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AnnuAl
RepoRt
2012
NUFARM
LIMITED
contents
01 Key events
01 Facts in brief
02 Managing director’s review
08 Business review
14 Health, safety and environment
18 Executive management
20 Board of directors
23 Corporate governance
32 Financial statements
33 Directors’ report
45 Lead auditor’s independence declaration
46 Income statement
47 Statement of comprehensive income
48 Balance sheet
49 Statement of cash flows
50 Statement of changes in equity
52 Notes to the financial statements
109 Directors’ declaration
110 Independent auditor’s report
112 Shareholder and statutory information
116 Directory
key events
– Underlying earnings show strong improvement
– Further progress on strategic growth plan
– Brazil business continues to strengthen
– Lower average debt reflects more effective working capital management
– Dividend reinstated
facts in brief
Trading results
Profit/(loss) attributable to shareholders
Material items
Underlying net profit after tax
Sales revenue
Total equity
Total assets
Ratios
Earnings per ordinary share
Earnings per ordinary share excluding material items
Gearing ratio
Net tangible assets per ordinary share
Distribution to shareholders
Annual dividend per ordinary share
People
Staff employed
12 months ended
31 July 2012
$000
12 months ended
31 July 2011
$000
72,594
42,846
115,440
2,181,551
1,476,802
2,801,268
(49,851)
148,130
98,279
2,083,589
1,564,118
2,837,836
12 months ended
31 July 2012
12 months ended
31 July 2011
22.3
38.7
24.1%
$2.88
(23.7)
32.9
22.9%
$3.28
6¢
–
3,401
3,193
The financial information contained within our financial statements has been prepared in accordance with IFRS. Refer to page 5 for definitions of the non-IFRS
measures used in the annual report. All references to the prior period are to the year ended 31 July 2011 unless otherwise stated. Non-IFRS measures have not
been subject to audit or review.
Nufarm Limited Annual Report 2012 | 01
Managing
director’s
review
doug rathbone aM
Managing director and chief executive
The ResULTs FoR The 2012 FinanciaL
yeaR aRe veRy saTisFying anD
ReFLecT conTinUeD gRowTh anD
eaRnings RecoveRy in The BUsiness
anD FURTheR PRogRess in ResPecT
oF oUR sTRaTegic gRowTh PLan.
The company reported a statutory
profit after tax of $72.6 million for the
12 months to 31 July, 2012. This compares
to a statutory loss after tax of $49.9
million in the previous financial year.
Underlying net profit after tax was
$115.4 million, representing a 17 per cent
increase on the underlying net profit after
tax of $98.3 million generated in the
previous year. Underlying earnings before
interest and tax (EBIT) was $206.0
million, an increase of 20 per cent on
the $171.8 million recorded in the 2011
financial year.
Group revenues increased by just under
five per cent to $2.18 billion (2011: $2.08
billion). On a constant currency basis,
revenues increased by almost 10 per cent.
Material items amounted to a net loss
of $42.8 million, including an after tax
impact of $30.5 million associated with
the proposed settlement of a shareholder
class action (refer subsequent events).
Earnings per share were 22.3 cents (2011:
a loss of 23.7 cents per share). Excluding
material items, earnings per share were
38.7 cents (2011: 32.9 cents).
In 2012, we saw earnings growth in
all of our crop protection geographic
segments, except Asia, which is the
smallest of those segments. In particular,
it was very pleasing to see the continued
turn-around in Brazil, and the very strong
improvement in the results generated by
that business.
In parallel with the strong profit growth
achieved in the period, we also delivered
very strong outcomes in respect of the
balance sheet.
Much closer attention to, and more
discipline around the management
of working capital – and a prudent
approach to the management of our
capital in general – has enabled us to
improve a number of balance sheet
parameters. This remains an important
focus for the company and we believe
there is more that can be achieved in
this area.
Net working capital at 31 July was
$771 million (31 July, 2011: $814 million)
while net debt increased marginally to
$468 million from $465 million at the
same time in the previous year. This small
increase included the impact of a debt
funded US$55 million acquisition to
support growth in the seeds business.
Profit/(loss) attributable to shareholders
.
9
7
3
1
.
9
9
7
.
6
2
7
.
0
4
2
-
.
8
9
4
-
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
n
o
i
l
l
i
m
$
02 | Nufarm Limited Annual Report 2012
Average net debt was lower in 2012 and
reflects more efficient management of
working capital through the course of
the full year.
The 2012 financial year was also a period in
which we continued to invest in important
operational improvements to the business.
The strengthening of the management
team; enhanced business systems and
reporting; and further progress on the
implementation of our regional strategies
are all important steps to ensuring we
put in place the elements that will enable
us to secure continued profit growth and
improved shareholder returns over the
long term.
final dividend
Directors declared a fully franked
final dividend of three cents per share,
resulting in a full year dividend of
six cents. No dividend was paid in
the previous year.
The final dividend will be paid on
16 November 2012 to the holders of
all fully paid shares in the company as
at the close of business on 19 October
2012. There is no conduit foreign income
attributed to the dividend.
The dividend reinvestment plan (DRP)
will be made available to shareholders
for the final dividend.
Directors have determined that the issue
price will be calculated on the volume
weighted average of the company’s
ordinary shares on the ASX over a
period of 10 consecutive trading days
commencing after the record date and
concluding prior to the date of allotment
of ordinary shares under the plan. The
last election date for shareholders who
are not yet participants in the DRP is
19 October. The board has determined
that, for this dividend payment, no
discount will apply to shares issued
under the DRP.
Underlying net
profit after tax
was $115.4 million,
representing a
17 per cent increase
Nufarm Limited Annual Report 2012 | 03
Managing
director’s
review continued
Material items
The after tax loss associated with material
items was $42.8 million (2011: net loss
$148.1 million). Major items included
$30.4 million in costs associated with the
settlement of a shareholder class action;
$5 million in restructuring costs; just under
$7 million in refinancing costs; and the final
amortisation charge associated with the
phase-out of several products in Brazil
($3.7 million). Other one-off costs related
to litigation expenses and an impairment
charge of just under $2 million relating to
Nufarm’s minority equity investment in
Excel Crop Care Ltd in India.
A $7.7 million gain was booked in relation
to the foreign exchange revaluation of
Nufarm step-up securities (NSS).
interest/tax/cash flow
Net external interest costs were lower
($40.9 million versus $48.9 million) due
to lower average net debt and more cost
effective facilities. The reported effective
tax rate is 34 per cent. Excluding material
items, the underlying effective tax rate
is 31.7 per cent (2011: 31.0 per cent), which
has been affected by a number of
non-recurring items including tax related
write-offs in France and Argentina.
Adjusting for those non-recurring items,
the effective tax rate for the year was
30 per cent.
The business generated net operating
cash flow of $166.5 million, which
was in line with the previous year
($165.2 million).
balance sheet management
Net debt at year end was $468 million,
slightly above that recorded on 31 July of
the previous year ($465 million). Average
net debt was down from $672 million in
2011 to $614 million in 2012, reflecting
more efficient management of working
capital through the course of the year.
This calculation excludes the impact
of the Seeds 2000 acquisition
(US$55 million) in December 2011.
Net working capital at 31 July reduced to
$771 million from $814 million at the end
of the previous year. While receivables
were up on the prior period due to the
late timing of sales in some markets, this
was more than offset by improvements
on the inventories and payables lines.
The payables position at 31 July includes
the settlement ($43.5 million) relating
to a shareholder class action (refer to
subsequent events).
Average net working capital as a
proportion of sales was 45 per cent,
down from 50 per cent in the previous
year. This was particularly pleasing given
the growth of the business in markets
such as Brazil, where industry standard
terms place increased pressure on
working capital.
year ended 31 July 2012
Material items by category
Class action settlement
Restructuring costs
Due diligence and litigation costs
Investment in associate write down
Intangibles write-off – Brazil
Debt refinancing costs
Net foreign exchange gains/(losses) on Nufarm step-up
securities financing
Total material items
add back material items impacting net finance costs:
– debt refinancing costs impacting net finance costs only
– net foreign exchange gains/(losses) on Nufarm
step-up securities financing
Total material items impacting operating profit
Pre-tax
$000
after-tax
$000
(43,500)
(7,295)
(3,552)
(1,993)
(3,708)
(9,931)
(30,450)
(5,013)
(2,427)
(1,993)
(3,708)
(6,952)
11,050
7,697
(58,929)
(42,846)
8,978
6,285
(11,050)
(61,001)
(7,697)
(44,258)
Gearing (net debt to net debt plus equity)
was 24.1 per cent (2011: 22.9 per cent).
Capital expenditure in 2012 was
$47.6 million, representing a return to
more normal levels, compared to the
$30.6 million expended in 2011 when the
company was subject to a refinancing.
People and organisation
During the 2012 financial year, the
company continued to invest in the
strengthening of management and the
enhancement of business systems. At
a head office level, key appointments
were made in areas including global
product management, finance, risk
management, information services and
global procurement and supply chain.
Several senior appointments were also
made at a regional level and within the
seed technologies business. I’m confident
these people will make a very valuable
contribution to the business over
future years.
Nufarm employees contributed
significantly to the much improved
financial performance of the business
in 2012. This was a period in which many
staff – at both a management and
employee level – assumed additional
responsibilities associated with business
improvement projects and undertook
training in new management processes
and policy.
The willingness of our people to rise
to that challenge shows a commitment
that deserves acknowledgement and
the appreciation of the board and our
shareholders.
subsequent events
On 1 August 2012, the company entered
into a conditional settlement agreement
in relation to the class action proceedings
commenced by Maurice Blackburn
and Slater & Gordon in early 2011.
The settlement covers claims made
on behalf of group members who
acquired shares during the period from
September 2009 to August 2010.
The settlement agreement was reached
14 months before the scheduled trial
date in September 2013, as part of
a court ordered mediation process.
04 | Nufarm Limited Annual Report 2012
Managing
director’s
review continued
Nufarm has agreed to pay $43.5 million,
which covers the claims, interest, the
costs of the litigation funders and
applicants’ legal fees. The settlement is
subject to court approval and, if court
approval is obtained, the class action
will be dismissed without admission
of liability by Nufarm.
While there remains considerable
uncertainty in relation to market
conditions in Europe, the company
is expecting some improvement in
its regional performance as structural
changes and a more focused
management approach begin
to yield benefits.
The settlement payment was recorded
as a material item in Nufarm’s 2012
financial year accounts.
In agreeing to the settlement, the Nufarm
board carefully considered risks and
costs associated with a protracted
litigation, and demand on management’s
time as the company implements its
strategic growth plans.
The seeds technologies segment is
again expected to deliver top line and
EBIT growth, although 2013 will see
additional investment in these businesses
to strengthen and consolidate Nufarm’s
position. This additional investment
will help deliver more secure long
term profit growth in the seeds
technologies segment.
Given at least average seasonal
conditions in Nufarm’s major geographic
markets, the company is well positioned
to generate an improved underlying
earnings result in the 2013 financial year.
Doug Rathbone AM
Managing Director
24 September 2012
outlook
With considerable supply pressure
on a number of key soft commodities,
the pricing outlook in relation to
those crops is very strong. If seasonal
conditions are supportive, growers will
look to take advantage of high crop
prices by maximising their yields and
this is generally a positive driver of crop
protection and seed technology sales.
Nufarm will continue to remain very
focused on its strategic growth plans
and will implement initiatives and make
appropriate changes to support those
plans. This will include an investment of
capital in areas that are seen to deliver
higher and more sustainable returns
over the medium to long term.
The Australian business is expected
to perform approximately in line with
2012, given seasonal conditions are
similar over the course of the year.
The North American business is expected
to generate modest growth at an EBIT
level, with the benefit of several new
product launches not scheduled to have
an impact on regional results until the
2014 financial year.
iFRs and non-iFRs financial information
Nufarm results are reported under International Financial Reporting Standards (IFRS) including underlying
EBIT and underlying EBITDA which are used to measure segment performance. Nufarm also includes
certain non-IFRS measures including underlying net profit after-tax and gross profit margin. These
measures are used internally by management to assess the performance of our business, make decisions
on the allocation of our resources and assess operational management. Non-IFRS measures have not been
subject to audit or review.
The following notes explain the terms used throughout this annual report:
1. Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is
underlying EBIT before depreciation and amortisation of $61.781 million for the year ended 31 July 2012
and $60.057 million for the year ended 31 July 2011. We believe that underlying EBIT and underlying
EBITDA provide useful information, but should not be considered as an indication of, or an alternative
to, profit/(loss) for the period as an indicator of operating performance or as an alternative to cash flow
as a measure of liquidity;
2. Underlying EBIT is used to reflect the underlying performance of Nufarm’s operations. Underlying EBIT
is reconciled to operating profit below;
year ended 31 July
Underlying EBIT
Material items impacting operating profit
Operating profit
3. Non-IFRS measures are defined as follows:
2012
$000
205,973
(61,001)
144,972
2011
$000
171,779
(143,690)
28,089
• underlying net profit after-tax – comprises profit/(loss) for the period attributable to the equity holders
of Nufarm Limited less material items as described on page 4;
• average gross margin – defined as average gross profit as a percentage of revenue;
• average gross profit – defined as revenue less a standardised estimate of production costs excluding
material items and non-product specific rebates and other pricing adjustments;
• net external interest expense – comprises interest income – external, interest expense – external and
lease expense – finance charges as described in note 10 to the 31 July 2012 Nufarm Limited financial
report; and
• constant currency revenue – reconciled as per the below – whereby ‘(a)’ represents the impact
from the fluctuation in exchange rates between all foreign currency denominated amounts and the
Australian dollar. Constant currency results exclude any benefit or loss caused by foreign exchange
fluctuations between foreign currencies and the Australian dollar, which would not have occurred if
there had been a constant exchange rate.
South America – and in particular, Brazil
– is positioned for another year of strong
growth and improved profit performance.
Key drivers will be the very buoyant local
market conditions, together with further
diversification of Nufarm’s portfolio.
year ended 31 July
FY 2011 revenue as reported
Foreign currency translation impact (a)
Revenues constant currency adjusted
FY 2012 revenue as reported
Change %
$000
2,083,589
(97,570)
1,986,019
2,181,551
10%
Nufarm Limited Annual Report 2012 | 05
Managing
director’s
review continued
Underlying net profit after tax
Group sales
.
9
3
6
1
.
6
9
5
1
.
4
5
1
1
.
3
8
9
.
6
8
5
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
Underlying EBITDA
1
.
0
8
3
.
3
6
5
3
.
8
7
6
2
8
.
1
3
2
.
