneration
database; and
• an incentive program – the incentive program is linked to meeting predetermined financial objectives for the
full year. 50 per cent of the incentive will be paid in cash and 50 per cent will be delivered by way of shares,
which, for the key management personnel, ensures a longer-term focus to achieve benefits consistent with
the delivery of sustained growth of shareholder value. The exception is the current managing director who
is paid in cash because of the very substantial shareholding he currently controls in the company.
Management personnel are not permitted to hedge any shares issued to them under the incentive program
whilst they remain held in trust.
If the financial objectives are achieved and the incentive program is paid at 100 per cent, the TTR will meet the
company’s TTR policy position of the upper quartile of similar sized companies within Mercer’s executive remuneration
database. Set out below are details of the maximum payment for 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; and
• 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 level of the performance condition on an annual basis.
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 hurdle for the incentive program. The hurdle
reflects targets for specific objectives and increasing company value, consistent with the company’s business
and investment strategies.
The target ROFE hurdle for the incentive program is 17.25 per cent.
At the end of each financial year the board:
• assesses company performance against the target ROFE hurdle to determine the percentage of any offer
to be made under of the incentive program; and
• reviews target ROFE for the incentive program for the following financial period.
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directors’ report continued
For the incentive program, 25 per cent of the incentive will be payable on achievement of 90 per cent of target
ROFE with a linear progression to 100 per cent of the incentive on achievement of target ROFE and a maximum
of 175 per cent of the incentive on achievement of 110 per cent of target ROFE.
If less than 90 per cent of target ROFE is achieved, no incentive will be paid.
The following table shows the proportion of incentive as a percentage of TTR.
Managing director
Key management personnel other than non-executive directors
Percentage (%) target ROFE achieved
<90
0
0
90
20
14
100
110
50
40
64
54
Consequences of performance on shareholders’ wealth
The board believes the following table demonstrates:
• the consequences of the company’s performance on shareholder wealth; and
• that the remuneration policy is generating the desired increase in shareholder wealth.
In considering the consolidated entity’s performance and benefits for shareholders’ wealth, the remuneration
committee and the board have regard to the following indices in respect of the current financial year and the
previous four financial years.
*Operating
EBIT
$m
*ROFE
achieved
*EPS
cents
cents
% per share per share
rate Dividends
paid
$000
Dividend
**Change
in share
price
$
***Total
Share shareholder
return
price
%
31 July
2004
2005
2006
2007
2008
142.2
196.6
211.2
217.8
311.2
15.7
19.8
17.8
16.6
17.2
47.1
60.5
60.3
59.2
69.7
23
26
27
31
33
33,656
40,548
45,879
53,145
58,332
1.72
4.08
(1.37)
4.31
4.05
6.09
10.15
8.80
13.10
16.85
54
63
(2.3)
40
17
* Numbers for 2005, 2006 and 2007 calculated in accordance with International Financial Reporting Standards. Numbers for 2004
calculated in accordance with previous Australian Generally Accepted Accounting Principles.
** This column reflects the change in share price from 1 August to 31 July in the relevant financial year.
*** Source: Goldman Sachs JBWere – total shareholder return as at 30 June.
Service contracts
The company has employment contracts with the managing director and the key management personnel.
These contracts formalise the terms and conditions of employment. The contracts are for an indefinite term.
The company may terminate the contracts upon, in the case of the managing director, 12 months, and in the case
of key management personnel, six months notice, in which case a termination payment equivalent to, in the case
of the managing director, 24 months, and in the case of key management personnel, 12 months, total employment
cost (base salary plus value of benefits such as motor vehicle and superannuation and any fringe benefits tax in
relation to those benefits,) will be paid. The company may terminate the employment contracts immediately for
serious misconduct.
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directors’ report continued
Non-executive directors (NED)
The board’s policy with regard to NED 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 2006 AGM, shareholders approved an aggregate of $1,200,000
per year (excluding superannuation costs).
Set out below are details of the annual fees payable at 31 July 2008 (excluding superannuation costs).
Chairman1
Deputy chairman1
Director board fees
Chairman audit committee
Chairman other board committees
Member audit committee
Member other board committees2
Effective 1 August 2008, the fees payable to the chairman, deputy chairman and directors will be:
Chairman
Deputy chairman
Director board fees
All other fees remain unaltered.
$
240,000
140,000
95,000
25,000
10,000
5,000
2,500
$
290,000
170,000
115,000
1 The chairman, KM Hoggard, and the deputy chairman, GDW Curlewis, receive no fees as members 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 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 five 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 benefit plan and
benefits 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 directors and executives
Details of the nature and amount of each major element of remuneration in respect of key management personnel,
which includes each director of the company and each of the five named company executives and relevant group
executives who receive the highest remuneration are:
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directors’ report continued
In AUD
Directors
Non-executive
KM Hoggard (Chairperson)
GDW Curlewis (Deputy chairman)
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker
RFE Warburton2
Executive Director
DJ Rathbone (Managing director)
Executive Officers
DA Pullan (Group general manager operations)
RF Ooms (Group general manager chemicals)
KP Martin (Chief financial officer)
B Benson (Group general manager marketing)
RG Reis (Group general manager corporate strategy and external affairs) 2008
2007
DA Mellody (Group general manager marketing and president
North America)
R Heath (Company secretary)
1 All cash bonuses were fully vested.
2 RFE Warburton retired on 5 December 2007.
2008
2007
2008
2007
8
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Salary and fees
$
Short term
Cash bonus
(vested1)
$
Short term
Non-monetary
benefits
$
Post-employment
Share based
payments
Other
long term
Total
Superannuation
Equity settled
$
$
$
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
228,000
192,000
112,000
112,000
86,750
76,000
110,500
94,333
92,750
78,500
89,750
–
57,911
21,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2008
2007
1,124,760
1,015,250
1,525,244
992,920
–
–
105,538
65,311
2,808,415
2,121,267
–
–
–
–
–
–
–
–
–
–
–
–
–
–
37,587
33,077
43,010
39,522
10,423
10,704
25,713
14,750
36,191
16,998
36,049
39,931
23,919
21,026
32,519
24,396
228,000
192,000
112,000
112,000
86,750
76,000
110,500
94,333
92,750
78,500
89,750
–
57,911
21,500
2,687,591
2,041,247
1,054,199
545,441
954,590
493,583
975,237
479,745
996,842
486,866
800,369
386,315
679,422
304,905
509,478
268,092
24,000
24,000
42,000
42,000
9,625
9,500
12,000
11,333
9,750
9,750
9,875
88,250
6,266
75,000
15,286
14,709
93,339
85,960
87,901
67,919
87,171
74,530
83,419
40,852
44,692
39,102
42,150
23,557
42,653
41,151
12,000
48,000
–
–
9,500
19,000
9,500
19,000
4,750
19,000
9,500
19,000
4,750
19,000
–
–
–
–
–
–
–
219,451
206,414
206,414
196,780
139,386
110,689
109,869
Total
$
264,000
264,000
154,000
154,000
105,875
104,500
132,000
124,666
107,250
107,250
109,125
107,250
68,927
115,500
1,177,430
870,382
1,058,363
782,706
1,095,249
770,257
1,104,346
749,842
892,276
581,645
749,571
449,633
563,484
427,469
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29,892
19,530
15,872
14,790
32,841
9,568
24,085
25,344
47,215
16,842
27,999
10,482
11,353
8,357
476,138
435,450
443,781
416,483
447,447
398,928
462,264
406,158
387,152
300,405
324,688
246,350
219,309
209,086
535,051
70,439
500,386
66,396
502,077
66,067
498,387
63,710
377,168
45,979
330,815
37,529
257,650
34,610
2008
2007
2008
2007
2008
2007
2008
2007
In AUD
Directors
Non-executive
KM Hoggard (Chairperson)
GDW Curlewis (Deputy chairman)
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker
RFE Warburton2
Executive Director
DJ Rathbone (Managing director)
Executive Officers
DA Pullan (Group general manager operations)
RF Ooms (Group general manager chemicals)
KP Martin (Chief financial officer)
B Benson (Group general manager marketing)
RG Reis (Group general manager corporate strategy and external affairs) 2008
DA Mellody (Group general manager marketing and president
North America)
R Heath (Company secretary)
1 All cash bonuses were fully vested.
2 RFE Warburton retired on 5 December 2007.
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
535,051
70,439
500,386
66,396
502,077
66,067
498,387
63,710
377,168
45,979
330,815
37,529
257,650
34,610
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2007
2008
2007
2008
2007
228,000
192,000
112,000
112,000
86,750
76,000
110,500
94,333
92,750
78,500
89,750
–
57,911
21,500
476,138
435,450
443,781
416,483
447,447
398,928
462,264
406,158
387,152
300,405
324,688
246,350
219,309
209,086
2008
2007
1,124,760
1,015,250
1,525,244
992,920
directors’ report continued
Short term
Cash bonus
(vested1)
Salary and fees
$
Short term
Non-monetary
benefits
$
Post-employment
Share based
payments
Other
long term
Total
$
Superannuation
$
Equity settled
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
37,587
33,077
43,010
39,522
10,423
10,704
25,713
14,750
36,191
16,998
36,049
39,931
23,919
21,026
32,519
24,396
228,000
192,000
112,000
112,000
86,750
76,000
110,500
94,333
92,750
78,500
89,750
–
57,911
21,500
2,687,591
2,041,247
1,054,199
545,441
954,590
493,583
975,237
479,745
996,842
486,866
800,369
386,315
679,422
304,905
509,478
268,092
24,000
24,000
42,000
42,000
9,625
9,500
12,000
11,333
9,750
9,750
9,875
88,250
6,266
75,000
15,286
14,709
93,339
85,960
87,901
67,919
87,171
74,530
83,419
40,852
44,692
39,102
42,150
23,557
42,653
41,151
Total
$
264,000
264,000
154,000
154,000
105,875
104,500
132,000
124,666
107,250
107,250
109,125
107,250
68,927
115,500
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,000
48,000
–
–
9,500
19,000
9,500
19,000
4,750
19,000
9,500
19,000
4,750
19,000
–
–
105,538
65,311
2,808,415
2,121,267
–
219,451
–
206,414
–
206,414
–
196,780
–
139,386
–
110,689
–
109,869
29,892
19,530
15,872
14,790
32,841
9,568
24,085
25,344
47,215
16,842
27,999
10,482
11,353
8,357
1,177,430
870,382
1,058,363
782,706
1,095,249
770,257
1,104,346
749,842
892,276
581,645
749,571
449,633
563,484
427,469
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directors’ report continued
Remuneration options: granted and vested during the year
During the year there were no options granted to directors or executives, nor were any options vested and
exercised by the specified executives.
Shares issued as a result of the exercise of options
There were no shares issued as a result of the exercise of options during the year.
Unissued shares under option
There are no unissued shares under option.
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.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 43 and forms part of the directors’ report for the
financial year ended 31 July 2008.
Rounding of amounts
The company is of a kind referred to in Australian Securities and Investment Commission Class Order 98/100 dated
10 July 1998 and, in accordance with that class order, amounts in the financial statements and the directors’ report
have been rounded off to the nearest thousand dollars, unless otherwise stated.
This report has been made in accordance with a resolution of directors.
KM Hoggard
Director
DJ Rathbone
Director
Melbourne
25 September 2008
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lead auditor’s independence declaration
under Section 307C of the Corporations Act 2001
To: the directors of Nufarm Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended
31 July 2008 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Paul J McDonald
Partner
Melbourne
25 September 2008
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income statements
for the year ended 31 July 2008
Consolidated
Company
Note
2008
$000
2007
$000
2008
$000
2007
$000
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Sales, marketing and distribution expenses
General and administrative expenses
Research and development expenses
Share of net profits of associates
7
19
Operating result
Barter trade loss realised on option
contracts – Brazil
Net non-cash revaluation profit/(loss)
on proceeds from Nufarm Step-up Securities
financing
6
6
Profit before net financing costs
and income tax
2,492,458
(1,747,965)
1,764,384
(1,269,608)
744,493
494,776
5,519
(263,878)
(138,378)
(41,585)
2,698
308,869
8,567
(186,019)
(93,357)
(30,000)
8,056
202,023
57,919
(39,910)
18,009
63,060
(4,784)
(7,076)
(515)
1,237
69,931
46,209
(31,287)
14,922
57,393
(5,573)
(5,947)
(564)
788
61,019
(34,259)
–
(4,119)
885
–
–
–
–
270,491
202,908
69,931
61,019
Financial income
Financial expenses
Net financing costs
10
10
3,202
(83,397)
(80,195)
5,336
(59,770)
(54,434)
119
(3,183)
(3,064)
6,801
(8,736)
(1,935)
Profit before income tax
190,296
148,474
66,867
59,084
Income tax expense
11
(52,176)
(41,151)
(2,169)
(1,448)
Profit from continuing operations
138,120
107,323
64,698
57,636
Discontinued operations
Profit/(loss) of discontinued operations
and gain/(loss) on sale of discontinued
operations (after tax)
12
–
41,840
–
–
Profit for the period
138,120
149,163
64,698
57,636
Attributable to:
Equity holders of the company
Minority interest
137,915
205
148,796
367
64,698
–
57,636
–
Profit for the period
138,120
149,163
64,698
57,636
Earnings per share
Basic earnings per share
Diluted earnings per share
Continuing operations
Basic earnings per share
Diluted earnings per share
31
31
31
31
69.7
69.7
69.7
69.7
83.6
83.6
59.2
59.2
The income statement is to be read in conjunction with the attached notes.
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balance sheets
as at 31 July 2008
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Total current assets
Non-current assets
Receivables
Equity accounted investments
Other investments
Deferred tax assets
Property, plant and equipment
Intangible assets
Other
Total non-current assets
TOTAL ASSETS
Current liabilities
Bank overdraft
Trade and other payables
Loans and borrowings
Employee benefits
Current tax payable
Provisions
Total current liabilities
Non-current liabilities
Payables
Loans and borrowings
Deferred tax liabilities
Employee benefits
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Share capital
Reserves
Retained earnings
Equity attributable to equity holders
of the company
Nufarm Step-up Securities
Minority interest
TOTAL EQUITY
Consolidated
Company
Note
2008
$000
2007
$000
2008
$000
2007
$000
15
16
17
18
16
19
20
21
23
24
22
15
25
26
27
18
29
25
26
21
27
30
30
30
30
30
30
59,143
839,963
843,544
61,185
92,377
787,909
477,404
27,348
3,308
467,536
17,318
12,860
15,034
235,182
14,721
11,651
1,803,835
1,385,038
501,022
276,588
29,041
24,264
354
93,270
433,112
821,500
8,504
15,336
22,966
271
93,577
333,777
580,721
7,225
–
9,206
300,769
1,603
5,283
49
–
–
8,341
307,214
1,079
5,034
24
–
1,410,045
1,053,873
316,910
321,692
3,213,880
2,438,911
817,932
598,280
20,841
778,060
587,612
16,849
12,461
6,184
12,716
812,336
360,061
15,328
23,956
11,436
–
133,671
–
342
7,227
–
2,667
119,217
–
317
14,096
–
1,422,007
1,235,833
141,240
136,297
39,842
351,456
57,239
38,118
15,200
92,092
34,893
31,742
–
–
74
52
486,655
173,927
126
–
–
2
52
54
1,908,662
1,409,760
141,366
136,351
1,305,218
1,029,151
676,566
461,929
456,870
6,822
593,558
240,886
9,192
531,124
456,870
37,355
182,341
240,886
45,135
175,908
1,057,250
246,932
1,036
781,202
246,932
1,017
676,566
–
–
461,929
–
–
1,305,218
1,029,151
676,566
461,929
The balance sheet is to be read in conjunction with the attached notes.
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statements of cash flows
for the year ended 31 July 2008
Consolidated
Company
Note
2008
$000
2007
$000
2008
$000
2007
$000
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Payment for barter trade loss realised
on option contracts – Brazil
2,580,996
(2,523,981)
1,692,095
(1,539,715)
57,015
3,202
373
(83,397)
(70,336)
152,380
5,336
171
(59,770)
(35,519)
65,692
(55,281)
10,411
119
59,817
(3,183)
(10,921)
79,130
(47,314)
31,816
6,801
53,335
(8,736)
(6,766)
(34,259)
–
–
–
Net cash from operating activities
38
(127,402)
62,598
56,243
76,450
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment
Proceeds from business sale
Payments for plant and equipment
Purchase of businesses, net of
cash acquired
Payments for acquired intangibles
and major product development
expenditure
Net investing cash flows
Cash flows from financing activities
Shares issued under private placement
(net of costs)
Shares issued under share purchase plan
Proceeds from issue of Nufarm Step-up
Securities (NSS)
Proceeds from borrowings
Repayment of borrowings
Repayment of capital notes
Advances to controlled entities
Payment for interest rate cap on
NSS securities
Distribution to NSS holders
Repayment of finance lease principal
Dividends paid
8,086
3,306
(69,509)
1,378
67,327
(63,231)
70
–
(1,524)
133
25,061
(1,433)
(374,256)
37,106
–
(61,211)
(493,584)
(22,866)
19,714
(62)
(1,516)
23,761
–
–
197,755
10,791
–
600,774
(148,272)
–
–
–
(22,036)
–
(58,422)
–
–
197,755
10,791
–
–
244,915
409,977
(426,383)
(195,228)
–
(3,755)
(8,184)
–
(53,451)
–
–
–
–
(212,452)
–
–
–
(58,264)
–
–
–
–
(20,498)
–
–
–
(53,145)
Net financing cash flows
580,590
(32,109)
(62,170)
(73,643)
Net increase (decrease) in cash and
cash equivalents
Cash at the beginning of the year
Exchange rate fluctuations on foreign
cash balances
Movement in cash reclassified as assets
held for sale
(40,396)
79,661
50,203
31,329
(7,443)
12,367
26,568
(12,835)
(963)
(1,871)
(1,616)
(1,366)
–
–
–
–
Cash and cash equivalents at 31 July
15
38,302
79,661
3,308
12,367
The statements of cash flows are to be read in conjunction with the attached notes.
