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Highfield Resources LtdNufarm Limited | Annual Report
2010
contents
01 key events
01
facts in brief
03 managing director’s review
09 business review
14 health, safety and environment
16 management team
18 board of directors
21 corporate governance
28 financial statements
29 directors’ report
39
lead auditor’s independence declaration
40
income statement
41 statement of comprehensive income
42 balance sheet
43 statement of cash flows
44 statement of changes in equity
46 notes to the financial statements
109 directors’ declaration
110 independent auditor’s report
113 shareholder and statutory information
117 directory
key events
– Continued instability in glyphosate segment
– Adverse seasonal conditions in key regions
– Competitive pricing environment
– New product introductions on track
facts in brief
Trading results
Profit/(loss) 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 12 months ended
31 July 2009
$000
31 July 2010
$000
(23,990)
82,556
58,566
2,168,630
1,749,891
3,093,842
79,877
79,755
159,632
2,677,083
1,631,939
3,251,597
12 months ended 12 months ended
31 July 2009
31 July 2010
(15.0)¢
35%
$3.45
33.5¢
57%
$3.59
–
27¢
3,154
3,155
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02
managing director’s review
Doug Rathbone AM
Managing director and chief executive
The combined impact of an unstable
global glyphosate market, adverse
climatic conditions in key regional
markets and an extremely competitive
pricing environment delivered a very
disappointing profit result for the
company in what has been a
challenging year.
The tax paid operating profit, excluding material items,
was $58.6 million for the year ended 31 July 2010.
The reported ‘headline’ result was a net loss of
$22.6 million, which includes the impact of material
items totalling $82.6 million.
Operating earnings before interest and tax (EBIT) –
before the impact of material items – was $135 million.
This compares to $278 million in the previous financial
year.
Group revenues decreased by 19 per cent to
$2.17 billion.
On a per share basis, the company lost 15 cents,
compared with last year’s earnings of 33.5 cents
per share.
Material items
The company recorded an $82.6 million after tax loss
associated with material items.
Of this amount, $30.1 million was associated with
glyphosate related losses and costs relating to pricing
support, the majority of which pertained to higher
cost inventory held at the end of the 2009 financial
year ($29.4 million of this total was recorded at the
half year). These costs were mainly associated with
inventory write downs, losses on sales and various
measures of one-off support provided to distribution
customers during the first six months of the
financial year.
The company has resolved that any tax loss that
cannot be recouped within eight years will no longer
be recognised in the financial accounts, irrespective
of the period in which the losses can be offset
against taxable income in the tax returns of the
individual jurisdiction.
Consistent with this policy, a loss of $37.5 million
was recorded for the non-cash write off of previously
recognised tax losses in Brazil.
After tax costs of $10.7 million were associated with
operational restructuring activities in France, and in
the UK where the company closed a manufacturing
site at Belvedere. The majority of other material items
were due diligence costs relating to the Sinochem
takeover proposal, the Sumitomo tender offer and
the acquisition of several seeds businesses.
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03
managing director’s review continued
Final dividend
Directors resolved not to declare a final dividend for
the 2010 financial year.
Treasury
The company generated nearly $200 million in
operating cash flow in 2010, compared to an operating
cash outflow of $50 million in 2009. This was despite
the higher than expected receivables at year-end. The
cash not collected from receivables prior to year-end
is being collected in the early months of the 2011
financial year.
These arrangements will incur additional costs
relating to fees associated with the provision of
waivers, additional interest costs and associated
advisory fees. It is estimated that these costs will
total up to approximately $10 million for the period
through to mid December when the company intends
to have in place a more efficient long term banking
structure. Approximately $8 million of this total
relates to one-off waiver and advisory costs.
Nufarm is now working with its lenders to establish
the new financing structure and is confident of
finalising new arrangements by mid December.
The improved cash flow was directly attributable
to a reduction in net working capital of $165 million,
primarily from reduced inventory holdings.
An increase in cash from operations, combined with
the proceeds of the April/May 2010 equity raising,
facilitated a reduction in net debt ($620 million
at 31 July 2010 compared to $938 million at
31 July 2009).
At year-end, gearing (net debt to equity) was 35 per cent
compared to 58 per cent at July 2009.
Subsequent events
Nufarm announced on 27 September that it has
secured waivers on its banking covenants for the
periods ending 31 July 2010 and 30 October 2010.
Nufarm’s lenders have also agreed to provide a funding
facility for the period through to mid December.
The waiver agreement has been finalised with
banks that are a party to the negative pledge deed
(Nufarm’s core financing document) and addresses
all maturities falling due during the balance of this
calendar year.
The funding facility is subject to satisfactory
performance against interim milestones based on
the company’s own projections and objectives, as
well as progress relating to strategy and management
plans, as discussed with its lenders. The Nufarm
board is confident that the milestones and other
requirements can be met. The facility is also subject
to undertakings and covenants typical for a transaction
of this nature and includes an undertaking by Nufarm
to provide security over its assets.
Strategic review
On 14 July 2010, we announced that we are
undertaking a comprehensive strategic review to
identify potential improvements to Nufarm’s financial
and reporting systems, and to confirm what business
and strategic changes are required to ensure Nufarm
can achieve sustainable and profitable growth.
Deloitte and Gresham Advisory Partners are assisting
the company with that review process.
The review will continue for several months, with
shareholders being updated at the Annual General
Meeting on 2 December 2010.
Tribute to Kerry Hoggard
Kerry Hoggard retired as chairman of Nufarm
on 13 July 2010. Kerry’s contribution to Nufarm –
both as a long-standing employee and executive
of the company and in his role as chairman –
has been significant.
In a career spanning 50 years, he served as managing
director of Fernz and, for the past 10 years, as chairman
of Nufarm.
Kerry’s leadership and deep knowledge of the business
have been fundamental to the company’s growth and
success over a long period.
On many occasions, his exceptional attributes also
have been recognised by a variety of professional
bodies, including Kerry being acknowledged as the
NZ Business Herald’s 1998 Business Leader of
the Year.
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04
managing director’s review continued
The company will continue to develop and introduce
new products in various segments and geographic
markets throughout 2011, with a much stronger
focus on higher value opportunities in insecticides,
fungicides, seed treatment and seeds.
These factors and initiatives provide strong confidence
that the group will generate an improved profit
outcome for the 2011 financial year.
Doug Rathbone AM
Managing Director
28 September 2010
Colleagues throughout the company and the Nufarm
board appreciated his wise counsel and excellent
people skills, as did external companies with which
we do business.
Kerry’s outstanding dedication and generosity
is a lasting legacy for Nufarm and he retired with
the best wishes of the board.
Loyalty and effort
The 2010 year has been a challenging year for the
business and for the people within it. I would like
to acknowledge the loyalty and effort displayed by all
Nufarm employees throughout our global operations.
It will be via the ongoing commitment and capabilities
of these people that Nufarm achieves its future goals
and a return to strong profit and growth.
Outlook
Following a difficult financial year in 2010, the
company expects to benefit from increased stability
and improved trading conditions in certain market
segments in the 2011 reporting period.
The glyphosate segment will continue to be very
competitive and we expect to generate margins
on glyphosate sales that will be below the average
margins achieved in the balance of the business.
Nufarm has begun the new financial year with
a market competitive cost position and no legacy
issues associated with high cost glyphosate
inventory. We do not expect glyphosate-related
writedowns and other one-off costs associated
with the market volatility and inventory issues
of 2010 to recur.
A return to more average seasonal conditions
in key markets would result in increased demand
and volume opportunities and would facilitate a
more favourable pricing environment in a number
of market segments.
Management and structural changes in Nufarm’s
Brazil business, coupled with any further recovery in
Brazil’s general credit environment and more rational
market behavior, is likely to lead to an improvement in
the profitability of that business in 2011. The addition
of several new products will also improve the overall
margins likely to be achieved in Brazil.
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1
2
0
2
9
6
1
,
2
1
.
3
9
1
5
.
5
0
1
0
2
0
1
0
0
1
2
0
2
.
1
3
5
9
3
1
5
.
5
0
1
0
0
1
0
2
0
1
2
0
2
5
3
0
1
0
2
5
0
.
.
5
5
1
-
0
1
0
2
0
1
0
2
5
3
0
1
0
2
0
.
5
1
-
0
1
0
2
0
1
0
2
0
.
5
1
-
0
1
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
06
0
1
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
07
0
1
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
08
business review
A combination of continued pricing
and margin pressure in the glyphosate
segment, adverse climatic impacts
and a generally weaker demand and
pricing environment contributed to
very challenging operating conditions
during the 2010 financial year and
a disappointing profit result.
While Nufarm maintained its market shares in most
key products and geographic markets, competition in
many segments was intense and this limited Nufarm’s
ability to maintain margins in certain areas of the
business.
Confidence in the early months of the financial period
that the global glyphosate issues that were having such
an impact on the industry had stabilised was not
realised and the continued instability and value erosion
in this segment had a dramatic impact on the group
result. While the glyphosate segment had begun to
stabilise in some markets by the end of the financial
year, the impact of high cost inventory and intense
pricing competition during the year was significant.
Glyphosate represented 27 per cent of total revenues
in 2010, down from almost 32 per cent in 2009 and
39 per cent in 2008. Glyphosate sales were down by
31 per cent (from $868 million in 2009 to $597 million
in 2010), despite volumes increasing. The total gross
margin contribution from glyphosate more than halved
during the same period, with the average gross
margin falling to 12 per cent (2009: 18 per cent).
The gross profit impact of high cost opening glyphosate
inventory and credits given in relation to the previous
year’s glyphosate sales was $57.1 million. Of this
amount, $44.7 million was classified as relating
to one-off items.
Revenues associated with products other than
glyphosate fell by 13 per cent during the year,
although sales of those products increased in a
number of markets when measured in local currency.
Both lower volume demand and pricing pressure
had an impact on sales. Herbicides and insecticides
recorded sales declines, but fungicide sales were up
by about 16 per cent and seeds sales grew strongly.
Climatic conditions in many regional markets saw
lower demand for a range of crop protection products,
with the increased competition for fewer sales
opportunities contributing to a weak pricing
environment.
Importantly, sales of new products (those introduced
by Nufarm within the previous five year period)
increased from 2009 to 2010 by 20 per cent
to $283 million. This increase reflects continued
momentum in the development and introduction
of products that will be important contributors
to the company’s profitable growth. As a group,
these products generated average gross margins
of just under 40 per cent.
Total new products* revenue
Total new products* revenue
300
250
200
150
150
100
50
s
n
o
i
l
l
i
m
$
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
Trend line
Actual
Continuous average growth rate – 53%
* Products launched by Nufarm within the past
five years.
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
Trend line
Actual
Continuous average growth rate – 53%
* Products launched by Nufarm within the past five years.
Australasia
Revenue
Segment profit*
2010
$ million
2009
$ million
799
89.2
850
118.5
* Segment earnings before interest and tax, excluding the
impact of material items.
The Australasian business generated $799 million
in sales, representing 37 per cent of total revenues.
This compares with 2009 sales of $850 million
(32 per cent of total). Segment profit, which is
segment earnings before interest and tax, excluding
the impact of material items, fell from $118.5 million
Nufarm sales by geography 2010
in the 2009 financial year to $89.2 million in 2010,
a decline of 25 per cent.
Australia
27%
North America
Revenues in Australia fell by seven per cent to
South America
$602 million. Glyphosate sales were slightly up on
the previous year, but on much stronger volumes.
Europe
Asia
Climatic conditions in Australia varied throughout
the period, with the first half affected by reduced
summer cropping activity and second half autumn
New Zealand
26%
16%
22%
7%
2%
Nufarm sales by geography 2009
0
1
0
2
t
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A
–
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u
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Sales by key products 2010
09
Sales by key products 2009
Other herbicides 21%
Other herbicides 20%
Glyphosate
Phenoxies
Insecticides
Fungicides
Other*
28%
22%
8%
10%
11%
* Other: includes plant growth regulators, adjuvants,
seed treatments, seeds, spray machinery and
* Other: includes plant growth regulators, adjuvants,
seed treatments, seeds, spray machinery and
industrial sales.
industrial sales.
300
250
200
150
150
100
50
s
n
o
i
l
l
i
m
$
Australia
North America
South America
Europe
Asia
New Zealand
24%
29%
15%
24%
6%
2%
Glyphosate
Phenoxies
Insecticides
Fungicides
Other*
31%
21%
8%
7%
13%
business review continued
and winter conditions being positive in the eastern
and southern states and poor in Western Australia.
Volume demand over the full year was relatively
strong, but strong competition had a negative impact
on pricing and margins. Nufarm’s distribution customers
also operated on lower than normal inventories and
this affected the working capital position.
Nufarm introduced a number of new horticultural
products and performed strongly in this segment.
High sugar prices also saw increased plantings in
the cane growing regions and the company’s Crop
Care division benefited from those additional sales
opportunities.
New Zealand sales declined by two per cent in local
currency, with the majority of this decrease attributable
to lower value glyphosate sales. In New Zealand the
drought in many regions, a cessation of dairy expansion
and farmer focus on debt reduction through cautious
spending had an adverse effect on the market. Retailers
adopted ambitious inventory reduction plans, which
further limited opportunities to generate profitable sales.
In Asia, Nufarm expanded its sales activity into a
number of markets. The Asian business contributed
a stronger profit result on lower sales, with margin
improvements in markets such as Indonesia and
Japan driving that result. Indonesia performed
particularly strongly, with higher than average rainfalls
leading to strong herbicide demand and a broader
product portfolio securing increased market share
in the plantation segment.
A long and severe winter delayed cropping
activity in the US, with spring rains also reducing
the pre-seeding herbicide market in key regions.
The glyphosate segment continued to experience
price reductions and strong competition, with smaller
traders discounting product offerings as they cleared
remaining inventories in July. With prices beginning
to stabilise at lower levels and major suppliers having
worked through higher cost inventory positions,
it is expected that a number of smaller glyphosate
suppliers will now leave the market.
Non-glyphosate sales increased by 15 per cent
(in USD) in the US in the 2010 reporting period.
Hot and humid weather in some areas led to increased
disease and insect pressure and Nufarm was able
to capitalise on those conditions with its sales in the
turf and ornamentals segment increasing by some
25 per cent. An expanded portfolio of cotton products
also saw growth in that segment.
US distribution began the year with relatively high
stock positions but aggressively ran these down
during the main selling season and finished the
period with lower than normal inventories.
In Canada, very heavy rainfalls and flooding
dramatically reduced cropping activity in the
western regions, with the total cropped area in
Canada being the lowest in 10 years. This significantly
reduced demand for crop protection products and
led to increased competition in many segments.
Nufarm’s Canadian sales were down by 17 per cent
in local currency.
North America
Revenue
Segment profit*
2010
$ million
2009
$ million
554
33.2
775
112.2
South America
* Segment earnings before interest and tax, excluding the
impact of material items.
Revenue
Segment profit*
2010
$ million
2009
$ million
342
(14.6)
415
(40.8)
On a segment reporting basis, North American
sales were down by almost 29 per cent on the
previous year ($554 million versus $775 million).
The region generated 25.5 per cent of total
revenues (2009: 29 per cent). Segment profit
was $33.2 million (2009: $112.2 million).
Nufarm’s US sales declined by 10 per cent in local
currency to $393 million. Glyphosate sales were
down by 44 per cent and comprised 28 per cent
of total sales.
* Segment earnings before interest and tax, excluding the
impact of material items.
South American segment sales in 2010 were
$342 million. The region recorded a segment loss
of $14.6 million. This compared to a segment loss
in 2009 of nearly $41 million.
In local currency, Brazil sales were down by 15 per cent
to 426 million Reals (R$). Glyphosate was 34 per cent
of total sales in Brazil (2009: 39 per cent). Excluding
glyphosate sales, revenues in Brazil declined by just
under four per cent.
0
1
0
2
t
r
o
p
e
R
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a
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A
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d
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i
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L
m
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N
10
business review continued
New suppliers entering the Brazilian market over
recent years have led to increased competition
in a number of segments, affecting glyphosate
and several other products. During the period of
volatile glyphosate pricing, Nufarm provided various
forms of support to its distribution customers in
Brazil and this had a severe impact on profitability
during the year.
cool and dry spring also dampened demand in some
markets. Grower purchases of crop protection inputs
were down by between 10 and 20 per cent in some
of the larger European markets.
In Germany, the cereal herbicide market was down by
about nine per cent and the potato fungicide market
saw sales decline by almost 50 per cent.
Credit risk also remained a key issue for much of the
year and this restricted Nufarm’s selling opportunities.
The reduced demand also affected Nufarm’s European-
based manufacturing operations with lower production
volumes resulting in under-recoveries in those plants.
Brazil generated a loss of R$25.8 million at the
operating EBIT level versus a loss of R$49.7 million
the previous year.
The company strengthened its position in insecticides
with the launch of ‘Nuprid’ (imidacloprid) and continued
to expand in the pasture segment. A number of other
new product launches improved the balance of the
portfolio between herbicides, insectides and fungicides.
Nufarm appointed a new regional manager for South
America in March, 2010, and commenced a review
of its Brazilian business. A number of changes were
implemented during the balance of the period,
including a restructure and expansion of the
company’s sales force.
Sales in Argentina increased by some 16 per cent in
local currency with an improved product mix generating
stronger margins and a better EBIT performance than
in the previous year. Nufarm’s businesses in both Chile
and Colombia also generated improved performances.
Europe
Revenue
Segment profit*
2010
$ million
2009
$ million
475
53.4
637
118.8
* Segment earnings before interest and tax, excluding the
impact of material items.
European sales fell by 25 per cent to $475 million
(21.9 per cent of total revenues versus 24 per cent
in 2009). Measured in Euros, sales declined by nine
per cent. Segment profit, at $53.4 million, was
substantially down on the previous year
($118.8 million).
Climatic conditions in Europe had an adverse impact
on demand for Nufarm’s product range. The financial
year commenced with a dry autumn and was followed
by long and harsh winter conditions. A generally
In past years European markets had been relatively
protected from competition from Chinese-sourced
glyphosate and margins were strong. The increased
competition in the glyphosate segment has resulted
in a substantial drop in the profitability of this segment
in Nufarm’s European business. This is despite
glyphosate being a comparatively small proportion
of total sales in Europe (2010: 13 per cent).
Overall sales declined in most of its European markets,
with the biggest falls recorded in France and Germany.
Market shares, however, were maintained in most
countries and there were some gains in markets such
as the UK (where branded products increased year
on year), Spain, the Nordics region and Eastern
Europe. These gains were driven by new product
introductions and increased support from local
distribution customers.
Nufarm launched its Ukraine business in October
2009 and generated good first season sales. Sales
in Romania were up by 20 per cent in local currency
and 10 new product registrations in Poland helped
secure market share gains.
Seeds
While remaining a relatively small business within
Nufarm, the Nuseed business expanded strongly
during 2010. This expansion was driven by both
organic growth – particularly in Australia – and by
the additions of newly acquired operations in the
US and Argentina. The seeds business recorded
total revenues of $42.5 million and a gross margin
of more than 40 per cent.
Seasonal conditions in Australia favoured larger
canola plantings. Nuseed launched three new
Roundup Ready® canola products, coinciding with
the Western Australian government’s decision to
lift a moratorium on genetically modified canola.
Total Australian Roundup Ready® canola plantings
0
1
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
11
Total new products* revenue
Total new products* revenue
Total new products* revenue
Total new products* revenue
Total new products* revenue
Total new products* revenue
Total new products* revenue
Total new products* revenue
business review continued
300
300
250
250
200
200
150
150
150
150
100
100
50
50
300
300
250
250
200
200
150
150
150
150
100
one director to the Nufarm board. That appointment
100
has not yet been made as both companies continue
50
to address certain regulatory approvals relating to
50
the appointment.