3
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2
8
0
0
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0
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2
Gearing ratio
.
8
0
4
.
5
6
3
.
7
5
2
.
9
2
2
1
.
4
2
8
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$
n
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$
e
g
a
t
n
e
c
r
e
P
06 | Nufarm Limited Annual Report 2012
7
7
6
2
,
2
9
4
2
,
9
6
1
,
2
2
8
1
,
2
4
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$
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g
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C
8
0
0
2
9
0
0
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0
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0
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1
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0
2
Return on funds employed
.
4
7
1
7
.
1
1
.
4
0
1
6
8
.
4
5
.
8
0
0
2
9
0
0
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0
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Earnings per share
.
7
9
6
.
5
3
3
.
3
2
2
.
0
5
1
-
.
7
3
2
-
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
Nufarm Limited Annual Report 2012 | 07
Implementing important
changes to support our
strategic growth plan
08 | Nufarm Limited Annual Report 2012
business
review
The BUsiness PeRFoRmeD soLiDLy in The 2012 FinanciaL yeaR, againsT a BackDRoP oF mixeD
seasonaL anD maRkeT conDiTions in The vaRioUs geogRaPhies in which nUFaRm oPeRaTes.
Australia experienced average seasonal
conditions; market conditions in Brazil
were mostly positive although areas of
the country were impacted by drought;
while in the USA – after a good start to
the season – severe drought had an
impact. Most European markets had
challenging climatic conditions during
key periods of the year, while economic
and credit risks were also elevated in
Europe.
In the 2012 financial period, the company
continued to implement important
changes in support of its strategic
growth plan. This included a review and
realignment of development programs;
the further diversification of product
offerings; additional resources to support
higher value growth segments; and the
strengthening of business systems and
management at both a corporate head
office and regional level.
Corporate (head office) costs were
higher in 2012 at $41.4 million (2011:
$30.5 million). This reflected investment
in additional management resources and
systems as well as increased incentive
payments made in parallel with the
earnings recovery in the business.
Nufarm’s crop protection business,
which accounts for 94 per cent of
group revenues, grew sales by three
per cent to $2.06 billion and generated
an average gross margin of 27 per cent
(2011: 27 per cent). The company’s seed
technologies business grew sales
by 39 per cent to $121.0 million and
generated an average gross margin
of 53 per cent, slightly up on the
previous year (52 per cent).
operating segments summary
The table above right provides a summary
of the performance of the operating
segments for the 2012 financial year
and the corresponding period.
year ended 31 July
Revenue
Underlying eBiT
2012
2011
change
(%)
2012
2011
change
(%)
($000)
crop protection
Australia and
New Zealand
Asia
Europe
North America
South America
701,022
125,586
431,095
470,243
332,636
674,827
142,297
435,794
418,931
324,544
1,996,393
87,196
–
Total crop protection 2,060,582
Seed technologies
– global
120,969
Corporate
–
nufarm group
2,181,551 2,083,589
3.9
-11.7
-1.1
12.2
2.5
3.2
105,982
16,735
43,223
33,327
17,526
94,723
22,319
38,346
16,456
4,107
216,793
175,951
30,589
38.7
26,318
N/A (41,409) (30,490)
171,779
4.7
205,973
11.9
-25.0
12.7
102.5
326.7
23.2
16.2
35.8
19.9
australia/new Zealand
The Australian and New Zealand
businesses generated $701.0 million in
segment sales, representing 34 per cent
of total crop protection revenues. This
compares with 2011 sales of $675 million
(also 34 per cent of total). Underlying
EBIT increased from $94.7 million in the
2011 financial year to $106.0 million in
2012, with the majority of the
improvement contributed by New
Zealand and the Croplands spray
machinery business.
Seasonal conditions in Australia were
average, with generally good rainfalls in
most of the eastern and southern states,
and a late and dry season in Western
Australia. Both pest and disease pressure
was below that of the previous year.
A solid first half performance was driven
by higher value herbicide sales into
the cotton and horticulture segments.
Glyphosate margins experienced
increased pressure with the high level
of formulated Chinese imports, but there
was solid demand for the company’s
post emergent herbicide range, and
the launch of a new 2,4-D formulation
– Amicide Advance – was very successful.
A number of other new products were
launched under both the Nufarm and
Crop Care brands, and Crop Care’s
proprietary ‘suSCon’ controlled release
technology continued to secure
increased market support.
The Croplands machinery business
benefited from increased capital
expenditure in the farm sector and
generated strong sales and an
improved margin.
Nufarm’s New Zealand business also
generated higher sales and improved
profitability on the previous year with
the important pasture and horticulture
markets performing solidly. The
company’s New Zealand based
insecticide and fungicide manufacturing
facility, which produces product for
export to Nufarm’s global markets,
contributed strongly in its first full
year of operation.
asia
Asian crop protection sales were $125.6
million in 2012 (six per cent of total
revenues), compared to $142.3 million in
the previous year (seven per cent of total
revenues). Underlying EBIT was $16.7
million, down from $22.3 million in 2011.
Nufarm Limited Annual Report 2012 | 09
south america
South American crop protection sales
increased slightly to $332.6 million (2011:
$324.5 million), but generated a much
stronger underlying EBIT, $17.5 million
versus $4.1 million in 2011. Regional
sales comprised 16 per cent of total
crop protection revenues, the same
proportion as in the previous year.
Seasonal impacts in Brazil were mixed
during the year, with drought conditions
in the south of Brazil affecting demand
in the first half of the period and dry
conditions in the north east of the
country having a negative impact on
some sales in that region in the latter
months of the second half. Conditions
in the important central cropping regions
were positive, however, and supported
a very large ‘safrinha’ corn crop. Brazilian
growers looked to capitalise on strong
crop prices, and this generated positive
demand for crop protection inputs.
Nufarm’s Brazilian business strengthened
its positions in pasture and sugar cane
and introduced new products into several
segments, including vegetable crops.
In local currency, Brazil sales were up
by nearly 14 per cent to R$488 million.
Improved margins were driven by
new product introductions and a
more balanced portfolio.
Dry conditions in the north of Argentina
affected summer cropping activity,
however Nufarm generated increased
sales and an improved margin. The
business in Chile also performed well
but a combination of seasonal impacts
and increased competition in some
segments resulted in Nufarm’s
Colombian operations generating
a result in line with the previous year.
europe
European sales were $431.1 million, down
slightly on the previous year (2011: $435.8
million) and represented 21 per cent of
total crop protection revenues (2011: 22
per cent). Underlying EBIT improved to
$43.2 million, up 13 per cent on the prior
year ($38.3 million).
Climatic conditions were varied across
Europe, with a dry autumn and very
cold winter negatively affecting demand
in the first half of the year in northern
and eastern markets before conditions
improved in the spring and summer
seasons. Southern Europe also
experienced mixed seasonal conditions
and the UK recorded its wettest summer
in 100 years.
Challenging economic and credit
conditions had an impact on a number
of European markets and this required
careful risk management in relation to
receivables exposure.
On a local currency basis, Nufarm
sales were higher in Germany, France,
Romania, Hungary and Ukraine and
the company reinforced its strong
position in the corn herbicide market.
Most Mediterranean markets, including
Spain and Italy, recorded lower sales.
In Italy, Nufarm entered into an
agreement with Sumitomo Chemical
Company’s local subsidiary and will
now sell its crop protection portfolio
via Sumitomo’s larger distribution
platform. The agreement took effect
from 1 August, 2012.
Nufarm’s European based phenoxy
herbicide manufacturing facilities made
a significant contribution to the regional
result. Global demand for this range of
products was strong and the facilities in
Holland, Austria and the UK all produced
increased volumes on the previous year
and generated improved overhead
recoveries.
Major product segments
crop protection
Nufarm’s crop protection business,
which accounts for 94 per cent of
group revenues, grew sales by three
per cent to $2.06 billion and generated
an average gross margin of 27 per cent
(2011: 27 per cent).
Herbicide sales were up five per cent
on the previous year to $1.43 billion
and generated an average gross margin
of 26 per cent (2011: 26 per cent).
business
review continued
A prolonged dry season, which reduced
applications in major crops, including the
important plantation segment, had an
impact on Nufarm’s Indonesian business.
Increased pressure on glyphosate
margins also contributed to lower
sales and a lower EBIT result.
A number of new products were
launched during the year as the Nufarm
businesses in Asia further diversified
their portfolios in the rice and fruit
and vegetable segments.
north america
North American crop protection sales
increased by just over 12 per cent
to $470.2 million. Measured in local
currency, the increase in US sales was
slightly higher. The region generated
23 per cent of total crop protection
revenues (2011: 21 per cent). Underlying
EBIT was up strongly, increasing to
$33.3 million from $16.5 million in the
previous year. After a positive and early
start to the major cropping season in the
US, conditions deteriorated significantly,
with key agricultural regions experiencing
the worst drought in many years. Nufarm
was able to capitalise on the strong early
season conditions with large plantings of
corn and soybeans supporting positive
demand for herbicides during that
period. Glyphosate pricing remained
competitive in the US.
The dry conditions had a negative
impact on the turf and ornamental
segment, particularly opportunities
for fungicide sales in the latter months
of the financial year. Despite this, Nufarm
increased its sales in this segment,
reflecting its strong market position and
customer relationships. The company
also performed strongly in the industrial
vegetative management segment.
Seasonal conditions in Canada were
mixed, but increased cropping activity
drove stronger demand for crop
protection inputs after several years
of flood-affected below average
plantings. Nufarm Canada benefited
from the addition of the Valent range
of products in the second half of the
financial year. Valent is a subsidiary
of Sumitomo Chemical Company.
10 | Nufarm Limited Annual Report 2012
business
review continued
Glyphosate sales were 22 per cent of
crop protection revenues, slightly higher
than in the previous year (21 per cent).
Pricing and margins improved in some
markets, including South America,
but increased competitive pressure
in Australia and Indonesia led to a fall
in glyphosate profitability. Phenoxy
herbicides were in strong demand in
most markets and Nufarm’s leadership
position in this segment helped facilitate
both higher sales and an increase in
margins. Several new formulations and
mixtures were successfully launched
and a new production facility for a
proprietary dry formulation of 2,4-D
was commissioned in India. An expanded
position in the pasture market in Brazil
helped drive increased sales of picloram,
and several other herbicides – including
bromoxynil and trifluralin – also recorded
increased sales.
Insecticide sales were down on the
previous year ($184 million versus
$197 million) but when these numbers
are adjusted to reflect several products
that were phased out at the end of last
financial year, the segment generated
eight per cent growth. These sales
generated an average gross margin
of 35 per cent (2011: 36 per cent).
Insect pressure in South America
was relatively high, leading to strong
demand for Nufarm’s insecticide
portfolio, in particular products based
on imidacloprid. Two insecticides that
had generated $27.5 million in sales
for Nufarm in 2011 were phased out in
Brazil at the end of that year, however
replacement products generating
improved margins have been introduced
into the portfolio. Insect pressure in
Europe was below average in most
markets and Australia did not see a
repeat of the locust infestation that
generated very high sales of products
such as fipronil in the previous year.
Other insecticide products to perform
strongly in 2012 included lambda-
cyhalothrin, on which several new
product launches were based, and
abamectin.
Fungicide sales in 2012 were $213 million
versus $244 million in the previous year.
A lower average gross margin (28 per
cent versus 32 per cent) was achieved.
The 2012 financial year was characterised
by lower fungal disease pressure in most
of Nufarm’s major geographic markets.
Dry conditions in the south of Brazil,
severe drought through the major
cropping regions of the United States
and the severe winter experienced in
much of Europe all contributed to softer
demand for fungicide products in those
markets and increased competition
for lower sales. Australia also had a
lower incidence of fungal disease. Initial
registration approvals were secured by
Nufarm in France and the UK for
azoxystrobin, a major fungicide with
global sales in excess of $1 billion.
Additional registrations, and related
product launches, will follow in other
markets.
Sales of plant growth regulators were
up by just over 12 per cent year on year
to $76 million, with a number of niche
products positioned in the horticulture
segment performing strongly and
generating good margins.
Nufarm’s spray machinery business,
Croplands (Australia and New Zealand),
also recorded higher sales ($57 million
versus $47 million) and a stronger EBIT
contribution.
seed technologies
The company’s seed technologies
business grew sales by 39 per cent to
$121.0 million and generated an average
gross margin of 53 per cent, slightly
up on the previous year (52 per cent).
Underlying EBIT was $30.6 million,
up from $26.3 million in the previous
corresponding period. This segment
includes the global Nuseed business and
Nufarm’s seed treatment applications.
Generally positive seasonal conditions
and strong oilseed prices drove growth
in canola and sunflower markets in
Australia. Nuseed Australia realised
excellent growth in all segments
including Roundup Ready canola, triazine
tolerant canola and high oleic sunflower.
The Monola specialty canola oil business
experienced a strong lift in demand with
several new end-use customers, including
KFC Australia, committing to the product
for its high stability, low saturate and
trans fat free profile.
Nuseed’s sorghum business achieved
record volume and improved margin,
driven by growth in the US domestic
market and the establishment of demand
for elite hybrids in emerging markets.
Increased investment in product
development, sales and marketing within
South America and Mexico resulted in
improved market presence and branded
sales growth. The company also invested
in the development of its food grade,
milling quality grain sorghum, which is
attracting strong international interest
and the emergence of a completely
new high value segment.
The Nuseed sunflower business
experienced strong organic and
acquisition growth in 2012. With the
purchase during the year of Seeds 2000
USA, Seeds 2000 Argentina and the
breeding assets of Super Seeds in Serbia,
Nuseed has established a global breeding
and development sunflower platform.
Seeds 2000 experienced strong growth
in its oilseed sunflower segments in the
US and in European markets. The China
confection sunflower market saw a drop
in total plant acreage in 2012 due to carry
over grain stocks from the record crops
in 2011. Despite this, Nuseed continued
to gain total share of this high value
segment.
Sales of seed treatment chemistry
grew strongly in 2012, with the US,
Brazil and European markets contributing
the majority of that growth. Several
new products were launched and
registration approvals were secured
to support additional product launches
over the next 12 months. Nufarm supplied
seed treatment solutions to a number of
major seed companies and is increasingly
seen as a reliable supply partner in this
expanding market segment.
During 2012, Nuseed’s global headquarters
were relocated to Chicago, reflecting its
expanding operations in North America.
The company invested in strengthening
management, in the optimisation of
its seed technologies research and
development pipeline and in the
establishment of the Nuseed brand.