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statements of recognised income and expense
for the year ended 31 July 2008
Consolidated
Company
Note
2008
$000
2007
$000
2008
$000
2007
$000
Items recognised directly in equity
Foreign exchange translation differences
for foreign operations
Actuarial gains (losses) on defined
benefit plans
Foreign exchange movements taken
to income statement
Income tax on income and expense
recognised directly in equity
Income and expense recognised
directly in equity
30
(2,491)
(14,680)
(7,871)
(1)
30
(2,451)
4,093
–
–
30
–
20
–
(50)
30
699
1,928
699
27
(4,243)
(8,639)
(7,172)
(24)
Profit for the year
138,120
149,163
64,698
57,636
Total recognised income and expense
for the year
133,877
140,524
57,526
57,612
Attributable to:
Equity holders of the parent
Minority interest
133,702
175
140,209
315
57,526
–
57,612
–
Total recognised income and expense
for the year
133,877
140,524
57,526
57,612
Other movements in equity arising from transactions with owners are set out in note 30.
The amounts recognised directly in equity are disclosed net of tax – see note 11 for tax effect.
The statements of recognised income and expense are to be read in conjunction with the attached notes.
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notes to the financial statements
1. Reporting entity
Nufarm Limited (the ‘company’) is domiciled in Australia. The address of the company’s registered office is
103-105 Pipe Road, Laverton North, Victoria, 3026. The consolidated financial statements of the company as
at and for the year ended 31 July 2008 comprise the company and its subsidiaries (together referred to as the
‘group’ and individually as ‘group entities’) and the group’s interest in associates and jointly controlled entities.
The group is primarily involved in the manufacture and sale of crop protection products used by farmers to
protect crops from damage caused by weeds, pests and disease.
2. Basis of preparation
(a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (AASBs) (including Australian interpretations) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated financial report of the group and the financial
report of the company also comply with International Financial Reporting Standards (IFRS) and interpretations
adopted by the International Accounting Standards Board (IASB).
The financial statements were approved by the board of directors on 25 September 2008.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the derivative
financial instruments which are measured at fair value. The methods used to measure fair values are discussed
further in note 4.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the company’s functional
currency. The company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance
with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest
thousand unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate
is revised.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements
are described in the following notes:
• note 14 – business combinations;
• note 21 – utilisation of tax losses;
• note 24 – measurement of the recoverable amounts of cash-generating units and impairment of goodwill
and indefinite life intangibles;
• note 27 – measurement of defined benefit obligations;
• note 32 – valuation of financial instruments; and
• note 29 and 35 – provisions and contingencies.
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notes to the financial statements continued
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements and have been applied consistently by group entities.
Certain comparative amounts have been reclassified to conform with the current year’s presentation. In addition,
the comparative income statement has been re-presented as if an operation discontinued during the current
period has been discontinued from the start of the comparative period (see note 12).
(a) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the group. Control exists when the group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements
of subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align
them with the policies adopted by the group.
In the company’s financial statements, investments in subsidiaries are carried at cost.
Associates and jointly controlled entities (equity accounted investments)
Associates and jointly controlled entities are accounted for using the equity method (equity accounted investments)
and are initially recognised at cost. The group’s investment includes goodwill identified on acquisition, net of any
accumulated impairment losses. The consolidated financial statements include the group’s share of the income
and expenses and equity movements of equity accounted investees, after adjustments to align the accounting
policies with those of the group, from the date that significant influence or joint control commences until the
date that significant influence or joint control ceases.
When the group’s share of losses exceeds its interest in an equity accounted investment, the carrying amount
of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that
the group has an obligation or has made payments on behalf of the investee.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
Gains and losses are recognised when the contributed assets are consumed or sold by the equity accounted
investee or, if not consumed or sold by the equity accounted investee, when the group’s interest in such entities
is disposed of.
(b) Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of group entities at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the foreign exchange rate at that date. Non-monetary
assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences
arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of
available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in foreign
operation, or qualifying cash flow hedges, which are recognised directly in equity.
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notes to the financial statements continued
3. Significant accounting policies continued
(b) Foreign currency continued
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated to Australian dollars at exchange rates at the reporting date. The income and expenses of foreign
operations are translated to Australian dollars at exchange rates at the dates of the transactions.
Foreign currency translation differences are recognised directly in equity. Since 1 August 2004, the group’s date
of transition to Australian equivalents to IFRS, such differences have been recognised in the foreign currency
translation reserve (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in
FCTR is transferred to profit or loss.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign subsidiary,
the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a
net investment in a foreign subsidiary and are recognised directly in equity in FCTR.
(c) Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables,
cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.
A financial instrument is recognised if the group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised if the group’s contractual rights to the cash flows from the financial assets
expire or if the group transfers the financial asset to another party without retaining control or substantially all
risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade
date, i.e. the date the group commits itself to purchase or sell the asset. Financial liabilities are derecognised
if the group’s obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
Accounting for finance income and expense is discussed in note 3(n).
Other non-derivative financial instruments are measured at amortised cost using the effective interest method,
less any impairment losses.
Derivative financial instruments
The group holds derivative financial instruments to manage its foreign currency and interest rate risk exposures.
Derivatives are recognised initially at fair value, with attributable transaction costs recognised in profit or loss
when incurred.
Subsequent to initial recognition, derivatives continue to be measured at fair value, with changes therein accounted
for in profit or loss.
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notes to the financial statements continued
3. Significant accounting policies continued
(c) Financial instruments continued
Derivative financial instruments continued
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised
directly in equity, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes
in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, then hedge accounting is discontinued. The cumulative gain or loss previously recognised in equity
remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount
recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the
amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit
or loss.
Economic flow hedges
Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities
denominated in foreign currencies. Changes in fair value of such derivatives are recognised in profit or loss as
part of foreign currency gains and losses.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any related income tax benefit.
Hybrid securities
The group has on issue a hybrid security called Nufarm Step-up Securities (NSS). The NSS are classified as equity
instruments and after-tax distributions thereon are recognised as distributions within equity.
Dividends
Dividends on ordinary capital are recognised as a liability in the period in which they are declared.
(d) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses. The cost of property, plant and equipment at 1 August 2004, the date of transition to AIFRS, was determined
by reference to its fair value at that date.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset
to a working condition for its intended use, and the costs of dismantling and removing the items and restoring
the site on which they are located. Purchased software that is integral to the functionality of the related equipment
is capitalised as part of that equipment. Borrowing costs related to the acquisition or construction of qualifying assets
are recognised in profit or loss as incurred.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within
‘other income’ in profit or loss.
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notes to the financial statements continued
3. Significant accounting policies continued
(d) Property, plant and equipment continued
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the group and its
cost can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised
in profit or loss as incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. Lease assets are depreciated over the shorter of the lease term and
their useful lives, unless it is reasonably certain that the group will obtain ownership by the end of the lease term.
Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
• buildings
15–50 years
• leasehold improvements
5 years
• plant and equipment
10–15 years
• motor vehicles
• computer equipment
5 years
3 years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
(e) Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and jointly controlled entities.
Acquisitions prior to 1 August 2004
As part of its transition to IFRS, the group elected not to restate those business combinations that occurred prior
to 1 August 2004. In respect of acquisitions prior to 1 August 2004, goodwill represents the amount recognised
under the group’s previous accounting framework, Australian GAAP.
Acquisitions since 1 August 2004
For acquisitions since 1 August 2004, goodwill represents the excess of the cost of the acquisition over the
group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.
Acquisitions of minority interests
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the
additional investment over the carrying amount of the net assets acquired at the date of exchange.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity investments, the carrying
amount of goodwill is included in the carrying amount of the investment.
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notes to the financial statements continued
3. Significant accounting policies continued
(e) Intangible assets continued
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge
and understanding, is recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products
and processes.
Development expenditure is capitalised only if development costs can be measured reliably, the product or process
is technically and commercially feasible, future economic benefits are probable and the group has sufficient resources
to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Borrowing
costs related to the development of qualifying assets are recognised in profit or loss as incurred. Development
expenditure that does not meet the above criteria is recognised in profit or loss as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses.
Intellectual property
Intellectual property consists of product registrations, product access rights, trademarks, task force seats,
product distribution rights and product licences acquired from third parties. Generally, product registrations,
product access rights, trademarks and task force seats, if purchased outright, are considered to have an indefinite
life as there are minimal annual fees to maintain the assets. Other items of acquired intellectual property are
considered to have a finite life in accordance with the terms of the acquisition agreement. Intellectual property
intangibles acquired by the group are measured at cost less accumulated amortisation and impairment losses.
Expenditure on internally generated goodwill and brands is expensed when incurred.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure is recognised in profit or loss when incurred.
Amortisation
For those intangibles with a finite life, amortisation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of the assets. The estimated useful life for intangible assets with a finite life, in the current
and comparative periods, are as follows:
• capitalised development costs
5 years
• intellectual property – finite life
Over the useful life in accordance with the acquisition agreement terms
• computer software
3 to 7 years
(f) Leased assets
Leases in terms of which the group assumes substantially all of the risks and rewards of ownership are classified
as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases
and the leased assets are not recognised on the group’s balance sheet.
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notes to the financial statements continued
3. Significant accounting policies continued
(g) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the
first-in first-out principle and includes expenditure incurred in acquiring the inventories, production or conversion
costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured
inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
(h) Impairment
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it
is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events
have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of estimated future cash flows discounted at the original
effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by
reference to its current fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial
asset recognised previously in equity is transferred to profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that
are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity
securities, the reversal is recognised directly in equity.
Non-financial assets
The carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives
or that are not yet available for use, the recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets
that generates cash flows from continuing use that are largely independent of the cash inflows of other assets
or groups of assets. The goodwill acquired in a business combination, for the purpose of impairment testing,
is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect
of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised
in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
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notes to the financial statements continued
3. Significant accounting policies continued
(i) Non-current assets held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered
primarily through sale rather than continuing use are classified as held for sale. Immediately before classification
as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the group’s
accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of their carrying
amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill,
and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories,
financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance
with the group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent
gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any
cumulative impairment loss.
(j) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into
a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution plans are recognised as an expense in profit or loss when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The group’s net
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods; that benefit
is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan
assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity
dates approximating the terms of the group’s obligations and that are denominated in the same currency in which
the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected
unit credit method. When the calculation results in a benefit to the group, the recognised asset is limited to the
net total of any unrecognised past service costs and the present value of any future refunds from the plan or
reductions in future contributions to the fund.
When the benefits of a fund are improved, the portion of the increased benefit relating to past service by employees
is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested.
To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.
The group recognises all actuarial gains and losses arising from the defined benefit plans directly in equity
immediately.
Other long term employee benefits
The group’s net obligation in respect of long term employee benefits, other than defined benefit plans, is the
amount of benefit that employees have earned in return for their service in the current and prior periods plus
related on-costs; that benefit is discounted to determine its present value, and the fair value of any related assets
is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates
approximating the terms of the group’s obligations. The calculation is performed using the projected unit credit
method. Any actuarial gains or losses are recognised in profit or loss in the period in which they arise.
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notes to the financial statements continued
3. Significant accounting policies continued
(j) Employee benefits continued
Termination benefits
Termination benefits are recognised as an expense when the group is demonstrably committed, without a realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement
date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination
benefits for voluntary redundancies are recognised as an expense if the group has made an offer encouraging
voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be
estimated reliably.
Short term benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations
resulting from employees’ services provided to reporting date and are calculated at undiscounted amounts based
on remuneration wage and salary rates that the group expects to pay as at reporting date including related on-costs,
such as workers compensation insurance and payroll tax. Non-accumulating non-monetary benefits, such as
medical care, housing, cars and free or subsidised goods and services are expensed based on the net marginal
cost to the group as the benefits are taken by employees.
A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans
if the group has a present legal or constructive obligation to pay this amount as a result of past service provided
by the employee and the obligation can be estimated reliably.
Share-based payment transactions
The group has a global share plan for employees whereby matching and loyalty shares are granted to employees.
The fair value of matching and loyalty shares granted is recognised as expense in the profit or loss over the respective
service period, with a corresponding increase in equity, rather than as the matching and loyalty shares are issued.
Refer note 28 for details of the global share plan.
(k) Provisions
A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money.
A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan,
and the restructuring either has commenced or has been announced publicly. Future operating costs are not
provided for.
(l) Revenue
Goods sold
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable,
net of returns, trade discounts and volume rebates. Revenue is recognised when the significant risks and
rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated
costs and possible return of goods can be estimated reliably, there is no continuing management involvement
with the goods and the amount of revenue can be measured reliably.
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notes to the financial statements continued
3. Significant accounting policies continued
(m) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of
the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term
of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments
are accounted for by revising the minimum lease payments over the remaining term of the lease when the
contingency no longer exists and the lease adjustment is known.
(n) Finance income and expense
Finance income comprises interest income on funds invested, dividend income, changes in the fair value of financial
assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss.
Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income
is recognised in profit or loss on the date that the group’s right to receive payment is established.
Finance expense comprises interest expense on borrowings, unwinding of the discount on provisions, changes
in the fair value of financial assets at fair value through profit or loss, dividends on preference shares classified as
liabilities, impairment losses recognised on financial assets and losses on hedging instruments that are recognised
in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
(o) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities
in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and
differences relating to investments in subsidiaries and jointly controlled entities to the extent that they will probably
not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences
arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right
to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the
same taxable entity or on different tax entities but they intend to settle current tax liabilities and assets on a net
basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the
liability to pay the related dividend is recognised.
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notes to the financial statements continued
3. Significant accounting policies continued
(o) Income tax continued
Tax consolidation
The company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a
consequence, all members of the tax-consolidated group are taxed as a single entity from that date. The head
entity within the tax-consolidated group is Nufarm Limited.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences
of the members of the tax-consolidated group are recognised in the separate financial statements of the members
of the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying
amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying
under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are
assumed by the head entity in the tax-consolidated group and are recognised by the company as amounts payable
(receivable) to (from) other entities in the tax-consolidated group in conjunction with any tax funding arrangement
amounts (refer below). Any difference between these amounts is recognised by the company as an equity
contribution or distribution.
The company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the
extent that it is probable that future taxable profits of the tax-consolidated group will be available against which
the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised
assessments of the probability of recoverability is recognised by the head entity only.
Nature of tax funding arrangements and tax sharing agreements
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax
amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability/
(asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in
the head entity recognising an inter-entity receivable/(payable) equal in amount to the tax liability/(asset) assumed.
The inter-entity receivables/(payables) are at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the
timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.
The head entity, in conjunction with other members of the tax-consolidated group, has also entered a tax sharing
agreement. The tax sharing agreement provides for the determination of the allocation of the income tax liabilities
between the entities should the head entity default on its tax payment obligations. No amounts have been
recognised in the financial statements in respect of this agreement as payment of any amounts under the tax
sharing agreement is considered remote.
(p) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST or equivalent),
except where the GST incurred is not recoverable from the taxation authority. In these circumstances, the GST
is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from,
or payable to, the ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the relevant tax authorities
are classified as operating cash flows.
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notes to the financial statements continued
3. Significant accounting policies continued
(q) Discontinued operations
A discontinued operation is a component of the group’s business that represents a separate major line of business
or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively
with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation
meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued
operation, the comparative income statement is re-presented as if the operation had been discontinued from
the start of the comparative period.
(r) Earnings per share
The group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number
of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable
to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all
potential dilutive ordinary shares, which comprise convertible notes and share options granted to employees.
(s) Segment reporting
A segment is a distinguishable component of the group that is engaged either in providing related products
or services (business segment) or in providing products or services within a particular economic environment
(geographic segment), which is subject to risks or rewards that are different from those of other segments.
The group’s primary format for reporting segment is based on geographic segments. The geographic segments
are determined based on the group’s management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis. Unallocated items comprise mainly loans and borrowings and related expenses,
corporate assets and head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment
and intangible assets other than goodwill.
(t) New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which may
impact the entity in the period of initial application. They are available for early adoption at 31 July 2008, but have
not been applied in preparing this financial report:
• Revised AASB 3 Business Combinations changes the application of acquisition accounting for business
combinations and the accounting for non-controlling (minority) interests. Key changes include: the immediate
expensing of all transaction costs; measurement of contingent consideration at acquisition date with subsequent
changes through the income statement; measurement of non-controlling (minority) interests at full fair value
or the proportionate share of the fair value of underlying net assets; guidance on issues such as reacquired
rights and vendor indemnities; and the inclusion of combinations by contract alone and those involving mutuals.
The revised standard becomes mandatory for the group’s 31 July 2010 financial statements. The group has not
yet determined the potential effect of the revised standard on the group’s financial report.