7
0
0
7
2
0
0
2
Actual
The Sumitomo investment has also facilitated
Actual
a number of commercial agreements between
Nufarm and Sumitomo relating to product distribution
and product development. Completed agreements
include arrangements that result in Sumitomo
products being distributed by Nufarm in markets
including Brazil and Indonesia.
6
0
0
6
2
0
0
2
Trend line
Trend line
6
0
0
6
2
0
0
2
Trend line
Trend line
7
0
0
7
2
0
0
2
Actual
Actual
s
n
o
s
i
n
l
l
o
i
m
i
l
l
i
$
m
$
s
n
o
s
i
n
l
l
o
i
m
i
l
l
i
$
m
$
8
0
0
8
2
0
0
2
8
0
0
8
2
0
0
2
9
0
0
9
2
0
0
2
9
0
0
9
2
0
0
2
0
1
0
0
2
1
0
2
0
1
0
0
2
1
0
2
Continuous average growth rate – 53%
Continuous average growth rate – 53%
Continuous average growth rate – 53%
Continuous average growth rate – 53%
* Products launched by Nufarm within the past five years.
* Products launched by Nufarm within the past five years.
* Products launched by Nufarm within the past five years.
* Products launched by Nufarm within the past five years.
increased from about 40,000 hectares in 2009 to
approximately 140,000 hectares in the 2010 season.
Nuseed increased its market share in this segment.
6
0
0
6
2
0
0
2
9
0
0
9
2
0
0
2
0
1
0
0
2
1
0
2
0
1
0
0
2
1
0
2
9
0
0
9
2
0
0
2
8
0
0
8
2
0
0
2
7
0
0
7
2
0
0
2
Trend line
Trend line
6
0
0
6
2
0
0
2
Trend line
Trend line
8
7
0
0
0
0
8
7
2
2
0
0
0
0
Nuseed now breeds and markets its core canola,
2
2
Actual
Actual
sorghum and sunflower varieties in more than
Actual
Actual
Continuous average growth rate – 53%
Continuous average growth rate – 53%
25 countries from operational bases in Australia,
Continuous average growth rate – 53%
Continuous average growth rate – 53%
* Products launched by Nufarm within the past
* Products launched by Nufarm within the past
the US and Argentina.
five years.
five years.
* Products launched by Nufarm within the past
* Products launched by Nufarm within the past
five years.
five years.
Sumitomo investment and cooperation
On 15 April 2010, Sumitomo Chemical Company
(Sumitomo) completed a tender offer to acquire
20 per cent of the issued capital in Nufarm at a
price of $14 per share. In an associated agreement
with Nufarm, Sumitomo has the right to appoint
Nufarm sales by geography 2010
Nufarm sales by geography 2010
Nufarm sales by geography 2010
Nufarm sales by geography 2010
Australia
Australia
Australia
Australia
North America
North America
North America
North America
South America
South America
South America
South America
Europe
Europe
Europe
Europe
Asia
Asia
Asia
Asia
New Zealand
New Zealand
New Zealand
New Zealand
27%
27%
26%
26%
16%
16%
22%
22%
7%
7%
2%
2%
27%
27%
26%
26%
16%
16%
22%
22%
7%
7%
2%
2%
Nufarm sales by geography 2009
Nufarm sales by geography 2009
Nufarm sales by geography 2009
Nufarm sales by geography 2009
Australia
Australia
Australia
Australia
North America
North America
North America
North America
South America
South America
South America
South America
Europe
Europe
Europe
Europe
Asia
Asia
Asia
Asia
New Zealand
New Zealand
New Zealand
New Zealand
24%
24%
29%
29%
15%
15%
24%
24%
6%
6%
2%
2%
24%
24%
29%
29%
15%
15%
24%
24%
6%
6%
2%
2%
Sales by key products 2010
Sales by key products 2010
Sales by key products 2010
Sales by key products 2010
28%
Glyphosate
28%
Glyphosate
28%
Glyphosate
28%
Glyphosate
22%
Phenoxies
22%
Phenoxies
22%
Phenoxies
22%
Phenoxies
Other herbicides 21%
Other herbicides 21%
Other herbicides 21%
Other herbicides 21%
Insecticides
8%
Insecticides
8%
8%
Insecticides
8%
Insecticides
10%
Fungicides
10%
Fungicides
10%
Fungicides
10%
Fungicides
11%
Other*
11%
Other*
11%
Other*
11%
Other*
Sales by key products 2009
Sales by key products 2009
Sales by key products 2009
Sales by key products 2009
31%
Glyphosate
31%
Glyphosate
31%
Glyphosate
31%
Glyphosate
21%
Phenoxies
21%
Phenoxies
21%
Phenoxies
21%
Phenoxies
Other herbicides 20%
Other herbicides 20%
Other herbicides 20%
Other herbicides 20%
Insecticides
8%
Insecticides
8%
8%
Insecticides
8%
Insecticides
7%
Fungicides
7%
Fungicides
7%
Fungicides
7%
Fungicides
13%
Other*
13%
Other*
13%
Other*
13%
Other*
* Other: includes plant growth regulators, adjuvants,
* Other: includes plant growth regulators, adjuvants,
seed treatments, seeds, spray machinery and
seed treatments, seeds, spray machinery and
* Other: includes plant growth regulators, adjuvants,
* Other: includes plant growth regulators, adjuvants,
industrial sales.
industrial sales.
seed treatments, seeds, spray machinery and
seed treatments, seeds, spray machinery and
industrial sales.
industrial sales.
* Other: includes plant growth regulators, adjuvants,
* Other: includes plant growth regulators, adjuvants,
seed treatments, seeds, spray machinery and
seed treatments, seeds, spray machinery and
* Other: includes plant growth regulators, adjuvants,
* Other: includes plant growth regulators, adjuvants,
industrial sales.
industrial sales.
seed treatments, seeds, spray machinery and
seed treatments, seeds, spray machinery and
industrial sales.
industrial sales.
300
300
250
250
200
200
150
150
150
150
100
100
50
50
s
n
o
s
i
n
l
l
o
i
m
i
l
l
i
$
m
$
300
300
250
250
200
200
150
150
150
150
100
100
50
50
s
n
o
s
i
n
l
l
o
i
m
i
l
l
i
$
m
$
0
1
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
12
0
1
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
13
LTIFR 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
LTIFR 2004-2009
MTIFR 2004-2009
10
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
Target
Actual
MTIFR 2004-2009
Severity 2004-2009
5
4
3
2
1
0
8
6
4
2
0
0.10
0.05
5
4
3
2
1
0
10
8
6
4
health, safety and environment
2
0
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
When organisations are faced with significant
operational and business challenges, it is often
all too easy to lose focus on areas such as safety
and environmental performance. During the calendar
Severity 2004-2009
year 2009, Nufarm’s performance in these critically
important areas was excellent and extends a strong
0.10
trend of continuous improvement.
In 2009, for the first time, the target limits set
by Nufarm’s board have been bettered globally
for all categories:
0.05
• lost time injuries;
• medical treatment injuries; and
• severity.
0
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
Unusual incident report/injury report
vs LTIFR 2004-2009
LTIFR 2004-2009
14
5
12
4
10
3
8
6
4
2
0
2
1
R
F
I
T
0
L
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
6
0
0
0
0
2
2
7
7
0
0
0
0
2
2
8
0
0
2
8
0
0
2
12
10
8
6
4
2
0
9
0
0
2
9
0
0
2
o
i
t
a
r
R
I
/
I
R
U
Target
Actual
Affecting and reinforcing the cultural change necessary
to influence the people’s behaviour in safety awareness
is a long term project. Over the past 10 years we
have achieved a 10 fold reduction in injuries across
Unusual incident report/injury report
the company, improving from 13 injuries with lost
vs LTIFR 2004-2009
LTIFR 2004-2009
time per million hours worked to a low of 1.6 in 2009.
12
14
5
12
4
10
Our current performance on key safety parameters
places Nufarm in the top quartile of industrial
companies in both Australia and Europe.
3
8
10
8
6
4
6
2
Each year, the company sets new targets aimed
at driving further improvements and supports
management initiatives within our various global
1
2
operations to meet those targets. These initiatives
R
F
T
0
L
4
2
0
I
o
i
t
a
r
R
I
/
I
R
U
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
6
0
0
0
0
2
2
7
7
0
0
0
0
2
2
8
0
0
2
8
0
0
2
0
9
0
0
2
9
0
0
2
LTIFR
Target
UIR/IR ratio
Actual
Production volume 2004-2009
MTIFR 2004-2009
10
500
8
6
4
s
e
n
n
o
2
t
0
0
0
‘
0
450
400
350
300
250
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
9
0
0
2
9
0
0
2
0
1
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
14
Target
LTIFR
Actual
UIR/IR ratio
Target
Actual
Production volume 2004-2009
MTIFR 2004-2009
10
500
Water efficiency 2004-2009
Severity 2004-2009
4
0.10
8
6
4
s
e
n
n
o
2
t
0
0
0
‘
0
450
400
350
300
250
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
9
0
0
2
9
0
0
2
3
t
c
u
d
o
r
p
e
2
n
n
0.05
o
t
/
r
e
t
a
w
s
e
n
n
o
t
1
0
0
4
0
0
4
2
0
0
2
5
0
0
5
2
0
0
2
6
0
0
6
2
0
0
2
7
0
0
7
2
0
0
2
8
0
0
8
2
0
0
2
9
0
0
9
2
0
0
2
Target
Actual
Target
Actual
Water efficiency 2004-2009
Severity 2004-2009
CO2 released from energy use and
processes 2004-2009
Unusual incident report/injury report
220
vs LTIFR 2004-2009
12
10
8
6
4
2
0
o
i
t
a
r
9
R
0
I
/
0
R
2
I
U
4
0
4
0
0
2
0
2
5
0
5
0
0
2
0
2
6
0
6
0
0
2
0
2
7
0
7
0
0
2
0
2
8
0
8
0
0
2
0
2
9
0
9
0
0
2
0
2
Target
Actual
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
LTIFR
UIR/IR ratio
CO2 released from energy use and
processes 2004-2009
Unusual incident report/injury report
220
vs LTIFR 2004-2009
Production volume 2004-2009
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
LTIFR
UIR/IR ratio
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Production volume 2004-2009
Water efficiency 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Water efficiency 2004-2009
CO2 released from energy use and
processes 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
CO2 released from energy use and
processes 2004-2009
12
10
8
6
4
2
0
o
i
t
a
r
R
9
I
0
/
0
R
I
2
U
200
14
180
12
10
160
140
120
100
2
8
6
4
0
e
n
n
o
t
0
0
0
‘
R
F
I
T
L
500
450
400
350
300
250
s
e
n
n
o
t
0
0
0
‘
4
3
2
1
0
t
c
u
d
o
r
p
e
n
n
o
t
/
r
e
t
a
w
s
e
n
n
o
t
220
200
180
160
140
e
n
n
o
t
0
0
0
‘
120
100
0.10
4
3
2
1
0
0
0.05
o
t
c
u
d
o
r
p
e
n
n
t
/
r
e
t
a
w
s
e
n
n
o
t
200
14
12
180
10
160
140
120
100
2
8
6
4
0
e
n
n
o
t
0
0
0
‘
R
F
I
T
L
500
450
400
350
300
250
s
e
n
n
o
t
0
0
0
‘
4
3
2
1
0
t
c
u
d
o
r
p
e
n
n
o
t
/
r
e
t
a
w
s
e
n
n
o
t
220
200
180
160
140
e
n
n
o
t
0
0
0
‘
120
100
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
LTIFR 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
MTIFR 2004-2009
10
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
Severity 2004-2009
LTIFR 2004-2009
0
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
Target
Actual
Unusual incident report/injury report
vs LTIFR 2004-2009
LTIFR 2004-2009
MTIFR 2004-2009
5
4
3
2
1
0
8
6
4
2
0
0.10
0.05
5
14
12
4
10
3
8
5
4
3
2
1
0
10
8
6
12
10
8
health, safety and environment continued
2
6
4
6
4
2
0
9
0
0
2
9
0
0
2
o
i
t
a
r
R
I
/
I
R
U
2
0
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
2
0
1
R
F
I
T
0
L
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
6
0
0
0
0
2
2
7
7
0
0
0
0
2
2
8
0
0
2
8
0
0
2
LTIFR
Target
Actual
UIR/IR ratio
take various forms in different locations and local
initiatives are supported by comprehensive internal
audits to address local areas of improvement
and change.
Production volume 2004-2009
MTIFR 2004-2009
Our efforts to reduce the impact of our operations on
10
the environment continue to show positive progress.
While many of the ‘easy wins’ have been secured,
we are continuing to identify ways to optimise our
use of water and energy and to reduce our generation
of waste and emissions.
500
450
400
8
6
350
4
Nufarm 2010 targets
s
e
300
n
LTIFR
n
2
o
t
MTIFR
0
0
250
Severity
0
‘
0
1.60
3.21
0.019
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
6
0
0
2
7
0
0
2
7
0
0
2
8
0
0
2
8
0
0
2
9
0
0
2
9
0
0
2
Target
Actual
Water efficiency 2004-2009
Severity 2004-2009
4
0.10
3
t
c
u
d
o
r
p
e
2
n
n
0.05
o
t
/
r
e
t
a
w
s
e
n
n
o
t
1
0
0
4
0
4
0
0
2
0
2
5
0
5
0
0
2
0
2
6
0
6
0
0
2
0
2
7
0
7
0
0
2
0
2
8
0
8
0
0
2
0
2
9
0
9
0
0
2
0
2
Target
Actual
LTIFR or ‘lost time injury frequency rate’ is the number
of lost time injuries per million hours worked that
result in one or more day’s absence from work.
MTIFR or ‘medical treatment injury frequency rate’
Severity 2004-2009
is the number of lost time injuries plus those that
0.10
did not result in lost time but required treatment
by a qualified medical practitioner per million
hours worked.
Severity is the number of days lost due to injuries
per thousand hours worked. We include employees,
0.05
contractors and visitors in our statistics.
0
Nufarm’s 11th annual health, safety and environment
report may be downloaded from the corporate website,
together with separate reports from manufacturing
sites around the world. The report covers 2009 calendar
year. The health and safety data includes permanent
and casual employees, as well as contractors.
Actual
Target
8
0
0
2
6
0
0
2
5
0
0
2
9
0
0
2
4
0
0
2
7
0
0
2
Unusual incident report/injury report
vs LTIFR 2004-2009
14
12
10
8
6
4
2
0
R
F
I
T
L
12
10
8
6
4
2
0
o
i
t
a
r
R
I
/
I
R
U
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Target
Actual
LTIFR
UIR/IR ratio
‘
I
I
/
0
R
U
100
2
9
0
0
2
e
n
n
o
t
120
4
o
i
t
a
r
R
0
0
0
R
F
I
T
L
10
160
8
140
6
CO2 released from energy use and
processes 2004-2009
Unusual incident report/injury report
vs LTIFR 2004-2009
220
200
14
12
180
12
10
8
6
4
2
0
4
0
0
2
4
0
0
2
5
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
LTIFR
UIR/IR ratio
Production volume 2004-2009
0
1
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
15
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
500
450
400
350
300
250
s
e
n
n
o
t
0
0
0
‘
4
3
2
1
0
t
c
u
d
o
r
p
e
n
n
o
t
/
r
e
t
a
w
s
e
n
n
o
t
220
200
180
160
140
e
n
n
o
t
0
0
0
‘
120
100
Production volume 2004-2009
Water efficiency 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
Water efficiency 2004-2009
CO2 released from energy use and
processes 2004-2009
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
CO2 released from energy use and
processes 2004-2009
500
450
400
350
300
250
s
e
n
n
o
t
0
0
0
‘
4
3
2
1
0
t
c
u
d
o
r
p
e
n
n
o
t
/
r
e
t
a
w
s
e
n
n
o
t
220
200
180
160
140
e
n
n
o
t
0
0
0
‘
120
100
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
management team
0
1
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
16
Doug Rathbone AM
Managing director and chief executive
Doug Rathbone’s background is chemical engineering
and commerce and he has worked for Nufarm Australia
Ltd for 37 years. Doug was appointed managing director
of Nufarm Australia in 1982 and managing director of
Nufarm Ltd in October 1999. He joined the board of
directors in 1987. He was appointed to the board of
CSIRO in 2007 and retired from the CSIRO board in
September 2010.
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 has 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 Ltd. In 2000,
Rod was appointed company secretary of Nufarm Ltd.
Kevin Martin
Chief financial officer
Kevin Martin is a chartered accountant with over
27 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.
management team continued
Bob Ooms
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.
Mike Pointon
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 was appointed to the
executive team in July 2008. He 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.
Robert Reis
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.
0
1
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
17
board of directors
Pictured from left to right: Donald McGauchie AO (Chairman, appointed 13 July 2010), Bob Edgar, John Stocker AO,
Kerry Hoggard (Chairman, retired 13 July 2010), Doug Rathbone AM (Managing director and chief executive),
Doug Curlewis (Deputy chairman), Bruce Goodfellow, Garry Hounsell.
Donald McGauchie AO
Kerry Hoggard
Chairman (appointed 13 July 2010)
Chairman (retired 13 July 2010)
DG (Donald) McGauchie AO, 60, joined the board in
2003 and was appointed chairman on 13 July 2010.
Kerry Hoggard, 69, 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. He was appointed chairman of the
board in October 1999 and retired on 13 July 2010.
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. Donald is chairman
of Australian Agricultural Company Ltd. He is
a director of James Hardie Industries SE and
Graincorp Ltd. In the past three years Donald
has been a director of Telstra Ltd (11 years).
Donald is chairman of the nomination committee
(effective 28 September 2010) and a member
of the remuneration committee.
0
1
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
18
board of directors continued
Doug Curlewis
Deputy chairman
GDW (Doug) Curlewis, 69, joined the board in
January 2000.
He has a master of business administration and was
formerly managing director of National Consolidated
Ltd. In the past three years Doug has been a director
of Pacifica Group Ltd (nine years), Remunerator
Australia Pty Ltd (seven years), GUD Holdings Ltd
(six years), Graincorp Ltd (three years) and Sigma
Pharmaceuticals Ltd (three years).
Doug is deputy chairman of the board and a member
of the audit, remuneration and nomination committees.
Doug Rathbone AM
Managing director and chief executive
Doug Rathbone AM, 64, joined the board in 1987.
His background is chemical engineering and
commerce and he has worked for Nufarm Australia
Ltd for 37 years. Doug was appointed managing
director of Nufarm Australia in 1982 and managing
director of Nufarm Ltd in October 1999.
He was appointed to the board of the CSIRO in 2007
and retired from the CSIRO board in September 2010.
Bob Edgar
Dr RJ (Bob) Edgar, 64, joined the board on 1 June 2009.
Dr Edgar holds a bachelor of economics (hons)
from University of Adelaide and a PhD from Ohio
State University. Bob was deputy chief executive
officer of ANZ Banking Group, where he also held
the positions of chief operating officer, managing
director, institutional financial services and chief
economist. Bob is a director of Transurban Holdings
Ltd, Transurban Infrastructure Management Ltd,
Asciano Ltd and Linfox Armaguard Pty Ltd. He is
also chairman of the Prince Henry’s Institute of
Medial Research.
Bob is chairman of the remuneration committee
(effective 28 September 2010) and a member
of the audit committee.