Nufarm Limited Annual Report 2012 | 11
business
review continued
Sales revenue by region 2012
Crop protection segment
Sales revenue by region 2011
Crop protection segment
Australia/New Zealand
North America
South America
Europe
Asia
$2,061 million
34%
23%
16%
21%
6%
Australia/New Zealand
34%
North America
South America
Europe
Asia
$1,996 million
21%
16%
22%
7%
Sales by product segment 2012
Crop protection segment
Sales by product segment 2011
Crop protection segment
Herbicides
Fungicides
Insecticides
Other*
70%
10%
9%
11%
Herbicides
Fungicides
Insecticides
Other
68%
12%
10%
10%
$2,061 million
$1,996 million
* Other includes equipment, adjuvants,
PGR’s and industrial.
Sales by product segment 2012
Seed technologies
Sales by product segment 2011
Seed technologies
Seed
Seed treatment
65%
35%
Seed
Seed treatment
61%
39%
$121.0 million
$87.2 million
12 | Nufarm Limited Annual Report 2012
Nufarm Limited Annual Report 2012 | 13
HealtH, safety
and environMent
nUFaRm conTinUes To PLace a veRy high PRioRiTy on managing anD minimising
The comPany’s enviRonmenTaL imPacT anD saFegUaRDing The heaLTh anD saFeTy
oF oUR emPLoyees.
As an organisation, we support initiatives
aimed at improving industry-wide
performance; we adhere closely to
regulatory requirements; and we are
committed to a culture of continuous
improvement.
It is very disappointing when accidents
occur that result in harm to our people.
The 2011 tragedy of a fatal accident at
our manufacturing facility in Laverton
North is a stark reminder of the need
to be ever more vigilant when it comes
to personal safety in the workplace.
Ultimately, the test of how well we
maintain a safe working environment
comes down to the vigilance and
response of individual employees.
Despite regular training and the best
procedures, circumstances will often
result in us having to use initiative and
good judgement when going about our
own work and encouraging our work
colleagues to follow safe work practice.
Nufarm’s annual report of its health,
safety and environment performance
for the calendar year 2011 may be
downloaded from the company’s
website, together with individual
site reports.
It provides performance data and
examples of initiatives by employees
to enhance the safety of our people
and customers, and to minimise
environmental effects from our
operations and products.
The health and safety data is collated
from 16 manufacturing sites, 20 offices
and regional service centres. Not
included is data from a further eight
offices in Asia and South America.
The health and safety data includes
permanent and casual employees and
contractors, as well as targets set by the
Nufarm board, including the expectation
of an annual 15 per cent improvement.
LTIFR 2006-2011
Severity 2006-2011
4.0
3.5
3.0
2.5
2.0
1.5
1.0
8
7
6
5
4
3
2
0.06
0.05
0.04
0.03
0.02
0.01
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
Limit
Actual
Limit
Actual
MTIFR 2006-2011
Unusual incident report/injury report
versus LTIFR 2006-2011
14
12
10
8
6
4
2
0
1
0
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
14
12
10
8
6
4
2
0
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
Limit
Actual
LTIFR
UIR/IR ratio
14 | Nufarm Limited Annual Report 2012
HealtH, safety
and environMent continued
nufarm 2012 limits
LtiFR <1.16 MtiFR <2.31 Severity <0.014
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 is the number of lost
time injuries plus those that 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.
Nufarm includes employees, contractors
and visitors in its statistics.
The injury statistics reported for the 2011
period reflect the fact that it requires only
a small number of incidents to reverse a
trend of improving performance.
Nufarm continues to expand its
behavioural training courses across its
operations, focusing on people related
incidents. A review of the 20 lost time
injuries in 2011 showed that all could have
been prevented. Engineering solutions
remove the more risky situations but
what remains are a few injuries that have
to do with behaviour.
We need to know what happened and
then determine what needs to be done to
prevent or modify the situation to avoid it
resulting in a further incident. The causes
may include: lack of training; time pressure;
fatigue; lack of understanding (especially
of written instructions); and language
difficulties. We need to deal with the
causes if we are to further reduce injuries.
On a broader front, the company has
achieved very significant reductions
in its carbon emissions over the past
decade of operations. Despite a
significant increase in the volume of
product produced at Nufarm’s global
manufacturing facilities, we have
reduced our CO2 emissions to 40 per
cent of the level produced in 2001.
Nufarm’s water consumption has also
dramatically reduced through process
and technology improvements and a
rationalisation of production to improve
efficiencies.
Water efficiency 2006-2011
Production volume 2006-2011
500
s
e
n
n
o
t
0
0
0
‘
400
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2.5
2.0
1.5
t
c
u
d
o
r
p
s
e
n
n
o
t
/
r
e
t
a
w
s
e
n
n
o
t
200
150
s
e
n
n
o
t
0
0
0
‘
100
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
CO2 released from energy use
and processes 2006-2011
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
Nufarm Limited Annual Report 2012 | 15
16 | Nufarm Limited Annual Report 2012
Nufarm Limited Annual Report 2012 | 17
executive
ManageMent
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 39
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 also served as a
non-executive director on the board
of CSIRO (2007-2010).
brian benson
group executive 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.
Paul binfield
chief financial officer
Paul Binfield joined Nufarm in November
2011. He has held senior strategic financial
roles at Coles Liquor and Hotels, a major
division of Wesfarmers Ltd, and at Mayne
Group. Paul has extensive experience
in publicly listed and private company
finance functions, both in Australia
and the UK.
bonita croft
group executive human resources
and organisation development
Bonita joined Nufarm in December 2010
in a newly created role responsible for
people and organisation structure. She
is a very experienced professional who
has had previous human resources
executive roles in large companies
with international operations, including
Brambles.
rodney Heath
group executive 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.
greg Hunt
group executive global marketing
and business development
Greg joined Nufarm in February 2012.
He has had considerable executive and
agribusiness experience with a successful
career at Elders Australia Limited where
he held a number of management
positions focused on both the Australian
and international operations of Elders.
Greg was appointed chief executive
officer of Elders in 2001, a position he
held until 2007, leading the company’s
operations across a broad range of
activity, including rural merchandising
and product distribution. After leaving
Elders, Greg worked with a number of
organisations in business development
and agribusiness related advisory roles.
He is a director of Tandou Limited.
dale Mellody
group executive global supply
chain and strategic procurement
Dale Mellody joined Nufarm as a
territory manager in 1995, having
completed his bachelor of agricultural
science. Promoted to the senior
management group in July 2005, he
has had various global roles including
group executive global marketing,
general manager NAFTA and has
assisted with a number of company
acquisitions. Dale is now responsible
for global supply chain and strategic
procurement.
Mike Pointon
group executive 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 executive 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 executive corporate strategy
and external affairs
A former journalist, political adviser and
lobbyist, Robert joined Nufarm in 1991.
Robert has executive management
responsibility for corporate strategy
and is responsible for global issues
management, investor relations, media,
government and stakeholder relations.
bob ooms
group executive chemicals
(1999–2012)
Bob Ooms joined the company in 1999. An
industrial chemist by training, he has more
than 40 years experience in the chemical
industry. At the time of his retirement in
February 2012, he was responsible for
global supply chain issues.
18 | Nufarm Limited Annual Report 2012
executive
ManageMent continued
doug Rathbone AM
david Pullan
Robert Reis
Mike Pointon
Bonita croft
Brian Benson
Paul Binfield
dale Mellody
Rodney Heath
Greg Hunt
Nufarm Limited Annual Report 2012 | 19
board of
directors
donald Mcgauchie ao
chairman
Donald McGauchie AO, 62,
joined the board in 2003 and
was appointed chairman 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. He is a former
member of the board of the
Reserve Bank of Australia.
Donald is chairman of
Australian Agricultural
Company Limited and a
director of James Hardie
Industries SE and Graincorp
Ltd.
Donald is chairman of the
nomination and governance
committee and a member
of the human resources
committee.
doug rathbone aM
managing director
and chief executive
Doug Rathbone AM, 66,
joined the board in 1987.
His background is chemical
engineering and commerce
and he has worked for Nufarm
Australia Limited for 39 years.
Doug was appointed
managing director of
Nufarm Australia in 1982
and managing director
of Nufarm Limited in
October 1999.
He was appointed to the
board of the CSIRO in
2007 and retired from that
board in September 2010.
anne brennan
gordon davis
Anne Brennan, 52, joined the
board on 10 February 2011.
Gordon Davis, 56, joined
the board on 31 May 2011.
He has a bachelor of forest
science (hons), master of
agricultural science and
holds a master of business
administration.
Gordon was managing
director of AWB Limited
between 2006 and 2010. Prior
to this, he held various senior
executive positions with Orica
Limited, including general
manager of Orica Mining
Services (Australia, Asia)
and general manager of
Incitec Fertilizers. He has also
served in a senior capacity on
various industry associations.
Gordon is chairman of the
health, safety and environment
committee and a member of
the audit committee and the
human resources committee.
She has a bachelor of
commerce (hons) from
University College Galway
and is a fellow of the Institute
of Chartered Accountants
in Australia and a fellow of
the Australian Institute
of Company Directors.
She has over 25 years
experience in senior finance
roles and in professional
accounting firms.
She was formerly the
executive finance director
for the Coates Group and
chief financial officer for CSR.
Anne is a director of Myer
Limited, Charter Hall Group,
Argo Investments Limited
and Echo Entertainment
Group Limited. She is also
a director of Cuscal Limited,
Rabobank Australia Limited
and Rabobank New Zealand
Limited.
Anne is a member of the audit
committee and health, safety
and environment committee.
20 | Nufarm Limited Annual Report 2012
board of
directors continued
bob edgar
(retired 27 March 2012)
Bob Edgar, 66, 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 chairman of Centro
Retail Australia and 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.
Bob was chairman of the
human resources committee
and a member of the audit
committee and nomination
committee.
John stocker ao
(retired 1 December 2011)
John Stocker AO, 67, 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 chief executive
and subsequently chairman
of CSIRO. He is a principal of
Foursight Associates Pty Ltd
and is a director of Telstra
Corporation Ltd.
John was a member of
the audit committee.
bruce goodfellow
garry Hounsell
Peter Margin
Bruce Goodfellow, 61, 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.
Dr Goodfellow is a director of
Sanford Ltd, a public company
registered in New Zealand
and listed on NZX Limited,
Chairman of Refrigeration
Engineering Co Ltd and a
director of Sulkem Co Ltd and
Cambridge Clothing Co Ltd,
all privately owned companies.
Bruce is a member of the
nomination and governance
committee.
Garry Hounsell, 57, joined the
board on 1 October 2004.
Peter Margin, 52, joined the
board on 3 October 2011.
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 a director of Qantas
Airways Limited, Orica Ltd,
Dulux Group Ltd, Treasury
Wine Estates Limited and
has been appointed to the
Advisory Board of Rothschilds
Australia. Garry is also
chairman of the audit
committee at Qantas and
Dulux. In the past three
years Garry has been
deputy chairman of Mitchell
Communication Group Ltd.
Garry is chairman of the
audit committee and a
member of the nomination
and governance committee.
He has a bachelor of science
(hons) from the University of
NSW and holds a master of
business administration from
Monash University. Peter has
many years of leadership
experience in major Australian
and international food
companies. His most recent
role was a chief executive of
Goodman Fielder Ltd and,
before that Peter was chief
executive and chief operating
office of National Foods Ltd.
Peter has also held senior
management roles in Simplot
Australia Pty Ltd, Pacific
Brands Limited (formerly
known as Pacific Dunlop
Limited), East Asiatic
Company and HJ Heinz
Company Australia Limited.
Peter is currently a director
of Bega Cheese Ltd and
PMP Limited and has been
appointed to the advisory
board of Grant Samuel. Over
the past three years Peter
has been a director of
Goodman Fielder Ltd.
Peter is chairman of the
human resources committee
and a member of the health,
safety and environment
committee.
Nufarm Limited Annual Report 2012 | 21
22 | Nufarm Limited Annual Report 2012
corPorate
governance
nUFaRm’s BoaRD PRocesses have Been RevieweD To ensURe They RePResenT anD PRoTecT
The inTeResTs oF aLL sTakehoLDeRs.
The review included detailed consideration
of the Corporate Governance Principles
and Recommendations (‘the ASX
principles’), published by the Australian
Securities Exchange Limited’s (ASX)
Corporate Governance Council.
Nufarm’s corporate governance
practices can be reviewed 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 30 best
practice ASX recommendations during
our reporting period and, where we do
not comply, to explain why not. Nufarm
complies with all the ASX principles.
Management and
oversight of nufarm
The board
The governing body of the company is
the board of directors. The board’s 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;
• review and approve operating budgets;
• approve major capital expenditure,
acquisitions, divestments and
corporate funding;
• oversee risk management and internal
compliance; and
The company is managed according to
the recommendations of ASX Principle 1.
• review 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.
There are seven scheduled board
meetings each year. When necessary,
additional meetings are convened to deal
with specific issues that require attention
before the next scheduled meeting. Each
year the board also reviews the strategic
plan and direction of the company.
At 31 July 2012, there are four board
committees: audit; human resources;
nomination and governance; and health,
safety and environment. All directors
are entitled to attend any committee
meeting.
Details of the attendances at meetings
of board and committees during the
reporting period appear on page 34
of this report.
evaluating the performance
of senior executives
The performance of the senior executive
team is reviewed by the managing
director, and then the human resources
committee and the board, as part of the
annual remuneration review. In the case
of the managing director, the human
resources committee and the board
conduct his review.
A performance evaluation of senior
executives was undertaken in accordance
with this process in the reporting period.
The executive compensation principles
and remuneration mix are set out in
detail in the remuneration report on
pages 35 to 44 of this report.
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
properly discharges its responsibilities.
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 judgement to the
board. The board applies the framework
set out in ASX Principle 2 to determine
the independence of directors. To decide
whether a director has a material
relationship with the company that may
compromise independence, the board
considers all relevant circumstances.
The board reviewed the ASX principles
and the circumstances of individual
directors and believes it is unnecessary
to define any specific materiality limits,
except that a substantial shareholder is
defined as one who holds or is associated
directly with a shareholder controlling
in excess of five per cent of the
company’s equity.
Tenure
The board believes that the way directors
discharge their responsibilities and their
contribution to the success of the
company determines their independence
and justifies their positions.
The nomination committee reviews the
performance of directors who seek to
offer themselves for re-election at the
company’s annual general meeting. That
committee then recommends to the
Nufarm Limited Annual Report 2012 | 23
corPorate
governance continued
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 all directors are independent with
the exception of Dr WB Goodfellow
(non-executive director) and DJ
Rathbone (chief executive officer
and managing director).