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notes to the financial statements continued
3. Significant accounting policies continued
(t) New standards and interpretations not yet adopted continued
• AASB 8 Operating Segments introduces the ‘management approach’ to segment reporting. AASB 8, which
becomes mandatory for the group’s 31 July 2010 financial statements, will require the disclosure of segment
information based on the internal reports regularly reviewed by the group’s chief operating decision maker in
order to assess each segment’s performance and to allocate resources to them. Currently, the group presents
segment information in respect of its geographical segments. This is not expected to change under AASB 8.
• Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly ‘primary’
statement) the ‘statement of comprehensive income’. The revised standard does not change the recognition,
measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB
101 will become mandatory for the group’s 31 July 2010 financial statements. The group has not yet
determined the potential effect of the revised standard on the group’s disclosures.
• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that an
entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the group’s 31 July
2010 financial statements and will constitute a change in accounting policy for the group. In accordance with
the transitional provisions the group will apply the revised AASB 123 to qualifying assets for which capitalisation
of borrowing costs commences on or after the effective date. The group has not yet determined the potential
effect of the revised standard on future earnings.
• Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments
in subsidiaries. Key changes include: the remeasurement to fair value of any previous/retained investment
when control is obtained/lost, with any resulting gain or loss being recognised in profit or loss; and the treatment
of increases ownership interest after control is obtained as transactions with equity holders in their capacity as
equity holders. The revised standard will become mandatory for the group’s 31 July 2010 financial statements.
The group has not yet determined the potential effect of the revised standard on the group’s financial report.
• AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payment: Vesting Conditions and
Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB
2008-1 becomes mandatory for the group’s 31 July 2010 financial statements. The group has not yet determined
the potential effect of the amending standard on the group’s financial report.
• AI 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate
in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which
the customer can redeem credits for awards such as free or discounted goods or services. AI 13, which becomes
mandatory for the group’s 31 July 2009 financial statements, is not expected to have any impact on the financial
report.
• AI 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction
clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be
regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such
assets. It also addresses when a MFR might give rise to a liability. AI 14 will become mandatory for the group’s
31 July 2009 financial statements, with retrospective application required. The group has not yet determined
the potential effect of the interpretation.
4. Determination of fair values
A number of the group’s accounting policies and disclosures require the determination of fair value, for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure
purposes based on the following methods. When applicable, further information about the assumptions made
in determining fair values is disclosed in the notes specific to that asset or liability.
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notes to the financial statements continued
4. Determination of fair values continued
(i) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is based on
market values. The market value of property is the estimated amount for which a property could be exchanged
on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market
value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.
(ii) Intangibles assets
The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated
royalty payments that have been avoided as a result of the patent or trademark being owned. The fair value of
other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual
sale of the assets.
(iii) Inventories
The fair value of inventory acquired in a business combination is determined based on its estimated selling price
in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit
margin based on effort required to complete and sell the inventory.
(iv) Investments in equity and debt securities
The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-
sale financial assets is determined by reference to their quoted bid price at the reporting date. The fair value of
held-to-maturity investments is determined for disclosure purposes only.
(v) Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted
at the market rate of interest at the reporting date.
(vi) Derivatives
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market
price is not available, then fair value is estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based
on government bonds).
The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and maturity of each contract and using market
interest rates for a similar instrument at the measurement date.
(vii) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance
leases, the market rate of interest is determined by reference to similar lease agreements.
(viii) Financial guarantees
For financial guarantee contract liabilities, the fair value at initial recognition is determined using a probability weighted
discounted cash flow approach. This method takes into account the probability of default by the guaranteed party
over the term of the contract, the loss given default (being the proportion of the exposure that is not expected to
be recovered in the event of default) and exposure at default (being the maximum loss at time of default).
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notes to the financial statements continued
5. Segment reporting
Segment information is presented in respect of the group’s geographic segments. This the primary format
of segment reporting based on the group’s management and internal reporting structure. The group operates
predominantly in one business segment, being the crop protection industry. The business is managed on a
worldwide basis, with the major geographic segments for reporting being Australasia, Europe, North America
and South America. In prior years, an Americas region only has been reported. However, with the consolidation
of the Agripec business in 2007, the Americas has been split between North and South America. The North
America region includes Canada, USA, Mexico, the Central American countries and the Andean region. The South
America region includes Brazil, Argentina, Chile, Uruguay, Paraguay and Bolivia. The prior year information has been
restated to reflect the new segments. In presenting information on the basis of geographic segments, segment
revenue is based on the geographic location of customers. Segment assets are based on the geographic location
of the assets.
Geographic segments 2008
Revenue
Total segment revenue
Results
Segment result before associate profit
Share of profit of associates
Segment result
Unallocated corporate expenses
Operating result
Barter trade loss realised on option
contracts – Brazil
Net non-cash revaluation profit/(loss)
on proceeds from Nufarm Step-up
Securities financing
Net financing costs
Income tax expense
Profit for the period
Assets
Segment assets
Investment in associates
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation
Amortisation
Australasia
$000
Europe
$000
North
America
$000
South
America
$000
Consolidated
$000
874,992
554,661
631,383
431,422
2,492,458
146,364
1,228
147,592
54,908
1,336
56,244
84,336
134
84,470
59,301
–
59,301
802,727
10,182
823,279
13,628
599,214
454
723,851
–
311,133
266,017
221,504
80,398
344,909
2,698
347,607
(38,738)
308,869
(34,259)
(4,119)
(80,195)
(52,176)
138,120
2,949,071
24,264
240,545
3,213,880
879,052
1,029,610
1,908,662
61,400
17,253
2,388
173,120
12,889
5,929
119,661
4,182
1,399
27,628
2,256
1,184
381,809
36,580
10,900
Capital expenditure includes the fixed assets, goodwill and intangibles resulting from the AH Marks and Etigra
acquisitions. The AH Marks values are included in Europe and Etigra is included in North America.
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notes to the financial statements continued
5. Segment reporting continued
Geographic segments 2007
Revenue
Total segment revenue
Australasia
$000
Europe
$000
North
America
$000
South
America
$000
Consolidated
$000
685,043
439,615
517,483
122,243
1,764,384
Results
Segment result before associate profit
Share of profit of associates
101,686
775
37,372
(600)
63,945
82
17,318
7,799
Segment result
102,461
36,772
64,027
25,117
Unallocated corporate expenses
Operating result
Net non-cash revaluation profit/(loss)
on proceeds from Nufarm Step-up
Securities financing
Net financing costs
Income tax expense
Profit/(loss) of discontinued operations
and gain on sale of discontinued operations
Profit for the period
Assets
Segment assets
Investment in associates
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation
Amortisation
220,321
8,056
228,377
(26,354)
202,023
885
(54,434)
(41,151)
41,840
149,163
2,187,529
22,966
228,416
2,438,911
886,041
523,719
1,409,760
797,017
9,407
556,272
13,207
302,834
352
531,406
–
276,168
154,006
149,716
306,151
56,533
15,983
2,742
26,989
13,114
5,044
8,270
4,009
660
257,121
486
171
348,913
33,592
8,617
Capital expenditure includes the goodwill and intangibles resulting from the Agripec acquisition. These are
included in the South America region.
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notes to the financial statements continued
6. Items of material income and expense
The following material items were included
in the period result:
Gain on sale of businesses
Barter trade loss realised on option contracts – Brazil
Net non-cash revaluation profit/(loss) on proceeds
from Nufarm Step-up Securities financing
Agripec impairment loss on trade receivables
Other items, including restructuring
Material items profit/(loss) before tax
Tax (expense)/benefit thereon
Material items profit/(loss) after tax
7. Other income
Consolidated
2008
$000
2007
$000
502
(34,259)
(4,119)
–
(1,568)
(39,444)
13,483
(25,961)
41,595
–
885
(4,606)
(3,487)
34,387
(5,859)
28,528
Dividends from wholly owned controlled entities
Management fees from controlled entities
Sundry income
Total other income
8. Other expenses
The following expenses were included in the
period result:
Depreciation and amortisation
Impairment gain/(loss) on trade receivables1
Movement in stock obsolescence provision
1 Excludes items set out in note 6
9. Personnel expenses
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution
superannuation funds
Expenses related to defined benefit
superannuation funds
Increase in liability for annual leave
Increase in liability for long-service leave
Consolidated
Company
2008
$000
–
–
5,519
5,519
2007
$000
–
–
8,567
8,567
2008
$000
59,444
3,240
376
63,060
2007
$000
53,164
3,522
707
57,393
(47,480)
(533)
(828)
(42,209)
251
(138)
(646)
(43)
(50)
(595)
–
–
(177,724)
(30,023)
(146,156)
(26,424)
(4,278)
(309)
(4,474)
(333)
(8,590)
(6,133)
(521)
(604)
(3,290)
(7,106)
(2,180)
(3,122)
(4,513)
(1,891)
–
(323)
–
–
(119)
–
(228,913)
(188,239)
(5,431)
(5,530)
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notes to the financial statements continued
10. Net financing costs
Interest income – controlled subsidiaries
Interest income – external
Financial income
Interest expense – controlled entities
Interest expense – external
Costs of securitisation program
Financial expenses
Consolidated
Company
2008
$000
–
3,202
3,202
–
(75,553)
(7,844)
(83,397)
2007
$000
–
5,336
5,336
–
(54,666)
(5,104)
(59,770)
2008
$000
–
119
119
(3,129)
(54)
–
(3,183)
2007
$000
4,485
2,316
6,801
(8,727)
(9)
–
(8,736)
Net financing costs
(80,195)
(54,434)
(3,064)
(1,935)
11. Income tax expense
Recognised in the income statement
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Reduction in tax rates
Benefit of tax losses recognised
43,941
(1,663)
42,278
12,717
283
(3,102)
9,898
73,187
306
73,493
(10,135)
(1,341)
(12,427)
(23,903)
2,016
87
2,103
58
8
–
66
1,428
1
1,429
19
–
–
19
Total income tax expense in income statement
52,176
49,590
2,169
1,448
Attributable to:
Continuing operations
Discontinued operations
Numerical reconciliation between tax expense
and pre-tax net profit
Profit before tax – continuing operations
Profit before tax – discontinued operations
Profit before tax
Income tax using the local corporate tax rate
of 30 per cent
Increase in income tax expense due to:
Non-deductible expenses
Effect on tax rate in foreign jurisdictions
Effect of changes in the tax rate
52,176
–
52,176
41,151
8,439
49,590
2,169
–
2,169
1,448
–
1,448
190,296
–
190,296
148,474
50,279
198,753
66,867
–
66,867
64,562
–
64,562
57,089
59,626
20,060
19,369
3,601
(2,206)
(459)
3,302
1,171
(1,064)
281
(63)
8
(139)
101
–
8
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notes to the financial statements continued
11. Income tax expense continued
Decrease in income tax expense due to:
Effect of tax losses derecognised/(recognised)
Tax exempt income
Tax incentives not recognised in the income statement
Under/(over) provided in prior years
Income tax expense on pre-tax net profit
Income tax expense/(benefit) recognised
directly in equity
Relating to actuarial gains on defined benefit plans
Relating to cost of issuing equity
Nufarm Step-up Securities distribution
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
–
(300)
(3,886)
53,839
(1,663)
52,176
221
(699)
(7,272)
(7,750)
(3,489)
(9,602)
660)
49,284
306
49,590
1,157
(1,928)
(2,700)
(3,471)
–
(18,204)
–
2,082
87
2,169
–
(17,884)
–
1,447
1
1,448
–
–
–
–
–
–
–
–
12. Discontinued operation
There were no discontinued operations in the current year. In the prior year, the group sold its stake in the
Nufarm-Coogee joint venture, which owns and operates two industrial chlor alkali plants in Western Australia.
Consolidated
Revenue
Expenses
Results from operating activities
Income tax expense
Results from operating activities, net of income tax
Gain on sale of discontinued operation
Income tax expense
Gain on sale of discontinued operations after tax
Profit and loss of discontinued operations
(per income statement)
Cash flows from discontinuing operations
Operating
Investing
Financing
Net cash flows attributable to discontinuing operations
2008
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
2007
$000
29,806
(16,703)
13,103
(3,938)
9,165
37,176
(4,501)
32,675
41,840
9,165
(384)
(934)
7,847
8
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notes to the financial statements continued
12. Discontinued operation continued
Effect of the disposals on the financial position
of the group
Receivables
Inventories
Property, plant and equipment
Intangibles
Deferred tax asset
Trade payables
Employee benefits
Income tax payable
Finance lease liability
Deferred tax liability
Net identifiable assets and liabilities
Consideration received, satisfied in cash
Deferred consideration
Cash disposed of
Net cash inflow
Other costs associated with disposal
Gain on sale of discontinued operations before tax
13. Non-current assets held for sale
Consolidated
2008
$000
2007
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,824
403
13,917
–
3,914
(1,449)
(742)
(5,285)
–
(328)
13,254
51,000
–
(489)
50,511
(81)
37,176
There were no assets held for sale at the end of the current or prior financial periods.
14. Acquisition of subsidiaries
Acquisitions during the year include the AH Marks (5 March 2008) and Etigra (31 March 2008) businesses. AH Marks
is a manufacturer and supplier of crop protection and industrial products. The company is based at Wyke, UK and
the purchase price was £74.6 million, consisting of cash consideration of £46.5 million with £28.1 million in assumed
debt. Etigra is a supplier of crop protection products, specialising in the US turf and specialty markets. It is based
in North Carolina and the assets of Etigra were acquired for US$65 million.
In the period to 31 July 2008, these businesses contributed profit of $8,411,160 to the consolidated group after
tax profit. If the above acquisitions had occurred on 1 August 2007, their full-year contribution to group revenues
would have been $182,872,236 and to the consolidated entity’s profit after tax would have been $2,866,358.
Since the date of acquisition (5 March 2008), AH Marks contributed a profit of $4.5 million. It had made a loss
in the period prior to acquisition, which will not occur in the following year.
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notes to the financial statements continued
14. Acquisition of subsidiaries continued
Acquiree’s net assets at acquisition date
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Intangibles
Deferred taxes
Trade and other payables
Employee benefits
Interest bearing loans and borrowings
Other liabilities
Net identifiable assets and liabilities
Acquisition costs
Identifiable intangibles (registrations and trademarks)
acquired on acquisition
Goodwill on acquisition
Consideration satisfied in cash
Deferred consideration at balance date
Cash (acquired)
Net cash outflow/(inflow)
Recognised
values
$000
Preliminary
fair value
adjustments
$000
Carrying
amounts
$000
(935)
57,877
11,905
75,561
4,059
(6,391)
(49,277)
(6,771)
(40,303)
(10,457)
35,268
2008
–
–
–
–
(3,471)
–
(1,506)
2,111
–
–
(2,866)
(935)
57,877
11,905
75,561
588
(6,391)
(50,783)
(4,660)
(40,303)
(10,457)
32,402
2,407
94,235
39,519
168,563
(11,135)
935
158,363
Pre-acquisition carrying values were determined based on applicable accounting standards immediately before
the acquisition. The value of assets, liabilities and contingent liabilities recognised on acquisition are their
estimated fair values (see note 4 for methods used in determining fair values).
Goodwill has arisen on the acquisitions above, mainly resulting from the synergies that these acquisitions bring
to the Nufarm group.
Acquisitions during the prior year included the Agrosol crop protection business in Italy for €6.4 million (19 October
2006), and the remaining 50.1 per cent of Agripec Quimica e Farmaceutica SA (1 June 2007), a crop protection
company based in Brazil. Agripec had previously been accounted for as an equity investment.
8
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68
notes to the financial statements continued
14. Acquisition of subsidiaries continued
Acquiree’s net assets at acquisition date
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Intangibles
Deferred taxes
Other assets
Trade and other payables
Employee benefits
Interest bearing loans and borrowings
Other liabilities
Net identifiable assets and liabilities
Reversal of equity investment
Acquisition costs
Identifiable intangibles (registrations and trademarks)
acquired on acquisition
Goodwill on acquisition
Consideration satisfied in cash
Deferred consideration at balance date
Cash (acquired)
Net cash outflow/(inflow)
15. Cash and cash equivalents
Bank balances
Call deposits
Cash and cash equivalents
Bank overdrafts repayable on demand
Cash and cash equivalents in the statement
of cash flows
Recognised
values
$000
Fair value
adjustments
$000
Carrying
amounts
$000
50,540
150,586
41,613
21,384
14,842
37,290
1,707
(88,927)
(583)
(34,585)
(16,714)
187,153
2007
–
(6,095)
1,209
6,451
(29)
(1,252)
–
(3,100)
(19)
–
(5,488)
(8,323)
50,540
144,491
42,822
27,835
14,813
36,038
11,707
(92,027)
(602)
(34,585)
(22,202)
178,830
(216,331)
(3,930)
128,488
142,127
229,184
(218,750)
(50,540)
(40,106)
Consolidated
Company
2008
$000
12,611
46,532
59,143
(20,841)
2007
$000
8,704
83,673
92,377
(12,716)
2008
$000
3,308
–
3,308
–
2007
$000
15,034
–
15,034
(2,667)
38,302
79,661
3,308
12,367
8
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2
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u
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69
notes to the financial statements continued
16. Trade and other receivables
Current
Trade receivables
Provision for impairment losses
Receivables due from controlled entities
Loans due from controlled entities
Receivables due from associates
Receivables due from securitisation program
Derivative financial instruments
Proceeds receivable from sale of businesses
Other receivables and prepayments
Non-current
Receivables due from associates
Other receivables
Proceeds receivable from sale of businesses
Provision for non-collectibility of sale proceeds
Consolidated
Company
2008
$000
2007
$000
2008
$000
685,316
(23,339)
666,617
(21,806)
661,977
644,811
4,713
(43)
4,670
–
–
362
52,176
26,946
3,306
95,196
–
–
375
57,338
15,114
3,210
67,061
939
461,389
–
–
375
–
163
2007
$000
4,877
–
4,877
50,390
177,256
–
–
–
–
2,659
839,963
787,909
467,536
235,182
–
22,656
9,491
(3,106)
29,041
344
5,909
12,387
(3,304)
15,336
–
–
–
–
–
–
–
–
–
–
Total trade and other receivables
869,004
803,245
467,536
235,182
17. Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence of finished goods
285,340
18,560
543,804
847,704
(4,160)
112,473
15,714
350,971
479,158
(1,754)
Total inventories
843,544
477,404
–
336
17,041
17,377
(59)
17,318
–
271
14,459
14,730
(9)
14,721
18. Current tax assets and liabilities
The current tax asset for the group of $61,185,329 (2007: $27,347,565) and for the company of $12,860,431
(2007: $11,650,621) represent the amount of income taxes recoverable in respect of prior periods. The current
tax liability for the group of $12,461,369 (2007: $23,955,941) and the company of $7,226,722 (2007: $14,096,247)
represent the amount of income taxes payable in respect of current and prior financial periods. In accordance
with the tax consolidation, legislation the company as the head entity of the Australian tax-consolidated group
has assumed the current tax liability/(asset) initially recognised by the members in the tax-consolidated group.