Bruce Goodfellow
Dr WB (Bruce) Goodfellow, 58, 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, 54, 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 Ltd, Orica Ltd and Dulux
Group Ltd.
Garry is chairman of the audit committee.
John Stocker AO
Dr JW (John) Stocker AO, 64, joined the board
in 1998.
He has a medical, scientific and management
background and was formerly chief scientist
of the Commonwealth of Australia and formerly
the chairman of CSIRO. He is a principal of Foursight
Associates Pty Ltd and is a director of Telstra
Corporation Ltd.
In the past three years John has been chairman of
Sigma Pharmaceuticals Ltd (four years) and a director
of Sigma Company Ltd (eight years), Cambridge
Antibody Technology Group plc (11 years) and
Circadian Technologies Ltd (12 years).
John is a member of the audit committee.
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corporate governance
Introduction
Management and oversight of Nufarm
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. The board is also
cognisant of the recent amendments to the ASX
principles.
Copies of our corporate governance practices are
publicly available in 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.
We note that recommendation 2.2 recommends
that the chairman should be an independent director.
The chairman is elected annually at the directors’
meeting immediately following the annual general
meeting (AGM). Until his retirement on 13 July 2010,
Kerry Hoggard was chairman of the board.
Kerry Hoggard was not deemed an independent
director in accordance with the tests set out
in principle 2 of the ASX principles. However,
the board unanimously re-elected Kerry as chairman
following the 2009 AGM believing this to be clearly
in the best interest of all stakeholders.
Consequent upon Kerry’s retirement on 13 July,
Donald McGauchie was elected chairman. Donald
is an independent director.
Doug Curlewis, an independent director, is deputy
chairman of the board.
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 charter clearly defines the board’s individual
and collective responsibilities and describes those
delegated to the managing director and senior
executives.
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 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 board
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 2010, 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 30 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 pages 16 to 17, the board believes
ROFE is the appropriate performance condition for
the company’s senior executive incentive program.
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.
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corporate governance continued
The nomination committee reviews the performance
of directors who seek to offer themselves for
re-election at a company annual general meeting
(AGM). That committee then recommends to the
board whether or not it should continue to support
the nomination of the retiring directors.
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
Dr RJ Edgar
GA Hounsell
DG McGauchie
Dr JW Stocker
Non-independent non-executive directors
KM Hoggard*
Dr WB Goodfellow
Executive director (chief executive officer)
DJ Rathbone
Profiles of each board member, including terms
in office, are on pages 18 to 19 of this report.
Chairman of the board
The chairman is elected annually at the directors’
meeting immediately following the company’s annual
general meeting.
As noted earlier in this report, Kerry Hoggard retired
as chairman and a director on 13 July 2010. Donald
McGauchie, an independent director, was then
elected chairman. 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.
The board structure is consistent with ASX Principle 2.
The nomination committee
Donald McGauchie is chairman of the nomination
committee (effective 28 September 2010) and Doug
Curlewis 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;
* Kerry Hoggard retired as chairman and a director
• review board succession plans;
on 13 July 2010.
• evaluate board performance; and
Access to independent advice
• recommend the appointment of new directors
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.
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,
including a review by external consultants and
a review by the chairman.
For recent reporting periods, the board has 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.
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corporate governance continued
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.
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.
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.
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 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.
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.
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corporate governance continued
Audit committee
Garry Hounsell is chairman of the board audit
committee with Doug Curlewis, John Stocker and
Bob Edgar as members. The committee comprises
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 30.
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 Pan Aust Ltd, deputy chairman
of Mitchell Communication Group Ltd and a director
of Qantas Airways Ltd, Orica Ltd and Dulux Group
Ltd. Garry is also chairman of the audit committee
at Qantas.
Doug Curlewis has an MBA and is a former managing
director of National Consolidated Ltd, chief executive
(Europe) of ICI Paints and managing director of Dulux
Australia. Doug has been a director of a number of
listed entities and has broad commercial experience.
Dr Bob Edgar holds a bachelor of economics (hons)
from University of Adelaide and a PhD from Ohio
State University.
Bob was deputy chief executive officer of the ANZ
Banking Group. Bob is a director of Transurban Holdings
Ltd, Transurban Infrastructure Management Ltd,
Asciano Ltd and Linfox Armaguard Pty Ltd. He is also
Chairman of the Prince Henry’s Institute of Medical
Research.
Dr John Stocker has a medical, scientific and
management background and was formerly chief
scientist of the Commonwealth of Australia and
formerly the chairman of CSIRO. He is a principal
of Foursight Associates Pty Ltd and a director
of Telstra Corporation Ltd.
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 provided by the auditor.
The charter also identifies those services that:
• the external auditor may and may not provide; and
• 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 partner 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 and its duties
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 best practice.
The company secretary prepares a schedule of
compliance and disclosure matters for directors
to consider at each board meeting.
A summary 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.
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corporate governance continued
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 annual general meeting;
• relevant market announcements and related
information; and
• copies of webcasts and teleconferences.
Our formal communications policy is available on
the corporate governance section of the company’s
website.
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 31
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.
The company’s policy in relation to the rights of
shareholders is consistent with ASX Principle 6.
All board committees report to the board on risk
management issues within their areas of responsibility.
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,
comprehensively reviews the material risks faced
by the company. In so doing, it considers the interests
of all relevant stakeholders. In addition, 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
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’ regular 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
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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
The board’s policy with regard to non-executive
directors remuneration is set out in the remuneration
report on page 35.
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.
corporate governance continued
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
• 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
in 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
Bob Edgar is chairman of the remuneration committee
(effective 28 September 2010) and Donald McGauchie
and Doug Curlewis are members, with a majority of
independent directors. The committee is chaired by
an independent director.
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financial statements
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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 2010 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) (retired 13 July 2010)
DG McGauchie AO* (Chairman) (appointed 13 July 2010)
GDW Curlewis (Deputy chairman)
DJ Rathbone AM (Managing director)
Dr RJ Edgar
Dr WB Goodfellow
GA Hounsell
Dr JW Stocker AO
* KM Hoggard retired as chairman and a director of the company on 13 July 2010. DG McGauchie was appointed chairman
on 13 July 2010.
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 pages 18 to 19.
Company secretary
The company secretary is R Heath.
Details of the qualifications and experience of the company secretary are set out on page 16.
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:
Nufarm Ltd
ordinary shares
Nufarm Finance (NZ) Ltd
Step-up Securities
GDW Curlewis1
DJ Rathbone
Dr RJ Edgar
Dr WB Goodfellow1,2
GA Hounsell1
DG Mc Gauchie1
Dr JW Stocker1
1 The shareholdings of GDW Curlewis, Dr WB Goodfellow, GA Hounsell, DG McGauchie and Dr JW Stocker include shares
45,913
16,144,890
–
1,120,551
43,723
31,239
41,521
–
–
–
47,723
–
–
–
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 (430,434 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 (120,000 shares).
(iii) 531 Trust (400,861 shares). Dr Goodfellow and EW Preston are trustees of 531 Trust.
(iv) Auckland Medical Research Foundation (26,558 Step-up Securities). Dr Goodfellow does not have a beneficial interest
in these Step-up Securities.
(v) Trustees of the Goodfellow Foundation (33,854 shares and 1,338 Step-up Securities). Dr Goodfellow is chairman of the
Trust Board and does not have a beneficial interest in these shares or Step-up Securities.
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directors’ report continued
Directors’ meetings
During the financial period numerous board meetings were convened at short notice to consider issues related
to the Sinochem takeover proposal, the Sumitomo proposal to acquire 20 per cent of the shareholding of Nufarm,
the Extraordinary General Meeting held on 2 March 2010, the Sumitomo Tender Offer and the Accelerated Rights
Entitlement Offer. Some directors were unable to attend some of these meetings due to prior commitments.
The number of directors’ meetings (including meetings of board committees) and number of meetings attended
by each of the directors of the company during the financial year are:
Committees
Director
Board
Audit
Remuneration
Nomination
KM Hoggard1,2,3
GDW Curlewis
DJ Rathbone3
Dr RJ Edgar2
Dr WB Goodfellow3
GA Hounsell3
DG McGauchie
Dr JW Stocker3
A
16
19
19
19
19
19
19
19
B
15
18
19
18
19
19
16
18
A
1
3
–
2
–
3
–
3
B
3
3
2
2
1
3
–
3
A
2
2
–
–
–
–
2
–
B
2
2
2
–
2
2
1
–
A
–
2
–
–
2
–
2
–
B
2
2
2
–
2
2
1
–
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 KM Hoggard retired as a director on 13 July 2010.
2 Dr RJ Edgar was appointed a member of the audit committee in September 2009. KM Hoggard retired as a member of the
audit committee in September 2009.
3 Attended meeting although not a member of the committee. All directors are entitled to attend any committee meetings.
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 in excess of 3,000 people at its various locations in Australasia, Africa, the Americas and Europe.
The company is listed on the Australian Securities Exchange (symbol NUF). Its head office is located at Laverton
in Melbourne.
Results
The net loss attributable to members of the group for the 12 months to 31 July 2010 is $22.6 million. The
comparable figure for the 12 months to 31 July 2009 was a profit of $79.9 million.
0
1
0
2
t
r
o
p
e
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a
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n
n
A
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d
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30
directors’ report continued
Dividends
The following dividends have been paid, declared or recommended since the end of the preceding financial year:
The final dividend for 2008–09 of 15 cents paid 13 November 2009
Nufarm Step-up Securities distribution payment
The following Nufarm Step-up Securities distribution payments have been
paid since the end of the preceding financial year:
Distribution payment for the period 15 April 2009 – 15 October 2009 at the rate
of 5.0167 per cent per annum paid 15 October 2009
Distribution payment for the period 16 October 2009 – 15 April 2010
at the rate of 6.08 per cent per annum paid 15 April 2010
Review of operations
$000
32,709
6,313
7,609
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
At 31 July 2010, the group was in breach of certain covenants under the deed of negative pledge, which
contains the covenants and other terms common to all bankers. On 27 September 2010, the group obtained
written waivers from all parties to the deed in respect of these covenant breaches. At the same time, the
parties to the deed confirmed that any undrawn facility amounts are no longer available to the group. The group
has contractually obtained additional secured funding through to 15 December 2010, subject to certain conditions
and obligations. The group is currently evaluating its options regarding the nature and terms of a new financing
facility beyond 15 December 2010. Further details are set out in note 2(b) of the financial report.
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.
0
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
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a
f
u
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31
directors’ report continued
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.
For the financial year ended 31 July 2010, the board has resolved:
• the company did not achieve the performance conditions for the cash component of the incentive program
and therefore no cash bonuses were paid to executives for the period ended 31 July 2010. Certain key executives
were paid a ‘retention’ payment in the financial period. This retention payment was made as a consequence
of the Sinochem proposal to acquire Nufarm. Whilst the Sinochem proposal did not ultimately proceed, it was
a fundamental condition of the proposal that all key executives were retained. It was a condition of the retention
payment that the executive remain in employment as at 30 August 2010, failing which the payment be repaid;
• the company did not achieve the performance condition for the share component of the incentive program and
therefore no shares will be delivered to executives for the period ended 31 July 2010; and
• there will be no increase in directors’ fees for the period ending 31 July 2011.
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.
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 benchmarked with reference to the 62nd percentile of similar sized companies within Mercer’s executive
remuneration database; and
0
1
0
2
t
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32
directors’ report continued
• an incentive program – upon achievement of the performance condition over six monthly periods, 50 per cent
of the incentive will be paid in cash. Upon achievement of the performance condition for the full year, 50 per
cent of the incentive 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 company’s 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 of the incentive program where there
has been above target achievement of the incentive program performance condition.
The performance condition for the incentive program is based on return on funds employed (ROFE) in the business.
Return is calculated on the group’s earnings before interest and taxation and adjusted for any non-operating items.
Funds employed are represented by shareholders’ funds plus total interest bearing debt.
The company believes ROFE is an appropriate performance condition for the following reasons:
• for many years the board has measured the company’s performance using an ‘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 for the financial period was 17.25 per cent.
At the end of each half year and financial year the board assesses company performance against target ROFE
to determine the percentage of any offer to be made under the cash component of the incentive program.
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 the share component of the incentive program; and
• reviews target ROFE for the incentive program for the following financial period.
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.
0
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
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a
f
u
N
33
directors’ report continued
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
Consequences of performance on shareholders’ wealth
Percentage (%) target ROFE achieved
<90
0
0
90
20
14
100
110
50
40
64
54
The executive remuneration policy is designed to align remuneration with the creation of shareholder wealth. The
incentive program links executive reward with company performance.
Target ROFE for the incentive program was not achieved for the year ended 31 July 2010 and therefore executives
received no bonuses under the cash component of the incentive program and no shares under the share component
of the incentive program. As set out above, key executives received a ‘retention’ payment related to the Sinochem
takeover proposal.
Set out below is a table which summarises the company’s performance and shareholder wealth statistics over the
last five years.
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
Dividend
rate
cents per share
Dividends
paid
$000
*Change in
share price
$
Share price
31 July
$
**Total
shareholder
return
%
2006
2007
2008
2009
2010
211.2
217.8
311.2
280.3
135.2
17.8
16.6
17.2
11.7
5.5
60.3
59.2
69.7
33.5
(15.0)
27
31
33
35
15
45,879
53,145
58,332
65,297
32,709
(1.37)
4.31
4.05
(5.86)
(7.04)
8.80
13.10
16.85
10.84
3.82
(2.3)
40
17
(41)
(37.8)
* This column reflects the change in share price from 1 August to 31 July in the relevant financial year.
** Source: Goldman Sachs JB Were – 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. The contracts for the managing director and key management personnel named in this report
were entered into prior to the announcement of legislation to change termination payment limits for executives.
0
1
0
2
t
r
o
p
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R
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a
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n
A
–
d
e
t
i
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L
m
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f
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N
34
directors’ report continued
Non-executive directors (NED)
The board’s policy with regard to non-executive directors remuneration is to position board remuneration at the
market median with comparable sized listed entities.
The board determines the fees payable to non-executive directors within the aggregate amount approved from
time to time by shareholders. At the company’s 2009 AGM, shareholders approved an aggregate of $1,600,000
per year (including superannuation costs).
Set out below are details of the annual fees payable at 31 July 2010 (excluding superannuation costs).
$
Chairman1
Deputy chairman1
Director board fees
Chairman audit committee
Chairman other board committees
Member audit committee
Member other board committees2
290,000
170,000
115,000
25,000
10,000
5,000
2,500
The board has resolved that there will be no increases in these fees for the period ending 31 July 2011.
1 The chairman and the deputy chairman 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.
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 most highly remunerated executives and relevant
group executives who receive the highest remuneration are:
0
1
0
2
t
r
o
p
e
R
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35
directors’ report continued
In AUD
Directors
Non-executive
KM Hoggard3 (Chairman)
GDW Curlewis (Deputy chairman)
Dr RJ Edgar4
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker
Executive director
DJ Rathbone (Managing director)
Executive officers
DA Pullan (Group general manager operations)
KP Martin (Chief financial officer)
B Benson (Group general manager marketing)
RF Ooms (Group general manager chemicals)
RG Reis (Group general manager corporate
strategy and external affairs)
DA Mellody (Group general manager global
marketing)
MJ Pointon (Group general manager innovation
and development)
R Heath (Company secretary)
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Short term
Salary and fees
$
Cash bonus
(vested2)
$
Non-monetary
benefits
$
Post-employment
Share based
payments
Other long term
Superannuation
Equity settled
Total
Total
$
remuneration
1
275,967
290,000
170,000
116,500
119,264
–
117,500
100,250
140,000
122,750
125,846
117,500
120,000
102,750
1,339,490
1,251,350
628,936
539,456
595,120
508,708
594,236
511,820
529,141
470,017
521,288
452,278
408,801
482,846
283,703
246,643
236,018
228,780
–
–
–
–
–
–
–
–
–
–
–
–
–
–
843,000
923,000
230,000
57,500
215,000
55,000
220,000
55,000
198,333
49,583
178,333
45,833
166,667
38,922
116,667
53,534
101,667
25,417
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34,432
64,029
27,454
25,890
28,594
27,063
24,339
29,859
12,064
13,595
34,877
39,401
–
–
26,691
28,761
25,495
26,630
Total
$
275,967
290,000
170,000
116,500
119,264
–
117,500
100,250
140,000
122,750
125,846
117,500
120,000
102,750
2,216,922
2,238,379
886,390
622,846
838,714
590,771
838,575
596,679
739,538
533,195
734,498
537,512
575,468
521,768
427,061
328,938
363,180
280,827
$
27,596
29,000
17,000
45,000
11,926
–
11,750
11,750
14,000
14,000
12,584
11,750
12,000
12,000
24,102
18,332
48,150
94,104
48,000
94,006
48,900
94,866
49,600
90,010
24,219
46,897
26,325
47,430
49,100
44,853
46,784
44,983
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,500
17,250
17,250
17,250
208,333
200,000
200,000
188,333
166,667
150,000
74,866
96,667
80,247
114,567
2,321,271
2,371,278
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,554
23,943
22,155
27,007
19,594
19,813
14,952
15,865
28,941
21,282
14,510
15,074
9,209
15,409
10,468
9,408
303,563
319,000
187,000
187,000
131,190
–
129,250
129,250
154,000
154,000
138,430
129,250
132,000
132,000
954,094
949,226
908,869
911,784
907,069
911,358
804,090
827,403
787,658
772,358
616,303
734,272
485,370
464,066
420,432
431,885
1 Represents total remuneration paid in the financial year.
2 The ‘retention’ payment made to key executives arising from the Sinochem takeover proposal is included in this item of cash
bonus. It was a condition of the retention payment that the key executives remain in employment until 30 August 2010 prior
to it vesting. If an executive ceased employment prior to 30 August 2010 then the retention payment was to be repaid in full.
All executives remained in employment as at 30 August 2010 and therefore all cash bonuses were fully vested.
3 KM Hoggard retired as chairman and a director on 13 July 2010.
4 Dr RJ Edgar was appointed a director on 1 July 2009.
0
1
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
36
Short term
Salary and fees
(vested2)
benefits
Cash bonus
Non-monetary
In AUD
Directors
Non-executive
KM Hoggard3 (Chairman)
GDW Curlewis (Deputy chairman)
Dr RJ Edgar4
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker
Executive director
DJ Rathbone (Managing director)
Executive officers
DA Pullan (Group general manager operations)
KP Martin (Chief financial officer)
B Benson (Group general manager marketing)
RF Ooms (Group general manager chemicals)
RG Reis (Group general manager corporate
strategy and external affairs)
DA Mellody (Group general manager global
marketing)
MJ Pointon (Group general manager innovation
and development)
R Heath (Company secretary)
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
1,339,490
1,251,350
$
275,967
290,000
170,000
116,500
119,264
–
117,500
100,250
140,000
122,750
125,846
117,500
120,000
102,750
628,936
539,456
595,120
508,708
594,236
511,820
529,141
470,017
521,288
452,278
408,801
482,846
283,703
246,643
236,018
228,780
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
843,000
923,000
230,000
57,500
215,000
55,000
220,000
55,000
198,333
49,583
178,333
45,833
166,667
38,922
116,667
53,534
101,667
25,417
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34,432
64,029
27,454
25,890
28,594
27,063
24,339
29,859
12,064
13,595
34,877
39,401
–
–
26,691
28,761
25,495
26,630
1 Represents total remuneration paid in the financial year.
2 The ‘retention’ payment made to key executives arising from the Sinochem takeover proposal is included in this item of cash
bonus. It was a condition of the retention payment that the key executives remain in employment until 30 August 2010 prior
to it vesting. If an executive ceased employment prior to 30 August 2010 then the retention payment was to be repaid in full.