Profiles of each board member, including
terms in office, are on pages 20 to 21 of
this report.
access to independent advice
To help directors discharge their
responsibilities, any director can appoint
legal, financial or other professional
consultants, at the expense of the
company with the chairman’s prior
approval, which may not be
unreasonably withheld.
The board charter provides that
non-executive directors may meet
without management present.
conflicts of interest
Board members must identify any
conflict of interest they may have in
dealing with the company’s affairs and
then refrain from participating in any
discussion or voting on these matters.
Directors and senior executives must
disclose any related party transactions
in writing.
chairman of the board
The chairman is elected annually at the
directors’ meeting immediately following
the company’s annual general meeting.
Nufarm’s chairman, Donald McGauchie,
is an independent director.
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.
24 | Nufarm Limited Annual Report 2012
Nufarm recognises the valuable
contribution made by each board
member to the effective running of the
company. When board positions become
available the opportunity is taken to
review the mix of skills and experience
on the board in considering the skills
and experience sought in new directors.
This analysis forms the basis of selection
criteria, which includes diversity, both as
to gender and experience.
The board is committed to reviewing
its performance and ensuring the board
has the skills and knowledge to provide
appropriate leadership and governance
for the company.
For some years now the board has
undertaken an annual internal survey
of its performance, the results of which
are used to monitor and improve
performance and identify ongoing
development to ensure directors have
a suitable level of knowledge of the
business.
In the current period, this formal internal
review was undertaken together with the
chairman’s assessment of board members
against the skills and experience matrix.
An external assessment is being
considered in 2013.
In line with ASX Principle 2.6 Nufarm
applies a capability matrix to assess the
collective capability of the board. This
matrix covers qualifications, strategic and
functional expertise, industry knowledge,
business and board experience and
diversity. Prior to initiating a search for
a new board member, these areas of
capability are reviewed in light of
Nufarm’s strategy and the prevailing
and expected market conditions. The
collective capability of the current board
is assessed against requirements and the
search then focuses on finding a board
member who will best complement the
current mix of capability on the board.
The nomination and governance
committee
Donald McGauchie is chairman of the
nomination committee and Bruce
Goodfellow and Garry Hounsell 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 following responsibilities:
• considering the appropriate size and
composition of the board;
• developing criteria for board
membership selection, composition
and assessing the skills required on
the board;
• reviewing the skills represented on the
board and determining whether those
skills meet the required skills;
• developing a process for the evaluation
of the performance of the board, its
committees and directors;
• recommending changes to the
membership of the board;
• making recommendations to the
board on candidates it considers
appropriate for appointment;
• reviewing board succession plans;
• in conjunction with the human
resources committee, ensuring the
application of the diversity policy
to the selection of board members;
• reviewing the time required from
non-executive directors and whether
those requirements are met;
• reviewing any retiring non-executive
director’s performance and making
recommendations to the board as to
whether the board should continue
to support the nomination of a retiring
non-executive director;
• managing the process of managing
director recruitment and transition
on behalf of the board;
• reviewing and approving the
company’s corporate governance
policies for continuous disclosure
and securities trading; and
• reviewing the company’s code of
conduct and other ethical standards.
corPorate
governance continued
The capability matrix is also used to
select induction, development and
education activities for the board and
to articulate the ongoing relevance of
a board member’s expertise prior to
recommending re-election of that
board member.
In 2012 the board reviewed and updated
the capability matrix and determined
that all the criteria remained relevant
and were free of gender bias.
The board ensures that new directors are
inducted to the company appropriately,
including relevant industry knowledge,
visits to specific company operations
and briefings by key executives.
All directors may obtain independent
professional advice and have direct
access to the company secretary, who
is appointed by, and accountable to,
the board on all governance matters.
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
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.
Diversity and inclusion
Nufarm is committed to building a
diverse and inclusive workforce. Diversity
of gender, sexual orientation, age,
ethnicity and religion increase our
capability to develop and maintain
a high performing workforce, and to
better take advantage of the diverse
challenges and opportunities we face
around the globe.
To this end opportunities are provided
for our people to work in different
countries and regions as part of their
development. Leadership teams within
countries and regions, are representative
of those countries and regions, resulting
in truly global representation across
the business.
In 2012 an initiative was undertaken
to better understand our diversity
profile and identify opportunities for
improvement. As a first step to creating
a sustainable diverse workforce, Nufarm
established a platform upon which
to base diversity objectives and
programs. Gender and culture
were confirmed as the first areas for
specific focus, without diminishing
the company’s commitment to inclusion
of all employees. Five measurable
objectives were set for the year.
1. Adopt a formal diversity policy
Nufarm adopted a formal diversity policy
in 2012. This policy has been published
on our website – www.nufarm.com
2. Articulate nufarm’s overall approach
to implementation of the diversity policy
Nufarm’s overall approach is to establish
and maintain long term sustainable
diversity and inclusion. Our initial areas
of focus will be gender and culture. The
company will combine the use of planned
programs to create a diverse talent pool
with activities to ensure current
employees are treated equitably and
provided with equal opportunities for
career progression and developmental
support.
3. ensure human resources policies
and practices support the attraction
and retention of women and other
diversity candidates
In 2012 the following activities were
undertaken:
• flexible working arrangements were
reviewed, and have been available to
Nufarm employees for many years;
• recruitment and selection processes
were reviewed and confirmed as
being free of gender or other bias.
All recruitment assignments actively
seek qualified diverse candidates;
• expatriate and relocation policies
were reviewed and updated to
better facilitate cross-regional
movement of employees; and
• the Nufarm global performance
management and development
process was introduced in 2012
providing the opportunity for
performance and development
discussions with all employees.
4. establish a formal process to collect
global gender and cultural diversity
statistics
Our Equal Opportunity for Women
in the Workplace Agency (EOWA)
categories were revised in 2012 for
greater transparency of our Australian
gender statistics. Currently detailed
gender and other diversity statistics
are not available from all regions. The
processes and systems to enable the
collection and analysis of this data will
be a major focus for the coming year.
5. Review board selection criteria to
ensure gender diversity is encouraged
The selection criteria for board members
were reviewed and confirmed as being
appropriate for the company and without
inherent gender bias. Gender, experience
and cultural diversity are stated criteria
in the board capability matrix.
Nufarm Limited Annual Report 2012 | 25
corPorate
governance continued
2012 gender statistics
category
Non executive board members
Senior executives (MD and direct reports)
Permanent full time employees globally
Permanent part time* employees globally
male
6
9
2,125
24
Female
1
1
597
63
* Part-time = regular hours but less than full time e.g. 20 hrs per week The balance of staff are employed
on a casual or temporary basis mainly in manufacturing areas. The mix of male and female varies but is
predominantly male.
Our diversity and inclusiveness focus in
2013 will be in the following three key areas:
1. build a deeper understanding of our
diversity profile through improved
reporting and the Nufarm employee
survey;
2. create an employee value proposition,
targeted at diverse candidates
including gender, culture and
experience, to attract them to
our industry and company; and
3. continue to encourage gender and
cultural diversity while maintaining
inclusion for all employees.
The duties of the human resources
committee include:
• reviewing and making recommendations
to the board on the diversity policy
to ensure it is in line with applicable
legislation and governance principles;
• in conjunction with the nomination
committee, ensuring the application
of the diversity policy to board
appointments and succession;
• making recommendations to the board
regarding the diversity policy and
strategies to address board diversity;
• monitoring the application of the
diversity policy to executive
appointments and succession; and
• reviewing remuneration by gender.
The manner in which the company
promotes ethical and responsible
decision making is consistent with
ASX Principle 3.
safeguard integrity
in financial reporting
Financial reports
The company has put in place a
structure of review and authorisation
to independently verify and safeguard
the integrity of financial reporting.
The audit committee reviews the
company’s financial statements and the
independence of the external auditors.
audit committee
Garry Hounsell is chairman of the board
audit committee with Anne Brennan
and Gordon Davis 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 34.
Garry Hounsell has a bachelor of
business (accounting) and is a former
senior partner with Ernst & Young and
a former Australian country-managing
partner with Arthur Andersen. He has
extensive experience across a range
of areas, relating to management and
corporate finance and has worked with
some of Australia’s leading companies
in consulting and audit roles, with a
particular emphasis in the manufacturing
sector. He is chairman of PanAust
Limited, and a director of Qantas Airways
Limited, Orica Limited, Dulux Group Ltd,
Treasury Wine Estates Limited and has
been appointed to the Advisory Board
of Rothschilds Australia. Garry is also
chairman of the audit committee at
Qantas and Dulux.
Anne Brennan has over 25 years
experience in senior finance roles and in
professional accounting firms. Anne has
a bachelor of commerce (hons) from
University College Galway and is a fellow
of the Institute of Chartered Accountants
in Australia and a fellow of the Australian
Institute of Company Directors. She was
formerly the executive finance director
for the Coates Group and chief financial
officer for CSR.
Anne is a director of Myer Limited,
Charter Hall Group, Argo Investments
Ltd and Echo Entertainment Group
Limited. She is also a director of Cuscal
Limited, Rabobank Australia Limited
and Rabobank New Zealand Limited.
Gordon Davis has a bachelor of forest
science (hons), master of agricultural
science and holds a master of business
administration.
Gordon was managing director of AWB
Limited between 2006 and 2010. Prior
to this, he held various senior executive
positions with Orica Limited, including
general manager of Orica Mining Services
(Australia, Asia) and general manager
of Incitec Fertilizers. He has also served
in a senior capacity on various industry
associations.
The committee has a formal charter
which is reviewed 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.
26 | Nufarm Limited Annual Report 2012
corPorate
governance continued
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 who also provide annual
disclosure training to the board and
senior executives.
The company secretary prepares a
schedule of compliance and disclosure
matters for directors to consider at
each board meeting.
Nufarm’s communication policy aims to:
• ensure that shareholders and the
financial markets are provided with
full and timely information about its
activities;
• comply with its 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; and
• notices of AGM.
Copies of:
• relevant market announcements
and related information; and
• presentations made to analysts
and investor briefings;
are also immediately made available
on the company’s website.
Nufarm’s formal communications policy
is available on the corporate governance
section of the company’s website.
A summary of the disclosure policy is
available on the corporate governance
section of the company’s website.
The company’s policy in relation to the
rights of shareholders is consistent with
ASX Principle 6.
The company’s disclosure policy is
consistent with ASX Principle 5.
rights of shareholders
communication
Nufarm is committed to timely, open
and effective communication with its
shareholders and the general investment
community.
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 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
executives who report directly to the
managing director) are responsible for
the management of material risks in
their respective areas of responsibility.
Their regular reports, submitted for
review to each board meeting, will
include relevant commentary on any
material risk.
In the current period, external consultants
assisted in the completion of a
management review of Nufarm’s risk
profile and risk inventory. Management
presented a risk profile report to the
board to provide assurance that all
material risks are being effectively
managed. The company remains
committed to continuous improvement
in relation to effective risk management
and during the period appointed
a general manager global risk and
assurance to enhance and manage
the company’s enterprise–wide risk
Nufarm Limited Annual Report 2012 | 27
corPorate
governance continued
management system. The position
formally reports to the audit committee
and has continual access to the chairman
and members of the audit committee.
enterprise-wide risk management and
internal control framework and oversight
of the relationship with the external and
internal auditors.
The board is responsible for the oversight
of the company’s risk management
system. The board ensures that
appropriate policies are in place to
ensure compliance with risk management
controls and requires management to
monitor, manage and report on business
risks. The board delegates certain
responsibilities to board committees.
All board committees report to the
board on risk management issues
within their area of responsibility.
The nomination and governance
committee is responsible for ensuring
the company has appropriate
governance policies and practices
and appropriate ethical standards.
During the period the board constituted
a new committee, the health, safety and
environment (HSE) committee. Gordon
Davis is chairman of the HSE committee
with Anne Brennan and Peter Margin
as members. The committee comprises
independent non-executive directors
and is chaired by an independent
director. The HSE committee assists
the board in respect of the company’s
responsibilities in relation to health,
safety and environment matters arising
out of activities within the Nufarm group
as they affect employees, contractors,
visitors, customers and the communities
in which the Nufarm group operates.
The audit committee assists the board
in regard to financial reporting, audit and
risk management, including oversight
of the preparation of Nufarm’s financial
reporting, compliance with legal and
regulatory obligations, oversight of
the effectiveness of the Nufarm’s
The audit committee has specific
oversight of financial and treasury risk,
including credit, liquidity and market
risks and will refer any relevant matters
to the board. The year-end exposure
to these risks is described in note 31
of the financial statements.
The Nufarm audit committee charter
specifies the roles and responsibilities
of the committee and the general
manager global risk and assurance
and requires the committee to:
• evaluate the effectiveness of the
Group’s process for assessing,
monitoring and managing significant
risks or exposures and the steps
management has taken to minimise
such risks to the group as required
by ASX Principle 7.2;
• assess the effectiveness of, or
weaknesses in, the group’s internal
control framework including
computerised information system
controls and security, the overall
control environment, and accounting,
treasury and financial controls;
• consider significant findings and
recommendations of the external
auditors and internal auditors, together
with management’s responses thereto,
and the timetable for implementation of
recommendations to correct identified
weaknesses in internal controls; and
• review, with the general manager
global risk and assurance and the
external auditors, the coordination
of audit effort to assure completeness
of coverage of key business controls
and risk areas, reduction of redundant
effort, and the effective use of risk
management and audit resources.
Senior executives and regional and local
financial controllers complete certificates,
which are reviewed by the chief financial
officer and the audit committee, as part
of the company’s 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.
28 | Nufarm Limited Annual Report 2012
corPorate
governance continued
remuneration
The board has procedures to ensure that
the level and structure of remuneration
for executives and directors is appropriate.
Full details of the executive remuneration
structure are set out in the remuneration
report on pages 35 to 44 of this report.
• existing or proposed incentive schemes;
• retirement and termination benefits
and payments for senior management;
and
• professional indemnity and liability
insurance policies.
human resources committee
Peter Margin is chairman of the human
resources committee and Gordon Davis
and Donald McGauchie are members.
The committee comprises independent
non-executive directors and is chaired
by an independent director.
The committee’s formal charter includes
responsibility to review and make
recommendations to the board in relation
to Nufarm’s board and executive
remuneration strategy, structure
and practice with regard to:
• Nufarm’s strategic objectives;
• corporate governance principles; and
• competitive practice.