8
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0
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70
notes to the financial statements continued
19. Investments accounted for using the equity method
The group accounts for investments in associates using the equity method.
The group had the following significant investments in associates during the year:
Bayer CropScience Nufarm Ltd Agricultural chemicals
UK
31.12.2007
Country
Balance date
of associate
Ownership and
voting interest
2008
25%
2007
25%
Excel Crop Care Ltd
F&N joint ventures
manufacturer
Agricultural chemicals
manufacturer
India
31.3.2008
14.69%
14.69%
Agricultural chemicals
distributor
Eastern
Europe
31.12.2007
50%
50%
The 14.69 per cent investment in Excel Crop Care Ltd is equity accounted as Nufarm has two directors on the
board and, together with an unrelated partner, has significant influence over nearly 35 per cent of the shares
of the company. The relationship also extends to manufacturing and marketing collaborations.
The F&N joint ventures represents the group’s interest in three joint ventures with FMC Corporation, which operate
in Poland, Czech Republic and Slovakia. The joint ventures sell Nufarm and FMC products within their country.
Financial summary of material associates
Revenues
(100%)
Profit
after tax
(100%)
Total
assets
(100%)
Net assets
Share of
as reported associate’s
by net assets
equity
(100%) accounted
associates
Total
liabilities
(100%)
2008
Bayer CropScience Nufarm Ltd
Excel Crop Care Ltd
F&N joint ventures
2007
Bayer CropScience Nufarm Ltd
Excel Crop Care Ltd
F&N joint ventures
77,918
144,498
81,039
(6,760)
6,567
1,910
101,873
99,559
76,356
37,273
67,161
71,959
64,600
32,398
4,397
303,455
1,717
277,788
176,393
101,395
92,556
125,821
75,748
(3,876)
5,584
3,375
105,264
86,311
58,982
39,059
55,669
57,625
294,125
5,083
250,557
152,353
66,205
30,642
1,357
98,204
16,150
4,759
2,199
23,108
16,551
4,501
679
21,731
The financial summary information is from the financial statements as per the balance dates above.
8
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71
notes to the financial statements continued
19. Investments accounted for using the equity method continued
Consolidated
Company
Carrying value by major associate
Bayer CropScience Nufarm Ltd
Excel Crop Care Ltd
F&N joint ventures
Others
Carrying value of associates
Share of profit by major associate
Agripec Quimica e Farmaceutica SA (to 31 May 2007)
Bayer CropScience Nufarm Ltd
Excel Crop Care Ltd
F&N joint ventures
Others
Share of net profits of associates
2008
$000
2007
$000
11,471
9,206
2,157
1,430
24,264
–
(242)
1,237
1,578
125
2,698
12,640
8,341
567
1,418
22,966
7,799
(969)
788
534
(96)
8,056
2008
$000
–
9,206
–
–
9,206
–
–
1,237
–
–
1,237
2007
$000
–
8,341
–
–
8,341
–
–
788
–
–
788
The share of net profits has been derived from the latest management reports as at 31 July 2008 for Bayer
CropSciences and the F&N joint ventures. The Excel Crop Care share of net profits is from the 30 June 2008
management accounts.
20. Other investments
Investment in controlled entities
Balance at the beginning of the year
New investments during the year
Exchange adjustment
Balance at the end of the year
Investment in other companies (at cost)
Balance at the beginning of the year
Exchange adjustment
Disposals
Reclassification to equity investment
Balance at the end of the year
Other investments
Balance at the beginning of the year
Exchange adjustment
Movements in investments during the year
Loans repaid during the year
Balance at the end of the year
Total other investments
8
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a
f
u
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72
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
–
–
–
–
–
–
–
–
271
7
76
–
354
354
–
–
–
307,214
1,394
(7,839)
247,213
60,001
–
300,769
307,214
233
(3)
(167)
(63)
–
270
–
1
–
271
271
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300,769
307,214
notes to the financial statements continued
21. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Consolidated
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
Tax assets/(liabilities)
Set off of tax
Assets
Liabilities
Net
2008
$000
2007
$000
2008
$000
2007
$000
2008
$000
2007
$000
11,478
6,428
11,956
5,044
18,501
48,568
15,731
8,829
11,917
3,977
17,576
43,970
101,975
(8,705)
102,000
(8,423)
(17,010)
(39,528)
–
–
(9,406)
–
(65,944)
8,705
(11,376)
(22,296)
–
(69)
(9,575)
–
(43,316)
8,423
(5,532)
(33,100)
11,956
5,044
9,095
48,568
36,031
–
4,355
(13,467)
11,917
3,908
8,001
43,970
58,684
–
Net tax assets/(liabilities)
93,270
93,577
(57,239)
(34,893)
36,031
58,684
Company
Property, plant and equipment
Employee benefits
Provisions
Other items
Net tax assets/(liabilities)
Assets
Liabilities
Net
2008
$000
–
118
31
1,454
1,603
2007
$000
–
369
9
701
1,079
2008
$000
2007
$000
(73)
–
–
(1)
(74)
(2)
–
–
–
(2)
2008
$000
(73)
118
31
1,453
1,529
2007
$000
(2)
369
9
701
1,077
Movement in temporary differences during the year
Consolidated 2008
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses
carried forward
Balance Recognised Recognised
in income
31.07.07
$000
$000
Other Balance
in equity adjustment movement 31.07.08
$000
Currency
$000
$000
$000
4,355
(13,467)
11,917
3,908
8,001
(10,160)
(20,130)
404
984
1,459
43,970
2,956
58,684
(24,487)
–
–
(221)
–
–
–
(221)
250
497
(144)
(163)
880
23
–
–
315
(1,245)
(5,532)
(33,100)
11,956
5,044
9,095
1,642
2,962
–
48,568
(907)
36,031
8
0
0
2
t
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u
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73
notes to the financial statements continued
21. Deferred tax assets and liabilities continued
Movement in temporary differences during the year continued
Consolidated 2007
Property, plant and equipment
Intangible assets
Other investments
Employee benefits
Provisions
Other items
Tax value of losses
carried forward
Company 2008
Property, plant and equipment
Employee benefits
Provisions
Other items
Consolidated 2007
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Balance Recognised Recognised
in income
31.07.06
$000
$000
Other Balance
in equity adjustment movement 31.07.07
$000
Currency
$000
$000
$000
(377)
(12,621)
(41)
14,543
3,827
(4,737)
28,458
29,052
3,785
(182)
41
(1,472)
(291)
7,042
16,766
25,689
–
–
–
(1,157)
–
1,928
–
771
555
1,283
–
(255)
(127)
81
(985)
552
392
(1,947)
–
258
499
3,687
4,355
(13,467)
–
11,917
3,908
8,001
(269)
43,970
2,620
58,684
Balance Recognised Recognised
in income
31.07.07
$000
$000
Other Balance
in equity adjustment movement 31.07.08
$00
Currency
$000
$000
$000
(2)
369
9
701
1,077
(71)
(235)
26
226
(54)
–
–
–
–
–
–
(16)
(4)
–
(20)
–
–
–
526
526
(73)
118
31
1,453
1,529
Balance Recognised Recognised
in income
31.07.06
$000
$000
Other Balance
in equity adjustment movement 31.07.07
$000
Currency
$000
$000
$000
(50)
(4)
121
67
947
1,081
53
4
214
(59)
(230)
(18)
–
–
–
–
–
–
(5)
–
34
1
(16)
14
–
–
–
–
–
–
(2)
–
369
9
701
1,077
At 31 July 2008, a deferred tax liability of $25,024,580 (2007: $23,789,596) relating to investments in subsidiaries
has not been recognised because the company controls whether the liability will be incurred and it is satisfied
that it will not be incurred in the foreseeable future.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Tax losses
Consolidated
Company
2008
$000
8,979
8,979
2007
$000
–
–
2008
$000
–
–
2007
$000
–
–
The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in
respect of these items because it is not probable that future taxable profit will be available against which the
consolidated entity can utilise the benefits from.
8
0
0
2
t
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74
notes to the financial statements continued
22. Other non-current assets
Derivative financial instrument
Other
Consolidated
Company
2008
$000
8,504
–
8,504
2007
$000
7,216
9
7,225
2008
$000
2007
$000
–
–
–
–
–
–
The derivative financial instrument is the market value of the interest rate cap relating to the NSS distribution
base rate.
23. Property, plant and equipment
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Consolidated
Cost
Balance at 1 August 2007
Additions
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
185,156
3,503
1,581
(5,109)
15,977
(102)
471,845
9,684
144,132
(15,447)
37,254
(1,350)
2008
1,361
258
14,237
(359)
(315)
(26)
Capital
work in
progress
$000
Total
$000
27,035
56,064
–
–
(52,916)
212
685,397
69,509
159,950
(20,915)
–
(1,266)
Balance at 31 July 2008
201,006
646,118
15,156
30,395
892,675
Depreciation and impairment losses
Balance at 1 August 2007
Depreciation charge for the year
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
(53,586)
(6,332)
(90)
1,187
(92)
224
(297,404)
(30,241)
(83,658)
11,421
(48)
229
(630)
(248)
(641)
191
140
15
Balance at 31 July 2008
(58,689)
(399,701)
(1,173)
–
–
–
–
–
–
–
(351,620)
(36,821)
(84,389)
12,799
–
468
(459,563)
Net property, plant and equipment
at 31 July 2008
142,317
246,417
13,983
30,395
433,112
8
0
0
2
t
r
o
p
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A
–
d
e
t
i
i
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L
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a
f
u
N
75
notes to the financial statements continued
23. Property, plant and equipment continued
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Consolidated
Cost
Balance at 1 August 2006
Additions
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
151,790
1,080
22,408
(846)
15,466
(4,742)
440,619
10,226
9,647
(8,501)
30,389
(10,535)
Balance at 31 July 2007
185,156
471,845
Depreciation and impairment losses
Balance at 1 August 2006
Depreciation charge for the year
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
(46,958)
(4,952)
(3,274)
340
(329)
1,587
(278,945)
(28,650)
(3,781)
8,692
162
5,118
Balance at 31 July 2007
(53,586)
(297,404)
2007
1,536
360
–
–
(548)
13
1,361
(776)
(153)
167
–
167
(35)
(630)
Capital
work in
progress
$000
Total
$000
18,472
51,565
2,668
–
(45,307)
(363)
612,417
63,231
34,723
(9,347)
–
(15,627)
27,035
685,397
–
–
–
–
–
–
–
(326,679)
(33,755)
(6,888)
9,032
–
6,670
(351,620)
Net property, plant and equipment
at 31 July 2007
131,570
174,441
731
27,035
333,777
Assets pledged as security for finance leases $0.7 million (2007: $0.7 million).
There were no impairment losses in the consolidated entity in the current financial year or the comparative year.
8
0
0
2
t
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A
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a
f
u
N
76
notes to the financial statements continued
23. Property, plant and equipment continued
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Company
Cost
Balance at 1 August 2007
Additions
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2008
Depreciation and impairment losses
Balance at 1 August 2007
Depreciation charge for the year
Disposals
Exchange adjustment
Balance at 31 July 2008
3,133
–
–
828
(406)
3,555
(275)
(123)
–
46
(352)
3,704
–
(207)
622
(489)
3,630
(1,846)
(489)
153
280
(1,902)
Net property, plant and equipment
at 31 July 2008
3,203
1,728
2008
–
–
–
–
–
–
–
–
–
–
–
–
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Company
Cost
Balance at 1 August 2006
Additions
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2007
Depreciation and impairment losses
Balance at 1 August 2006
Depreciation charge for the year
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2007
2,209
564
(6)
131
235
3,133
(198)
(74)
6
13
(22)
(275)
3,178
550
(549)
187
338
3,704
(1,583)
(511)
434
(13)
(173)
(1,846)
Net property, plant and equipment
at 31 July 2007
2,858
1,858
2007
–
–
–
–
–
–
–
–
–
–
–
–
–
Capital
work in
progress
$000
318
1,524
–
(1,450)
(40)
352
–
–
–
–
–
Total
$000
7,155
1,524
(207)
–
(935)
7,537
(2,121)
(612)
153
326
(2,254)
352
5,283
Capital
work in
progress
$000
286
319
–
(318)
31
318
–
–
–
–
–
–
Total
$000
5,673
1,433
(555)
–
604
7,155
(1,781)
(585)
440
–
(195)
(2,121)
318
5,034
There were no impairment losses in the company in the current financial year or the comparative year.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
77
notes to the financial statements continued
24. Intangible assets
Goodwill
$000
Intellectual property
Indefinite
life
$000
Capitalised
Definite development Computer
software
$000
costs
$000
life
$000
Total
$000
Consolidated
2008
Cost
Balance at 1 August 2007
Additions
Additions through business
combinations
Disposals
Other transfers
Exchange adjustment
299,288
13,359
285,750
38,643
55,873
30,111
54,706
16,679
17,130 712,747
99,998
1,206
41,386
–
–
6,294
94,775
(2,402)
15,696
8,871
–
–
(11,666)
1,623
1,268
(1,594)
3,894
633
25 137,454
(3,999)
(3)
7,924
–
17,227
(194)
Balance at 31 July 2008
360,327
441,333
75,941
75,586
18,164 971,351
Amortisation and impairment
losses
Balance at 1 August 2007
Amortisation charge for the year
Additions through business
combinations
Disposals
Other transfers
Exchange adjustment
(74,248)
–
(10,263)
–
(25,017)
(4,000)
(12,566)
(4,685)
(9,932) (132,026)
(10,658)
(1,973)
–
–
–
945
–
–
–
56
–
–
360
(697)
(705)
1,201
(8,284)
(204)
–
–
–
161
(705)
1,201
(7,924)
261
Balance at 31 July 2008
(73,303)
(10,207)
(29,354)
(25,243)
(11,744) (149,851)
Intangibles carrying amount
at 31 July 2008
287,024
431,126
46,587
50,343
6,420 821,500
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
78
notes to the financial statements continued
24. Intangible assets continued
Goodwill
$000
Intellectual property
Indefinite
life
$000
Capitalised
Definite development Computer
software
$000
costs
$000
life
$000
Total
$000
Consolidated
2007
Cost
Balance at 1 August 2006
Additions
Additions through business
combinations
Disposals
Other transfers
Exchange adjustment
161,945
376
150,627
13,158
45,356
10
34,921
16,062
16,544 409,393
30,474
868
128,768
–
15,625
(7,426)
128,488
(5)
(431)
(6,087)
10,682
–
839
(1,014)
6,512
(1,582)
–
(1,207)
82 274,532
(1,661)
(74)
16,164
131
(16,155)
(421)
Balance at 31 July 2007
299,288
285,750
55,873
54,706
17,130 712,747
Amortisation and impairment
losses
Balance at 1 August 2006
Amortisation charge for the year
Transferred to discontinued
businesses
Disposals
Other transfers
Exchange adjustment
(61,917)
–
(10,606)
–
(21,063)
(3,448)
(11,297)
(2,585)
(8,104) (112,987)
(8,195)
(2,162)
–
–
(15,194)
2,863
–
1
–
342
–
–
(1,004)
498
–
793
67
456
(55)
54
(33)
368
(55)
848
(16,164)
4,527
Balance at 31 July 2007
(74,248)
(10,263)
(25,017)
(12,566)
(9,932) (132,026)
Intangibles carrying amount
at 31 July 2007
225,040
275,487
30,856
42,140
7,198 580,721
The major intangibles with an indefinite economic life are the product registrations that Nufarm owns. These
registrations are considered to have an indefinite life because, based on past experience, they will be renewed
by the relevant regulatory authorities and the underlying products will continue to be commercialised and
available for sale in the foreseeable future. The company will satisfy all of the conditions necessary for renewal
and the cost of renewal is minimal. In determining that the registrations have indefinite useful life, the principal
factor that influenced this determination is the expectation that the existing registration will not be subject to
significant amendment in the foreseeable future.