All executives remained in employment as at 30 August 2010 and therefore all cash bonuses were fully vested.
3 KM Hoggard retired as chairman and a director on 13 July 2010.
4 Dr RJ Edgar was appointed a director on 1 July 2009.
directors’ report continued
Post-employment
Share based
payments
Other long term
Total
$
Superannuation
$
Equity settled
$
275,967
290,000
170,000
116,500
119,264
–
117,500
100,250
140,000
122,750
125,846
117,500
120,000
102,750
2,216,922
2,238,379
886,390
622,846
838,714
590,771
838,575
596,679
739,538
533,195
734,498
537,512
575,468
521,768
427,061
328,938
363,180
280,827
27,596
29,000
17,000
45,000
11,926
–
11,750
11,750
14,000
14,000
12,584
11,750
12,000
12,000
24,102
18,332
48,150
94,104
48,000
94,006
48,900
94,866
49,600
90,010
24,219
46,897
26,325
47,430
49,100
44,853
46,784
44,983
–
–
–
25,500
–
–
–
17,250
–
17,250
–
–
–
17,250
–
–
–
208,333
–
200,000
–
200,000
–
188,333
–
166,667
–
150,000
–
74,866
–
96,667
Total
Total
1
remuneration
$
303,563
319,000
187,000
187,000
131,190
–
129,250
129,250
154,000
154,000
138,430
129,250
132,000
132,000
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
80,247
114,567
2,321,271
2,371,278
19,554
23,943
22,155
27,007
19,594
19,813
14,952
15,865
28,941
21,282
14,510
15,074
9,209
15,409
10,468
9,408
954,094
949,226
908,869
911,784
907,069
911,358
804,090
827,403
787,658
772,358
616,303
734,272
485,370
464,066
420,432
431,885
0
1
0
2
t
r
o
p
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A
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37
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 or
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 39 and forms part of the directors’ report for the
financial year ended 31 July 2010.
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.
DG McGauchie
Director
DJ Rathbone
Director
Melbourne
28 September 2010
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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 2010 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
BW Szentirmay
Partner
Melbourne
28 September 2010
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39
income statement
for the year ended 31 July 2010
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
Operating result
Note
7
19
Consolidated
2010
$000
2009
$000
2,168,630
(1,698,717)
2,677,083
(2,121,446)
469,913
555,637
8,641
(217,617)
(156,285)
(38,529)
47
11,054
(210,914)
(162,018)
(45,375)
3,080
66,170
151,464
Net non-cash revaluation profit/(loss) on proceeds from
Nufarm Step-up Securities financing
6
3,323
(431)
Profit before net financing costs and income tax
69,493
151,033
Financial income
Financial expenses
Net financing costs
10
10
6,014
(62,790)
(56,776)
8,177
(100,253)
(92,076)
Profit before income tax
12,717
58,957
Income tax (expense)/benefit
11
(35,369)
21,585
Profit/(loss) for the period from continuing operations
(22,652)
80,542
Attributable to:
Equity holders of the company
Non-controlling interest
Profit/(loss) for the period
Earnings per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Continuing operations
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
(23,990)
1,338
79,877
665
(22,652)
80,542
30
30
30
30
(15.0)
(15.0)
(15.0)
(15.0)
33.5
33.5
33.5
33.5
The income statement is to be read in conjunction with the attached notes.
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40
statement of comprehensive income
for the year ended 31 July 2010
Net profit/(loss) for the period
Other comprehensive income
Foreign exchange translation differences for foreign operations
Actuarial gains/(losses) on defined benefit plans
Income tax on share issue costs recognised directly in equity
Other comprehensive income/(loss) for the period,
net of income tax
Note
Consolidated
2010
$000
2009
$000
(22,652)
80,542
(58,698)
(2,280)
777
(19,788)
(8,454)
1,683
(60,201)
(26,559)
Total comprehensive income/(loss) for the period
(82,853)
53,983
Attributable to:
Equity holders of the company
Non-controlling interest
(82,875)
22
53,895
88
Total comprehensive income/(loss) for the period
(82,853)
53,983
The amounts recognised directly in equity are disclosed net of tax – see note 11 for tax effect.
The statement of comprehensive income is to be read in conjunction with the attached notes.
0
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41
balance sheet
as at 31 July 2010
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Investments in equity accounted investees
Other investments
Deferred tax assets
Property, plant and equipment
Intangible assets
Other financial assets
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
Non-controlling interests
TOTAL EQUITY
The balance sheet is to be read in conjunction with the attached notes.
Note
15
16
17
18
13
16
19
20
18
22
23
21
15
24
25
26
18
28
24
25
18
26
Consolidated
2010
$000
188,741
852,986
553,432
42,461
7,677
2009
$000
84,312
787,760
797,383
48,973
–
1,645,297
1,718,428
19,342
11,964
6,879
150,323
413,235
846,759
43
33,125
12,468
7,442
194,960
435,468
848,739
967
1,448,545
1,533,169
3,093,842
3,251,597
28,036
393,868
766,128
22,330
5,565
11,763
35,669
407,421
584,692
20,671
17,772
26,091
1,227,690
1,092,316
15,849
13,633
47,890
38,889
116,261
17,695
402,327
64,215
43,105
527,342
1,343,951
1,619,658
1,749,891
1,631,939
1,058,578
(71,704)
515,242
1,502,116
246,932
843
812,844
(13,006)
584,348
1,384,186
246,932
821
1,749,891
1,631,939
0
1
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2
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statement of cash flows
for the year ended 31 July 2010
Consolidated
2010
$000
2009
$000
Note
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
Net cash from operating activities
38
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of businesses and investments
Payments for plant and equipment
Payment for investments
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 issue proceeds (net of costs)
Shares issue proceeds under share purchase plan
Proceeds from borrowings
Repayment of borrowings
Repayment of receivables securitisation program
Distribution to Nufarm Step-up Security holders
Dividends paid
Net financing cash flows
Net increase (decrease) in cash and cash equivalents
Cash at the beginning of the year
Exchange rate fluctuations on foreign cash balances
Cash and cash equivalents at 31 July
15
The statement of cash flows is to be read in conjunction with the attached notes.
2,160,601
(1,894,590)
2,874,917
(2,799,092)
266,011
6,014
292
(62,790)
(14,916)
194,611
1,498
5,014
(45,918)
–
(43,628)
75,825
8,177
423
(100,252)
(37,298)
(53,125)
284
12,821
(54,317)
(8,321)
(14,454)
(45,486)
(48,257)
(128,520)
(112,244)
245,881
–
48,784
(201,930)
–
(14,469)
(34,025)
44,241
110,332
48,643
1,730
160,705
294,764
35,691
56,022
(43,799)
(94,728)
(21,908)
(53,208)
172,834
7,465
38,302
2,876
48,643
0
1
0
2
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43
statement of changes in equity
for the year ended 31 July 2010
Consolidated
Share
capital
$000
Translation
reserve
$000
Capital profit
reserve
$000
Other
reserve
$000
Retained
earnings
$000
Nufarm Step-up
Securities
$000
Total
$000
Non-controlling
interest
$000
Total
equity
$000
Balance at 1 August 2008
453,824
(26,805)
33,627
3,046
593,558
246,932
1,304,182
1,036
1,305,218
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares 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
Dividend reinvestment plan
Tax benefit on share issue costs
Profit for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
Non-controlling interest acquired
–
–
3,078
784
294,764
35,691
7,975
12,705
1,683
–
–
–
–
(19,828)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2009
810,504
(46,633)
33,627
2,340
584,348
246,932
1,631,118
821
1,631,939
Balance at 1 August 2009
810,504
(46,633)
33,627
2,340
584,348
246,932
1,631,118
821
1,631,939
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares issued to employees
Accrual and issue of shares under global share plan
Shares issued under institutional offer (net of costs)
Shares issued under retail offer (net of costs)
Tax benefit on share issue costs
Profit/(loss) for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
–
–
699
–
140,951
104,930
777
–
–
–
(58,698)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2010
1,057,861
(105,331)
33,627
717
515,242
246,932
1,749,048
843
1,749,891
(8,454)
(706)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,623)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
79,877
(65,297)
(15,336)
–
(2,280)
(23,990)
(32,709)
(10,127)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(19,828)
(8,454)
3,078
78
294,764
35,691
7,975
12,705
1,683
79,877
(65,297)
(15,336)
–
(58,698)
(2,280)
699
(1,623)
140,951
104,930
777
(23,990)
(32,709)
(10,127)
48
79,925
(303)
40
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(19,788)
(8,454)
3,078
78
294,764
35,691
7,975
12,705
1,683
(65,297)
(15,336)
(303)
(58,698)
(2,280)
699
(1,623)
140,951
104,930
777
(32,709)
(10,127)
22
(23,968)
0
1
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statement of changes in equity continued
for the year ended 31 July 2010
Consolidated
Share
capital
$000
Translation
Capital profit
reserve
$000
reserve
$000
Other
reserve
$000
Retained
earnings
$000
Nufarm Step-up
Securities
$000
Total
$000
Non-controlling
interest
$000
Total
equity
$000
Balance at 1 August 2008
453,824
(26,805)
33,627
3,046
593,558
246,932
1,304,182
1,036
1,305,218
–
–
–
(706)
–
–
–
–
–
–
–
–
–
–
(8,454)
–
–
–
–
–
–
–
79,877
(65,297)
(15,336)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(19,828)
(8,454)
3,078
78
294,764
35,691
7,975
12,705
1,683
79,877
(65,297)
(15,336)
–
40
–
–
–
–
–
–
–
–
(19,788)
(8,454)
3,078
78
294,764
35,691
7,975
12,705
1,683
48
79,925
–
–
(303)
(65,297)
(15,336)
(303)
Balance at 31 July 2009
810,504
(46,633)
33,627
2,340
584,348
246,932
1,631,118
821
1,631,939
Balance at 1 August 2009
810,504
(46,633)
33,627
2,340
584,348
246,932
1,631,118
821
1,631,939
–
–
–
(1,623)
–
–
–
–
–
–
–
(2,280)
–
–
–
–
–
(23,990)
(32,709)
(10,127)
–
–
–
–
–
–
–
–
–
–
(58,698)
(2,280)
699
(1,623)
140,951
104,930
777
(23,990)
(32,709)
(10,127)
–
–
–
–
–
–
–
(58,698)
(2,280)
699
(1,623)
140,951
104,930
777
22
(23,968)
–
–
(32,709)
(10,127)
Balance at 31 July 2010
1,057,861
(105,331)
33,627
717
515,242
246,932
1,749,048
843
1,749,891
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares 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
Dividend reinvestment plan
Tax benefit on share issue costs
Profit for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
Non-controlling interest acquired
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares issued to employees
Accrual and issue of shares under global share plan
Shares issued under institutional offer (net of costs)
Shares issued under retail offer (net of costs)
Tax benefit on share issue costs
Profit/(loss) for the period
Dividends paid to shareholders
Distributions to Nufarm Step-up Security holders
–
–
3,078
784
294,764
35,691
7,975
12,705
1,683
–
–
–
–
–
–
–
–
–
–
699
140,951
104,930
777
(19,828)
(58,698)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0
1
0
2
t
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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 2010 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 complies
with International Financial Reporting Standards (AIFRS) and interpretations adopted by the International Accounting
Standards Board (IASB).
The consolidated financial statements were authorised for issue by the board of directors on 28 September 2010.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for derivative
financial instruments, which are measured at fair value. The methods used to measure fair values are discussed
further in note 4.
The main bilateral bankers to the group are parties to a deed of negative pledge dated 24 October 1996 (the
‘deed’) (last amendment 30 January 2009), which contains the covenants and other terms common to all
bankers. These covenants include an interest cover covenant, a net debt to EBITDA covenant and a gearing
covenant. At 31 July 2010, the group was not in compliance with the first two covenants.
Despite there being a breach of certain banking covenants that were applicable at 31 July 2010, the group
has prepared its financial report on a going concern basis, which contemplates the realisation of assets and
extinguishment of liabilities in the ordinary course of business, as the directors and management are confident
that there will be sufficient funds available to meet the group’s financial obligations until new longer term banking
arrangements are established.
As a consequence of these covenant breaches, the main bankers to the group had the right, but not the obligation,
to request immediate repayment of all amounts borrowed under the deed which as at 31 July 2010 totalled
$701 million. Accordingly, all borrowings have been classified as current in the balance sheet.
Subsequent to 31 July 2010, the group obtained written waivers from all parties to the deed in respect to these
covenant breaches. At the same time, the parties to the deed confirmed that any undrawn facility amounts under
the deed were no longer available to the group.
Subsequent to 31 July, the group has contractually obtained additional secured funding totalling $176 million for
the period through to 15 December 2010. Of this amount, $55 million is immediately available, with the balance
available on satisfaction of normal terms and conditions, and also the following:
• provision by the group of a strategic plan and a management plan;
• provision of a financial advisor’s report that is satisfactory to the lenders;
• providing security to the lenders within an acceptable time period;
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notes to the financial statements continued
2. Basis of preparation (continued)
(b) Basis of measurement (continued)
• the achievement of forecast profitability and cash flow targets will be subject to regular review by the financial
advisor. Variances outside agreed levels have to be approved by a majority of lenders (by value); and
• the adherence to newly established covenant levels.
The agreements provide the lenders with certain rights and impose certain obligations and restrictions on the
group, with the exception of where a majority of lenders (by value) otherwise provide their consent. These
obligations and restrictions include:
• restrictions on the disposal of assets; and
• progress against the strategic plan and the management plan to be reported in writing.
The directors and management are confident that the group can comply with the above obligations and restrictions.
The agreements provide each individual lender with the ability to revoke its waiver and request immediate repayment
of total indebtedness to that lender in certain circumstances, including in the event that adverse variances between
actual and forecast EBIT and cash flows exceed specified limits. Based on current forecasts, the directors and
management are confident that these limits will not be breached for the duration of the agreements.
The agreements provide a majority of lenders (by value) with the right to revoke their waivers and request
immediate repayment of total indebtedness to that lender in certain circumstances, including:
• if certain ratio requirements in respect of interest coverage and cash flow are not satisfied;
• if the lenders are not satisfied with the strategic plan or the management plan prepared by the group,
or are not satisfied with the progress in implementing the plans; and
• if adverse findings are reported by the financial advisor as part of the conditions precedent to drawing down
new loans.
Based on current forecasts, intended actioning of the plans referred to above and the anticipated findings of
the lenders’ financial advisor, the directors and management are confident that such events are not expected
to occur for the duration of the agreement.
The group is currently evaluating its options regarding the nature and term of a new financing facility beyond
15 December 2010. This facility may take the form of a secured syndicated facility or a similar arrangement.
Management and the directors are confident that new banking arrangements on mutually agreeable terms
and conditions can be established prior to this date.
(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 in conformity with AASBs 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 and in any future periods affected.
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notes to the financial statements continued
2. Basis of preparation (continued)
(d) Use of estimates and judgements (continued)
Information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant impact on the amount recognised in the financial statements are
described below.
(i) Business combinations
Fair valuing assets and liabilities acquired in a business combination involves making assumptions about the
timing of cash inflows and outflows, growth assumptions, discount rates and cost of debt. Refer to note 14
for details of acquisitions made during the period.
(ii) Impairment testing
The group determines whether goodwill and intangibles with indefinite useful lives are impaired on an annual
basis. This requires an estimation of the recoverable amount of the cash-generating units, using a value in use
discounted cash flow methodology. The estimation of future cash flows requires management to make significant
estimates and judgements concerning the identification of impairment indicators, earnings before interest and
tax, growth rates, applicable discount rates and useful lives. Further details can be found in note 23 on intangibles.
(iii) Income taxes
The group is subject to income taxes in Australia and overseas jurisdictions. There are many transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain.
Where the final tax outcome of these matters is different from the amounts initially recorded, such differences
will impact the current and deferred tax provisions in the period in which the tax determination is made. Deferred
tax assets are recognised only to the extent that it is probable that future taxable profits will be available against
which the assets can be utilised. The assessment of probability involves estimation of a number of factors
including future taxable income.
(iv) Defined benefit plans
A liability in respect of defined benefit pension plans is recognised in the balance sheet, and is measured as
the present value of the defined benefit obligation at the reporting date less the fair value of the pension plan’s
assets. The present value of the defined benefit obligation is based on expected future payments which arise
from membership of the fund at the reporting date, calculated annually by independent actuaries. Consideration
is given to expected future salary levels, experience of employee departures and periods of service. Refer note
26 for details of the key assumptions used in determining the accounting for these plans.
(v) Valuation of inventories
Inventories of finished goods, raw materials and work in progress are valued at lower of cost and net realisable
value. The net realisable value of inventories is the estimated market price at the time the product is expected
to be sold.
(vi) Valuation of receivables
Nufarm and a major supplier are currently in dispute with respect to a claim that the supplier is liable for a
relevant share of losses attributable to the sale of product during the 2009 and 2010 financial years.
The parties entered into an agreement in 2002 that provides for the sharing of costs and proceeds associated
with Nufarm’s sale of products. Nufarm’s claim, for approximately $52.7 million (2009: $39.9 million), is being
contested by the supplier. This matter is currently subject to arbitration proceedings. Nufarm is confident it will
recover all of this amount and will vigorously pursue its claim.
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notes to the financial statements continued
2. Basis of preparation (continued)
(e) Changes in accounting policies
Overview
Starting as of 1 August 2009, the group has changed its accounting policies in the following areas:
• accounting for business combinations;
• accounting for acquisitions of non-controlling interests;
• accounting for borrowing costs;
• determination and presentation of operating segments; and
• presentation of financial statements.
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.
(a) Basis of consolidation
(i) Business combinations
Change in accounting policy
The group has adopted revised AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and
Separate Financial Statements (2008) for business combinations occurring in the financial year starting 1 August
2009. All business combinations occurring on or after 1 August 2009 are accounted for by applying the acquisition
method. The group has applied the acquisition method for the business combinations disclosed in note 14. The
change in accounting policy is applied prospectively and had no material impact on earnings per share.
For every business combination, the group identifies the acquirer, which is the combining entity that obtains
control of the other combining entities or businesses. Control is the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing control, the group takes into consideration
potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred
to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is
transferred from one party to another.
Measuring goodwill
The group measures goodwill as the fair value of the consideration transferred including the recognised amount
of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed, all measured as of the acquisition date.
Contingent liabilities
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a
present obligation and arises from a past event, and its fair value can be measured reliably.
Non-controlling interest
The group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the
acquiree.
Transaction costs
Transaction costs that the group incurs in connection with a business combination, such as finder’s fees, legal
fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(ii) Accounting for acquisitions of non-controlling interests
The group has adopted AASB 3 Business Combinations (2008) and AASB 127 Consolidated and Separate
Financial Statements (2008) for acquisitions of non-controlling interests occurring in the financial year starting
1 August 2009. Under the new accounting policy, acquisitions of non-controlling interests are accounted for as
transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a
result of such transactions. Previously, goodwill was recognised on the acquisition of a non-controlling interest in
a subsidiary, and that represented the excess of the cost of the additional investment over the carrying amount
of the interest in the net assets acquired at the date of exchange. The change in accounting policy was applied
prospectively and had no impact on earnings per share.
(iii) Subsidiaries
Subsidiaries are entities controlled by the group. 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 where necessary to align them with the policies adopted
by the group.