The specific matters the committee may
consider include the review of:
• executive management and directors’
remuneration, including the link
between company and individual
performance;
• current industry best practice;
• the outcome of the annual vote on the
adoption of the remuneration report;
• different methods for remunerating
senior management and directors
including superannuation
arrangements;
The committee is responsible for
seeking and approving independent
remuneration advisers who will provide
independent remuneration advice, as
appropriate, on board, chief executive
officer and other key management
personnel remuneration strategy,
structure, practice and disclosure.
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.
The company distinguishes the structure
of non-executive directors’ remuneration
from that of senior executives. Details
of senior executive and non-executive
directors’ remuneration are set out in
the remuneration report on pages 35
to 44 of this report.
A copy of the human resources
committee charter and the company
policy on margin loans and prohibiting
key management personnel from
entering into transactions in associated
products which operate to limit the
economic risk of security holdings in
Nufarm over unvested entitlements
(contained within the security trading
policy) are available on the corporate
governance section of the company’s
website. Nufarm’s remuneration policies
are consistent with ASX Principle 8.
Nufarm Limited Annual Report 2012 | 29
30 | Nufarm Limited Annual Report 2012
Nufarm Limited Annual Report 2012 | 31
financial
stateMents
32 | Nufarm Limited Annual Report 2012
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 2012 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:
DG McGauchie AO (Chairman)
DJ Rathbone AM (Managing director)
AB Brennan
GR Davis
Dr WB Goodfellow
GA Hounsell
PM Margin (appointed 3 October 2011)
Dr JW Stocker AO (retired 1 December 2011)
Dr RJ Edgar (retired 27 March 2012)
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 20 and 21.
Company secretary
The company secretary is R Heath.
Details of the qualifications and experience of the company secretary are set on page 18.
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:
AB Brennan
GR Davis
Dr WB Goodfellow 1, 2
GA Hounsell 1
DG McGauchie 1
PM Margin
DJ Rathbone
Nufarm Ltd
ordinary shares
10,000
Nufarm Finance (NZ) Ltd
step-up securities
–
40,000
1,141,491
43,723
31,239
2,458
11,676,031
–
48,423
–
–
1,500
Note, at the date of their retirement Dr JW Stocker and Dr RJ Edgar owned 41,521 and 13,000 shares respectively.
1. The shareholdings of Dr WB Goodfellow, GA Hounsell and DG McGauchie include shares issued under the company’s non-executive director share plan and
held by Pacific Custodians Pty Ltd as trustee of the plan.
2. The holding of Dr WB Goodfellow includes his relevant interest in:
(i)
St Kentigern Trust Board (430,434 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 Foundation and does not
have a beneficial interest in these shares or step-up securities.
(vi) Archem Trading (NZ) Ltd (700 step-up securities).
Nufarm Limited Annual Report 2012 | 33
DIRECTORS’
REPORT continued
Directors’ meetings
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:
Director
Board
Audit
Committees
Human
resources
Nomination and
governance
Health science
and environment
AB Brennan
GR Davis
Dr WB Goodfellow
GA Hounsell
DG McGauchie
PM Margin1
DJ Rathbone
Dr JW Stocker 1
Dr RJ Edgar 1
Meetings
held2
13
Meetings
attended
12
Meetings
held2
3
Meetings
attended
3
Meetings
held2
–
Meetings
attended
–
Meetings
held2
–
Meetings
attended
–
Meetings
held2
1
Meetings
attended
1
13
13
13
13
8
13
8
11
13
13
13
13
8
13
7
11
1
–
3
–
–
–
1
2
1
–
3
–
–
–
1
1
3
–
–
3
1
–
–
2
3
–
–
3
1
–
–
2
–
2
1
2
–
–
–
1
–
2
1
2
–
–
–
1
1
–
–
–
1
–
–
–
1
–
–
–
1
–
–
–
1. PM Margin was appointed a director on 3 October 2011. Dr JW Stocker retired as a director on 1 December 2011. Dr RJ Edgar retired as a director on 27 March 2012.
2. Number of meetings held during the period the director held office.
Principal activities and changes
Nufarm is a leading global crop protection company and has operated in the industry for over 50 years. Nufarm develops,
manufactures and sells a wide range of crop protection products, including herbicides, insecticides and fungicides that help crop
producers protect their crops against damage caused by weeds, pests and disease. Nufarm sells its products in most of the world’s
major agricultural regions, and operates primarily in the off-patent segment of the crop protection market, which consists of
products using technical active ingredients for which the patent has expired. Nufarm’s focus is on creating products that use
off-patent active ingredients within a differentiated formulation, delivery system or other technology that provide additional benefits
to farmers. The company also has a proprietary seeds business with a portfolio covering canola, sorghum and sunflower crops, and is
developing a global presence in the fast growing and high value seed treatment segment.
Nufarm employs approximately 3,400 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 profit attributable to members of the group for the 12 months to 31 July 2012 is $72.6 million. The comparable figure for
the 12 months to 31 July 2011 was a loss of $49.9 million.
Dividends
The following dividends have been paid declared or recommended since the end of the preceding financial year.
The interim dividend for 2011–2012 of 3 cents paid 30 April 2012.
The final dividend for 2011–2012 of 3 cents as declared and recommended by the directors is payable 16 November 2012.
Nufarm step-up securities distributions
The following Nufarm step-up securities distributions have been paid since the end of the preceding financial year:
Distribution for the period 15 April 2011 – 16 October 2011
at the rate of 6.94 per cent per annum paid 17 October 2011
Distribution for the period 17 October 2011 – 15 April 2012 at the rate of:
(i) 6.61 per cent for the period 17 October 2010 – 23 November 2011, and
(ii) 8.61 per cent for the period 24 November 2011 – 15 April 2012 paid 16 April 2012
$000
7,865
$000
8,829
10,253
34 | Nufarm Limited Annual Report 2012
DIRECTORS’
REPORT continued
Review of operations
The review of the operations during the financial year and the results of those operations are set out in the managing director’s
review on pages 2 to 6 and the business review on pages 9 to 12.
State of affairs
The state of the group’s affairs are set out in the managing director’s review on pages 2 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 group, which enables an informed assessment of its operations, financial position,
strategies and prospects, is contained in the financial accounts, managing director’s review and the business review.
Events subsequent to reporting date
On 1 August 2012 the company announced that it had entered into a conditional settlement agreement in relation to the class action
proceedings originally issued in January 2011 by Maurice Blackburn and Slater & Gordon. In accordance with Accounting Standards
the class action settlement amount, along with related legal costs, has been provided for in the financial statements and is reported
in the items of material income and expense (refer to note 6 for further information).
On 21 September 2012, Nufarm announced that it intended to offer, subject to market and other conditions, US$300 million
aggregate principal amount of senior unsecured notes. If successful, the net proceeds would be used to repay existing indebtedness
outstanding under the $625 million senior secured syndicated bank facility (SFA) entered into in November 2011. Concurrent with
this, US$250 million of the commitments under the $625 million SFA would be cancelled.
On 24 September 2012, the directors declared a final franked dividend of 3 cents per share payable 16 November 2012.
Likely developments
The directors believe that likely developments in the group’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 group did not incur
any prosecutions or fines in the financial period relating to environmental performance. The group publishes annually a health,
safety and environment report. This report can be viewed on the group’s website or a copy will be made available upon request
to the company secretary.
Non-audit services
During the year KPMG, the company’s auditor, has performed certain other services in addition to their statutory duties. Details
of the audit fee and non-audit services are set out in note 42 to 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
Introduction
Nufarm’s remuneration report is for the year ended 31 July 2012. The report details remuneration information as it applies to Nufarm
non-executive directors (NED) and Nufarm’s executives (referred to as key management personnel [KMP]).
KMP include the managing director and the group executives who have the authority and responsibility for successfully planning,
directing and controlling Nufarm’s business.
Remuneration governance
The human resources (HR) committee is responsible for reviewing and making recommendations to the board on remuneration
policies and packages applicable to KMP. The committee is comprised of three independent non-executive directors and is tasked
with ensuring that remuneration policies and packages retain and motivate high calibre executives and have a clear relationship
between company performance and executive remuneration. The committee charter can be found at www.nufarm.com
Nufarm Limited Annual Report 2012 | 35
DIRECTORS’
REPORT continued
The board measures financial performance under the short term incentive (STI) and long term incentive plan (LTIP) using audited
numbers. The relative total shareholder return (TSR) will be measured by an independent external advisor. Within this framework
the board has discretion to ‘clawback’ deferred STI prior to vesting where: payment is contrary to the financial soundness of the
company; in circumstances where the financial performance of Nufarm over the relevant period (including the initial STI
performance period) has been mis-stated; and/or for individual gross misconduct.
KMP are not permitted to hedge any shares issued to them under the STI while those shares remain held in trust.
Key outcomes for the 2012 year detailed in this report include:
• fixed remuneration increases for KMP;
• STI awards to KMP in line with performance;
• initial LTIP awards to KMP; and
• fee increases for NEDs.
Remuneration advice
The human resources committee engaged Mercer as advisors to provide executive remuneration benchmarking data through
comparisons to organisations of similar size and complexity to Nufarm and through detailed analysis of KMP compensation trends.
This advice covered both fixed and variable components of compensation.
Mercer was paid $35,222 for the provision of this advice. No other services were provided by Mercer during the year.
The human resources committee appointed Mercer with a set of clear criteria including the requirement for all reporting to be delivered
directly to the chairman of the human resources committee. A process was established to ensure that Mercer would be able to carry
out its work, including information capture and the formation of its recommendations, free from undue influence from KMP to whom
the recommendations would apply. The human resources committee undertook a full and independent review of the advice.
The board was satisfied that the remuneration recommendations made by Mercer were free from undue influence by members
of the KMP to whom the recommendations would apply.
The remuneration recommendations were provided to the Nufarm board as an input into decision making only. The board
considered the recommendations, along with other factors, in making its remuneration decisions.
Principles of remuneration for the period ended 31 July 2012
As disclosed in last year’s remuneration report, the board undertook a major review of the executive remuneration structure
which resulted in:
• a change to the target remuneration mix and a plan to move all KMP to this mix over a defined period;
• a change to the STI measures to be more directly aligned to financial accountabilities;
• the addition of strategic and business improvement objectives to ensure focus on the ongoing health and profitability of the
business; and
• the introduction of the LTIP to better align executive remuneration with shareholder returns.
The company’s remuneration policy for the period ended 31 July 2012 was based on total target reward (TTR) structured to align
overall remuneration spend with business performance.
TTR was composed of total fixed remuneration (TFR), a variable component of STI linked to current year performance and an LTIP
linked to longer term performance and business outcomes.
Remuneration mix
The TTR for the majority of the KMP (excluding the managing director) will have a mix at target of 55 per cent fixed, 25 per cent
STI (50 per cent paid cash and 50 per cent retained in equity) and 20 per cent LTIP (retained in performance rights). New KMP
are employed on this basis. For longer serving KMP a case by case transition plan is being implemented to arrive at the target
remuneration mix. Individual plans are necessary given different salary levels and contractual arrangements.
The effect of this transition is that an increasing percentage of the KMP’s remuneration is ‘at risk’ and is directly linked to company
performance in the short, medium and longer term.
36 | Nufarm Limited Annual Report 2012
DIRECTORS’
REPORT continued
Fixed remuneration
The company’s policy for the fixed reward was benchmarked against Australian executives with reference to the 62.5th percentile
of companies of similar size and complexity excluding retail, utilities, financial and resources companies.
The 62.5th percentile positioning reflects the reality that while the current KMP are Australian based they have significant
international responsibility and operate in a globally competitive employment market where remuneration levels are often higher
than in the Australian market.
Short term incentive
Nufarm’s strategy focuses on growth and increased participation in high value markets with sustainable returns. Therefore our
STI program is heavily biased to growth in profitability and a strong focus on balance sheet management. Twenty per cent of
STI potential was attached to strategic objectives focused on the development of innovation capability and increased business
discipline, both of which the company sees as integral to delivering targeted financial outcomes and returning the company
to acceptable returns for shareholders.
In 2012 the STI, which rewards annual performance, was delivered through a combination of cash incentive and shares which were
retained and will vest 50 per cent on the first anniversary and 50 per cent on the second anniversary. Future awards will vest on the
second anniversary.
Who participates in the Sti? Plan participants include KMP and senior managers globally.
When are awards made?
Awards under the plan are made at the end of the financial year.
What measures are used in
the plan?
The board sets measures at the start of each year focused on profitability, balance sheet
management and overall return. Noted below are the measures used in 2012 and the measures
to be applied in 2013.
2012
80 per cent of the potential is based on budget
measures of underlying EBIT and return on
operating assets (ROA).
20 per cent of the potential is based on strategic
and business improvement objectives.
2013
80 per cent of the potential will be based on net
operating profit after tax (NPAT) and average net
working capital ANWC/sales*.
20 per cent of the potential is based on strategic
and business improvement objectives.
These changes in 2013 better reflect Nufarm’s strong focus on the use of capital and refines the
alignment of reward to business outcomes and shareholder returns.
When and how are the Sti
payments determined?
Awards are assessed annually at the end of the financial year. Awards are based on the percentage
achievement against the budget and strategic measures.
Percentage budget achievement
Percentage of STI target award realised
<85
Nil
85
25
100
100
120*
150
Straight-line vesting between 85 per cent and budget and between budget and 120 per cent budget
achievement.
Are payments in cash or
shares?
50 per cent of STI paid in cash at time of performance testing and 50 per cent deferred into shares
or rights in the company for nil consideration.
Strategic and business improvement objectives are assessed on a merit basis against stated objectives.
When do the shares vest?
Vesting will occur on the second anniversary subject to continued employment. The unvested awards
are subject to the clawback provisions of the plan. 2012 awards will vest 50 per cent on the first
anniversary and 50 per cent on the 2nd anniversary. Future awards will vest in full on the second
anniversary.
* In respect of the ANWC/sales measure in FY13, the maximum potential budget achievement will be set at 110 per cent.
Nufarm Limited Annual Report 2012 | 37
DIRECTORS’
REPORT continued
Long term incentive plan
Nufarm’s LTIP commenced in 2012 and is based on the principle of aligning executive interests and reward with those of
shareholders. Return on funds employed (ROFE) has long been held as an important metric for Nufarm and it was considered
important to include a return measure in the LTIP. Relative TSR recognises that investors will choose to invest their money in
industries and companies with acceptable returns. This plan rewards executives to the degree the company performs against
two hurdles over three years.
Why have an LtiP?
Who participates in the
LtiP?
Are the awards cash or
shares?
This plan aligns executive interests and earnings with the longer term Nufarm strategy and the
interests of shareholders.
The current participants in the plan are KMP and other selected senior managers (together, the LTIP
participants).