8
0
0
2
t
r
o
p
e
R
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a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
79
notes to the financial statements continued
24. Intangible assets continued
The group has determined that legal entity by country is the appropriate method for determining the cash-generating
units (CGU) of the business. This level of CGU aligns with the cash flows of the business and the management
structure of the group. The goodwill and intellectual property with an indefinite life are CGU specific, as the
acquisitions generating goodwill and the product registrations that are the major indefinite intangible are country
specific in nature. There is no allocation of goodwill between CGUs.
The most significant item in goodwill and indefinite life intangibles relates to the Agripec business and amounts
to $307 million. The balance of goodwill and indefinite life intangibles is spread across multiple CGUs, with no
individual amount being material relative to the total intangibles at balance date.
For the impairment testing of these assets, the carrying amount of the asset is compared to its recoverable amount
at a CGU level. The group uses the value-in-use method to estimate the recoverable amount. In assessing
value-in-use, the estimated future cash flows are derived from the five year plan for each cash-generating unit
with a growth factor applied to extrapolate a cash flow over a 20 year period. The 20 year period has been
selected on the basis that this period most closely aligns with the product registration life in most geographies.
The growth rate assumed for each CGU is the forecast growth over the next five years, with a cap of 10 per cent.
The 10 per cent growth cap is the average growth achieved by the group in recent years. The cash flow is then
discounted to a present value using a discount rate of 11.4 per cent, which is the company’s weighted average
cost of capital. At 31 July 2008, the recoverable amount exceeded the carrying amount for all CGUs.
Intellectual property
Indefinite
life
$000
Capitalised
Definite development Computer
software
$000
costs
$000
life
$000
Total
$000
2008
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
84
62
6
(12)
84
62
6
(12)
140
140
(60)
(34)
(6)
9
(91)
(60)
(34)
(6)
9
(91)
49
49
Company
Cost
Balance at 1 August 2007
Additions
Transfer
Exchange adjustment
Balance at 31 July 2008
Amortisation and impairment
losses
Balance at 1 August 2007
Amortisation charge for the year
Transfer
Exchange adjustment
Balance at 31 July 2008
Intangibles carrying amount
at 31 July 2008
Goodwill
$000
–
–
–
–
–
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
80
notes to the financial statements continued
24. Intangible assets continued
Goodwill
$000
Intellectual property
Indefinite
life
$000
Capitalised
Definite development Computer
software
$000
costs
$000
life
$000
Company
2007
Cost
Balance at 1 August 2006
Disposals through sale of entities
Exchange adjustment
Balance at 31 July 2007
Amortisation and impairment losses
Balance at 1 August 2006
Amortisation charge for the year
Balance at 31 July 2007
Intangibles carrying amount
at 31 July 2007
25. Trade and other payables
–
–
–
–
–
–
–
–
Current payables
Trade creditors and accruals – unsecured
Payables due to controlled entities
Loans due to controlled entities
Payable in respect of Agripec acquisition
Payables due to associated entities
Derivative financial instruments
Securitisation payables
Non-current payables
Creditors and accruals
Payables – acquisitions
Total
$000
66
16
2
84
(49)
(11)
(60)
66
16
2
84
(49)
(11)
(60)
24
24
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
619,525
–
–
–
829
90
157,616
386,950
–
–
218,750
961
2,274
203,401
11,324
8,310
114,037
–
–
–
–
8,310
4,228
106,339
–
–
340
–
778,060
812,336
133,671
119,217
13,283
26,559
39,842
–
15,200
15,200
–
–
–
–
–
–
The group sells receivables to an unrelated third party for which Nufarm acts as the collection agent. The securitisation
payables above represent the sum payable in respect of those sales. Amounts that are to be collected on their
behalf are included as part of trade receivables. Refer note 16.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
81
notes to the financial statements continued
26. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the group’s and the company’s interest-bearing
loans and borrowings.
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
587,171
441
587,612
335,962
1,028
14,466
351,456
359,662
399
360,061
90,955
854
283
92,092
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Consolidated
Company
Accessible
$000
Utilised Accessible
$000
$000
Utilised
$000
1,614,589
1,028
157,616
943,974
1,028
157,616
1,773,233
1,102,618
–
–
–
–
1,266,860
208
203,401
1,470,469
463,333
208
203,401
666,942
2,667
–
–
2,667
–
–
–
–
2,667
–
–
2,667
Current liabilities
Bank loans – unsecured
Finance lease liabilities – secured
Non-current liabilities
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
2008
Financing facilities
The group has access to the following facilities
with a number of financial institutions.
Bank loan facilities
Other facilities
Receivables securitisation-type facilities
Total financing facilities
2007
Bank loan facilities
Other facilities
Receivables securitisation-type facilities
Total financing facilities
Financing arrangements
Bank loans
All unsecured bank borrowings, including bank overdraft facilities, 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 36) are in
excess of their related borrowings.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
82
notes to the financial statements continued
26. Interest-bearing loans and borrowings continued
Repayment of borrowings (excluding finance leases)
Period ending 31 July 2008
Period ending 31 July 2009
Period ending 31 July 2010
Period ending 31 July 2011
No specified repayment date
Consolidated
Company
2008
$000
–
608,011
100,040
235,923
1,028
2007
$000
372,661
62,748
27,924
–
854
2008
$000
2007
$000
–
–
–
–
–
–
–
–
The obligations with no specified repayment date are repayable upon certain contingent events, which the
directors believe will not occur in the foreseeable future.
Finance lease liabilities
Finance leases are entered to fund the acquisition of plant and equipment. 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
Less future finance charges
Consolidated
Company
2008
$000
502
243
15,247
15,992
(1,085)
14,907
2007
$000
2008
$000
2007
$000
452
302
19
773
(91)
682
–
–
–
–
–
–
–
–
–
–
–
–
Finance lease liabilities are secured over the relevant leased plant.
Nufarm Step-up Securities
Bank loans
Other loans
Finance lease liabilities – secured
Consolidated
Company
2008
%
8.78
7.32
9.25
6.79
2007
%
8.35
6.6
9.48
13.2
2008
%
2007
%
–
–
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
83
notes to the financial statements continued
27. Employee benefits
Current
Liability for annual leave
Non-current
Present value of wholly unfunded obligations
Present value of wholly funded obligations
Fair value of fund assets – funded
Recognised liability for defined benefit fund
obligations
Liability for long service leave
Total employee benefits
Consolidated
Company
2008
$000
2007
$000
16,849
16,849
8,201
110,487
(93,786)
15,328
15,328
8,440
50,847
(39,732)
24,902
19,555
13,216
38,118
54,967
12,187
31,742
47,070
2008
$000
342
342
–
–
–
–
52
52
394
2007
$000
317
317
–
–
–
–
52
52
369
The consolidated entity makes contributions to defined benefit pension funds, in the UK, Holland, France and
Indonesia, that provide defined benefit amounts for employees upon retirement. The company has no defined
benefit pension funds.
Historical information
Consolidated
2008
$000
2007
$000
2006
$000
2005
$000
2004
$000
Present value of defined benefit obligation
Fair value of plan assets
(118,688)
93,786
(59,287)
39,732
(62,587)
35,477
(57,881)
30,534
(56,466)
27,693
Surplus/(deficit)
(24,902)
(19,555)
(27,110)
(27,347)
(28,773)
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
700
(10,088)
321
1,687
961
586
3,640
4,086
58
(433)
Consolidated
2008
$000
2007
$000
Changes in the present value of the defined
benefit obligation are as follows:
Opening defined benefit obligation
Liability assumed with AH Marks business
Indonesia defined benefit plan inclusion
Service cost
Interest cost
Actuarial gains
Plan changes
Past service cost
Losses/(gains) on curtailment
Contributions
Benefits paid
Exchange differences on foreign funds
59,287
65,017
–
2,952
4,609
(6,617)
–
5
–
355
(3,508)
(3,412)
Closing defined benefit obligation
118,688
62,587
–
382
2,696
3,109
(5,087)
404
6
(932)
(808)
(1,166)
(1,904)
59,287
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
84
notes to the financial statements continued
27. Employee benefits continued
Changes in the fair value of fund assets
are as follows:
Opening fair value of fund assets
Assets assumed with AH Marks business
Expected return
Actuarial gains/(losses)
Contributions by employer
Distributions
Exchange differences on foreign funds
Closing fair value of fund assets
The actual return on plan assets is the sum
of the expected return and the actuarial gain.
Expense recognised in profit or loss
Current service costs
Interest on obligation
Expected return on fund assets
Past service cost
Plan changes
Losses/(gains) on curtailment
The expense is recognised in the following line
items in the income statement:
Cost of sales
Sales, marketing and distribution expenses
General and administrative expenses
Research and development expenses
Actuarial gains/(losses) recognised directly
in equity (net of tax)
Cumulative amount at 1 August
Recognised during the period
Cumulative amount at 31 July
Consolidated
2008
$000
2007
$000
39,732
60,286
4,276
(9,079)
3,964
(2,674)
(2,719)
93,786
2,952
4,609
(4,276)
5
–
–
3,290
2,044
577
450
219
3,290
3,380
(2,451)
929
35,477
–
2,161
1,687
2,018
(409)
(1,202)
39,732
2,696
3,109
(2,161)
6
404
(932)
3,122
1,776
617
583
146
3,122
(713)
4,093
3,380
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
85
notes to the financial statements continued
27. Employee benefits continued
The major categories of fund assets as a
percentage of total fund assets are as follows:
European equities
European bonds
Property
Cash
Principal actuarial assumptions at the reporting
date (expressed as weighted averages):
Discount rate at 31 July
Expected return on fund assets at 31 July
Future salary increases
Future pension increases
Consolidated
2008
%
2007
%
60.7%
36.9%
2.3%
0.1%
6.4%
6.9%
3.5%
3.3%
58.7%
31.3%
2.8%
7.2%
5.5%
6.6%
3.4%
2.9%
The overall expected long term rate of return on assets is 6.9 per cent. The expected rate of return on plan
assets reflects the average rate of earnings expected on the funds invested to provide for the benefits included
in the projected benefit obligation.
The group expects to pay $3,880,000 in contributions to defined benefit plans in 2009.
28. Share-based payments
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 per cent 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. All outstanding amounts were fully repaid during the current
year (2007: $21,740). Each executive is entitled to exercise voting rights attached to the shares allocated. As the
outstanding amounts have been fully repaid, the trustees of the Executive Share Purchase Scheme (1984) held
no ordinary shares at 31 July 2008 (2007: 25,000) and there are no remaining participants (2007: four participants)
in the scheme.
The Nufarm Executive Share Plan (2000) offers shares 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 10 years without board approval. An independent trustee holds the
shares and options on behalf of the executives. At 31 July 2008 there were 58 participants (2007: 63 participants)
in the scheme and 1,522,934 shares (2007: 1,635,832) were allocated and held by the trustee on behalf of the
participants. The cost of issuing shares is expensed in the year of issue.
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 per cent of
the number of ordinary shares acquired with a participant’s contribution in the form of additional ordinary shares.
Amounts over 10 per cent 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 per cent of the value
of the shares acquired with the participant’s contribution. An independent trustee holds the shares on behalf of
the participants. At 31 July 2008 there were 749 participants (2007: 751 participants) in the scheme and 1,604,742
shares (2007: 1,527,135) were allocated and held by the trustee on behalf of the participants. The cost of the
Global Share Plan expensed for the year ended 31 July 2008 was $1,037,967 (2007: $1,241,729).
The power of appointment and removal of the trustees for the share purchase schemes is vested in the company.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
86
notes to the financial statements continued
29. Provisions
Current
Restructuring
Other
Provision for dividends
Consolidated
Company
2007
$000
2008
$000
2007
$000
2008
$000
–
6,184
–
6,184
128
6,536
4,772
11,436
–
–
–
–
Consolidated
–
–
–
–
Total
$000
11,436
878
(6,194)
64
6,184
Movement in provisions
Balance at 1 August 2007
Provisions made during the year
Provisions used during the year
Exchange adjustment
Balance at 31 July 2008
Dividends Restructuring
$000
$000
Other
provisions
$000
4,772
–
(4,772)
–
–
128
–
(131)
3
–
6,536
878
(1,291)
61
6,184
The other provisions consist of contingent liabilities recognised with the Agripec acquisition ($4.4 million) and
provisions for employee litigation in France ($1.8 million).
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
87
notes to the financial statements continued
30. Capital and reserves
30. Capital and reserves continued
Reconciliation of movements in capital and reserves attributable to equity holders of the parent
Consolidated
Share
capital
$000
Translation Capital profit
reserve
$000
reserve
$000
Hedging
reserve
$000
Other
reserve
$000
Retained Nufarm Step-up
earnings
$000
Securities
$000
Minority
interest
$000
Total
equity
$000
Balance at 1 August 2006
240,760
(9,716)
33,627
–
436,530
1,008
702,189
Foreign exchange translation differences
Foreign exchange movement taken to hedging reserve
Actuarial gains/(losses) on defined benefit plans
Accrual and issue of shares under global share plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
Issue of Nufarm Step-up Securities
Distributions to Nufarm Step-up Security holders
–
–
–
–
99
27
–
–
–
–
–
(14,628)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2007
240,886
(24,344)
33,627
(91)
531,124
246,932
1,017
1,029,151
Balance at 1 August 2007
240,886
(24,344)
33,627
(91)
531,124
246,932
1,017
1,029,151
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Share issued to employees
Accrual and issue of shares under global share plan
Shares issued under private placement (net of costs)
Shares issued under share purchase plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
–
–
1,805
948
197,755
10,791
3,986
699
–
–
–
–
(2,461)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2008
456,870
(26,805)
33,627
593,558
246,932
1,036
1,305,218
(20)
–
20
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
367
149,163
246,932
(306)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(52)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30)
(14,680)
20
4,093
(91)
99
27
334
(53,451)
246,932
(5,484)
(2,491)
(2,451)
1,805
1,039
197,755
10,791
3,986
699
56
–
(58,478)
(14,764)
205
138,120
(156)
–
4,093
–
–
–
–
–
334
148,796
(53,145)
–
(5,484)
(2,451)
–
–
–
–
–
–
–
56
137,915
(58,322)
(14,764)
(91)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
91
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
88
notes to the financial statements continued
30. Capital and reserves
30. Capital and reserves continued
Reconciliation of movements in capital and reserves attributable to equity holders of the parent
Consolidated
Share
capital
$000
Translation Capital profit
reserve
$000
reserve
$000
Hedging
reserve
$000
Other
reserve
$000
Retained Nufarm Step-up
Securities
earnings
$000
$000
Minority
interest
$000
Total
equity
$000
Balance at 1 August 2006
240,760
(9,716)
33,627
(20)
–
436,530
Balance at 31 July 2007
240,886
(24,344)
33,627
Balance at 1 August 2007
240,886
(24,344)
33,627
Foreign exchange translation differences
Foreign exchange movement taken to hedging reserve
Actuarial gains/(losses) on defined benefit plans
Accrual and issue of shares under global share plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
Issue of Nufarm Step-up Securities
Distributions to Nufarm Step-up Security holders
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Share issued to employees
Accrual and issue of shares under global share plan
Shares issued under private placement (net of costs)
Shares issued under share purchase plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
–
–
–
–
99
27
–
–
–
–
–
–
–
1,805
948
197,755
10,791
3,986
699
–
–
–
–
(14,628)
(2,461)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2008
456,870
(26,805)
33,627
–
20
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(91)
–
–
–
–
–
–
–
–
–
4,093
–
–
–
334
148,796
(53,145)
–
(5,484)
–
–
–
–
–
–
–
–
–
–
246,932
–
1,008
702,189
(52)
–
–
–
–
–
–
(14,680)
20
4,093
(91)
99
27
334
367
149,163
(306)
–
–
(53,451)
246,932
(5,484)
(91)
531,124
246,932
1,017
1,029,151
(91)
531,124
246,932
1,017
1,029,151
–
–
–
91
–
–
–
–
–
–
–
–
–
–
(2,451)
–
–
–
–
–
–
56
137,915
(58,322)
(14,764)
–
–
–
–
–
–
–
–
–
–
–
–
(30)
–
–
–
–
–
–
–
–
205
(156)
–
(2,491)
(2,451)
1,805
1,039
197,755
10,791
3,986
699
56
138,120
–
(58,478)
(14,764)
593,558
246,932
1,036
1,305,218
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
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L
m
r
a
f
u
N
89
notes to the financial statements continued
30. Capital and reserves continued
30. Capital and reserves continued
Reconciliation of movements in capital and reserves attributable to equity holders of the parent
Company
Share
capital
$000
Translation Capital profit
reserve
$000
reserve
$000
Hedging
reserve
$000
Other
reserve
$000
Balance at 1 August 2006
240,760
(325)
40,074
Foreign exchange translation differences
Foreign exchange movement taken to hedging reserve
Accrual and issue of shares under global share plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Profit for the period
Dividends paid to shareholders
–
–
–
99
27
–
–
5,477
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2007
240,886
5,152
40,074
Balance at 1 August 2007
240,886
5,152
40,074
Foreign exchange translation differences
Share issued to employees
Accrual and issue of shares under global share plan
Shares issued under private placement (net of costs)
Shares issued under share purchase plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
–
1,805
948
197,755
10,791
3,986
699
–
–
–
(7,871)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2008
456,870
(2,719)
40,074
Retained Nufarm Step-up
Securities
$000
earnings
$000
171,417
Minority
interest
$000
50
(50)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(91)
(91)
(91)
–
–
91
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
57,636
(53,145)
175,908
175,908
–
–
–
–
–
–
–
–
–
–
–
–
57
64,698
(58,322)
182,341
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$000
451,976
5,477
(50)
(91)
99
27
57,636
(53,145)
461,929
461,929
(7,871)
1,805
1,039
197,755
10,791
3,986
699
57
64,698
(58,322)
676,566
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
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L
m
r
a
f
u
N
90
notes to the financial statements continued
30. Capital and reserves continued
30. Capital and reserves continued
Reconciliation of movements in capital and reserves attributable to equity holders of the parent
Company
Share
capital
$000
Translation Capital profit
reserve
$000
reserve
$000
Hedging
reserve
$000
Other
reserve
$000
Retained Nufarm Step-up
Securities
earnings
$000
$000
Minority
interest
$000
Balance at 1 August 2006
240,760
(325)
40,074
Balance at 31 July 2007
240,886
5,152
40,074
Balance at 1 August 2007
240,886
5,152
40,074
Foreign exchange translation differences
Foreign exchange movement taken to hedging reserve
Accrual and issue of shares under global share plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Profit for the period
Dividends paid to shareholders
Foreign exchange translation differences
Share issued to employees
Accrual and issue of shares under global share plan
Shares issued under private placement (net of costs)
Shares issued under share purchase plan
Shares issued as consideration for business acquisition
Tax benefit on share issue costs
Transfer to/from reserves
Profit for the period
Dividends paid to shareholders
–
–
–
99
27
–
–
–
1,805
948
197,755
10,791
3,986
699
–
–
–
5,477
(7,871)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2008
456,870
(2,719)
40,074
50
–
(50)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
171,417
–
–
(91)
–
–
–
–
(91)
(91)
–
–
91
–
–
–
–
–
–
–
–
–
–
–
–
–
57,636
(53,145)
175,908
175,908
–
–
–
–
–
–
–
57
64,698
(58,322)
182,341
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$000
451,976
5,477
(50)
(91)
99
27
57,636
(53,145)
461,929
461,929
(7,871)
1,805
1,039
197,755
10,791
3,986
699
57
64,698
(58,322)
676,566
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
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a
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u
N
91
notes to the financial statements continued
30. Capital and reserves continued
The parent company has a branch and division based in New Zealand. The functional currency of the branch and
division is New Zealand dollars. This creates a translation reserve when the results of the branch and division are
translated to the reporting currency of Australian dollars. In the prior year, this translation difference was incorrectly
taken to the income statement when it should have been taken to translation reserve. This has been corrected
in the current reporting year. The correction has the effect of reducing the prior year profit from $63,114,000 to
$57,636,000 as shown on the face of the income statement. The difference of $5,477,000 is shown as a foreign
translation reserve difference above. There was no impact to the consolidated group results or the net assets
of the company.