(iv) Investments in associates and jointly controlled entities (equity accounted investees)
Associates are those entities in which the group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the group holds between 20 and 50 per cent
of the voting power of another entity. Jointly controlled entities are those entities over whose activities the group
has joint control, established by contractual agreement and requiring unanimous consent for strategic financial
and operating decisions.
Investments in 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, including any long
term investments, 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.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised 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.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(b) Foreign currency
(i) 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. Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency gains
and losses are included in cost of sales as they mostly relate to the purchase of raw materials from overseas
suppliers.
(ii) 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 differences are recognised in other comprehensive income. Since 1 August 2004, the group’s
date of transition to AIFRS, 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 the FCTR is transferred
to profit or loss as part of the profit or loss on disposal.
When the settlement of a monetary item receivable or payable to a foreign operation is neither planned or likely
in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to
form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are
presented within equity in the FCTR.
(c) Financial instruments
(i) Non-derivative financial assets
The group initially recognises loans and receivables and deposits on the date that they are originated. All other
financial assets (including assets designated at fair value through profit or loss) are recognised initially on the
trade date at which the group becomes a party to the contractual provisions of the instrument.
The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risk and rewards of ownership of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only
when, the group has the legal right to offset the amounts and intends to settle on a net basis or to realise the
asset and settle the liability simultaneously.
The group has the following non-derivative financial assets: financial assets at fair value through profit or loss,
loans and receivables and available-for-sale financial assets.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(i) Non-derivative financial assets (continued)
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated
as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the group
manages such investments and makes purchases and sale decisions based on their fair value in accordance with
the group’s documented risk management or investment strategy. Upon initial recognition attributable transaction
costs are recognised in profit and loss when incurred. Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in profit or loss.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus any direct attributable transaction costs. Subsequent
to initial recognition loans and receivables are measured at amortised cost using the effective interest method,
less any impairment losses. Loans and receivables comprise trade and other receivables.
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less. 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 purposes of the statement of cash flows.
(ii) Non-derivative financial liabilities
The group initially recognises debt securities and subordinated liabilities on the date they are originated. All
other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially
on the trade date at which the group becomes a party to the contractual provisions of the instrument. The group
derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial
assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the
group has the legal right to offset the amounts and intends to settle on a net basis or to realise the asset and
settle the liability simultaneously.
The group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts and trade
and other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost
using the effective interest method.
(iii) 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. Dividends on ordinary shares are
recognised as a liability in the period in which they are declared.
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.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(iv) Derivative financial instruments, including hedge accounting
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 as
incurred. Subsequent to initial recognition, derivatives continue to be measured at fair value, with changes
therein accounted for in profit or loss.
Cash flow hedges
The group has not entered into any cash flow hedging transactions in the current or comparative periods.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses.
Cost includes expenditure that is 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, and capitalised borrowing costs (see below). Purchased software that is
integral to the functionality of the related equipment is capitalised as part of that equipment.
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 in
general and administrative expenses.
Change in accounting policy
In respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is
on or after 1 August 2009, the group capitalises borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset as part of the cost of that asset. Previously the group immediately recognised all
borrowing costs as an expense. This change in accounting policy was due to the adoption of AASB 123 Borrowing
Costs (2007) and in accordance with the transitional provisions of that standard, comparative figures have not
been restated. The change in accounting policy had no material impact on earnings per share.
(ii) 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 carrying amount of the replaced part is derecognised. The costs of day-to-day
servicing of property, plant and equipment are recognised in profit or loss as incurred.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value.
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, since this most closely reflects the expected pattern of consumption of
the future economic benefits embodied in the asset. Leased 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
(i) Goodwill
Change in accounting policy
As from 1 August 2009, the group has adopted the revised AASB 3 Business Combinations (2008) and the amended
AASB 127 Consolidated and Separate Financial Statements (2008). Revised AASB 3 and amended AASB 127 have
been applied prospectively to business combinations with an acquisition date on or after 1 August 2009.
The change in accounting policy had no material impact on earnings per share. For details on the initial recognition
and measurement of goodwill related to business combinations that occurred during the financial year ended
31 July 2010, see note 14.
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as
equity holders and therefore no goodwill is recognised as a result of such transactions.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the
carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such
an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the
equity accounted investee.
(ii) 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
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notes to the financial statements continued
3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(ii) Research and development (continued)
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 and capitalised borrowing costs. 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 accumulated
impairment losses.
(iii) 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. 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.
(iv) Other intangible assets
Other intangible assets that are acquired by the group, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses.
(v) 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.
(vi) Amortisation
Amortisation is calculated over the cost of the asset, less its residual asset. 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 intangible
assets from the date that they are available for use, since this most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset. 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
Amortisation methods, useful lives and residual values are reassessed at each reporting date.
(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 in 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
(i) Financial assets
A financial asset, not carried at fair value through profit or loss, is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had
a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
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.
(ii) 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, then 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 each year at 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 ‘cash-generating unit’). 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
estimated 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)
(h) Impairment (continued)
(ii) Non-financial assets (continued)
Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately,
and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate
is tested for impairment as a single asset when there is objective evidence that the investment in an associate
may be impaired.
(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
(i) 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 employee benefit expense in profit or loss in the periods during
which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in future payments is available.
(ii) 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 plan. In order to calculate the present value of economic benefits,
consideration is given to any minimum funding requirements that may apply to any plan in the group. An economic
benefit is available to the group if it is realisable during the life of the plan, or on settlement of the plan liabilities.
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 other
comprehensive income.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(j) Employee benefits (continued)
(iii) 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 future 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.
(iv) 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. If benefits are payable more than twelve months after the reporting period, then they
are discounted to their present value.
(v) Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
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.
(vi) 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 27 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 and the risks specific to the liability. The unwinding
of the discount is recognised as finance cost.
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 losses are not
provided for.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(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 persuasive evidence exists, usually in
the form of an executed sales agreement, that 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. If it is probable that discounts will be granted and the amount can be measured reliably,
then the discount is recognised as a reduction of revenue as the sales are recognised.
(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 lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At the inception of an arrangement, the group determines whether such an arrangement is or contains a lease.
A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified
asset. An arrangement conveys the right to use the asset if the arrangement conveys to the group the right
to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the group
separates payments and other considerations required by such an arrangement into those for the lease and those
for other elements on the basis of their relative fair values. If the group concludes for a finance lease that it is
impracticable to separate the payments reliably, an asset and liability are recognised at an amount equal to the
fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed
finance charge on the liability is recognised using the group’s incremental borrowing rate.
(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 classified as ‘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. Borrowing costs that are not directly attributable to the acquisition, construction
or production of a qualifying asset are recognised in profit or loss using the effective interest rate method.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(o) Income tax
Income tax expense comprises current and deferred tax. Current and deferred taxes are recognised in profit
or loss except to the extent that it relates to a business combination, or items recognised directly in equity
or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for
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 or loss, 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 for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised. The group
will not recognise deferred tax assets related to tax losses where the estimated recovery period extends beyond
eight years, even if there is no statutory time limit on the recoupment of these losses. The effect of this change
is identified in note 6. 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 cash dividends are recognised at the same time as the
liability to pay the related dividend is recognised. The group does not distribute non-cash assets as dividends to
its shareholders.
(i) 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. 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.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(o) Income tax (continued)
(i) Tax consolidation (continued)
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.
(ii) 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.
(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.
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notes to the financial statements continued
3. Significant accounting policies (continued)
(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
Determination and presentation of operating segments
As of 1 August 2009, the group determines and presents operating segments based on the information that internally
is provided to the chief executive officer (CEO), who is the group’s chief operating decision maker. This change
in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously, operating segments were
determined and presented in accordance with AASB 114 Segment Reporting. The new accounting policy in
respect of segment reporting disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the transitional requirements of such
standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no
impact on earnings per share.
An operating segment is a component of the group that engages in business activities from which it may earn
revenue and incur expenses, including revenues and expenses that relate to transactions with any of the group’s
other components. All operating segments’ operating results are regularly reviewed by the group’s CEO to make
decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the CEO 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) Presentation of financial statements
The group applies revised AASB 101 Presentation of Financial Statements (2007), which became effective for the
financial year beginning after 1 January 2009. As a result, the group presents in the consolidated statement of
changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the
consolidated statement of comprehensive income.
Comparative information has been re-presented so that it is also in conformity with the revised standard. Since
the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
(u) 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 2010, but have
not been applied in preparing this financial report:
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notes to the financial statements continued
3. Significant accounting policies (continued)
(u) New standards and interpretations not yet adopted (continued)
• AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets
resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and
Measurement. AASB 9 will become mandatory for the group’s 31 July 2014 financial statements. Retrospective
application is generally required, although there are exceptions, particularly if the entity adopts the standard for
the year ended 31 July 2012 or earlier. The group has not yet determined the potential effect of the standard.
• AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning
of the definition of a related party and provides a partial exemption from the disclosure requirements for
government-related entities. The amendments, which will become mandatory for the group’s 31 July 2012
financial statements, are not expected to have any impact on the financial statements.
• AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements
Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement
purposes. The amendments, which become mandatory for the group’s 31 July 2011 financial statements, are
not expected to have a significant impact on the financial statements.
• AASB 2009-8 Amendments to Australian Accounting Standard – Group Cash-settled Share-based Payment
Transactions resolves diversity in practice regarding the attribution of cash-settled share-based payments
between different entities within a group. As a result of the amendments AI 8 Scope of AASB 2 and AI AASB 2
– Group and Treasury Share Transactions will be withdrawn from the application date. The amendments, which
become mandatory for the group’s 31 July 2011 financial statements, are not expected to have a significant
impact on the financial statements.
• AASB 2009-10 Amendments to Australian Accounting Standard – Clarification of Rights Issue [AASB 132]
(October 2010) clarify that rights, options or warrants to acquire a fixed number of an entity’s own equity
instruments for a fixed amount in any currency are equity instruments if the entity offers the rights, options
or warrants pro rata to all existing owners of the same class of its own non-derivative equity instruments.
The amendments, which will become mandatory for the group’s 31 July 2011 financial statements, are not
expected to have a significant impact on the financial statements.
• AASB 2009-14 Amendments to Australian Accounting Standard – Prepayments of a Minimum Funding Requirement
– AASB 14 make amendments to Interpretation 14 AASB 119 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements removing an unintended consequence arising from the treatment of the prepayments
of future contributions in some circumstances when there is a minimum funding requirement. The amendments
will become mandatory for the group’s 31 July 2012 financial statements, with retrospective application
required. The amendments are not expected to have any impact on the financial statements.
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments addresses the accounting by an entity when
the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor
of the entity to extinguish all or part of the financial liability. IFRIC 19 will become mandatory for the group’s
31 July 2011 financial statements. The group has not yet determined the potential effect of the amendment.
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, and willingly. The market value of items of plant,
equipment, fixtures and fittings is based on the market approach and cost approaches quoted market prices
for similar items when available and replacement cost when appropriate.
(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 inventories 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 inventories.
(iv) 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. This fair value is determined for disclosure purposes.
(v) 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.
(vi) 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.
5. Operating segments
Segment information is presented in respect of the group’s business and geographic segments. The primary
format, geographic segments, is 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. The North America region includes Canada, US, Mexico and the Central
American countries. The South America region includes Brazil, Argentina, Chile, Uruguay, Paraguay, Bolivia
and the Andean countries.
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notes to the financial statements continued
5. Operating segments (continued)
Information regarding the results of each reportable segment is included below. Performance is measured based
on segment profit as included in the internal management reports that are reviewed by the group’s CEO. Segment
profit is used to measure performance as management believes that such information is the most relevant in
evaluating the results of each segment. Segment revenue is based on the geographic location of customers.
Segment results include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis. The corporate segment comprises mainly corporate expenses, interest-bearing loans,
borrowings and corporate assets.
Comparative segment information has been presented in conformity with the requirement of AASB 8 Operating
Segments.
Geographic segments 2010
Revenue
Total segment revenue
Results
Operating earnings
Exchange gains/(losses)
Share of net profit/(losses)
of associates
Australasia
$000
North
South
Europe America America Corporate Consolidated
$000
$000
$000
$000
$000
798,875 474,590
553,653
341,512
–
2,168,630
92,248
(4,516)
54,422
408
34,468
(1,244)
(15,658)
1,051
(26,055)
8
139,425
(4,293)
1,476
(1,449)
20
–
–
47
Segment result
89,208
53,381
33,244
(14,607)
(26,047)
135,179
Material items of income/
(expense) (note 6)
Net non-cash revaluation
profit/(loss) on proceeds
from Nufarm Step-up
Securities financing (note 6)
Segment result including
material items
Net financing costs
Income tax benefit/(expense)
Profit/(loss) for the period
Assets
Segment assets
Investment in associates
Total assets
Liabilities
Segment liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation
Amortisation
(11,446)
(26,217)
(30,970)
(376)
–
(69,009)
–
–
–
–
3,323
3,323
77,762
27,164
2,274
(14,983)
(22,724)
739,492 717,133
180
11,496
483,768
288
687,515
–
453,970
–
69,493
(56,776)
(35,369)
(22,652)
3,081,878
11,964
3,093,842
155,381 156,270
41,865
99,501
890,934
1,343,951
1,343,951
16,238
18,025
4,415
14,703
15,232
6,289
32,047
5,632
2,878
4,740
3,204
1,873
–
–
–
67,728
42,093
15,455
0
1
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2
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notes to the financial statements continued
5. Operating segments (continued)
Geographic segments 2009
Revenue
Total segment revenue
Results
Operating earnings
Exchange gains/(losses)
Share of net profit/(losses)
of associates
Australasia
$000
North
South
Europe America America Corporate Consolidated
$000
$000
$000
$000
$000
850,211 636,928
775,375
414,569
–
2,677,083
103,852 125,939
(9,028)
13,514
109,664
2,465
(5,118)
(35,009)
(31,226)
530
303,111
(27,528)
1,100
1,934
46
–
–
3,080
Segment result
118,466 118,845
112,175
(40,127)
(30,696)
278,663
Material items of income/
(expense) (note 6)
Net non-cash revaluation
profit/(loss) on proceeds
from Nufarm Step-up
Securities financing
Segment result including
material items
Net financing costs
Income tax benefit/(expense)
Profit/(loss) for the period
Assets
Segment assets
Investment in associates
Total assets
Liabilities
Segment liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation
Amortisation
–
(18,259)
(103,824)
(753)
(4,363)
(127,199)
–
–
–
–
(431)
(431)
118,466 100,586
8,351
(40,880)
(35,490)
151,033
808,444 852,219
1,812
10,656
580,115
–
653,988
–
344,363
–
(92,076)
21,585
80,542
3,239,129
12,468
3,251,597
162,760 221,321
55,593
75,310 1,104,674
1,619,658
1,619,658
32,408
18,960
5,360
45,163
21,177
8,338
21,570
5,841
2,558
6,541
2,434
1,294
–
–
–
105,682
48,412
17,550
0
1
0
2
t
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notes to the financial statements continued
6. Items of material income and expense
The following material items of income/(expense)
were included in the period result:
Cost of sales items
Net realisable value adjustment – year end inventories
Net realisable value adjustment – product sold
Restructuring costs
General and administrative expense items
Competition inquiries (AH Marks)
Provision for non-collectability of sale proceeds
Due diligence costs
Restructuring costs and sale of equity investment
Consolidated
Consolidated
2010
$000
Pre-tax
2010
$000
After-tax
2009
$000
Pre-tax
2009
$000
After-tax
–
(44,654)
(15,323)
–
(30,074)
(10,713)
(67,611)
(37,770)
(16,421)
(40,794)
(22,662)
(10,989)
(59,977)
(40,787)
(121,802)
(74,445)
(569)
(2,521)
(5,464)
(478)
(9,032)
(432)
(1,690)
(4,116)
(321)
(6,559)
(10,567)
(2,564)
(1,859)
9,593
(10,182)
(1,709)
(1,364)
8,247
(5,397)
(5,008)
Material items included in operating result
(69,009)
(47,346)
(127,199)
(79,453)
Disclosed on face of income statement
Net non-cash revaluation profit/(loss) on proceeds
from Nufarm Step-up Securities financing
Income tax expense
Derecognition of tax losses
3,323
2,326
(431)
(302)
–
(37,536)
–
–
Items of material income and expense
(65,686)
(82,556)
(127,630)
(79,755)
7. Other income
Dividends received
Rental income
Sundry income
Total other income
Consolidated
2010
$000
52
236
8,353
8,641
2009
$000
–
383
10,671
11,054
0
1
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
67
notes to the financial statements continued
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
Exchange gains/(losses)
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
Annual leave expense
Long-service leave expense
Restructuring expense – Europe
Personnel expenses
The restructuring expense in Europe represents the redundancy costs
associated with the shut down of the Belvedere UK site and two manufacturing
units at the Gaillon plant in France. The restructuring costs are included in the
material items in note 6.
10. Finance income and expense
Interest income – external
Financial income
Interest expense – external
Lease expense – finance charges
Costs of securitisation program
Financial expenses
Net financing costs
Consolidated
2010
$000
2009
$000
(57,548)
(375)
(453)
(4,293)
(65,962)
(4,241)
(648)
(27,528)
(179,411)
(31,146)
(10,567)
(3,106)
(6,451)
(1,690)
(7,937)
(203,969)
(37,214)
(10,847)
(457)
(6,319)
(1,886)
(23,403)
(240,308)
(284,095)
6,014
6,014
(61,225)
(1,565)
–
8,177
8,177
(98,796)
(1,887)
430
(62,790)
(100,253)
(56,776)
(92,076)
0
1
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
68
notes to the financial statements continued
11. Income tax expense/(benefit)
Recognised in the income statement
Current tax expense
Current period
Adjustments for prior periods
Current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Reduction in tax rates
Benefit of tax losses recognised
Derecognition of tax losses
Deferred tax expense
Consolidated
2010
$000
2009
$000
(2,680)
163
(2,517)
30,303
124
(30,077)
37,536
37,886
6,161
(247)
5,914
(10,228)
2,604
(19,875)
–
(27,499)
Total income tax expense/(benefit) in income statement
35,369
(21,585)
Attributable to:
Continuing operations
Total income tax expense/(benefit) in income statement
Numerical reconciliation between tax expense/(benefit) and pre-tax net profit
Profit before tax – continuing 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
Other taxable income
Effect of changes in the tax rate
Effect of tax losses derecognised/(recognised)
Decrease in income tax expense due to:
Effect on tax rate in foreign jurisdictions
Tax exempt income
Tax incentives not recognised in the income statement
Under/(over) provided in prior years
Income tax expense/(benefit) on pre-tax net profit
Income tax recognised directly in equity
Relating to cost of issuing equity
Nufarm Step-up Securities distribution
Income tax recognised directly in equity
Income tax recognised in other comprehensive income
Relating to actuarial gains on defined benefit plans
Income tax recognised in other comprehensive income
35,369
35,369
(21,585)
(21,585)
12,717
12,717
58,957
58,957
3,815
17,687
3,222
689
124
37,574
(6,508)
(347)
(3,363)
35,206
163
35,369
(777)
(3,795)
(4,572)
(835)
(835)
3,175
1,383
2,604
1,015
(38,850)
(1,225)
(7,127)
(21,338)
(247)
(21,585)
(1,683)
(6,572)
(8,255)
(3,363)
(3,363)
0
1
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
69
notes to the financial statements continued
12. Discontinued operation
There were no discontinued operations in the current or prior period.