Awards are granted to Australian executives in the form of performance rights, which comprise
rights to acquire ordinary shares in the company for nil consideration, subject to the achievement
of global performance hurdles.
The plan rules provide the flexibility to use other instruments to comply with local regulations and
sound practice.
When are the awards
made?
Under the plan, Australian LTIP participants receive an annual award of performance rights as soon
as practical after the announcement of results for the preceding year.
In the case of the managing director the award is delayed until after shareholder approval is gained
at an AGM.
The initial awards were made to LTIP participants (excluding the managing director) in the first
quarter of 2012 in line with the individual transition plans mentioned above under ‘remuneration mix’.
How are the number of
rights calculated?
The number of rights for the 2012 award was calculated at ‘face value’ using the five day VWAP post
the announcement of annual results for FY12.
The 2013 awards will be valued in the same way. The board will review the efficacy of a fair value
methodology for the 2014 awards.
When do the awards vest?
The performance/vesting period for awards is three years. Awards will vest in two equal tranches
as follows:
To be eligible the LTIP participant needs to be employed by Nufarm on the vesting date.
Why have RoFe and
relative tSR been chosen
as the hurdles?
What is the comparator
group for the assessment
of relative tSR?
How is relative tSR
measured?
• 50 per cent of the LTIP grant will vest subject to the achievement of a relative TSR performance
hurdle measured against a selected comparator group of companies; and
• the remaining 50 per cent of the LTIP grant will vest subject to the three year average of an
absolute ROFE target.
ROFE is used to track progress towards the goal to return long term results back to acceptable
levels for Nufarm. Strong relative TSR performance ensures Nufarm is an attractive investment
for shareholders.
Based on the results of research and modelling carried out by Ernst & Young, the board approved
the adoption of the ‘S&P ASX 200 excluding those companies in the Financial, Materials and Energy
groups’ as the TSR comparator group. This provides a group which is large enough for sound
measurement with exclusions that reduce the volatility by removing companies which are in
significantly different industries to Nufarm. This comparator group is also seen as an appropriate
representation of Nufarm’s competitors for investment.
TSR will be measured over the performance period. For the purposes of this measurement, each
company’s share price will be measured using the average closing price over 60 days up to (but
excluding) the first day of the performance period, and the average closing price over 60 days
up to and including the last day of the performance period.
38 | Nufarm Limited Annual Report 2012
DIRECTORS’
REPORT continued
What is the relative tSR
performance required for
vesting?
tSR of nufarm relative to the tSR of comparator
group companies
Less than 50th percentile
50th percentile
Between 51st percentile and
75th percentile
75th percentile
Proportion of tSR grant vesting
0 per cent
50 per cent
Straight-line vesting between
50 per cent and 100 per cent
100 per cent vesting
How is the RoFe measure
set?
ROFE objectives are set by the board at the beginning of each year. There is both a ‘target’ and a
‘stretch’ hurdle. These numbers are based on the budget and growth strategy.
How is RoFe measured?
Return is calculated on the group’s earnings before interest and taxation and adjusted for any
non-operating items. Funds employed are represented by shareholder’s funds plus total interest
bearing debt. For the purposes of measuring ROFE performance in the LTIP, ROFE will be averaged
over the life of the plan.
What RoFe result is
required for vesting?
Percentage of RoFe target achieved
Less than target
Proportion of RoFe grant vesting
0 per cent
Target
Between target and stretch
Stretch
50 per cent
Straight-line vesting between
50 per cent and 100 per cent
100 per cent
What was the result for the
2012 year?
There is no partial vesting of the LTI before the third anniversary which will be 31 July 2014. However the
2012 ROFE result of 10.4 per cent is currently tracking at a level of performance required to achieve
the 2014 ROFE target hurdle rate.
What happens if the awards
do not vest?
To the extent the TSR and ROFE performance hurdles are not met at the end of the initial three year
performance period and full vesting is not achieved, performance will not be retested and the award
will lapse.
Link between performance and KMP remuneration outcomes
• Fixed and variable remuneration review – given the financial performance of the group and the contribution to the continued
recovery of the business, KMP were granted a four per cent increase in fixed remuneration and short term incentive potential. Salary
benchmarking carried out by Mercer confirmed that a four per cent increase was in line with market movement in executive salaries.
• STI – based on an underlying EBIT result at 100.2 per cent of target and a return on operating assets result at 105.4 per cent
of target and performance against individual strategic and business improvement objectives, KMP were awarded an STI.
– Individual objectives were driven by Nufarm’s strategy and the goals to deliver on sustainable innovation and business
discipline across the business. These objectives included organisation restructuring, management and board renewal, business
process and systems improvements and the implementation of initiatives to support growth in higher value segments.
• LTIP – The LTIP vests on the third anniversary. While both measures are tested on the third anniversary, the 2012 ROFE result
of 10.4 per cent is currently tracking at a level to achieve the 2014 ROFE target hurdle rate.
The table below summarises the company’s performance and shareholder wealth statistics over the last five years.
*Underlying
EBIT
ROFE
achieved
Dividend
rate
Dividends
paid
**Change in
share price
Share price
31 July
EPS
$m
307.6
312.5
148.4
171.8
206.0
%
17.0
13.0
6.0
7.6
10.4
cents per share
33
69.7
33.5
(15.0)
(23.7)
22.3
35
15
–
3
$000
58,332
65,297
32,709
–
7,865
$
3.75
(6.01)
(7.02)
0.52
1.13
$
16.85
10.84
3.82
4.34
5.47
***Total
shareholder
return
%
31.5
(33.8)
(62.7)
13.6
26.8
2008
2009
2010
2011
2012
*
Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBIT is a non-IFRS measure used to reflect the underlying
performance of Nufarm’s operations. Underlying EBIT is reconciled to operating profit in the managing director’s review (pages 2 to 6). Refer to note 2(e)
of the Nufarm Limited financial statements for a discussion of the classification of foreign exchange gains or losses and debt establishment costs as net
finance costs in 2012 and all prior periods.
** This column reflects the change in share price from 1 August to 31 July in the relevant financial year.
*** Source: JB Were.
Nufarm Limited Annual Report 2012 | 39
DIRECTORS’
REPORT continued
2012 STI outcomes
2012 STI Potential
KMP
Doug Rathbone***
At target $
1,560,000
At maximum $
2,340,000
To be paid
in cash in
October 2012 $
652,454
2012 STI Awarded
Retained in shares
vesting on 1st
anniversary $
489,341
Retained in shares
vesting on 2nd
anniversary $
489,341
Paul Binfield*
David Pullan
Brian Benson
Robert Reis
Greg Hunt**
Dale Mellody
Mike Pointon
Bonita Croft
Rodney Heath
213,000
497,297
475,675
411,840
198,000
360,360
251,909
219,648
216,216
319,500
745,945
713,512
617,760
297,000
540,495
377,863
329,472
324,324
109,226
259,987
248,683
215,310
100,545
182,991
129,179
114,832
113,038
54,613
129,994
124,342
107,655
50,273
91,496
64,590
57,416
56,519
54,613
129,994
124,342
107,655
50,273
91,496
64,590
57,416
56,519
* Potential pro-rated to reflect nine months service.
** Potential pro-rated to reflect six months service.
*** Retained STI in cash.
2012 LTIP allocations
Doug Rathbone
Paul Binfield
David Pullan
Brian Benson
Robert Reis
Greg Hunt
Dale Mellody
Mike Pointon
Bonita Croft
Rodney Heath
Value of award $
750,000
*Number of performance rights
180,749
227,000
150,696
144,144
124,800
218,000
109,200
76,336
66,650
65,520
54,710
36,320
34,740
30,080
52,588
26,320
18,340
16,040
15,790
* Rights were valued at $4.1494 being the five day VWAP post the announcement of 2011 annual results. Rights will vest on 31 July 2014 to the degree that the
ROFE and relative TSR hurdles are met.
Service contracts
The company has employment contracts with the KMP. These contracts formalise the terms and conditions of employment. The
contracts are for an indefinite term. The contracts of the managing director and most other KMP named in this report were entered
into prior to the announcement of legislation to change termination payment limits for executives:
• the company may terminate the contract of the managing director, either immediately or by giving 12 months notice, in which
case the managing director will be paid a termination payment equivalent to 24 months TFR (base salary plus value of benefits
such as motor vehicle and superannuation and any fringe benefits tax in relation to those benefits). The contract also provides
for the company to be able to make a payment in lieu of notice should it wish, for payment of any entitlements due under existing
STI and LTI plans and for payment of applicable statutory entitlements;
• the managing director may terminate the contract by giving the company 12 months notice. In this event, the contract provides
an entitlement for the managing director to a termination payment equal to any part of the notice period, paid in lieu, by the
company. In addition, the managing director will be paid any entitlements due under existing STI and LTI plans and all applicable
statutory entitlements;
• in certain limited circumstances, the managing director may also terminate his contract on immediate notice. This includes where
there is a change of duties or responsibilities without the managing director’s agreement which has the effect of material change
in status and in certain other limited circumstances. If the contract is terminated in these circumstances, the managing director
will, in general, be entitled to the payments outlined above where the company terminates on immediate notice. In extremely
limited circumstances, the managing director may also be entitled to an additional amount equal to 24 months entitlement
under the STI and LTI plans;
40 | Nufarm Limited Annual Report 2012
DIRECTORS’
REPORT continued
• the company may terminate the contract of other KMP by six months notice in which case a termination payment equivalent to
12 months total employment cost will be paid. In addition, the contracts provide for payment of any part of the applicable notice
period paid in lieu, plus any entitlements due under existing STI and LTI plans (including any entitlements which would have been
payable under the STI and LTI plans in the period ending on the later of i) the last day of the financial year following notice of
termination or ii) six months following notice of termination) and applicable statutory entitlements; and
• the company may terminate the employment contracts immediately for serious misconduct.
Termination benefits
• Under the rules of the STI plan if a KMP leaves before the vesting anniversary under ‘qualifying leaver’ provisions the equity
will remain in the plan until the vesting date. If the KMP leaves under other than ‘qualifying leaver’ circumstances the equity
will be forfeited.
• To be eligible under the LTI plan the KMP must be employed by Nufarm on the first anniversary of the allocation. If the executive
leaves before this date the allocation is forfeited. If the executive leaves under ‘qualifying leaver’ provisions after the first anniversary
and before the third anniversary of the plan the allocation will be pro-rated and the pro-rated allocation will remain ‘on foot’ in
the plan subject always to certain overriding discretions set out in the plan, and to supervening provisions in certain executive
contracts, which extend or alter the manner in which the pro-rating is undertaken.
• ‘Qualifying leaver’ provisions include participants who cease employment due to retirement, death, ill health/disability, redundancy,
or contract severance without cause by Nufarm.
• The rules of the plans provide the flexibility, in special circumstances (e.g. health or severe personal hardship), to accelerate the
vesting. In the case of the STI this would result in the shares being released from the trust to the KMP. In the case of the LTI plan
the qualifying allocation will be tested against the hurdles to determine the value (if any) of the allocation.
Non-executive directors
The board’s policy with regard to NED remuneration is to position board remuneration at the market median with comparable
sized listed entities.
The board determines the fees payable to non-executive directors within the aggregate amount approved from time to time by
shareholders. At the company’s 2009 AGM, shareholders approved an aggregate of $1,600,000 per year (excluding superannuation costs).
Set out below are details of the annual fees payable for the year ending 31 July 2012 (including superannuation costs). Increases
in these fees were effective as of 1 February 2012 and bring board remuneration in line with market practice.
The board’s decision in relation to NED fee increases was informed by independent advice received from the Godfrey Remuneration Group.
The fee changes remained well within the approved cap.
Chairman 1
General board
Audit committee chair
Audit committee member
HSE committee chair
HSE committee member
Human resources committee chair
Human resources committee member
Nomination and governance committee chair
Nomination and governance committee member
1. The chairman receives no fees as a member of any committee.
Fees applicable for the period
to 31 January 2012 $
319,000
Fees applicable from
1 February 2012 to the 31 July 2012 $
330,000
126,500
27,500
5,500
11,000
2,750
11,000
2,750
135,000
27,500
11,000
16,500
5,500
22,000
8,250
11,000
1,375 per meeting
Nufarm Limited Annual Report 2012 | 41
DIRECTORS’
REPORT continued
Remuneration of directors and executives
Details follow of the nature and amount of each major element of remuneration in respect of the non-executive directors and key
management personnel, which includes the managing director and group executives.
In AUD
directors’ non-executive
AB Brennan
GR Davis
Dr RJ Edgar3
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker4
P Margin2
GDW Curlewis (Deputy chairman)
Sub total non–executive directors’ remuneration
executive director DJ Rathbone (Managing director)
total directors’ remuneration
Group executives
DA Pullan (Group executive operations)
P Binfield5 (Chief financial officer)
BF Benson (Group executive marketing)
G Hunt6 (Group executive global marketing)
RG Reis (Group executive corporate strategy and external affairs)
DA Mellody (Group executive global supply chain and strategic procurement)
MJ Pointon (Group executive innovation and development)
BJ Croft (Group executive human resources and organisation development)
R Heath (Company secretary)
RF Ooms7 (Group executive chemicals)
KP Martin8 (Chief financial officer)
Sub total – total executive remuneration
total directors’ and executive remuneration
Short term
Non-
monetary
benefits
$
Salary and
fees
$
Cash bonus
(vested)
$
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
128,864
56,093
135,025
20,035
84,833
128,446
121,364
117,500
155,114
140,000
295,000
290,000
40,455
120,000
110,310
–
–
57,974
1,070,965
930,048
1,451,451
1,370,932
2,522,416
2,300,980
702,458
677,411
449,875
–
624,858
605,879
270,310
–
542,504
538,472
475,262
464,054
298,261
290,204
285,629
173,940
245,157
239,274
604,812
534,781
–
556,748
4,499,126
4,080,763
7,021,542
6,381,743
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,141,795
300,000
1,141,795
300,000
259,987
–
309,226
–
248,683
–
100,545
–
215,310
–
182,991
–
129,179
–
114,832
100,000
113,038
–
–
–
–
–
1,673,791
100,000
2,815,586
400,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
51,508
65,781
51,508
65,781
–
20,414
–
–
22,030
33,548
–
–
22,829
33,355
31,612
6,419
35,468
34,387
–
–
38,096
28,836
13,293
13,173
–
31,750
163,328
201,882
214,836
267,663
1. Represents total remuneration in the financial year.
2. Peter Margin was appointed a director on 3 October 2011.
3. Dr RJ Edgar retired as a director on 27 March 2012.
4. Dr JW Stocker retired as a director on 1 December 2011.
5. Paul Binfield was appointed chief financial officer on 7 November 2011.
6. Greg Hunt was appointed as group executive global marketing on 6 February 2012.
7. Robert Ooms left Nufarm on 29 February 2012. The payments to Mr. Ooms comprised his entitlements and termination under the conditions of his employment contract.