Share capital
Balance at 1 August
Issue of shares
Balance at 31 July
Consolidated
Number
of ordinary
shares
2008
Number
of ordinary
shares
2007
171,501,253
14,381,080
171,492,251
9,002
185,882,333
171,501,253
On 15 October 2007, 131,000 shares at a price of $13.78 were issued under the executive share plan. On 13
December 2007, 65,000 shares at a price of $14.60 were issued under the global share plan. On 12 March 2008,
13,245,034 were issued at a price of $15.10 under a private placement to fund the AH Marks and Etigra acquisitions.
On 9 April 2008, 714,614 share were issued at $15.10 under a share placement plan to existing shareholders on
the same terms as the private placement. On 7 May 2008, 225,432 shares at $17.68 were issued as part of the
acquisition cost of Etigra.
In May 2006, Nufarm acquired the shares of Nutrihealth Pty Ltd. Dr John Stocker, a director of Nufarm, was
a minority shareholder of Nutrihealth. In accordance with the purchase agreement, Dr Stocker was allocated
9,002 ordinary shares in respect of his Nutrihealth shares. These shares were issued on 8 December 2006,
after the issue was approved by the shareholders at the company’s 2006 annual general meeting.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the company.
Nufarm Step-up Securities
In the year ended 31 July 2007 Nufarm Finance (NZ) Limited, a wholly owned subsidiary of Nufarm Limited,
issued a new hybrid security called Nufarm Step-up Securities (NSS). The NSS are perpetual step up securities
and on 24 November 2006, 2,510,000 NSS were allotted at an issue price of $100 per security raising $251 million.
The NSS are listed on the ASX under the code ‘NFNG’ and on the NZDX under the code ‘NFFHA’. The after-tax
costs associated with the issue of the NSS, totalling $4.1 million, have been deducted from the proceeds.
Distributions on the NSS are at the discretion of the directors and are floating rate, unfranked, non-cumulative
and subordinated. However, distributions of profits and capital by Nufarm Limited are restricted if distributions
to NSS holders are not made, until such time that Nufarm Finance (NZ) Limited makes up the arrears. The first
distribution date for the NSS was 16 April 2007 and on a six-monthly basis after this date. The floating rate is the
average mid-rate for bills with a term of six months plus a margin of 1.90 per cent. The step-up date is five years
from issue date, and provides the issuer with the following options: (a) keep the NSS on issue whereby the
margin will be reset or stepped up by the step-up margin; or (b) redeem the NSS for face value, or exchange
them for a number of ordinary shares in Nufarm. The exchange ratio is calculated based on the average market
price of Nufarm ordinary shares for 20 business days prior to exchange date less a 2.5 per cent discount.
8
0
0
2
t
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92
notes to the financial statements continued
30. Capital and reserves continued
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations where their functional currency is different to the presentation currency of
the reporting entity.
Capital profit reserve
This reserve is used to accumulate realised capital profits.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Dividends
Dividends recognised in the current year by the company are:
2008
Interim 2008 ordinary
Final 2007 ordinary
Total amount
2007
Interim 2007 ordinary
Final 2006 ordinary
Total amount
Cents Total amount
$000
per share
Franked/
unfranked
Payment
date
12.0
21.0
11.0
20.0
22,279
36,043
58,322
18,894
34,251
53,145
Franked 2 May 2008
9 Nov 2007
Franked
Franked 27 Apr 2007
Franked 10 Nov 2006
Dividends paid on ordinary shares during the year were franked at the tax rate of 30 per cent.
Distributions recognised in the current year by Nufarm Finance (NZ) Ltd on the Nufarm Step-up Securities are:
2008
Distribution
Distribution
2007
Distribution
Distribution
rate
Total
amount
$000
Payment
date
8.95% 11,263 15 Apr 2008
8.56% 10,772 15 Oct 2007
8.35%
8,184 16 Apr 2007
The distribution on the Nufarm Step-up Securities reported on the equity movement schedule has been reduced
by the tax benefit on the gross distribution, giving an after-tax amount of $14.764 million (2007: $5.484 million).
8
0
0
2
t
r
o
p
e
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a
u
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A
–
d
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i
i
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93
notes to the financial statements continued
30. Capital and reserves continued
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 per cent (2007: 30 per cent)
Franking credits that will arise from the payment
of income tax payable as at the end of the year
Balance at 31 July
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
7,742
13,163
7,742
13,163
(2,721)
5,021
(2,769)
10,394
(2,721)
5,021
(2,769)
10,394
The impact on the dividend franking account of dividends proposed after the balance sheet date but not recognised
as a liability is to reduce it by $17,526,048 (2007: $15,435,113). In accordance with the tax consolidation legislation,
the company as the head entity in the tax-consolidated group has also assumed the benefit of $5,021,081
(2007: $10,394,000) franking credits.
31. Earnings per share
Net profit for the year
Net profit attributable to minority interest
Net profit attributable to equity holders of the parent
Nufarm Step-up Securities distribution
Earnings used in the calculations of basic and diluted
earnings per share
Earnings from continuing operations
Earnings from discontinued operations
Subtract items of material income/(expense)
(refer note 6)
Earnings excluding items of material income/
(expense) used in the calculation of operating
earnings per share
Consolidated
2008
$000
138,120
(205)
137,915
(14,764)
2007
$000
149,163
(367)
148,796
(5,484)
123,151
143,312
123,151
–
123,151
101,472
41,840
143,312
(25,961)
34,387
149,112
108,925
For the purposes of determining basic and diluted earnings per share, the after-tax distributions on NSS are
deducted from net profit.
8
0
0
2
t
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o
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–
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94
notes to the financial statements continued
31. Earnings per share continued
Weighted average number of ordinary shares
used in calculation of basic earnings per share
Weighted average number of ordinary shares
used in calculation of diluted earnings per share
Number of shares
2008
2007
177,021,657 171,498,071
177,021,657 171,498,071
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.
Cents per share
2008
2007
69.7
0.0
69.7
69.7
0.0
69.7
84.3
84.3
59.2
24.4
83.6
59.2
24.4
83.6
66.9
66.9
Earnings per share for continuing and discontinued operations
Basic earnings per share
From continuing operations
From discontinued operations
Diluted earnings per share
From continuing operations
From discontinued operations
Earnings per share (excluding items of material income/expense – see note 6)
Basic earnings per share
Diluted earnings per share
32. Financial risk management
The group and the company have exposure to the following financial risks:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the group and company’s exposure to each type of the above risks, their
objectives, policies and processes for measuring and managing risk, and the management of capital.
The board of directors has responsibility to identify, assess, monitor and manage the material risks facing the group
and to ensure that adequate identification, reporting and risk minimisation mechanisms are established and working
effectively. 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 system-based
analyses of the internal controls in major business systems operating within all significant company entities
worldwide.
The general manager global risk management reports 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.
8
0
0
2
t
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95
notes to the financial statements continued
32. Financial risk management continued
Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the group’s receivables from customers and investment
securities. For the company, it primarily arises from receivables due from subsidiaries.
Exposure to credit risk
The group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The
demographics of the group’s customer base, including the default risk of the industry and country in which the
customers operate, has less of an influence on credit risk.
The group has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers before the group’s standard payment and delivery terms and conditions
are offered. Purchase limits are established for each customer, which represents the maximum open amount
without requiring further management approval.
The group and company’s maximum exposure to credit risk at the reporting date was:
Carrying amount
Trade and other receivables
Receivables due from controlled entities
Loans due from controlled entities
Cash and cash equivalents
Interest rate cap:
Assets
Forward exchange contracts
Assets
Carrying amount
The group and company’s maximum exposure
to credit risk for trade receivables at the reporting
date by geographic region was:
Australasia
Europe
North America
South America
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
842,058
–
–
59,143
788,131
–
–
92,377
4,833
939
461,389
3,308
7,536
50,390
177,256
15,034
8,504
7,225
–
26,946
15,114
375
–
–
936,651
902,847
470,844
250,216
164,988
263,754
130,177
283,139
842,058
327,212
179,620
86,659
194,640
788,131
4,833
–
–
–
4,833
7,536
–
–
–
7,536
The group’s top five customers account for $116.4 million of the trade receivables carrying amount at 31 July 2008
(2007: $196.8 million). These top five customer represents 17 per cent (2007: 29.5 per cent) of the total receivables
balance.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
96
notes to the financial statements continued
32. Financial risk management continued
In Brazil, barter trade is used to partially offset the customer credit risk by allowing settlement through the
delivery of soybeans from the customer’s crop. In 2007, options were taken out on the soybean price to hedge
movements between the date of sale and the date of settlement. These options resulted in a loss as disclosed
in note 6. There were no soybean options in 2008.
Impairment losses
The ageing of the group’s trade receivables at the reporting date was:
Receivables ageing
Current
Past due – 0 to 90 days
Past due – 90 to 180 days
Past due – 180 to 360 days
Past due – more than one year
Provision for impairment
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
593,034
53,372
12,454
5,775
20,681
685,316
(23,339)
577,847
44,458
13,293
10,154
20,865
666,617
(21,806)
661,977
644,811
3,978
523
212
–
–
4,713
(43)
4,670
4,329
340
208
–
–
4,877
–
4,877
Some of the past due receivables are secured by collateral such as directors guarantees, bank guarantees and
charges on fixed assets. The past due receivables not impaired relate to customers that have a good credit history
with the group. Historically, the bad debt write-off from trade receivables has been very low. Over the past six
years, the bad debt write-off amount has averaged 0.03 per cent of sales, with no greater than 0.05 per cent of
sales written off in any one year.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 August
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Provisions acquired through business combinations
Exchange adjustment
Balance at 31 July
Consolidated
Company
2008
$000
21,806
522
(534)
–
–
1,545
23,339
2007
$000
3,243
621
(335)
(874)
19,209
(58)
21,806
2008
$000
2007
$000
–
43
–
–
–
–
43
–
–
–
–
–
–
–
In the crop protection industry, it is normal practice to vary the terms of sales depending on the climatic conditions
experienced in each country.
The allowance account for trade receivables is used to record the impairment losses unless the group is satisfied
that no recovery of the amount owing is possible: at that point the amount is considered irrecoverable and is written
off against the receivable directly.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
97
notes to the financial statements continued
32. Financial risk management continued
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the group’s reputation.
Most group entities have entered into a deed of negative pledge dated 24 October 1996 (as amended on
26 April 1999, 26 January 2000 and 9 October 2003) 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.
See note 36 for the listing of entities who are a party to the deed. The deed of negative pledge allows all
borrowings with group lenders to be on an unsecured basis.
The following are the contractual maturities of the group’s financial liabilities:
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1–2 More than
2 years
$000
years
$000
Consolidated
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
20,841
817,812
923,133
1,028
14,907
20,841
817,812
923,133
1,028
14,907
2008
20,841
777,970
587,171
–
441
–
2,000
100,040
–
213
–
37,842
235,922
1,028
14,253
Derivative financial liabilities
Forward exchange contracts:
Outflow
Inflow
Derivative financial assets
Forward exchange contracts:
Outflow
Inflow
90
–
73,872
(73,782)
73,872
(73,782)
–
(26,946)
269,391
(296,337)
24,003
(25,661)
–
–
–
–
–
–
245,388
(270,676)
1,750,865
1,750,865
1,384,855
102,253
263,757
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
98
notes to the financial statements continued
32. Financial risk management continued
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1–2 More than
2 years
$000
years
$000
Consolidated
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
12,716
825,262
450,617
854
682
12,716
825,262
450,617
854
682
2007
12,716
810,062
359,662
–
399
Derivative financial liabilities
Forward exchange contracts:
Outflow
Inflow
Derivative financial assets
Forward exchange contracts:
Outflow
Inflow
2,274
–
138,036
(135,762)
138,036
(135,762)
–
(15,114)
273,731
(288,845)
18,153
(18,169)
–
2,000
62,748
–
266
–
13,200
28,207
854
17
–
–
–
–
–
–
255,578
(270,676)
1,277,291
1,277,291
1,185,097
65,014
27,180
The following are the contractual maturities of the company’s financial liabilities:
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1–2 More than
2 years
$000
years
$000
Company
2008
Non-derivative financial liabilities
Trade and other payables
133,671
133,671
133,671
Derivative financial assets
Forward exchange contracts
Outflow
Inflow
–
(375)
9,594
(9,969)
9,594
(9,969)
133,296
133,296
133,296
–
–
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
99
notes to the financial statements continued
32. Financial risk management continued
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1–2 More than
2 years
$000
years
$000
Company
2007
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Derivative financial liabilities
Forward exchange contracts
Outflow
Inflow
2,667
118,877
2,667
118,877
2,667
118,877
340
–
13,345
(13,005)
13,345
(13,005)
121,884
121,884
121,884
–
–
–
–
–
–
–
–
–
–
Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying
operations of the group. This provides an economic hedge and no derivatives are entered into.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimising
the return.
Currency risk
The consolidated entity uses derivative financial instruments to manage specifically identified foreign currency
risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency
of the individual group entity. The currencies giving rise to this risk are primarily the US dollar, the Euro and the
British pound. The consolidated entity uses forward exchange contracts to hedge its foreign currency risk. Most
of the forward exchange contracts have maturities of less than three months after reporting date.
The consolidated entity uses foreign exchange contracts to manage the foreign currency exposures between the
Nufarm Step-up Securities issued in Australia and New Zealand, and related group funding to several jurisdictions
to which the funds were advanced. The foreign exchange contracts cover the exposure on the principal advanced
to group companies in US dollars, the Euro, the British pound and the Canadian dollar.