13. Non-current assets held for sale
The Belvedere, UK manufacturing site has been shut down and is currently being prepared for sale. A sale
agreement for the site has been executed with sales proceeds of £6.1 million. The site demolition has been
completed, however, title cannot pass until remediation is complete and the necessary regulatory approvals
are received. This is expected to occur before 31 December 2010. The following assets and liabilities related
to the site are classified as assets held for sale.
Assets classified as held for sale
Property, plant and equipment including costs incurred in preparing site for sale
Total assets held for sale
14. Acquisition of businesses
Consolidated
2010
$000
7,677
7,677
2009
$000
–
–
On 3 August 2009, the group acquired the shares in Richardson Seeds Pty Ltd and MMR Genetics. Richardson Seeds
is a leading producer of sorghum seed hybrids and MMR Genetics is a global leader in the development of elite
sorghum germplasm. Both businesses are based in Texas, US. On 30 March 2010, the group acquired the Druetto
seed business based in Argentina. Druetto is focused on the breeding development, production, processing and
sales of hybrid sorghum into the South American market. On 19 May 2010, the group acquired the oilseed and
confection sunflower assets of California based Flower Genetics LLC. Flower Genetics is involved in the breeding,
production and marketing of elite sunflower hybrids.
In the period to 31 July 2010, these businesses contributed profit of $1,624,800 to the consolidated group after
tax profit. If the above acquisition had occurred on 1 August 2009, the full-year contribution to group revenues
would have been $45.093 million and to the consolidated entity’s profit after tax would have been $4.962 million.
2010
Acquiree’s net assets at acquisition date
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Other assets
Trade and other payables
Interest bearing loans and borrowings
Other liabilities
Net identifiable assets and liabilities
Intangibles acquired on acquisition
Goodwill on acquisition
Consideration paid
Cash acquired
Net cash outflow
0
1
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
70
Pre-acquisition Preliminary Recognised
carrying
values on
fair value
amounts adjustments acquisition
$000
$000
$000
345
5,997
11,911
3,982
1,099
(1,871)
(7,480)
(5,054)
8,929
–
–
496
2,799
81
–
–
–
3,376
345
5,997
12,407
6,781
1,180
(1,871)
(7,480)
(5,054)
12,305
13,707
17,961
43,973
(345)
43,628
notes to the financial statements continued
14. Acquisition of businesses (continued)
Pre-acquisition carrying values were determined based on applicable AASBs 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 technical expertise and know-how
included in the acquired businesses and from the synergies that the acquisitions bring to the Nufarm group.
On 1 October 2008, the group acquired the shares in Lefroy Seeds Pty Ltd. Lefroy Seeds specialises in hybrid
breeding, production and commercialisation activities in sunflower and sorghum with facilities located in
Toowoomba, Queensland, Australia.
2009
Acquiree’s net assets at acquisition date
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Intangibles
Other assets
Trade and other payables
Employee benefits
Other liabilities
Net identifiable assets and liabilities
Acquisition costs
Identifiable intangibles acquired on acquisition
Goodwill on acquisition
Consideration paid
Cash acquired
Consideration satisfied by issue of shares
Net cash outflow
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
Fair value
values adjustments
$000
$000
175
353
236
167
8
621
(113)
(21)
(68)
1,358
–
–
102
–
(8)
–
–
(85)
–
9
Carrying
amounts
$000
175
353
338
167
–
621
(113)
(106)
(68)
1,367
(46)
5,074
5,075
11,470
(175)
(7,975)
3,320
Consolidated
2010
$000
113,922
74,819
188,741
(28,036)
160,705
2009
$000
48,502
35,810
84,312
(35,669)
48,643
0
1
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
71
notes to the financial statements continued
16. Trade and other receivables
Current
Trade receivables
Provision for impairment losses
Receivables due from associates
Derivative financial instruments
Proceeds receivable from sale of businesses
Other receivables and prepayments
Current receivables
Non-current
Receivables due from associates
Other receivables
Proceeds receivable from sale of businesses
Provision for non-collectability of sale proceeds
Non-current receivables
Consolidated
2010
$000
2009
$000
755,475
(26,677)
728,798
473
43,801
9,233
70,681
852,986
38
9,569
9,735
–
19,342
680,573
(25,087)
655,486
475
16,118
6,230
109,451
787,760
38
9,319
27,101
(3,333)
33,125
Total trade and other receivables
872,328
820,885
Nufarm and a major supplier are currently in dispute with respect to a claim that the supplier is liable for a
relevant share of losses attributable to the sale of product during the 2009 and 2010 financial years.
The parties entered into an Agreement in 2002 that provides for the sharing of costs and proceeds associated
with Nufarm’s sale of products. Nufarm’s claim, for approximately $52.7 million (2009: $39.9 million), is being
contested by the supplier. This matter is currently subject to arbitration proceedings. Nufarm is confident it
will recover all of this amount and will vigorously pursue its claim. The claim is included in trade receivables.
17. Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence of finished goods
Total inventories
Consolidated
2010
$000
155,707
9,849
391,119
556,675
(3,243)
553,432
2009
$000
223,461
7,932
571,003
802,396
(5,013)
797,383
The finished goods and raw material values above are net of the net realisable value adjustments referred to in
note 6.
0
1
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
72
notes to the financial statements continued
18. Tax assets and liabilities
Current tax assets and liabilities
The current tax asset for the group of $42,460,651 (2009: $48,973,455) represents the amount of income taxes
recoverable in respect of prior periods and that arise from the payment of tax in excess of the amounts due to
the relevant tax authority. The current tax liability for the group of $5,564,530 (2009: $17,771,673) represents
the amount of income taxes payable in respect of current and prior financial periods.
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
Assets
Liabilities
Net
2010
$000
8,625
6,629
14,446
9,641
44,324
2009
$000
9,467
6,545
14,889
14,500
35,541
2010
$000
(22,188)
(48,200)
–
–
(10,032)
2009
$000
(12,338)
(52,275)
–
–
(8,578)
2010
$000
(13,563)
(41,571)
14,446
9,641
34,292
2009
$000
(2,871)
(45,730)
14,889
14,500
26,963
99,188
122,994
–
–
99,188
122,994
Tax assets/(liabilities)
Set off of tax
182,853
(32,530)
203,936
(8,976)
(80,420)
32,530
(73,191)
8,976
102,433
–
130,745
–
Net tax assets/(liabilities)
150,323
194,960
(47,890)
(64,215)
102,433
130,745
Movement in temporary differences during the year
Consolidated 2010
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses carried
forward
Balance Recognised Recognised
31.07.09
$000
Currency
in equity adjustment movement
$000
in income
$000
Other Balance
31.07.10
$000
$000
$000
(2,871)
(45,730)
14,889
14,500
26,963
(27,563)
(10,840)
1,993
(4,005)
9,988
122,994
(7,459)
–
–
835
–
777
–
130,745
(37,886)
1,612
1,187
3,615
(1,131)
(854)
(2,327)
(8,329)
(7,839)
15,684
11,384
(2,140)
–
(1,109)
(13,563)
(41,571)
14,446
9,641
34,292
(8,018)
99,188
15,801
102,433
0
1
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
73
notes to the financial statements continued
18. Tax assets and liabilities (continued)
Consolidated 2009
Property, plant and equipment
Intangibles assets
Employee benefits
Provisions
Other items
Tax value of losses carried
forward
Balance Recognised Recognised
31.07.08
$000
Currency
in equity adjustment movement
$000
in income
$000
Other Balance
31.07.09
$000
$000
$000
(5,532)
(33,100)
11,956
5,044
9,095
4,429
(12,202)
(2,601)
9,654
14,517
48,568
36,031
24,750
38,547
–
–
3,363
–
1,683
–
5,046
78
(428)
(293)
(198)
1,624
(1,846)
–
2,464
–
44
(2,871)
(45,730)
14,889
14,500
26,963
(2,092)
(1,309)
51,768
122,994
52,430
130,745
Deferred tax assets and liabilities
Unrecognised deferred tax liability
At 31 July 2010, a deferred tax liability of $17,551,281 (2009: $18,450,432) 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. This amount represents the theoretical withholding tax
payable if all overseas retained earnings were paid as dividends.
Unrecognised deferred tax assets
At 31 July 2010, there are unrecognised tax losses of $37,535,877 (2009: nil). These losses do not have an expiry
date.
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:
Country
Balance date
of associate
Percentage
ownership and
voting interest
2009
2010
Excel Crop Care Ltd Agricultural chemicals manufacturer
F&N joint ventures Agricultural chemicals distributor
31 March
Eastern Europe 31 December
India
14.69
50.00
14.69
50.00
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.
0
1
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
74
notes to the financial statements continued
19. Investments accounted for using the equity method (continued)
Financial summary of material associates (at reporting date)
2010
Excel Crop Care Ltd
F&N joint ventures
2009
Excel Crop Care Ltd
F&N joint ventures
Profit
Revenues after tax
(100%)
(100%)
Total
assets
(100%)
Total
liabilities
(100%)
Net assets as
reported by
associates
(100%)
Share of
associate’s
net assets
equity
accounted
151,540
61,568
9,001
(2,942)
117,203
61,973
74,328
61,613
213,108
6,059
179,176
135,941
196,112
77,347
9,558
649
110,292
70,070
72,306
66,429
273,459
10,207
180,362
138,735
42,875
360
43,235
37,986
3,641
41,627
6,298
180
6,478
5,580
1,821
7,401
The financial summary information is from the financial statements as per the balance dates above.
Carrying value by major associate
Excel Crop Care Ltd
F&N joint ventures
Others
Carrying value of associates
Share of profit by major associate
Bayer CropSciences Nufarm Ltd
Excel Crop Care Ltd
F&N joint ventures
Others
Share of net profits of associates
Consolidated
2010
$000
10,610
180
1,174
11,964
–
1,447
(1,449)
49
47
2009
$000
9,803
1,812
853
12,468
1,837
1,090
97
56
3,080
The share of net profits has been derived from the latest management reports as at 31 July 2010 for the F&N
joint ventures. The Excel Crop Care share of net profits is from the 30 June 2010 management accounts. Nufarm
sold its 25 per cent share in Bayer CropSciences Nufarm Limited to Bayer CropSciences Limited at 31 July 2009.
0
1
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
75
notes to the financial statements continued
20. Other investments
Investments – available-for-sale
Balance at the beginning of the year
New investments during the year
Exchange valuation adjustment
Balance at the end of the year
Other investments
Other investments
Total other investments
The group’s investment in an unlisted entity is classified as available-for-sale.
21. Other non-current assets
Derivative financial instrument
Consolidated
2010
$000
7,008
–
(527)
6,481
2009
$000
–
6,829
179
7,008
398
434
6,879
7,442
43
43
967
967
The derivative financial instrument is the market value of the interest rate cap relating to the NSS distribution
base rate.
22. Property, plant and equipment
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Consolidated
Cost
Balance at 1 August 2009
Additions
Additions through business combinations
Disposals
Transfer to assets held for sale
Other transfers
Exchange adjustment
207,393
2,079
6,382
(3,639)
(7,040)
11,444
(13,174)
663,878
8,281
5,413
(87,201)
(6,431)
38,684
(57,999)
2010
14,469
41
–
(963)
–
(505)
(1,739)
Capital
work in
progress
$000
35,876
41,935
–
(13)
–
(49,623)
(2,610)
Total
$000
921,616
52,336
11,795
(91,816)
(13,471)
–
(75,522)
Balance at 31 July 2010
203,445
564,625
11,303
25,565
804,938
0
1
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
76
notes to the financial statements continued
22. Property, plant and equipment (continued)
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Consolidated
Depreciation and impairment losses
Balance at 1 August 2009
Depreciation charge for the year
Additions through business combinations
Disposals
Transfer to assets held for sale
Other transfers
Exchange adjustment
(65,103)
(6,971)
(1,328)
3,317
3,972
15
6,294
(419,596)
(34,791)
(3,686)
84,537
3,082
(205)
39,292
Balance at 31 July 2010
(59,804)
(331,367)
2010
(1,449)
(331)
–
963
–
190
95
(532)
Capital
work in
progress
$000
–
–
–
–
–
–
–
–
Total
$000
(486,148)
(42,093)
(5,014)
88,817
7,054
–
45,681
(391,703)
Net property, plant and equipment
at 31 July 2010
143,641
233,258
10,771
25,565
413,235
Land
and
Leased
plant and
Plant and
buildings machinery machinery
$000
$000
$000
Capital
work in
progress
$000
Total
$000
Consolidated
Cost
Balance at 1 August 2008
Additions
Additions through business
combinations
Disposals
Other transfers
Exchange adjustment
2009
201,006
3,039
646,118
12,196
15,156
166
30,395
44,437
892,675
59,838
–
(4,030)
4,795
2,583
280
(28,022)
32,684
622
–
(80)
(104)
(669)
–
(1,380)
(37,375)
(201)
280
(33,512)
–
2,335
Balance at 31 July 2009
207,393
663,878
14,469
35,876
921,616
Depreciation and impairment losses
Balance at 1 August 2008
Depreciation charge for the year
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
(58,689)
(7,460)
–
2,223
(33)
(1,144)
(399,701)
(40,525)
(113)
20,591
(7)
159
Balance at 31 July 2009
(65,103)
(419,596)
(1,173)
(427)
–
55
40
56
(1,449)
–
–
–
–
–
–
–
(459,563)
(48,412)
(113)
22,869
–
(929)
(486,148)
Net property, plant and equipment
at 31 July 2009
142,290
244,282
13,020
35,876
435,468
Assets pledged as security for finance leases totalled $10.77 million (2009: $13.02 million). There were no
impairment losses in the consolidated entity in the current financial year or the comparative year.
0
1
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
23. Intangible assets
Consolidated
Cost
Balance at 1 August 2009
Additions
Additions through business
combinations
Disposals
Other transfers
Exchange adjustment
Intellectual property
indefinite definite development Computer
software
$000
costs
$000
life
$000
life
$000
Capitalised
Goodwill
$000
Total
$000
2010
358,570
–
454,582
3,731
84,547
1,110
98,142
25,693
21,745 1,017,586
33,307
2,773
17,961
–
–
(17,921)
9,201
(1,365)
(2,956)
(28,444)
4,506
(48)
2,956
(7,231)
–
(1,125)
–
(8,014)
–
–
–
(1,331)
31,668
(2,538)
–
(62,941)
Balance at 31 July 2010
358,610
434,749
85,840
114,696
23,187 1,017,082
Amortisation and impairment
losses
Balance at 1 August 2009
Amortisation charge for the year
Exchange adjustment
(72,262)
–
5,160
(10,468)
–
1,172
(39,964)
(7,133)
3,283
(32,008)
(6,218)
3,230
(14,145)
(2,104)
1,134
(168,847)
(15,455)
13,979
Balance at 31 July 2010
(67,102)
(9,296)
(43,814)
(34,996)
(15,115)
(170,323)
Intangibles carrying amount
at 31 July 2010
291,508
425,453
42,026
79,700
8,072
846,759
Intellectual property
indefinite definite development Computer
software
$000
costs
$000
life
$000
life
$000
Capitalised
Goodwill
$000
Total
$000
Consolidated
Cost
Balance at 1 August 2008
Additions
Additions through business
combinations
Disposals
Exchange adjustment
2009
360,327
9,109
441,333
10,339
75,941
818
75,586
24,847
18,164
3,565
971,351
48,678
5,075
(10,824)
(5,117)
5,074
(13,467)
11,303
–
(35)
7,823
–
(3,425)
1,134
–
(4)
20
10,149
(27,755)
15,163
Balance at 31 July 2009
358,570
454,582
84,547
98,142
21,745 1,017,586
Amortisation and impairment
losses
Balance at 1 August 2008
Amortisation charge for the year
Exchange adjustment
(73,303)
–
1,041
(10,207)
–
(261)
(29,354)
(8,776)
(1,834)
(25,243)
(6,386)
(379)
(11,744)
(2,388)
(13)
(149,851)
(17,550)
(1,446)
Balance at 31 July 2009
(72,262)
(10,468)
(39,964)
(32,008)
(14,145)
(168,847)
Intangibles carrying amount
at 31 July 2009
286,308
444,114
44,583
66,134
7,600
848,739
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notes to the financial statements continued
23. Intangible assets (continued)
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.
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 intangibles are
country specific in nature. There is no allocation of goodwill between CGUs.
The major CGUs and their intangible value is as follows: Brazil $294 million, US $165 million, seeds business
$102 million, UK and Holland $56 million, AH Marks business $37 million, Australia $53 million and France
$24 million. The balance of 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 relevant assets is compared to their 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 CGU with a growth factor
applied to extrapolate cash flows over a maximum period of 20 years. The 20 year time limit has been used on
the basis that this period most closely aligns with the product registration life in most geographies. The revenue
and margin assumptions contained in the five year plans are based on a return to normal pricing and volume
conditions within the relevant market from 2011, particularly in relation to sales of glyphosate which contributes
significantly to forecast profitability in a number of CGUs including Australia, the US, Brazil and certain European
countries. The growth rate assumed for each CGU is based on an assessment of historical and expected growth
over the period, ranging from zero per cent to 10 per cent. The cash flows are then discounted to a present value
using a discount rate of 10.9 per cent, which is the group’s weighted average cost of capital. At 31 July 2010,
the recoverable amount exceeded the carrying amount for all CGUs.
Sensitivity analysis on the impairment testing was performed on management’s valuation calculations using a zero
growth rate for all CGUs. There were no impairment issues under this scenario. Sensitivity analysis was also done
around the discount rate, assuming a one per cent increase and one per cent decrease in the discount rate. Again,
no impairment issues arose.
Further impairment analysis was undertaken in relation to the Brazilian CGU, where a significant amount of the
value-in-use supporting the CGU’s assets is expected to be derived outside of the five year plan period. The five
year plan assumes a return to trading profitability in 2011, with significant annual growth in EBITDA over the five
year period. A growth rate of five per cent was applied to years after 2015 based on observable market forecasts
relevant to the country and the industry sector. A future impairment charge against the Brazilian CGU assets
could arise should forecast profitability and/or growth rate assumptions not be achieved.
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notes to the financial statements continued
24. Trade and other payables
Current payables – unsecured
Trade creditors and accruals – unsecured
Payables due to associated entities
Derivative financial instruments
Payables – acquisitions
Current payables
Non-current payables – unsecured
Creditors and accruals
Payables – acquisitions
Non-current payables
25. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the group’s
interest-bearing loans and borrowings.
Current liabilities
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
Current liabilities
Non-current liabilities
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
Non-current liabilities
Consolidated
2010
$000
2009
$000
383,332
583
306
9,647
393,868
376,432
608
9,250
21,131
407,421
9,523
6,326
9,452
8,243
15,849
17,695
765,277
669
182
766,128
117
1,684
11,832
13,633
583,961
314
417
584,692
387,048
1,522
13,757
402,327
Financing facilities
At 31 July 2010, the group had access to facilities of $1.247 billion under the deed of negative pledge (dated
24 October 1996). However, at that date the group was in breach of certain covenants under the deed and the
parties to the deed have subsequently confirmed that any undrawn facility amounts are no longer available to the
group. The group has obtained its required funding through to 15 December 2010 on a secured basis. See note
2(b) for further details.
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notes to the financial statements continued
25. Interest-bearing loans and borrowings (continued)
2010
Bank loan facilities
Other facilities
Total financing facilities
2009
Bank loan facilities
Other facilities
Total financing facilities
Financing arrangements
Bank loans
Repayment of borrowings (excluding finance leases)
Period ending 31 July 2010
Period ending 31 July 2011
Period ending 31 July 2012
Period ending 31 July 2013
Period ending 31 July 2014 or later
Finance lease liabilities
Finance leases are entered into to fund the acquisition of plant and equipment.