8. Kevin Martin left Nufarm on 30 June 2011.
42 | Nufarm Limited Annual Report 2012
Post-
employment
Share based
payments
Other
long term
Total1
Total
Superannuation
benefits Equity settled
$
$
Termination
Percentage of
remuneration
performance
Value of
options as a
proportion
of total
based
remuneration
%
%
Total
remuneration
$
128,864
56,093
135,025
20,035
84,833
128,446
121,364
117,500
155,114
140,000
295,000
290,000
40,455
120,000
110,310
–
–
57,974
1,070,965
930,048
2,644,754
1,736,713
3,715,719
2,666,761
962,445
697,825
759,101
895,571
639,427
370,855
–
–
780,643
571,827
689,865
470,473
462,908
324,591
400,461
273,940
396,291
268,110
618,105
547,954
–
588,498
6,336,245
4,382,645
10,051,964
7,049,406
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,525,000
2,026,238
1,525,000
2,026,238
1,525,000
2,026,238
12,886
5,609
13,482
2,003
8,483
12,844
12,136
11,750
14,511
14,000
29,500
29,000
4,045
12,000
11,031
–
–
5,797
106,074
93,003
24,102
24,102
130,176
117,105
45,854
47,938
13,311
48,800
48,725
16,667
–
34,646
24,220
24,300
24,300
46,791
48,900
47,917
28,316
45,890
47,330
28,992
49,550
–
44,000
353,168
363,279
483,344
480,384
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
233,393
233,393
145,844
115,000
102,024
139,504
115,000
96,166
–
–
120,784
115,000
103,432
75,000
72,830
75,000
64,418
100,000
63,412
50,000
75,000
–
–
908,414
720,000
1,141,807
720,000
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
178,174
170,228
178,174
170,228
17,400
14,233
19,671
13,510
–
–
–
–
20,455
11,826
13,969
10,033
8,520
6,917
–
–
–
–
9,316
5,827
11,994
12,359
89,331
86,699
267,505
256,927
141,750
61,702
148,507
22,038
93,316
141,290
133,500
129,250
169,625
154,000
324,500
319,000
44,500
132,000
121,341
–
–
63,771
1,177,039
1,023,051
3,080,423
1,931,043
4,257,462
2,954,094
1,171,543
874,996
874,436
1,103,546
816,662
483,688
–
–
956,528
722,873
831,566
579,806
591,049
455,408
512,796
402,256
514,909
371,267
2,172,097
684,498
–
2,671,095
9,212,158
7,578,861
13,469,620
10,532,955
45
16
35
13
24
35
14
41
35
16
34
13
34
16
35
50
34
13
–
11
–
8
–
3
–
6
3
–
11
3
–
3
–
3
–
3
–
3
–
–
–
–
Remuneration of directors and executives
Details follow of the nature and amount of each major element of remuneration in respect of the non-executive directors and key
management personnel, which includes the managing director and group executives.
Post-
employment
Share based
payments
Other
long term
Total1
DIRECTORS’
REPORT continued
Salary and
Cash bonus
(vested)
fees
$
Total
$
Superannuation
$
benefits Equity settled
$
$
Termination
128,864
56,093
135,025
20,035
84,833
128,446
121,364
117,500
155,114
140,000
295,000
290,000
40,455
120,000
110,310
–
–
57,974
1,070,965
930,048
2,644,754
1,736,713
3,715,719
2,666,761
962,445
697,825
759,101
–
895,571
639,427
370,855
–
780,643
571,827
689,865
470,473
462,908
324,591
400,461
273,940
396,291
268,110
618,105
547,954
–
588,498
6,336,245
4,382,645
10,051,964
7,049,406
12,886
5,609
13,482
2,003
8,483
12,844
12,136
11,750
14,511
14,000
29,500
29,000
4,045
12,000
11,031
–
–
5,797
106,074
93,003
24,102
24,102
130,176
117,105
45,854
47,938
13,311
48,800
48,725
16,667
–
34,646
24,220
24,300
24,300
46,791
48,900
47,917
28,316
45,890
47,330
28,992
49,550
–
44,000
353,168
363,279
483,344
480,384
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,525,000
–
–
2,026,238
1,525,000
2,026,238
1,525,000
2,026,238
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
233,393
–
233,393
–
–
145,844
115,000
102,024
–
139,504
115,000
96,166
–
120,784
115,000
103,432
75,000
72,830
75,000
64,418
100,000
63,412
50,000
–
75,000
–
908,414
720,000
1,141,807
720,000
Percentage of
remuneration
performance
based
%
Value of
options as a
proportion
of total
remuneration
%
Total
remuneration
$
141,750
61,702
148,507
22,038
93,316
141,290
133,500
129,250
169,625
154,000
324,500
319,000
44,500
132,000
121,341
–
–
63,771
1,177,039
1,023,051
3,080,423
1,931,043
4,257,462
2,954,094
1,171,543
874,996
874,436
–
1,103,546
816,662
483,688
–
956,528
722,873
831,566
579,806
591,049
455,408
512,796
402,256
514,909
371,267
2,172,097
684,498
–
2,671,095
9,212,158
7,578,861
13,469,620
10,532,955
45
16
35
13
24
35
14
41
35
16
34
13
34
16
35
50
34
13
–
11
–
8
–
3
–
6
3
–
11
3
–
3
–
3
–
3
–
3
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
178,174
170,228
178,174
170,228
17,400
14,233
–
–
19,671
13,510
–
–
20,455
11,826
13,969
10,033
8,520
6,917
–
–
9,316
5,827
–
11,994
–
12,359
89,331
86,699
267,505
256,927
7. Robert Ooms left Nufarm on 29 February 2012. The payments to Mr. Ooms comprised his entitlements and termination under the conditions of his employment contract.
Nufarm Limited Annual Report 2012 | 43
Short term
Non-
monetary
benefits
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
51,508
65,781
51,508
65,781
20,414
22,030
33,548
22,829
33,355
31,612
6,419
35,468
34,387
–
–
–
–
–
–
–
38,096
28,836
13,293
13,173
–
31,750
163,328
201,882
214,836
267,663
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,141,795
300,000
1,141,795
300,000
259,987
309,226
248,683
100,545
215,310
182,991
129,179
114,832
100,000
113,038
–
–
–
–
–
–
–
–
–
–
–
–
1,673,791
100,000
2,815,586
400,000
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
128,864
56,093
135,025
20,035
84,833
128,446
121,364
117,500
155,114
140,000
295,000
290,000
40,455
120,000
110,310
–
–
57,974
1,070,965
930,048
1,451,451
1,370,932
2,522,416
2,300,980
702,458
677,411
449,875
624,858
605,879
270,310
–
–
542,504
538,472
475,262
464,054
298,261
290,204
285,629
173,940
245,157
239,274
604,812
534,781
–
556,748
4,499,126
4,080,763
7,021,542
6,381,743
In AUD
directors’ non-executive
AB Brennan
GR Davis
Dr RJ Edgar3
Dr WB Goodfellow
GA Hounsell
DG McGauchie
Dr JW Stocker4
P Margin2
GDW Curlewis (Deputy chairman)
Sub total non–executive directors’ remuneration
executive director DJ Rathbone (Managing director)
total directors’ remuneration
Group executives
DA Pullan (Group executive operations)
P Binfield5 (Chief financial officer)
BF Benson (Group executive marketing)
G Hunt6 (Group executive global marketing)
RG Reis (Group executive corporate strategy and external affairs)
DA Mellody (Group executive global supply chain and strategic procurement)
MJ Pointon (Group executive innovation and development)
BJ Croft (Group executive human resources and organisation development)
R Heath (Company secretary)
RF Ooms7 (Group executive chemicals)
KP Martin8 (Chief financial officer)
Sub total – total executive remuneration
total directors’ and executive remuneration
1. Represents total remuneration in the financial year.
2. Peter Margin was appointed a director on 3 October 2011.
3. Dr RJ Edgar retired as a director on 27 March 2012.
4. Dr JW Stocker retired as a director on 1 December 2011.
5. Paul Binfield was appointed chief financial officer on 7 November 2011.
6. Greg Hunt was appointed as group executive global marketing on 6 February 2012.
8. Kevin Martin left Nufarm on 30 June 2011.
DIRECTORS’
REPORT continued
Remuneration options: granted and vested during the year
During the year 465,677 performance rights were granted to executives under the LTIP. No options vested or were 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 45 and forms part of the directors’ report for the financial year
ended 31 July 2012.
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
24 September 2012
44 | Nufarm Limited Annual Report 2012
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 2012 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
24 September 2012
KPMG, an Australian partnership and a
member firm of the KPMG network of
independent member firms affiliated
with KPMG International Cooperative
(KPMG International), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards Legislation.
Nufarm Limited Annual Report 2012 | 45
INCOME STaTEMENT
FOR THE YEAR ENDED 31 JULY 2012
continuing operations
Revenue
Cost of sales(a)
Gross profit
Other income
Sales, marketing and distribution expenses
General and administrative expenses(a)
Research and development expenses
Share of net profits of equity accounted investees
operating profit
Financial income(a)
Financial expenses(a)
Net foreign exchange gains/(losses) on Nufarm step-up securities financing
net financing costs
Profit/(loss) before income tax
Income tax benefit/(expense)
Consolidated
2012
$000
2011
$000
Note
2,181,551
2,083,589
(1,570,657)
(1,521,643)
610,894
561,946
7
10,124
13,033
(240,543)
(234,036)
19
10
10
6, 10
(198,007)
(37,874)
378
144,972
16,097
(61,796)
11,050
(278,757)
(36,474)
2,377
28,089
27,524
(67,210)
(20,951)
(34,649)
(60,637)
110,323
(32,548)
11
(37,501)
(16,981)
Profit/(loss) for the period from continuing operations
72,822
(49,529)
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
The income statement is to be read in conjunction with the attached notes.
(a) Comparative amounts have been reclassifed to align with current classification. Refer to note 2(e) for details.
72,594
228
(49,851)
322
72,822
(49,529)
30
30
22.3
22.3
(23.7)
(23.7)
46 | Nufarm Limited Annual Report 2012
STaTEMENT OF COMPREhENSIvE INCOME
FOR THE YEAR ENDED 31 JULY 2012
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 based payment transactions
Income tax on share issue costs recognised directly in equity
other comprehensive loss for the period, net of income tax
total comprehensive loss for the period
Attributable to:
Equity holders of the company
Non-controlling interest
total comprehensive loss for the period
The amounts recognised directly in equity are disclosed net of tax.
The statement of comprehensive income is to be read in conjunction with the attached notes.
Note
Consolidated
2012
$000
72,822
2011
$000
(49,529)
(135,859)
(122,220)
(5,494)
(1,699)
93
–
–
(22)
(141,260)
(123,941)
(68,438)
(173,470)
(68,666)
(173,400)
228
(70)
(68,438)
(173,470)
Nufarm Limited Annual Report 2012 | 47
BaLaNCE ShEET
AS AT 31 JULY 2012
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 interest
totAL eQuitY
The balance sheet is to be read in conjunction with the attached notes.
48 | Nufarm Limited Annual Report 2012
Consolidated
2012
$000
2011
$000
Note
15
16
17
18
13
16
19
20
18
22
23
21
15
24
25
26
18
28
24
25
18
26
191,317
730,496
515,254
37,664
–
257,706
666,124
541,679
40,659
8,830
1,474,731
1,514,998
41,095
4,126
6,213
181,633
370,780
722,690
–
47,184
7,567
5,969
182,502
373,805
705,811
–
1,326,537
1,322,838
2,801,268
2,837,836
–
474,991
292,323
18,167
14,834
6,742
10,881
394,022
700,671
22,102
2,298
5,256
807,057
1,135,230
10,246
366,798
95,823
44,542
517,409
1,324,466
1,476,802
1,059,522
(326,915)
496,663
1,229,270
246,932
600
13,031
11,374
76,898
37,185
138,488
1,273,718
1,564,118
1,058,151
(193,210)
451,472
1,316,413
246,932
773
1,476,802
1,564,118
STaTEMENT OF CaSh FLOwS
FOR THE YEAR ENDED 31 JULY 2012
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees(a)
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 sales of businesses and investments
Payments for plant and equipment
Purchase of businesses, net of cash acquired
Payments for acquired intangibles and major product development expenditure
net investing cash flows
Cash flows from financing activities
Debt establishment transaction costs(a)
Proceeds from borrowings
Repayment of borrowings
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
The statement of cash flows is to be read in conjunction with the attached notes.
(a) Comparative amounts have been reclassifed to align with current classification. Refer to note 2(e) for details.
15
Consolidated
2012
$000
2011
$000
Note
2,163,049
2,273,304
(1,927,654)
(2,034,079)
235,395
239,225
7,910
151
(48,824)
(28,127)
166,505
591
4,915
(47,569)
(53,914)
(34,320)
(130,297)
(26,960)
832,466
(863,406)
(19,082)
(7,614)
(84,596)
(48,388)
246,825
(7,120)
191,317
7,518
296
(56,372)
(25,434)
165,233
1,180
6,128
(30,635)
–
(37,381)
(60,708)
(10,838)
21,872
(2,671)
(16,967)
(388)
(8,992)
95,533
160,705
(9,413)
246,825
Nufarm Limited Annual Report 2012 | 49
STaTEMENT OF ChaNgES IN EqUITy
FOR THE YEAR ENDED 31 JULY 2012
Consolidated
Balance at 1 August 2010
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares issued to employees
Accrual and issue of shares under global share plan
Tax benefit/(expense) on share issue costs
Profit/(loss) for the period
Distributions to Nufarm step–up security holders
Balance at 31 July 2011
Balance at 1 August 2011
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Income tax on share based payment transactions
Profit/(loss) for the period
Accrued employee share award entitlement
Issuance of shares under employee share plans
Dividends paid to shareholders
Dividend reinvestment plan
Distributions to Nufarm step–up security holders
Acquisition of non-controlling interest
Share
capital
$000
1,057,861
Translation
reserve
$000
(105,331)
Capital profit
reserve
$000
33,627
–
–
312
–
(22)
–
–
(122,220)
–
–
–
–
–
–
–
–
–
–
–
–
–
1,058,151
(227,551)
33,627
451,472
1,316,413
246,932
1,058,151
(227,551)
33,627
451,472
1,316,413
246,932
–
–
–
–
–
768
–
603
–
–
(135,859)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(49,851)
(49,851)
(70)
(49,921)
(12,220)
(12,220)
Other
reserve
$000
717
–
–
–
(3)
–
–
–
714
714
–
–
93
–
2,829
(768)
–
–
–
–
Retained
earnings
$000
515,242
(1,699)
–
–
–
–
(5,494)
72,594
(7,865)
(14,044)
–
–
–
–
–
–
Total
$000
1,502,116
(122,220)
(1,699)
312
(3)
(22)
(135,859)
(5,494)
93
72,594
2,829
–
(7,865)
603
(14,044)
–
Nufarm
step-up
securities
$000
246,932
Non-controlling
interest
$000
843
Total
equity
$000
1,749,891
(122,220)
(1,699)
312
(3)
(22)
(12,220)
1,564,118
1,564,118
(135,859)
(5,494)
93
72,822
2,829
–
(8,216)
603
(14,044)
(50)
–
–
–
–
–
–
–
–
–
–
–
–
–
773
773
228
(351)
(50)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2012
1,059,522
(363,410)
33,627
2,868
496,663
1,229,270
246,932
600
1,476,802
The statement of changes in equity is to be read in conjunction with the attached notes.