In the current year, the consolidated entity discontinued cash flow hedging with all movements in fair value
recognised in profit or loss during the period. The net fair value of forward exchange contracts in the group
used as hedges of forecasted transactions at 31 July 2008 was $26,856,120 (2007: $12,840,418) comprising
assets of $26,946,301 (2007: $15,114,295) and liabilities of $90,181 (2007: $2,273,877) that were recognised
as derivatives measured at fair value. The net fair value of forward exchange contracts in the company at
31 July 2008 was $374,991 (2007: $340,150) comprising assets of $374,991 (2007: nil) and liabilities of $nil
(2007: $340,150) that were recognised as derivatives measured at fair value.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
100
notes to the financial statements continued
32. Financial risk management continued
Currency risk (continued)
Exposure to currency risk
The consolidated entity’s exposure to major foreign currency risks at balance date was as follows, based on
notional amounts:
Consolidated
31 July 2008
Cash and cash equivalents
Trade and other receivables
Bank overdraft
Trade and other payables
Loans and borrowings
Gross balance sheet exposure
Forward exchange contracts
Net exposure
Consolidated
31 July 2007
Cash and cash equivalents
Trade and other receivables
Bank overdraft
Trade and other payables
Loans and borrowings
Gross balance sheet exposure
Forward exchange contracts
Net exposure
AUD
$000
357
1,034
–
(3,588)
–
(2,197)
786
(1,411)
AUD
$000
290
1,632
–
(3,311)
–
(1,389)
4,505
3,116
USD
$000
5,764
139,893
(3,935
(74,543)
(114,168)
Euro
$000
1,152
4,956
(23)
(14,701)
(4,555)
(46,989)
(13,171)
37,826
(2,015)
(9,163)
(15,186)
USD
$000
3,327
132,813
(3,883)
(69,930)
(11,209)
Euro
$000
2,517
2,845
–
(10,568)
(285)
51,118
(5,491)
20,236
71,354
(3,605)
(9,096)
GBP
$000
–
–
(113)
(277)
–
(390)
1,756
1,366
GBP
$000
–
–
(197)
–
–
(197)
–
(197)
The company’s exposure to major foreign currency risks at balance date was as follows, based on notional
amounts:
Company
31 July 2008
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Gross balance sheet exposure
Forward exchange contracts
Net exposure
AUD
$000
357
180
(3,441)
(2,904)
–
(2,904)
USD
$000
205
–
(3,438)
(3,233)
9,627
6,394
Euro
$000
150
–
(591)
(441)
–
(441)
GBP
$000
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
101
notes to the financial statements continued
32. Financial risk management continued
Currency risk (continued)
Company
31 July 2007
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Gross balance sheet exposure
Forward exchange contracts
Net exposure
AUD
$000
290
248
(172)
366
4,505
4,871
USD
$000
457
72
(218)
311
5,932
6,243
Euro
$000
100
–
(662)
(562)
742
180
GBP
$000
–
–
–
–
–
–
The following significant exchange rates applied during the year:
AUD
US dollar
Euro
GBP
BRL
Average rate
Reporting date
2008
0.911
0.608
0.454
1.578
2007
2008
2007
0.798
0.604
0.408
1.653
0.944
0.605
0.476
1.478
0.859
0.623
0.421
1.610
Sensitivity analysis
A 10 per cent strengthening or weakening of the Australian dollar against the following currencies at 31 July
would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes all other
variables, including interest rates, remain constant. The analysis also assumes that any increases in raw material
costs arising from changes in exchange rates are not passed on to customers in their selling prices. In the market
place, nearly all raw material cost increases are passed onto customers and therefore, the profit or loss impact
below is not truly reflective of the full profit or loss impact of changes in exchange rates. The analysis is performed
on the same basis for 2007.
10 per cent strengthening
10 per cent weakening
Consolidated Company
profit or
loss
$000
profit or
loss
$000
Consolidated Company
profit or
loss
$000
profit or
loss
$000
882
2,282
(261)
(7,551)
1,327
43
(616)
66
–
(661)
(26)
–
(971)
(2,510)
287
8,307
(1,460)
(47)
677
(73)
–
727
29
–
31 July 2008
US dollar
Euro
GBP
31 July 2007
US dollar
Euro
GBP
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
102
notes to the financial statements continued
32. Financial risk management continued
Interest rate risk
The group has the ability to use derivative financial instruments to manage specifically identified interest rate risks.
Interest rate swaps, denominated in AUD, have been entered into to achieve an appropriate mix of fixed and floating
rate exposures. However, at 31 July 2008 and at 31 July 2007, there were no interest rate swaps in place.
Cash flow risk on Nufarm Step-up Securities
The group uses interest rate caps to protect the cash flow impact of a movement in the distribution base rate.
The distribution rate is the average mid-rate for bank bills with a term of six months plus a margin of 1.90 per cent.
Profile
At the reporting date the interest rate profile of the group and company’s interest-bearing financial instruments was:
Variable rate instruments
Financial assets
Financial liabilities
Consolidated
Carrying amount
Company
Carrying amount
2008
$000
2007
$000
2008
$000
2007
$000
46,532
(939,068)
83,673
(452,153)
(892,536)
(368,480)
–
–
–
–
–
–
There were no fixed interest rate instruments during the year ended 31 July 2008.
Sensitivity analysis for fixed rate instruments
The group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss,
and therefore, a change in interest rates at the reporting date would not affect profit or loss.
Sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. The sensitivity is calculated on the debt at 31 July. Due to the seasonality of the crop
protection business, debt levels can vary during the year. This analysis is performed on the same basis for 2007.
31 July 2008
Variable rate instruments
Total sensitivity
31 July 2007
Variable rate instruments
Total sensitivity
Profit or loss
100bp
increase
$000
100bp
decrease
$000
(9,134)
(9,134)
(3,812)
(3,812)
9,134
9,134
3,812
3,812
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
103
notes to the financial statements continued
32. Financial risk management continued
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet,
are as follows:
Consolidated
Note
Cash and cash equivalents
Trade and other receivables
Interest rate cap:
Payable maturities – one to five years
Forward exchange contracts:
Assets
Liabilities
Bank overdraft
Unsecured bank loans
Other loans
Finance leases
15
16
22
16
25
15
26
26
26
Company
Cash and cash equivalents
Trade and other receivables
Receivables due from controlled entities
Loans due from controlled entities
Forward exchange contracts:
Asset/(liabilities)
Bank overdraft
Note
15
16
16
16
16,25
15
Carrying
amount
2008
$000
59,143
842,058
Fair
value
2008
$000
Carrying
amount
2007
$000
Fair
value
2007
$000
59,143
842,058
92,377
788,131
92,377
788,131
8,504
8,504
7,225
7,225
26,946
(90)
(20,841)
(923,133)
(1,028)
(14,907)
26,946
(90)
(20,841)
(923,133)
(1,028)
(14,907)
15,114
(2,274)
(12,716)
(450,617)
(854)
(682)
15,114
(2,274)
(12,716)
(450,617)
(854)
(682)
(23,348)
(23,348)
435,704
435,704
Carrying
amount
2008
$000
3,308
4,833
939
461,389
Fair
value
2008
$000
3,308
4,833
939
461,389
Carrying
amount
2007
$000
15,034
7,536
50,390
177,256
Fair
value
2007
$000
15,034
7,536
50,390
177,256
375
–
375
–
(340)
(2,667)
(340)
(2,667)
470,844
470,844
247,209
247,209
Capital management
The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The board of directors monitors the group’s return on funds
employed (ROFE). Return is calculated on the group’s earnings before interest and tax and adjusted for any
non-operating items. Funds employed is defined as shareholder’s funds plus total interest bearing debt. The board
of directors determines the level of dividends to ordinary shareholders. The board also reviews the group’s total
shareholder return with relevant comparator groups.
The board believes ROFE is an appropriate performance condition as it 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 group’s target ROFE is 17.25 per cent; during the year ended 31 July 2008 the
return was 17.2 per cent (2007: 16.6 per cent).
There were no changes in the group’s approach to capital management during the year.
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
104
notes to the financial statements continued
33. Operating leases
Non-cancellable operating lease rentals 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
Consolidated
Company
2008
$000
6,763
6,526
18,232
183,339
2007
$000
5,726
4,560
9,801
4,664
214,860
24,751
2008
$000
2007
$000
–
–
–
–
–
–
–
–
–
–
Operating leases are generally entered to access the use of shorter term assets such as motor vehicles, mobile
plant and 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.
The increase in operating lease rentals compared to the prior year is due to the 50 year operating lease for the
land at the Wyke site of AH Marks. The lease was assumed as part of the AH Marks acquisition.
34. Capital and other commitments
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
14,078
17,717
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
105
notes to the financial statements continued
35. Contingencies
The directors are of the opinion that provisions are not required in respect of the following matters, as it is not probable
that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
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
repayment of all liabilities in the event that any of these companies are wound up.
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
Guarantee facility for Eastern European joint
ventures with FMC Corporation.
4,222
5,680
–
Environmental guarantee given to the purchaser
of land and buildings at Genneviliers for EUR 8.5
million.The guarantee expires in 2014, 18 months
after the expiry of the business tenancy contract.
Guarantee upon sale of a business limited to
EUR 2.29 million on account of possible remediation
costs for soil and groundwater contamination.
This guarantee decreases from 2004 progressively
to nil in 2011.
Insurance bond for EUR 2.7 million established
to make certain capital expenditures at Gaillon
plant in France. The insurance bond is for a three
year term.
14,050
13,710
–
3,785
4,419
4,463
–
26,520
23,809
–
–
–
–
–
–
–
–
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
r
a
f
u
N
106
notes to the financial statements continued
36. Group entities
Notes
Place of
incorporation
Percentage
of shares held
2008
2007
Parent entity
Nufarm Limited – ultimate controlling entity
Subsidiaries
Access Genetics Pty Ltd
ACN000425927 Pty Ltd
Agcare Biotech Pty Ltd
Agchem Receivables Corporation
Agripec Quimica e Farmaceutica SA
Agryl Holdings Limited
Ag-seed Research Pty Ltd
AH Marks (New Zealand) Limited
AH Marks Australia Pty Ltd
AH Marks Holdings Limited
Artfern Pty Ltd
Australis Services Pty Ltd
Bestbeech Pty Ltd
Chemicca Limited
CNG Holdings BV
Crop Care Australasia Pty Ltd
Crop Care Holdings Limited
Croplands Equipment Limited
Croplands Equipment Pty Ltd
CSRPAR Participacoes LTDA
(merged into Agripec)
Danestoke Pty Ltd
Fchem (Aust) Limited
Fernz Canada Limited
Fernz Singapore Pte Ltd
Fidene Limited
Finotech BV
Framchem SA
Frost Technology Corporation
Laboratoire European de Biotechnologie s.a.s
Le Moulin des Ecluses s.a
Les Ecluses de la Garenne s.a.s
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
(a),(b)
(b)
(a),(b)
(a)
(b)
(a)
(a)
(a)
(a)
(a),(b)
(b)
(a),(b)
(b)
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
Australia
Australia
Australia
USA
Brazil
Australia
Australia
New Zealand
Australia
United Kingdom
Australia
Australia
Australia
Australia
Netherlands
Australia
New Zealand
New Zealand
Australia
Brazil
Australia
Australia
Canada
Singapore
New Zealand
Netherlands
Egypt
USA
France
France
France
Malaysia
USA
Guatemala
Mexico
USA
Australia
Malaysia
Australia
Malaysia
Malaysia
100
100
70
40
100
100
100
100
100
100
100
100
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
70
70
100
100
70
40
100
100
100
–
–
–
100
100
100
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
70
70
8
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107
notes to the financial statements continued
36. Group entities continued
Medisup International NV
Medisup Securities Limited
Nufarm (Asia) Pte Ltd
Nufarm Agriculture (Pty) Ltd
Nufarm Agriculture Inc
Nufarm Agriculture Inc (USA)
Nufarm Agriculture Zimbabwe (Pvt) Ltd
Nufarm Americas Holding Company
Nufarm Americas Inc
Nufarm Colombia S.A. (formerly Agrogen
de Nufarm Colombia SA)
Nufarm Asia Sdn Bhd
Nufarm Australia Limited
Nufarm BV
Nufarm Chemical (Shanghai) Co Ltd
Nufarm Chile Limitada
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 Espana SA
Nufarm Finance (NZ) Limited
Nufarm GmbH
Nufarm GmbH
Nufarm GmbH & Co KG
Nufarm Holdings (NZ) Limited
Nufarm Holdings BV
Nufarm Holdings s.a.s
Nufarm Hungaria Kft
Nufarm Inc.
Nufarm Insurance Pte Ltd
Nufarm Investments Cooperatie WA
Nufarm Italia Holding srl
Nufarm Italia srl
Nufarm KK
Nufarm Labuan Pte Ltd
Nufarm Limited (formerly AH Marks & Co, Ltd)
Nufarm Malaysia Sdn Bhd
Nufarm Materials Limited
Nufarm NZ Limited
Nufarm Platte Pty Ltd
Nufarm Portugal LDA
Notes
(a),(b)
(b)
(b)
(b)
(b)
(b)
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(a),(b)
(b)
(b)
Place of
incorporation
N. Antillies
Australia
Singapore
South Africa
Canada
USA
Zimbabwe
USA
USA
Colombia
Malaysia
Australia
Netherlands
China
Chile
United Kingdom
Costa Rica
Guatemala
Mexico
Panama
Venezuela
Ecuador
Germany
Brazil
Spain
New Zealand
Germany
Austria
Austria
New Zealand
Netherlands
France
Hungary
USA
Singapore
Netherlands
Italy
Italy
Japan
Malaysia
United Kingdom
Malaysia
Australia
New Zealand
Australia
Portugal
Percentage
of shares held
2008
2007
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
–
100
100
100
100
100
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108
notes to the financial statements continued
36. Group entities continued
Nufarm s.a.s
Nufarm SA
Nufarm Srl
Nufarm Switzerland LLC
Nufarm Technologies (M) Sdn Bhd
Nufarm Technologies USA
Nufarm Technologies USA Pty Ltd
Nufarm Treasury Pty Ltd
Nufarm UK Limited
Nugrain Pty Ltd
Nuseed Pty Ltd
Nutrihealth Grains Pty Ltd
Nutrihealth Pty Ltd
Opti-Crop Systems Pty Ltd
Pharma Pacific Pty Ltd
PT Crop Care
PT Nufarm Indonesia
Safepak Industries Sdn Bhd (liquidated)
Selchem Pty Ltd
TPL Limited (amalgamated into
Nufarm Holdings (NZ) Ltd)
Notes
(b)
(b)
(a),(b)
(b)
(b)
(a)
(b)
(a)
(b)
Place of
incorporation
France
Argentina
Romania
Switzerland
Malaysia
New Zealand
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Indonesia
Malaysia
Australia
New Zealand
Percentage
of shares held
2008
2007
100
100
100
100
51
100
100
100
100
100
100
100
100
75
100
100
100
–
100
–
100
100
100
–
51
100
100
100
100
100
100
100
100
75
100
100
100
70
100
100
Note (a). These entities have entered into a deed of cross guarantee date 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 24 October 1996 (as amended on
26 April 1999, 26 January 2000 and 9 October 2003) 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.
37. Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 dated 13 August 1998, the wholly-owned subsidiaries referred to in
note 37 are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of
financial reports and director’s reports.
It is a condition of the class order that the company and each of the subsidiaries enter into a deed of cross
guarantee. The parent entity and all the Australian controlled entities have entered into a deed of cross guarantee
dated 10 July 2000 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.
A consolidated income statement and consolidated balance sheet, comprising the company and controlled entities
which are a party to the deed, after eliminating all transactions between parties to the deed of cross guarantee,
at 31 July 2008 is set out as follows:
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notes to the financial statements continued
37. Deed of cross guarantee continued
Consolidated
2008
$000
2007
$000
Summarised income statement and retained profits
Profit before income tax expense
Income tax expense
65,100
(20,201)
Net profit attributable to members of the closed group
44,899
Retained profits at the beginning of the period
Dividends paid
Retained profits at the end of the period
299,730
(58,322)
286,307
81,236
(12,021)
69,215
283,660
(53,145)
299,730
12,543
238,460
185,590
23,677
460,270
9,408
620,190
25,028
154,244
85,296
894,166
3,632
216,307
281,801
19,265
521,005
12,749
527,716
23,687
162,959
91,039
818,150
1,339,155
1,354,436
3,680
386,779
84,500
8,509
11,169
494,637
14,000
13,090
9,173
4,000
40,263
534,900
804,255
5,584
611,963
57,800
7,674
28,294
711,315
23,500
7,918
8,605
6,000
46,023
757,338
597,098
456,870
61,078
286,307
248,086
49,282
299,730
804,255
597,098
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Total current assets
Non-current assets
Equity accounted investments
Other investments
Deferred tax assets
Property, plant and equipment
Intangible assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Bank overdraft
Trade and other payables
Interest bearing loans and borrowings
Employee benefits
Current tax payable
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Share capital
Reserves
Retained earnings
TOTAL EQUITY
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110
notes to the financial statements continued
38. Reconciliation of cash flows from operating activities
Cash flows from operating activities
Profit for the period
Dividend from associated company
Non-cash items:
Amortisation
Depreciation
Gain on disposal of non current assets
Gain on sale of discontinued operation
Write-down of 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
Operating profit before changes in working
capital and 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
Movements in intercompany balances relating
to cash transactions
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
138,120
373
149,163
171
64,698
373
63,114
171
10,900
36,580
(135)
–
165
(2,698)
15,956
(33,530)
–
8,454
33,755
(1,063)
(37,176)
–
34
612
(16)
–
–
(8,056)
(1,237)
10
585
(18)
–
–
(788)
6,804
(16,390)
–
71
(1,734)
–
(53)
(11,216)
–
1,851
589
(220)
54
167,582
136,251
62,581
51,859
(8,728)
(354,235)
68,583
(4,223)
(136,362)
(2,559)
56,848
14,742
2,286
(2,597)
2,742
(6,869)
19,911
(1,123)
(578)
5,897
3,619
(6,322)
(1,901)
484
–
–
–
(294,984)
(73,653)
(6,339)
Net operating cash flows
(127,402)
62,598
56,242
–
24,591
76,450
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111
notes to the financial statements continued
39. Key management personnel disclosures
The following were key management personnel of the consolidated entity at any time during the reporting period
and were key management personnel for the entire period.