Lease commitments for capitalised finance leases are payable as follows:
Not later than one year
Later than one year but not later than two years
Later than two years but not later than five years
Later than five years
Less future finance charges
Finance lease liabilities
Finance lease liabilities are secured over the relevant leased plant.
Average interest rates
Nufarm Step-up Securities
Bank loans
Other loans
Finance lease liabilities – secured
Consolidated
Accessible
$000
Utilised
$000
1,449,865
2,353
1,452,218
793,430
2,353
795,783
1,773,580
1,836
1,006,678
1,836
1,775,416
1,008,514
Consolidated
2010
$000
–
793,982
1,034
745
22
2009
$000
619,944
172,191
137,571
78,808
–
1,500
1,389
4,017
96,856
103,762
(91,748)
1,854
1,704
4,618
113,111
121,287
(107,113)
12,014
14,174
Consolidated
2010
%
5.55
5.05
6.00
11.58
2009
%
8.73
5.03
6.00
11.69
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notes to the financial statements continued
26. Employee benefits
Current
Liability for annual leave
Liability for long service leave
Current employee benefits
Non-current
Present value of unfunded obligations
Present value of funded obligations
Fair value of fund assets – funded
Recognised liability for defined benefit fund obligations
Liability for annual leave
Liability for long service leave
Non-current employee benefits
Total employee benefits
Consolidated
2010
$000
15,950
6,380
22,330
5,328
112,438
(87,900)
29,866
–
9,023
38,889
61,219
2009
$000
13,069
7,602
20,671
5,114
116,543
(89,829)
31,828
4,046
7,231
43,105
63,776
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.
Consolidated
2010
$000
2009
$000
2008
$000
2007
$000
2006
$000
Historical information
Present value of defined benefit
obligation
Fair value of plan assets
Surplus/(deficit)
(29,866)
(31,828)
(24,902)
(117,766)
87,900
(121,657)
89,829
(118,688)
93,786
(59,287)
39,732
(19,555)
(62,587)
35,477
(27,110)
Experience adjustments arising
on plan liabilities
Experience adjustments arising
on plan assets
1,103
(1,223)
700
321
6,013
(8,058)
(10,088)
1,687
961
586
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notes to the financial statements continued
26. Employee benefits (continued)
Changes in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation
Service cost
Interest cost
Actuarial loss
Past service cost
Losses/(gains) on curtailment
Contributions
Benefits paid
Exchange differences on foreign funds
Closing defined benefit obligation
Changes in the fair value of fund assets are as follows:
Opening fair value of fund assets
Expected return
Actuarial gains/(losses)
Surplus taken to retained earnings
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/(loss).
Expense recognised in profit or loss
Current service costs
Interest on obligation
Expected return on fund assets
Past service cost
Losses/(gains) on curtailment
Expense recognised in profit or loss
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
Expense recognised in profit or loss
Consolidated
2010
$000
2009
$000
121,657
2,865
6,297
10,934
11
(799)
261
(6,660)
(16,800)
117,766
89,829
5,268
8,382
(333)
3,813
(6,499)
(12,560)
87,900
2,865
6,297
(5,268)
11
(799)
3,106
1,784
712
323
287
3,106
118,688
3,692
7,768
5,516
5
(4,301)
414
(5,901)
(4,224)
121,657
93,786
6,707
(7,017)
–
4,928
(5,126)
(3,449)
89,829
3,692
7,768
(6,707)
5
(4,301)
457
(1,134)
754
449
388
457
0
1
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2
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notes to the financial statements continued
26. Employee benefits (continued)
Actuarial gains/(losses) recognised in other comprehensive income (net of tax)
Cumulative amount at 1 August
Recognised during the period
Cumulative amount at 31 July
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
2010
$000
(7,525)
(2,280)
(9,805)
2009
$000
929
(8,454)
(7,525)
Consolidated
2010
%
2009
%
60.6
37.5
1.6
0.3
5.3
6.7
3.3
2.9
58.7
39.3
1.6
0.4
6.0
6.6
3.5
3.1
The overall expected long term rate of return on assets is 6.7 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 $3,299,000 in contributions to defined benefit plans in 2011.
27. Share-based payments
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 ten years without board approval. An independent trustee holds the shares and
options on behalf of the executives. At 31 July 2010 there were 72 participants (2009: 77 participants) in the scheme
and 1,237,872 shares (2009: 1,714,045) 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 2010 there were 747 participants (2009: 763 participants) in the scheme and
1,356,706 shares (2009: 1,710,550) were allocated and held by the trustee on behalf of the participants.
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notes to the financial statements continued
27. Share-based payments (continued)
The impact of the global share plan for the year ended 31 July 2010 was a reduction of expenses by $755,007.
The reduction results from the lower share price at 31 July 2010 compared to 31 July 2009. For 2009, the cost
of the global share plan was an expense of $306,865.
The power of appointment and removal of the trustees for the share purchase schemes is vested in the company.
28. Provisions
Current
Restructuring
Other
Current provisions
Consolidated
Movement in provisions
Balance at 1 August 2009
Provisions made during the year
Provisions used during the year
Exchange adjustment
Balance at 31 July 2010
Consolidated
2010
$000
7,698
4,065
11,763
Restructuring
$000
Other
provisions
$000
21,958
3,821
(15,189)
(2,892)
7,698
4,133
–
–
(68)
4,065
2009
$000
21,958
4,133
26,091
Total
$000
26,091
3,821
(15,189)
(2,960)
11,763
The provision for restructuring is mainly relating to the shutdown of two French manufacturing units and the
associated redundancy costs. The other provision consists of contingent liabilities recognised with the Agripec
acquisition.
29. Capital and reserves
Share capital
Balance at 1 August
Issue of shares
Balance at 31 July
Parent company
Number
of ordinary
shares
2010
Number
of ordinary
shares
2009
218,061,199
43,714,532
185,882,333
32,178,866
261,775,731
218,061,199
The company does not have authorised capital or par value in respect of its issued shares.
On 17 December 2009, 65,519 shares at $10.67 were issued under the global share plan. On 6 May 2010,
25,019,852 shares at a price of $5.75 were issued under the institutional component of the company’s one for
five renounceable rights offer. The retail component of the offer was completed on 28 May 2010, under which
18,629,161 shares were issued at the same price of $5.75.
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notes to the financial statements continued
29. Capital and reserves (continued)
On 1 October 2008, 527,585 shares at $15.12 were issued as part of the acquisition cost of Lefroy Seeds
Pty Ltd. On 20 October 2008, 198,450 shares at a price of $15.51 were issued under the executive share plan.
On 17 November 2008, 805,960 shares at a price of $10.35 were issued under the dividend reinvestment plan.
On 19 December 2008, 82,000 shares at a price of $9.56 were issued under the global share plan. On 8 May
2009, 358,866 shares at a price of $12.16 were issued under the dividend reinvestment plan. On 21 May 2009,
26,700,000 shares were issued at a price of $11.25 under an institutional placement to provide the group with
enhanced financial flexibility and to strengthen the balance sheet. On 30 June 2009, 3,506,005 shares were
issued at $10.18 under a share purchase plan to existing shareholders.
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 curtailed 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 (c) change
them for a number of ordinary shares in Nufarm Limited. 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.
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.
Dividends
Dividends recognised in the current year by the company are:
2010
Interim 2010 ordinary
Final 2009 ordinary
Total amount
per share
0.0
15.0
–
32,709 Unfranked 13 Nov 2009
32,709
Cents Total amount
Franked/
$000 unfranked
Payment
date
0
1
0
2
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notes to the financial statements continued
29. Capital and reserves (continued)
2009
Interim 2009 ordinary
Final 2008 ordinary
Total amount
Cents Total amount
Franked/
$000 unfranked
Payment
date
per share
12.0
23.0
22,469 Unfranked 8 May 2009
Franked 17 Nov 2008
42,828
65,297
Distributions recognised in the current year by Nufarm Finance (NZ) Ltd on the Nufarm Step-up Securities are:
2010
Distribution
Distribution
2009
Distribution
Distribution
Distribution
rate
Total amount
$000
Payment
date
6.08%
5.02%
7,609 15 Apr 2010
6,313 15 Oct 2009
13,922
7.48%
9.97%
9,361 15 Apr 2009
12,547 15 Oct 2008
21,908
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 $10.127 million (2009: $15.336 million).
Consolidated
2010
$000
2009
$000
Franking credit/(debit) 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 (2009: 30 per cent)
18,871
(1,374)
Franking credits/(debits) that will arise from the payment of income tax payable/
(refund) as at the end of the year
Balance at 31 July
(2,939)
15,932
6,452
5,078
The impact on the dividend franking account of dividends proposed after the balance sheet date is zero as there
is no dividend proposed for 2010. In accordance with the tax consolidation legislation, the company as the head
entity in the tax-consolidated group has also assumed the benefit of $15,931,794 (2009: $5,078,270) franking credits.
0
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2
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notes to the financial statements continued
30. Earnings per share
Net profit/(loss) for the year
Net profit/(loss) attributable to minority interest
Net profit/(loss) attributable to equity holders of the parent
Nufarm Step-up Securities distribution
Earnings/(loss) used in the calculations of basic and diluted earnings per share
Earnings/(loss) from continuing operations
Consolidated
2010
$000
(22,652)
(1,338)
(23,990)
(10,127)
(34,117)
(34,117)
(34,117)
2009
$000
80,542
(665)
79,877
(15,336)
64,541
64,541
64,541
Subtract items of material income/(expense) (refer note 6)
(82,556)
(79,755)
Earnings excluding items of material income/(expense) used in the calculation
of earnings per share excluding material items
48,439
144,296
For the purposes of determining basic and diluted earnings per share, the after-tax distributions on NSS are
deducted from net profit.
Number of shares
2010
2009
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
227,263,338
192,664,368
227,263,338
192,664,368
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.
Earnings per share for continuing and discontinued operations
Basic earnings/(loss) per share
From continuing operations
Diluted earnings/(loss) per share
From continuing operations
Earnings per share (excluding items of material income/expense – see note 6)
Basic earnings per share
Diluted earnings per share
Cents per share
2010
2009
(15.0)
(15.0)
(15.0)
(15.0)
21.3
21.3
33.5
33.5
33.5
33.5
74.9
74.9
0
1
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
31. Financial risk management and financial instruments
The group has exposure to the following financial risks:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the group’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.
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 other
financial assets.
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 represent the maximum open amount
without requiring further management approval.
0
1
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
89
notes to the financial statements continued
31. Financial risk management and financial instruments (continued)
The group’s maximum exposure to credit risk at the reporting date was:
Carrying amount
Trade and other receivables
Cash and cash equivalents
Interest rate cap:
Assets
Forward exchange contracts:
Assets
The group’s maximum exposure to credit risk for trade and other receivables
at the reporting date by geographic region was:
Carrying amount
Australasia
Europe
North America
South America
Trade and other receivables
The group’s top five customers account for $174.5 million of the trade receivables
carrying amount at 31 July 2010 (2009: $139.4 million). These top five customer
represent 22 per cent (2009: 19 per cent) of the total receivables.
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
Trade receivables
Consolidated
2010
$000
2009
$000
828,527
188,741
804,767
84,312
43
967
43,801
16,118
1,061,112
906,164
276,515
253,224
48,815
249,973
828,527
276,653
238,432
44,284
245,398
804,767
568,843
53,941
23,237
72,610
36,844
755,475
(26,677)
728,798
504,313
130,284
6,405
11,877
27,694
680,573
(25,087)
655,486
0
1
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
90
notes to the financial statements continued
31. Financial risk management and financial instruments (continued)
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 seven
years, the bad debt write-off amount has averaged 0.02 per cent of sales, with no greater than 0.50 per cent of
sales written off in any one year.
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 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 acquired through business combinations
Exchange adjustment
Balance at 31 July
Consolidated
2010
$000
25,087
3,007
(536)
114
(995)
26,677
2009
$000
23,339
12,201
(9,139)
–
(1,314)
25,087
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.
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 (last amendment dated
30 January 2009) 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 35 for 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.
At 31 July 2010, the group had access to facilities of $1.247 billion under the deed of negative pledge (dated
24 October 1996). However, at that date the group was in breach of certain covenants under the deed and the
parties to the deed have subsequently confirmed that any undrawn facility amounts are no longer available to the
group. The group has obtained its required funding through to 15 December 2010 on a secured basis. See note
2(b) for further details.
0
1
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
91
notes to the financial statements continued
31. Financial risk management and financial instruments (continued)
The following are the contractual maturities of the group’s financial liabilities:
Carrying Contractual
cash flows
amount
$000
$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
28,036
409,411
765,394
2,353
12,014
28,036
409,411
765,394
2,353
12,014
2010
28,036
393,562
765,277
669
182
–
6,326
95
1,012
49
–
9,523
22
672
11,783
Derivative financial liabilities
Forward exchange contracts:
Outflow
Inflow
Derivative financial assets
Forward exchange contracts:
Outflow
Inflow
Consolidated
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities – secured
Derivative financial liabilities
Forward exchange contracts:
Outflow
Inflow
Derivative financial assets
Forward exchange contracts:
Outflow
Inflow
306
–
18,674
(18,368)
18,674
(18,368)
–
–
–
(43,801)
232,151
(275,952)
8,160
(8,472)
223,991
(267,480)
–
–
–
–
1,173,713
1,173,713
1,187,720
(36,007)
22,000
Carrying Contractual
cash flows
amount
$000
$000
Less than
1 year
$000
1–2 More than
2 years
$000
years
$000
35,669
415,866
971,009
1,836
14,174
35,669
415,866
971,009
1,836
14,174
2009
35,669
398,171
583,961
314
417
–
8,243
171,605
586
186
–
9,452
215,443
936
13,571
9,250
–
111,290
(102,040)
111,290
(102,040)
–
(16,118)
295,046
(311,164)
40,021
(40,488)
–
–
–
–
–
–
255,025
(270,676)
1,431,686
1,431,686
1,027,315
180,620
223,751
0
1
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
92
notes to the financial statements continued
31. Financial risk management and financial instruments (continued)
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 group 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, the British Pound and the
Brazilian Real. 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 group 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 primarily cover the exposure on the principal
advanced to group companies in US Dollars, the Euro and the British Pound.
The group does not have any cash flow hedges 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 economic hedges of forecast
transactions at 31 July 2010 was $43,495,711 (2009: $6,867,549) comprising assets of $43,801,271 (2009:
$16,118,071) and liabilities of $305,560 (2009: $9,250,522) that were recognised as derivatives measured
at fair value.
Exposure to currency risk
The group’s exposure to major foreign currency risks at balance date was as follows, based on notional amounts:
Consolidated
31.07.2010
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
74
404
–
(267)
–
211
USD
$000
30,531
66,279
(5,777)
(86,797)
(7)
Euro
$000
964
8,017
–
(12,039)
(2,828)
GBP
$000
13,767
35
(341)
–
–
4,229
(5,886)
13,461
–
211
(14,441)
(10,212)
2,636
–
(3,250)
13,461
0
1
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
93
notes to the financial statements continued
31. Financial risk management and financial instruments (continued)
Currency risk (continued)
Exposure to currency risk (continued)
Consolidated
31.07.2009
Cash and cash equivalents
Trade and other receivables
Bank overdraft
Trade and other payables
Loans and borrowings
AUD
$000
80
275
–
(1,122)
–
USD
$000
7,328
88,947
(4,431)
(28,936)
(86,521)
Euro
$000
2,263
4,477
–
(10,408)
(5,914)
Gross balance sheet exposure
(767)
(23,613)
(9,582)
Forward exchange contracts
Net exposure
(558)
(1,325)
84,577
60,964
(17,732)
(27,314)
The following significant exchange rates applied during the year:
GBP
$000
–
194
(64)
(435)
–
(305)
–
(305)
AUD
US Dollar
Euro
GBP
BRL
Sensitivity analysis
Average rate
Reporting date
2010
0.888
0.649
0.568
1.592
2009
0.737
0.541
0.465
1.524
2010
0.903
0.693
0.576
1.584
2009
0.835
0.585
0.500
1.558
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 by way of 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 2009.
10 per cent
strengthening
10 per cent
weakening
Consolidated
profit or
loss
$000
Consolidated
profit or
loss
$000
1,028
426
(2,125)
(6,637)
4,245
55
(1,131)
(469)
2,337
7,301
(4,669)
(61)
31 July 2010
US Dollar
Euro
GBP
31 July 2009
US Dollar
Euro
GBP
0
1
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
94
notes to the financial statements continued
31. Financial risk management and financial instruments (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, are entered into to achieve an appropriate mix of fixed and
floating rate exposures. However, at 31 July 2010 and at 31 July 2009, 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
2010
$000
2009
$000
74,819
(807,797)
35,810
(1,022,688)
(732,978)
(986,878)
There were no fixed interest rate instruments during the year ended 31 July 2010 (2009: Nil).
Sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) 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 2009.
31 July 2010
Variable rate instruments
Total sensitivity
31 July 2009
Variable rate instruments
Total sensitivity
Profit and loss
100bp
increase
$000
100bp
decrease
$000
(7,330)
(7,330)
(9,869)
(9,869)
7,330
7,330
9,869
9,869
0
1
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
95
notes to the financial statements continued
31. Financial risk management and financial instruments (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
21
16
24
15
25
25
25
Carrying
amount
2010
$000
188,741
828,527
Fair
value
2010
$000
188,741
828,527
Carrying
amount
2009
$000
84,312
804,767
Fair
value
2009
$000
84,312
804,767
43
43
967
967
43,801
(306)
(28,036)
(765,394)
(2,353)
(12,014)
43,801
(306)
(28,036)
(765,394)
(2,353)
(12,014)
16,118
(9,250)
(35,669)
(971,009)
(1,836)
(14,174)
16,118
(9,250)
(35,669)
(971,009)
(1,836)
(14,174)
253,009
253,009
(125,774)
(125,774)
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
31 July 2010
Derivative financial assets
Derivative financial liabilities
31 July 2009
Derivative financial assets
Derivative financial liabilities
Level 1
$000
–
–
–
–
Level 1
$000
–
–
–
Consolidated
Level 2
$000
43,844
43,844
(306)
43,538
Level 3
$000
–
–
–
–
Consolidated
Level 2
$000
17,085
17,085
(9,250)
7,835
Level 3
$000
–
–
–
–
Total
$000
43,844
43,844
(306)
43,538
Total
$000
17,085
17,085
(9,250)
7,835
There have been no transfers between levels in either 2010 or 2009.
0
1
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
31. Financial risk management and financial instruments (continued)
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 2010 the
return was 5.5 per cent (2009: 11.7 per cent).
There were no changes in the group’s approach to capital management during the year.
32. 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
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 is a small number of leases
for office properties. These rentals have regular reviews based on market
rentals at the time of review.
33. Capital commitments
Capital expenditure commitments
Plant and equipment
Contracted but not provided for and payable:
Within one year
Consolidated
2010
$000
9,873
9,139
17,713
151,579
188,304
2009
$000
10,793
9,479
20,290
180,300
220,862
11,274
12,021
0
1
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
34. 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.
Guarantee facility for Eastern European joint ventures with FMC Corporation.
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.
Consolidated
2010
$000
6,076
2009
$000
10,276
12,265
14,530
3,304
3,915
Insurance bond for EUR 2.717 million established to make certain capital
expenditures at Gaillon plant in France. The insurance bond is for a three year term.
3,921
4,644
Bank guarantee for Holland defined benefit pension plan to ensure coverage ratios.