Non-executive directors
KM Hoggard (Chairman)
GDW Curlewis
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker
RFE Warburton (retired 5 Dec 2007)
Executives
BF Benson – Group general manager agriculture
R Heath – Group general manager corporate services and company secretary
KP Martin – Chief financial officer
DA Mellody – Group general manager marketing and president North America
RF Ooms – Group general manager chemicals
DA Pullan – Group general manager operations
RG Reis – Group general manager corporate strategy and external affairs
Executive director
DJ Rathbone – Managing director and chief executive
Key management personnel compensation
The key management personnel compensation included in personnel expenses (see note 9) are as follows:
Short term employee benefits
Post employment benefits
Equity compensation benefits
Other long term benefits
Consolidated
Company
2008
$
2007
$
9,435,389
610,127
50,000
294,795
5,580,527
647,613
1,332,003
170,224
10,390,311
7,730,367
2008
$
777,661
113,516
50,000
–
941,177
2007
$
574,333
259,833
143,000
–
977,166
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation is provided in the remuneration report
section of the director’s report.
Apart from the details disclosed in this note, no director has entered into a material contract with the company or
the consolidated entity since the end of the previous financial year and there were no material contracts involving
director’s interest existing at year-end.
Loans to key management personnel and their related parties
There were no loans to key management personnel at 31 July 2008.
Other key management personnel transactions with the company or its controlled entities
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of those entities. A number of these
entities transacted with the company or its subsidiaries in the reporting period. The terms and conditions of the
transactions with management persons and their related parties were no more favourable than those available,
or which might reasonably be expected to be available, on similar transactions to non-director related entities
on an arms-length basis.
From time to time, key management personnel of the company or its controlled entities, or their related entities,
may purchase goods from the group. These purchases are on the same terms and conditions as those entered
into by other group employees or customers and are trivial or domestic in nature.
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notes to the financial statements continued
39. Key management personnel disclosures continued
Options and rights over equity instruments granted as compensation
No options or other equity instruments were granted to key management personnel during the current or prior
year reporting period as compensation.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Nufarm Limited held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
Shares held
in Nufarm Ltd
2008
Directors
KM Hoggard1
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow1,2
GA Hounsell1
DG McGauchie1
Dr JW Stocker1
RFE Warburton3
Executives
BF Benson
R Heath
KP Martin
DA Mellody
RF Ooms
DA Pullan
RG Reis
Total
Balance
at 1 August
2007
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
at 31 July
2008
2,383,614
29,912,610
43,787
662,914
61,959
16,376
40,973
66,938
159,429
209,001
402,673
16,491
356,820
225,392
180,319
–
–
415
549
549
–
549
–
–
–
–
–
–
–
–
34,739,296
2,062
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,383,614
(4,000,000) 25,912,610
44,533
665,846
45,170
17,038
41,522
67,600
331
2,383
(17,338)
662
–
662
(9,669)
–
–
–
(25,665)
(87,208)
(51,750)
149,760
209,001
402,673
16,491
331,155
138,184
128,569
(4,187,592) 30,553,766
1 Messrs Hoggard, Curlewis, Goodfellow, Hounsell, McGauchie, and Stocker are participants in the non-executive share plan which
enables participants to sacrifice 20 per cent 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 The shareholding of Dr WB Goodfellow includes his relevant interest in:
(i)
St Kentigern Trust Board (430,186 shares and 19,727 Nufarm Step-up Securities) – Dr Goodfellow is Chairman of the Trust Board.
Dr Goodfellow does not have a beneficial interest in these shares or step-up securities;
(ii) Sulkem Company Limited (113,947 shares); and
(iii)
Auckland Medical Research Foundation (25,462 step-up securities). Dr Goodfellow does not have a beneficial interest in the
step-up securities.
3 Mr RFE Warburton retired as a director on 5 December 2007.
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notes to the financial statements continued
39. Key management personnel disclosures continued
Movements in shares continued
Shares held
in Nufarm Ltd
2007
Directors
KM Hoggard1
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow1,2
GA Hounsell1
DG McGauchie1
Dr JW Stocker1
RFE Warburton1
Executives
BF Benson
R Heath
KP Martin
DA Mellody
RF Ooms
DA Pullan
RG Reis
Total
Balance
at 1 August
2006
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
at 31 July
2007
2,379,426
29,912,610
42,787
1,468,296
60,302
14,719
30,314
65,281
157,694
197,790
381,610
5,196
335,757
232,132
166,096
4,188
–
–
1,657
1,657
1,657
1,657
1,657
20,080
11,211
21,063
11,295
21,063
22,393
14,223
35,450,010
133,801
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,000
(807,039)
–
–
9,002
–
2,383,614
29,912,610
43,787
662,914
61,959
16,376
40,973
66,938
(18,345)
–
–
–
–
(29,133)
–
159,429
209,001
402,673
16,491
356,820
225,392
180,319
(844,515) 34,739,296
All equity transactions with key management personnel 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, Curlewis, Goodfellow, Hounsell, McGauchie, and Stocker are participants in the non-executive share plan which
enables participants to sacrifice 20 per cent 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 The shareholding of Dr WB Goodfellow includes his relevant interest in:
(i)
St Kentigern Trust Board (430,186 shares and 19,727 Nufarm Step-up Securities) – Dr Goodfellow is Chairman of the Trust Board.
Dr Goodfellow does not have a beneficial interest in these shares or step-up securities;
(ii) Sulkem Company Limited (113,947 shares); and
(iii)
Auckland Medical Research Foundation (25,462 step-up securities). Dr Goodfellow does not have a beneficial interest in the
step-up securities.
3 Mr RFE Warburton retired as a director on 5 December 2007.
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notes to the financial statements continued
40. Non-key management personnel disclosures
(a) Transactions with related parties in the wholly-owned group
The parent entity entered into the following transactions during the year with subsidiaries of the group:
• loans were advanced and repayments received on short term intercompany accounts; and
• management fees were received from several wholly-owned controlled entities.
These transactions were undertaken on commercial terms and conditions.
(b) Transactions with associated parties
Consolidated
Bayer CropScience Nufarm Limited sales to
SRFA LLC
Excel Crop Care Ltd
F&N joint ventures
purchases from
trade receivable
trade payable
sales to
loan receivable
interest received
trade receivable
purchases from
trade payable
sales to
trade payable
trade receivable
2008
$000
13,859
13,875
1,651
5,930
2,238
–
16
486
1,015
247
65,087
248
29,140
2007
$000
11,734
14,342
41
3,949
2,159
582
19
60
2,610
573
48,638
–
21,170
These transactions were undertaken on commercial terms and conditions.
41. Subsequent events
On 25 September 2008, the directors declared a final dividend of 23 cents per share, fully franked, payable
17 November 2008. The financial effect of this dividend has not been brought to account in the financial statements
for the year ended 31 July 2008 and will be recognised in the subsequent financial reports. The declaration and
subsequent payment of dividends has no income tax consequences for the company. The directors have also
approved a dividend reinvestment plan. For the final dividend, shareholders will be given the opportunity to
reinvest dividends in Nufarm shares at a 2.5 per cent discount to the volume weighted average share price
calculated over a period and on a basis to be determined by the board. Details of the plan and election notices
will be mailed to all shareholders.
As announced by the company on 1 September 2008, the UK Competition Commission has initiated an investigation
into possible competition concerns that might arise as a result of the acquisition of AH Marks. The review is expected
to be completed by mid-February, 2009. Combined Nufarm and AH Marks annual sales of the main products
under investigation amount to £4 million, with AH Marks sales of those products totalling less than £1.5 million.
Nufarm is cooperating fully with the Competition Commission in an effort to clarify and address such concerns.
Regulators in other jurisdictions are also reviewing certain aspects of the acquisition. Certain restructuring
proposals for the business have been delayed pending completion of this review.
On 24 September 2008, Nufarm signed an agreement to acquire Lefroy Seeds Pty Ltd, based in Toowoomba,
Queensland. Lefroy Seeds specialises in hybrid breeding, production and commercialisation activities in sunflower
and sorghum. The company has established registrations, sales and commercial partnerships in Australia, Argentina,
South Africa, China, Pakistan, Thailand and various countries in Europe. The acquisition involves total consideration
of $11.5 million, the majority of which will be paid in Nufarm equity.
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notes to the financial statements continued
42. Auditors’ remuneration
Audit services
KPMG Australia
Audit and review of group financial report
Audit of superannuation fund
Overseas KPMG firms
Audit and review of group financial report
Audit and review of local statutory reports
Other auditors
Audit and review of financial reports
Other services
KPMG Australia
Transaction due diligence services
Other assurance services
Overseas KPMG firms
Other assurance services
Consolidated
Company
2008
$000
2007
$000
2008
$000
2007
$000
385
–
941
188
1,514
155
1,669
12
14
35
61
384
65
670
166
1,285
87
1,372
120
6
46
172
–
–
63
64
127
–
127
–
–
–
–
–
–
44
47
91
–
91
–
–
9
9
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directors’ declaration
1. In the opinion of the directors of Nufarm Limited (the company):
(a) the financial statements and notes, including the remuneration disclosures that are contained in the
remuneration report in the directors’ report, are in accordance with the Corporations Act 2001 including:
(i) giving a true and fair view of the company’s and the group’s financial position as at 31 July 2008
and of their performance, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
note 2(a); and
(c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
2. There are reasonable grounds to believe that the company and the group entities identified in note 36 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 Company and those group 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 2008.
Signed in accordance with a resolution of the directors:
Dated at Melbourne this 25th day of September 2008
KM Hoggard
Director
DJ Rathbone
Director
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independent audit report
Independent auditor’s report to the members of Nufarm Limited
Report on the financial report
We have audited the accompanying financial report of Nufarm Limited (the company), which comprises the
balance sheets as at 31 July 2008, and the income statements, statements of recognised income and expense
and cash flow statements for the year ended on that date, a description of significant accounting policies and
other explanatory notes 1 to 42 and the directors’ declaration of the group comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In note 2(a), the directors also state, in accordance with Australian Accounting
Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly,
in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian
Accounting Interpretations), a view which is consistent with our understanding of the company’s and the group’s
financial position and of their performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
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independent audit report continued
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of Nufarm Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and the group’s financial position as at 31 July 2008
and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a).
Report on the remuneration report
We have audited the remuneration disclosures included under the heading ‘remuneration report’ in the directors’
report for the year ended 31 July 2008. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance
with Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Nufarm Limited for the year ended 31 July 2008 complies with
Section 300A of the Corporations Act 2001.
KPMG
Paul J McDonald
Partner
Melbourne
25 September 2008
KPMG, an Australian partnership and a member firm of the KPMG network of independent member films affiliated with
KPMG International, a Swiss cooperative.
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shareholder and statutory information
Details of shareholders, shareholdings and top 20 shareholders
Listed securities – 25 September 2008
Number
of holders
Number Percentage held
by top 20
of securities
Fully paid ordinary shares
9,929
185,882,333
74.76
Twenty largest shareholders
Falls Creek No 2 Pty Ltd
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Amalgamated Dairies Limited
ANZ Nominees Limited
Citicorp Nominees Pty Limited
Challenge Investment Company Limited
UBS Nominees Pty Ltd
Mr Edgar William Preston & Mr Paul Gerard Keeling
Cogent Nominees Pty Limited
RAM Custodian Limited & GBH Trustee Services Limited
Australian Foundation Investment Company Limited
AMP Life Limited
Pacific Custodians Pty Ltd
CPU Share Plans Pty Ltd
Grantali Pty Ltd
Citicorp Nominees Pty Limited
Cogent Nominees Pty Limited
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
Ordinary
shares as at
25.09.08
Percentage of
issued capital
as at 25.09.08
24,130,987
23,060,243
22,981,994
18,244,821
15,111,068
7,168,450
4,573,622
2,983,199
2,715,502
2,491,779
2,285,542
2,243,750
1,910,785
1,765,790
1,609,118
1,489,105
1,283,846
1,023,331
974,000
916,896
12.98
12.41
12.36
9.82
8.13
3.86
2.46
1.60
1.46
1.34
1.23
1.21
1.03
0.95
0.87
0.80
0.69
0.55
0.52
0.49
Number of
holders as at
25.09.08
Ordinary
shares held
as at 25.09.08
4,028
4,435
833
553
80
2,112,373
10,613,220
5,736,310
11,590,956
155,829,474
Of these, 80 shareholders held less than a marketable parcel of shares of $500 worth of shares (33 shares).
In accordance with the ASX Listing Rules, the last sale price of the company’s shares on the ASX on 25 September
2008 was used to determine the number of shares in a marketable parcel.
Securities exchanges on which securities are listed
Ordinary shares: Australian Securities Exchange Limited.
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shareholder and statutory information continued
Substantial shareholders
In accordance with section 671B of the Corporations Act, as at 25 September 2008, 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:
Number and percentage of shares in
which interest held at date of notice
Date of notice
Number
Interest %
Amalgamated Dairies Ltd
Khyber Pass Ltd1
Glade Building Ltd2
Hauraki Trading Ltd3
Oxford Trustees (Paul Gerard Keeling
and Edgar William Preston)4
Douglas John Rathbone
11 March 2008
11 March 2008
11 March 2008
11 March 2008
11 March 2008
11 March 2008
15,110,737
15,128,819
15,490,607
15,846,421
15,508,689
25,912,610
8.17
8.18
8.37
8.57
8.38
14.01
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.
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 4 December 2008 at 10.00am in the
Telstra Conference Centre, Level 1, 242 Exhibition Street, 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. Proxy voting can be completed
online via www.investorvote.com.au and following the instructions provided, or via post by completing the proxy
form and sending it back in the return envelope.
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:
(a) one vote for each fully paid share; and
(b) voting rights in proportion to the paid up amount of the issue price for partly paid shares.
Securities 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.
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shareholder and statutory information continued
Shareholder details
The Nufarm Limited Share Register is managed by Computershare Investor Services. You can gain access to your
shareholding information in the following ways.
Online via investor centre
Step 1 Go to www.computershare.com/au/investors
Step 2 Select ‘access a single holding’
Step 3 Enter NUF or Nufarm Limited
Step 4
Enter your Securityholder Reference Number (SRN) or Holder Identification Number (HIN), postcode or
country if outside Australia
Step 5 Enter the security code that appears and agree to the terms and conditions
Step 6 Select ‘submit’
Alternatively, manage your portfolio by becoming a member of Investor Centre and register for a username and
password at www.computershare.com/au/investors
By telephone via InvestorPhone (Australian shareholders only)
InvestorPhone provides telephone access 24 hours a day seven days a week.
Step 1 Call the Nufarm shareholder information line on 1300 652 479
Step 2 Follow the prompts to gain secure, immediate access to your:
– holding details
– registration details
– payment information
Shareholder communications
You can choose to receive shareholder communications electronically. Register for this initiative at
www.eTree.com.au/nufarm and a donation of $1 will go to Landcare to support urgent reforestation projects
in Australia and New Zealand.
The default for receiving the annual report is now via the Company’s website – www.nufarm.com
Shareholder enquires
Contact:
Computershare Investor Services
Yarra Falls, 452 Johnston Street
Abbotsford Victoria 3067
GPO Box 2975
Melbourne Victoria 3001
Telephone: 1300 652 479 (within Australia)
+61 3 9415 4360 (outside Australia)
Email: web.queries@computershare.com.au
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shareholder and statutory information continued
Dividends
A final dividend of 23 cents per share will be paid on 17 November 2008 to shareholders registered on
24 October 2008.
For Australian tax purposes, the dividend will be 100 per cent franked at the 30 per cent tax rate. Australian and
New Zealand shareholders may elect to have dividends paid directly into a bank account anywhere in Australia
and New Zealand. Forms for this purpose can be obtained on www.computershare.com.au or by request from
the share registry.
Key dates
– 24 October 2008
Record date (books closing) for 2007–08 final dividend
– 17 November 2008
Final dividend for 2007–08 payable
– 29 October 2008*
Annual report sent to shareholders
– 4 December 2008
Annual general meeting
– 26 March 2009*
Announcement of profit result for half year ending 31 January 2009
– 31 July 2009
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
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directory
Directors
Share registrar
KM Hoggard – Chairman
GDW Curlewis – Deputy Chairman
DJ Rathbone AM – Managing Director
Dr WB Goodfellow
GA Hounsell
DG McGauchie AO
Dr JW Stocker 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
147 Collins Street
Melbourne Victoria 3000 Australia
Trustee for Nufarm Step-up Securities
Permanent Trustee Company Ltd
35 Clarence Street
Sydney NSW 2000
Australia
Computershare Investor Services Pty Ltd
GPO Box 2975EE
Melbourne Victoria 3001 Australia
Telephone: 1300 850 505
Outside Australia: 61 3 9415 4000
Step-up securities registrar
New Zealand
Computershare Registry Services Limited
Private Bag 92119
Auckland New Zealand 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
6 Manu Street
Otahuhu, Auckland New Zealand
Telephone: 64 9 270 4157
Facsimile: 64 9 267 8444
Website
http://www.nufarm.com
Nufarm Limited
ACN 091 323 312
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contents
Produced by Gillian Sweetland. Designed by MDM Design. Photographers include: Alex Craig, Melissa Powell and Doug Wilson.