–
342
Contingent liabilities
35. Group entities
Parent entity
Nufarm Limited – ultimate controlling entity
Subsidiaries
Access Genetics Pty Ltd
ACN000425927 Pty Ltd
Agcare Biotech Pty Ltd
Agchem Receivables Corporation
Agryl Holdings Limited
Ag-seed Research Pty Ltd
Agturf Inc
AH Marks (New Zealand) Limited
AH Marks Australia Pty Ltd
AH Marks Holdings Limited
Artfern Pty Ltd
Australis Services Pty Ltd
Bestbeech Pty Ltd
25,566
33,707
Notes
Place of
incorporation
Percentage
of shares held
2010
2009
(a),(b)
(a),(b)
(b)
(a)
(a)
(a)
Australia
Australia
Australia
US
Australia
Australia
US
New Zealand
Australia
United Kingdom
Australia
Australia
Australia
100
100
70
100
100
100
100
100
100
100
100
100
100
100
100
70
100
100
100
–
100
100
100
100
100
100
0
1
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
35. Group entities (continued)
Chemicca Limited
CNG Holdings BV
Crop Care Australasia Pty Ltd
Crop Care Holdings Limited
Croplands Equipment Limited
Croplands Equipment Pty Ltd
Danestoke Pty Ltd
Edgehill Investments Pty Ltd
Fchem (Aust) Limited
Fernz Canada Limited
Fernz Singapore Pte Ltd
Fidene Limited
Finotech BV (Liquidated)
First Classic Pty Ltd
Framchem SA
Frost Technology Corporation
Greenfarm Hellas Chemicals SA
Growell Limited
Grupo Corporativo Nufarm SA
Laboratoire European de Biotechnologie s.a.s
Le Moulin des Ecluses s.a
Lefroy Seeds Pty Ltd
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
Medisup International NV
Medisup Securities Limited
Midstates Agri Services de Mexico
Midstates Agri Services Inc
MMR Genetics Ltd
Nufarm (Asia) Pte Ltd
Nufarm Africa SARL AU
Nufarm Agriculture (Pty) Ltd
Nufarm Agriculture Inc
Nufarm Agriculture Inc (USA)
Nufarm Agriculture Zimbabwe (Pvt) Ltd
Nufarm Americas Holding Company
Nufarm Americas Inc
Notes
(a)
(a),(b)
(b)
(a),(b)
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(a),(b)
(b)
(b)
(b)
(b)
Place of
incorporation
Australia
Netherlands
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Canada
Singapore
New Zealand
Netherlands
Australia
Egypt
US
Greece
United Kingdom
Guatemala
France
France
Australia
France
Malaysia
US
Guatemala
Mexico
US
Australia
Malaysia
Australia
Malaysia
Malaysia
N. Antillies
Australia
Mexico
US
US
Singapore
Morocco
South Africa
Canada
US
Zimbabwe
US
US
Percentage
of shares held
2010
2009
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
70
70
70
70
70
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
50
–
100
100
100
100
100
100
100
100
100
70
70
70
70
70
100
100
–
–
–
100
–
100
100
100
100
100
100
0
1
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
35. Group entities (continued)
Nufarm Asia Sdn Bhd
Nufarm Australia Limited
Nufarm BV
Nufarm Canada Receivables Partnership
Nufarm Chemical (Shanghai) Co Ltd
Nufarm Chile Limitada
Nufarm Colombia S.A.
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 & Co KG
Nufarm GmbH (liquidated)
Nufarm Grupo Mexico
Nufarm Holdings (NZ) Limited
Nufarm Holdings BV
Nufarm Holdings s.a.s
Nufarm Hong Kong Investments Ltd
Nufarm Hungaria Kft
Nufarm Inc.
Nufarm Industria Quimica e Farmaceutica SA
Nufarm Insurance Pte Ltd
Nufarm Investments Cooperatie WA (b)
Nufarm Italia srl
Nufarm KK
Nufarm Labuan Pte Ltd
Nufarm Limited
Nufarm Malaysia Sdn Bhd
Nufarm Materials Limited
Nufarm NZ Limited
Nufarm Peru SAC
Nufarm Platte Pty Ltd
Nufarm Portugal LDA
Nufarm Romania SRL
Nufarm s.a.s
Nufarm SA
Nufarm Suisse Sarl
Nufarm Technologies (M) Sdn Bhd
Notes
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
Place of
incorporation
Malaysia
Australia
Netherlands
Canada
China
Chile
Colombia
United Kingdom
Costa Rica
Guatemala
Mexico
Panama
Venezuela
Ecuador
Germany
Brazil
Spain
New Zealand
Austria
Austria
Germany
Mexico
New Zealand
Netherlands
France
Hong Kong
Hungary
US
Brazil
Singapore
Netherlands
Italy
Japan
Malaysia
United Kingdom
Malaysia
Australia
New Zealand
Peru
Australia
Portugal
Romania
France
Argentina
Switzerland
Malaysia
Percentage
of shares held
2010
2009
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
51
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
51
0
1
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
35. Group entities (continued)
Nufarm Technologies USA
Nufarm Technologies USA Pty Ltd
Nufarm Treasury Pty Ltd
Nufarm UK Limited
Nufarm Ukraine LLC
Nufarm USA Inc
Nugrain Pty Ltd
Nuseed Americas Inc
Nuseed Holding Company
Nuseed Pty Ltd
Nuseed SA
Nutrihealth Grains Pty Ltd
Nutrihealth Pty Ltd
Opti-Crop Systems Pty Ltd
Pharma Pacific Pty Ltd
PT Crop Care
PT Nufarm Indonesia
Richardson Seeds Ltd
Selchem Pty Ltd
Notes
(a),(b)
(b)
(b)
(a)
(b)
(a)
Place of
incorporation
New Zealand
Australia
Australia
United Kingdom
Ukraine
US
Australia
US
US
Australia
Argentina
Australia
Australia
Australia
Australia
Indonesia
Indonesia
US
Australia
Percentage
of shares held
2010
2009
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
100
100
100
–
100
100
–
–
100
–
100
100
75
100
100
100
–
100
Note (a). These entities have entered into a deed of cross guarantee dated 10 July 2000 with Nufarm Limited
which provides that all parties to the deed will guarantee to each creditor payment in full of any debt of each
company participating in the deed on winding-up of that company. As a result of a class order issued by the
Australian Securities and Investment Commission, 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 (last amendment
dated 30 January 2009) with 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.
36. Deed of cross guarantee
Under ASIC Class Order 98/1418, the Australian wholly-owned subsidiaries referred to in note 35 are relieved
from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and
directors’ 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 2010 is set out as follows:
0
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
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a
f
u
N
101
notes to the financial statements continued
36. Deed of cross guarantee (continued)
Summarised income statement and retained profits
Profit before income tax expense
Income tax expense
Net profit attributable to members of the closed group
Retained profits at the beginning of the period
Amendments to the closed group
Dividends paid
Retained profits at the end of the period
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
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
0
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
e
t
i
i
m
L
m
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a
f
u
N
102
Consolidated
2010
$000
2009
$000
31,517
(12,239)
19,278
267,222
8
(32,708)
253,800
87,326
459,622
139,347
10,759
697,054
11,174
793,934
26,558
160,756
53,346
1,045,768
60,239
(16,149)
44,090
286,307
2,122
(65,297)
267,222
4,326
470,871
192,403
1,823
669,423
10,365
588,586
23,274
162,553
43,909
828,687
1,742,822
1,498,110
310,476
4,800
8,278
8,497
332,051
47,350
4,261
1,952
–
53,563
195,705
105,875
3,471
7,130
312,181
32,350
4,185
2,863
11,277
50,675
385,614
362,856
1,357,208
1,135,254
notes to the financial statements continued
36. Deed of cross guarantee (continued)
Equity
Share capital
Reserves
Retained earnings
TOTAL EQUITY
37. Parent entity disclosures
Result of the parent entity
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Retained earnings
Total equity
Consolidated
2010
$000
2009
$000
1,058,578
44,830
253,800
812,844
55,188
267,222
1,357,208
1,135,254
Company
2010
$000
35,993
346
36,339
2009
$000
55,349
355
55,704
1,053,216
810,007
1,382,006
1,134,897
112,024
112,163
113,633
113,633
1,058,578
35,590
175,675
812,844
36,027
172,393
1,269,843
1,021,264
Parent entity contingencies
There are no contingent liabilities for the parent entity in 2010 or 2009.
Parent entity capital commitments for acquisition of property, plant and equipment
There are no capital commitments for the parent entity in 2010 or 2009.
Parent entity guarantees in respect of debts of its subsidiaries
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.
0
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
–
d
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i
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L
m
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a
f
u
N
103
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
Loss on sale of investment
Gain on disposal of non current assets
Net realisable value inventory adjustment
Share of profits of associates net of tax
Movement in provisions for:
Deferred tax
Tax assets
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
Net operating cash flows
39. Key management personnel disclosures
Consolidated
2010
$000
(22,652)
241
15,455
42,093
–
1,303
–
(47)
(16,325)
51,149
(8,504)
2009
$000
80,542
423
16,361
48,412
3,813
(284)
67,611
(3,080)
6,976
(78,655)
2,511
62,713
144,630
(50,450)
256,358
(6,664)
(7,866)
(59,480)
131,898
194,611
58,862
46,499
(349,585)
11,883
34,586
(197,755)
(53,125)
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 (except where denoted otherwise).
Executives
BF Benson – Group general manager agriculture
Non-executive directors
DG McGauchie
(Chairman, appointed 13 July 2010) R Heath – Group general manager corporate services and company secretary
GDW Curlewis
Dr RJ Edgar
Dr WB Goodfellow
GA Hounsell
KM Hoggard
(Chairman, retired 13 July 2010)
Dr JW Stocker
KP Martin – Chief financial officer
DA Mellody – Group general manager global marketing
RF Ooms – Group general manager chemicals
MJ Pointon – Group general manager innovation and development
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
0
1
0
2
t
r
o
p
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a
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n
A
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d
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i
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u
N
104
notes to the financial statements continued
39. Key management personnel disclosures (continued)
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
2010
$
8,688,922
472,036
–
219,630
2009
$
6,320,665
698,981
77,250
262,368
9,380,588
7,359,264
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
directors’ 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 2010 (2009: Nil).
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.
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:
0
1
0
2
t
r
o
p
e
R
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a
u
n
n
A
–
d
e
t
i
i
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L
m
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a
f
u
N
105
notes to the financial statements continued
39. Key management personnel disclosures (continued)
Movements in shares (continued)
Shares held in Nufarm Ltd
2010
Directors
DG McGauchie
(Chairman, appointed 13 July 2010)1
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow1,2
Dr RJ Edgar
KM Hoggard
(Chairman, retired 13 July 2010)1,3
GA Hounsell1
Dr JW Stocker1
Executives
BF Benson
R Heath
KP Martin
DA Mellody
RF Ooms
MJ Pointon
DA Pullan
RG Reis
Total
Shares held in Nufarm Ltd
2009
Directors
KM Hoggard1
DJ Rathbone
GDW Curlewis
Dr WB Goodfellow1,2
GA Hounsell1
DG McGauchie1
Dr JW Stocker1
0
1
0
2
t
r
o
p
e
R
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a
u
n
n
A
–
d
e
t
i
i
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a
f
u
N
106
Executives
BF Benson
R Heath
KP Martin
DA Mellody
RF Ooms
MJ Pointon
DA Pullan
RG Reis
Total
Balance
at 1 August
2009
Granted as
Exercise
remuneration of options
Net Balance as
change
other
at 31 July
2010
20,038
24,162,610
48,280
708,018
–
2,383,614
46,720
43,780
74,501
215,234
415,632
20,966
343,298
17,583
151,616
119,315
28,771,205
Balance
at 1 August
2008
2,383,614
25,912,610
44,533
665,846
45,170
17,038
41,522
149,760
209,001
402,673
16,491
331,155
32,756
138,184
128,569
30,518,922
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,201
31,239
(8,017,720) 16,144,890
45,913
1,120,551
–
(2,367)
412,533
–
(2,383,614)
(2,997)
(2,259)
–
43,723
41,521
(11,339)
(8,984)
(21,497)
(838)
(9,889)
1,634
7,911
(15,219)
63,162
206,250
394,135
20,128
333,409
19,217
159,527
104,096
(10,043,444) 18,727,761
Granted as
Exercise
remuneration of options
Net Balance as
change
other
at 31 July
2009
–
–
2,293
1,550
1,550
–
1,550
12,895
6,233
12,895
9,671
12,143
4,827
13,432
10,746
89,785
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,383,614
(1,750,000) 24,162,610
48,280
708,018
46,720
20,038
43,780
1,454
40,622
–
3,000
708
(88,154)
–
64
(5,196)
–
(20,000)
–
(20,000)
74,501
215,234
415,632
20,966
343,298
17,583
151,616
119,315
(1,837,502) 28,771,205
notes to the financial statements continued
39. Key management personnel disclosures (continued)
Movements in shares (continued)
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 The shareholdings of 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 are held by Pacific Custodians Pty Ltd as trustee of the
plan.
2 The shareholding of Dr WB Goodfellow includes his relevant interest in:
(i)
St Kentigern Trust Board (430,434 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 (120,000 shares).
(iii) 531 Trust (400,861 shares). Dr Goodfellow and EW Preston are trustees of 531 Trust.
(iv) Auckland Medical Research Foundation (26,558 Step-up Securities). Dr Goodfellow does not have a beneficial interest
in these Step-up Securities.
(iv) Trustees of the Goodfellow Foundation (33,854 shares and 1,338 Step-up Securities). Dr Goodfellow is chairman of the
Trust Board and does not have a beneficial interest in these shares or Step-up Securities.
3 The shareholding of KM Hoggard has been removed under the net change other column due to his retirement as chairman
on 13 July 2010.
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
Excel Crop Care Ltd
F&N joint ventures
Purchases from
Sales to
Trade payable
Trade receivable
Sumitomo Chemical Company Ltd Sales to
Purchases from
Trade receivable
Trade payable
Bayer CropScience Nufarm Limited Sales to
SRFA LLC
Purchases from
Sales to
Commissions received
Interest received
Consolidated
2010
$000
291
47,754
(247)
36,608
1,001
2,029
251
564
–
–
–
–
–
2009
$000
978
68,450
–
36,028
–
–
–
–
17,069
18,938
3,682
57
3
The Bayer CropScience equity investment and the SRFA LLC joint venture were disposed of at July 2009.
These transactions were undertaken on commercial terms and conditions.
0
1
0
2
t
r
o
p
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R
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a
u
n
n
A
–
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i
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107
notes to the financial statements continued
41. Subsequent events
At 31 July 2010, the group was in breach of certain covenants under the deed of negative pledge (dated 24 October
1996), which contains the covenants and other terms common to all bankers. By 27 September 2010, the group
obtained written waivers from all parties to the deed in respect to these covenant breaches.
In the agreements signed 27 September 2010, the parties to those agreements confirmed that any undrawn facility
amounts are no longer available to the group. In the same agreements, the group has obtained its required funding
through to 15 December 2010 on a secured basis, subject to certain conditions and obligations. The group is currently
evaluating its options regarding the nature and terms of a new financing facility beyond 15 December 2010.
Consolidated
2010
$000
2009
$000
469
409
1,143
212
1,824
150
1,974
69
27
96
947
286
1,642
122
1,764
15
48
63
Refer to note 2(b) for further details.
42. Auditors’ remuneration
Audit services
KPMG Australia
Audit and review of group financial report
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
Audit services remuneration
Other services
KPMG Australia
Transaction due diligence services
Overseas KPMG firms
Other assurance services
Other services remuneration
0
1
0
2
t
r
o
p
e
R
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a
u
n
n
A
–
d
e
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i
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L
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a
f
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108
directors’ declaration
1. In the opinion of the directors of Nufarm Limited (the company):
(a) the consolidated financial statements and notes, and 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 group’s financial position as at 31 July 2010 and of its 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; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
2. There are reasonable grounds to believe that the company and the 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 2010.
4. The directors draw attention to note 2 to the consolidated financial statements, which includes a statement
of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Melbourne this 28th day of September 2010
DM McGauchie
Director
DJ Rathbone
Director
0
1
0
2
t
r
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independent auditor’s report
to the members of Nufarm Limited
Report on the financial report
We have audited the accompanying financial report of the Group comprising Nufarm Limited (the Company)
and the entities it controlled at the year’s end or from time to time during the financial year, which comprises the
consolidated balance sheet as at 31 July 2010, and consolidated income statement and consolidated statement
of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year ended on that date, a summary of significant accounting policies and other explanatory
notes 1 to 42 and the directors’ declaration.
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 Group’s financial position
and of its 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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110
independent auditor’s report continued
to the members of Nufarm Limited
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 the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 July 2010 and of its 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).
Material uncertainty regarding group debt refinancing
Without qualification to the opinion set out above, we draw attention to note 2(b) in the financial report which
details the status and terms of the Group’s debt financing arrangements.
As a consequence of breaching certain debt covenant requirements at 31 July 2010, the Group has subsequently
obtained written confirmation from its lenders that rights to call for immediate repayment of amounts outstanding
will be waived until 15 December 2010, by which time the Group expects to secure a revised longer term financing
arrangement under new terms and conditions. As part of providing waivers certain lenders to the Group have agreed
to provide short term funding to 15 December 2010 pursuant to agreements entered into on 27 September 2010.
The provision of such funding and/or continuation of waivers is subject to a number of conditions and obligations
as set out in the agreements, the details of which are set out in note 2(b).
The ability of the Group to meet the conditions and obligations as set out in the agreements, and to secure a longer
term revised debt financing arrangement by 15 December 2010 on mutually acceptable terms and conditions,
cannot presently be determined with certainty. These conditions, along with other matters as set out in note 2(b),
indicate the existence of a material uncertainty which may cast significant doubt over the Group’s ability to continue
as a going concern, and therefore, whether it will realise its assets and extinguish its liabilities at the amounts
stated in the financial report.
Material uncertainty regarding revenue recognised and valuation of accounts receivable relating
to a claim made on a supplier
Without qualification to the opinion expressed above, attention is drawn to the following matter. As stated in
note 2(d)(vi), the Group and a major supplier are in dispute relating to liability for a share of losses pursuant to
an Exclusive Distribution Agreement. During the year the Group recorded an additional receivable of $12.8 million
in relation to these losses and as at 31 July 2010 has recorded a total receivable owing by the supplier in relation
to these losses of $52.7 million (31 July 2009: $39.9 million). The matter is the subject of a commercial dispute
between the parties and is currently subject to arbitration proceedings, the outcome of which cannot be predicted
with certainty. No provision has been made for any shortfall in recovery of the amount.
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111
independent auditor’s report continued
to the members of Nufarm Limited
Report on the remuneration report
We have audited the remuneration report included under the heading ‘remuneration report’ in the directors’
report for the year ended 31 July 2010. 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 2010, complies with Section
300A of the Corporations Act 2001.
KPMG
BW Szentirmay
Partner
Melbourne
28 September 2010
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112
shareholder and statutory information
Details of shareholders, shareholdings and top 20 shareholders
Listed securities – 28 September 2010
Number
of holders
Number
of securities
Percentage held
by top 20
Fully paid ordinary shares
16,733
261,775,731
74.12
Twenty largest shareholders
Sumitomo Chemical Company
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
Falls Creek No 2 Pty Ltd
Amalgamated Dairies Limited
Citicorp Nominees Pty Limited
Challenge Investment Company Limited
ANZ Nominees Limited
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