50 | Nufarm Limited Annual Report 2012
STaTEMENT OF ChaNgES IN EqUITy continued
FOR THE YEAR ENDED 31 JULY 2012
Nufarm
step-up
securities
$000
246,932
Non-controlling
interest
$000
843
Consolidated
Balance at 1 August 2010
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Shares issued to employees
Accrual and issue of shares under global share plan
Tax benefit/(expense) on share issue costs
Profit/(loss) for the period
Distributions to Nufarm step–up security holders
Balance at 31 July 2011
Balance at 1 August 2011
Foreign exchange translation differences
Actuarial gains/(losses) on defined benefit plans
Income tax on share based payment transactions
Profit/(loss) for the period
Accrued employee share award entitlement
Issuance of shares under employee share plans
Dividends paid to shareholders
Dividend reinvestment plan
Distributions to Nufarm step–up security holders
Acquisition of non-controlling interest
Share
Translation
Capital profit
capital
$000
reserve
$000
1,057,861
(105,331)
reserve
$000
33,627
(122,220)
–
–
312
–
(22)
–
–
–
–
–
–
–
–
–
–
768
603
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,058,151
(227,551)
33,627
1,058,151
(227,551)
33,627
(135,859)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
reserve
$000
717
–
–
–
(3)
–
–
–
714
714
–
–
93
–
2,829
(768)
–
–
–
–
Retained
earnings
$000
515,242
–
(1,699)
–
–
–
Total
$000
1,502,116
(122,220)
(1,699)
312
(3)
(22)
(49,851)
(49,851)
(12,220)
(12,220)
–
–
–
–
–
–
–
451,472
1,316,413
246,932
451,472
1,316,413
246,932
–
(5,494)
–
72,594
–
–
(7,865)
–
(14,044)
–
(135,859)
(5,494)
93
72,594
2,829
–
(7,865)
603
(14,044)
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$000
1,749,891
(122,220)
(1,699)
312
(3)
(22)
(49,921)
(12,220)
1,564,118
1,564,118
(135,859)
(5,494)
93
72,822
2,829
–
(8,216)
603
(14,044)
(50)
–
–
–
–
–
(70)
–
773
773
–
–
–
228
–
–
(351)
–
–
(50)
Balance at 31 July 2012
1,059,522
(363,410)
33,627
2,868
496,663
1,229,270
246,932
600
1,476,802
The statement of changes in equity is to be read in conjunction with the attached notes.
Nufarm Limited Annual Report 2012 | 51
NOTES TO ThE FINaNCIaL STaTEMENTS
1. Reporting entity
Nufarm Limited (the ‘company’) is a company limited by shares and domiciled in Australia that is listed on the Australian Securities
Exchange. 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 2012 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 a for-profit entity and 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 consolidated financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations
Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) adopted by the
International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the board of directors on 24 September 2012.
(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 group’s financial report has been prepared on the going concern basis, which assumes the realisation of assets and
extinguishment of liabilities in the ordinary course of business. The going concern basis is considered appropriate by the directors
having regard to the group’s access to appropriate lines of credit to support the group’s working capital and general corporate
financing requirements through its three year $625 million syndicated bank facility and a debtors’ securitisation facility, entered
into in November 2011 and August 2011 respectively.
(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 estimates are revised and in any future periods affected.
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 or at each
reporting date if required. 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 assumptions
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.
Other non-current assets are also assessed for impairment indicators.
52 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
2. Basis of preparation (continued)
(d) Use of estimates and judgements (continued)
(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 less costs to sell at the time the product is expected to be sold.
(vi) capitalised development costs
Development expenditures are recognised as an intangible asset when the group judges and is able to demonstrate:
(a) the technical feasibility of completing the intangible asset so that it will be available for use;
(b) intention to complete;
(c) ability to use the asset; and
(d) how the asset will generate future economic benefits and the ability to measure reliably the expenditure during development
(e) Reclassification – foreign exchange gains or losses and debt establishment transaction costs
Foreign exchange gains of $8.189 million (2011: $20.006 million) and debt establishment transaction costs of $12.972 million (2011:
$10.838 million) are classified within net financing costs in the income statement and attached notes having previously been
disclosed within cost of sales and general and administrative expenses respectively. Debt establishment cash outflows of $26.960
million (2011: $10.838 million) are classified within cash flows from financing activities having previously been disclosed within cash
flows from operating activities.
Net foreign exchange gains on proceeds from Nufarm step-up securities financing of $11.505 million (2011: loss $20.951 million)
are also classified within net financing costs in the income statement and attached notes.
Comparatives have been adjusted to present them on the same basis as current period figures.
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.
(a) Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the group. 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.
Acquisitions on or after 1 July 2009
For acquisitions on or after 1 July 2009, the group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree;
• plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;
less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Nufarm Limited Annual Report 2012 | 53
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
Acquisitions on or after 1 July 2009 (continued)
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the group incurs in
connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified
as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognised in profit or loss.
Acquisitions between 1 July 2004 and 1 July 2009
For acquisitions between 1 July 2004 and 1 July 2009, goodwill represents the excess of the cost of the acquisition over the group’s
interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree.
When the excess was negative, a bargain purchase gain was recognised immediately in profit and loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the group incurred in connection
with business combinations were capitalised as part of the cost of the acquisition.
Acquisitions prior to 1 July 2004 (date of transition to IFRSs)
As part of its transition to IFRSs, the group elected to restate only those business combinations that occurred on or after 1 July
2003. In respect of acquisitions prior to 1 July 2003, goodwill represents the amount recognised under the group’s previous
accounting framework, Australian GAAP.
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no
goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate
amount of the net assets of the subsidiary.
(ii) 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.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so
causes the non-controlling interests to have a deficit balance.
(iii) investments in 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 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.
54 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iv) 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.
(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 net financing costs as they are mostly derived from financing arrangements.
Proceeds from the Nufarm step-up securities (note 29) have been utilised to provide funding throughout the group. This has
provided a foreign currency exposure when the funding currency denomination differs from the respective entity’s functional
currency. Foreign exchange gains and losses arising on these proceeds have been disclosed as a material item in finance costs
(note 6 and note 10).
(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 from or payable to a foreign operation is neither planned nor 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 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.
Nufarm Limited Annual Report 2012 | 55
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.
Financial assets designated at fair value through profit or loss comprise equity securities that otherwise would have been classified
as available for sale.
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
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.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified
as another category of financial asset. Available-for-sale financial assets are recognised initiallly at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and any changes other than
impairment losses are recognised in other comprehensive income and presented in the fair value reserve in equity. When an
investment is derecognised, the cumulative gain or loss in equity is reclassified to profit or loss.
(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 expired. 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 rate 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 but as
non-controlling interests as they are issued by a subsidiary. After-tax distributions thereon are recognised as distributions within equity.
56 | Nufarm Limited Annual Report 2012
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. 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.
(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.
(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
5 years
• computer equipment
3 years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
(e) Intangible assets
(i) Goodwill
Goodwill that arises upon the acquisition of business combinations is included in intangible assets. Subsequent to initial recognition,
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.
Nufarm Limited Annual Report 2012 | 57
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(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 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 value. With the exception of goodwill, intangibles with a finite
life are amortised on a straight-line basis in profit and loss 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 – 10 years
• intellectual property – finite life
over the useful life in accordance with the acquisition agreement terms
• computer software
3 – 7 years
Amortisation methods, useful lives and residual values are reassessed at each reporting date.
(f) Leased assets
Leases where 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.
58 | Nufarm Limited Annual Report 2012
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) non-derivative 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.
Objective evidence of impairment includes default or deliquency by a debtor, indications that a debtor will enter bankruptcy, and,
in the case of an investment in an equity security, a significant or prolonged decline in its fair value.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount, and the present value of estimated future cash flows discounted at the original effective interest rate.
An impairment loss on an available-for-sale financial asset is recognised by reclassifying the losses accumulated in the fair value
reserve in equity to profit and loss. The cumulative loss that is reclassified from equity to profit and loss is the difference between
the acquisition cost and the current fair value less any impairment loss previously recognised in profit and loss. If, in a subsequent
period, the fair value of an impaired available-for-sale financial asset increases and the increase relates to an event occurring after the
impairment loss was recognised then the impairment loss is reversed, with the amount of the reversal recognised in profit and loss.
(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 at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs to sell.
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of assets that generates cash inflows 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.
Nufarm Limited Annual Report 2012 | 59
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 costs 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.
Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.
In addition, equity accounting of equity accounted investees ceases once classified as held for sale or distribution.
(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.
The group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement
occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, change in the present value of
defined obligation and any related actuarial gains and losses and past service cost that had not previously been recognised.
(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.
60 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(j) Employee benefits (continued)
(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 12 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.
The group has a short term incentive plan (STI) available to key executives, senior managers and other managers globally. A
predetermined percentage of the STI is paid in cash with the remainder deferred into shares which have either a one or two
year vesting period. The cash portion is recognised immediately as an expense at the time of performance testing. The expense
relating to deferred shares is expensed over the vesting period. Refer to note 27 for further details on this plan.
The group has a long term incentive plan (LTIP) which is available to key executives and certain selected senior managers. Peformance
rights have been granted to acquire ordinary shares in the company subject to the achievement of global performance hurdles. The
expense in relation to the LTIP is recognised over the vesting period of three years. Refer note 27 for further details on this 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 a 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.
(l) Revenue
(i) 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 of an arrangement 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.
(ii) dividend income
Dividend income is recognised when the right to receive the payment is established. This is generally at the point the dividend
has been formally declared.
(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.
Nufarm Limited Annual Report 2012 | 61
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(m) Lease payments (continued)
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 consideration 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 finance costs
Finance income comprises interest income on funds invested, 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.
Finance costs comprise interest expense on borrowings, transaction costs, 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.
(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. 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.
62 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(o) Income tax (continued)
(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.
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) 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.
Nufarm Limited Annual Report 2012 | 63
NOTES TO ThE FINaNCIaL STaTEMENTS continued
3. Significant accounting policies (continued)
(r) Segment reporting
determination and presentation of operating segments
An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the group’s other components. All operating
segments’ results are reviewed regularly by the group’s CEO to make decisions about resources to be allocated to the segment
and to assess its performance.
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.
(s) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2012, and have not been applied in preparing these consolidated financial statements. None of these is expected to have
a significant effect on the consolidated financial statements of the group, except for AASB 9 Financial Instruments, which becomes
mandatory for the group’s 2016 consolidated financial statements and could change the classification and measurement of financial
assets. The group does not plan to adopt this standard early and the extent of the impact has not been determined.
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.
(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.
64 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
4. Determination of fair values (continued)
(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 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.
(i) 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.
(ii) Share-based payment transactions
The fair value of the performance rights issued under the Nufarm long term incentive plan have been measured using Monte
Carlo Simulation and the Binomial Tree. The fair value of the deferred shares granted to participants under the Nufarm short
term incentive will be measured using the volume weighted average price for the five day period subsequent to year end results
announcement. Measurement inputs include the share price on the measurement date, the exercise price of the instrument,
expected volatility, expected term of the instruments, dividends, and the risk-free rate (based on government bonds).
5. Operating segments
Segment information is presented in respect of the group’s key operating segments. The operating segments are based on the
group’s management and internal reporting structure.
Operating segments
The group operates predominantly along two business lines, being crop protection and seed technologies.
The crop protection business deals in the manufacture and sale of crop protection products used by farmers to protect crops from
damage caused by weeds, pests and disease. It is managed by major geographic segments, being Australia and New Zealand, Asia,
Europe, North America and South America. The North America region includes Canada, USA, Mexico and the Central American
countries. The South America region includes Brazil, Argentina, Chile, Uruguay, Paraguay, Bolivia, Colombia and the Andean countries.
The seed technologies business deals in the sale of seeds and seed treatment products. The seed technologies business is managed
on a worldwide basis.
Information regarding the results of each operating segment is included below. Performance is measured based on underlying EBIT as
included in the internal management reports that are reviewed by the group’s CEO. Underlying EBIT 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.
Change in operating segments
In 2011, the group’s operating segments were presented purely on an geographic basis. In 2012, the group’s operating segments are
presented on a crop protection and seed technologies basis. The change is an evolution of our segmental reporting reflecting the
relative size of our seed technologies business.
Nufarm Limited Annual Report 2012 | 65
NOTES TO ThE FINaNCIaL STaTEMENTS continued
5. Operating segments (continued)
Operating
segments
2012
Revenue
Total segment revenue
Results
Underlying EBITDA(a)
Depreciation and
amortisation excluding
material items
underlying eBit(a)
Material items included
in operating profit (refer
note 6)
Material items included in
net financing costs (refer
note 6)
Net financing costs
(excluding material items)
Profit/(loss) before tax
Assets
Segment assets
Crop protection
technologies Corporate
Group
Australia and
New Zealand
$000
Asia
$000
Europe
$000
North
America
$000
South
America
$000
Total
$000
Global
$000
$000
Total
$000
Seed
701,022 125,586 431,095 470,243
332,636 2,060,582
120,969
–
2,181,551
127,036
19,387
65,801
43,501
19,365
275,090
32,721
(40,057)
267,754
(21,054) (2,652) (22,578)
(10,174)
(1,839)
(58,297)
105,982
16,735
43,223
33,327
17,526
216,793
(2,132)
30,589
(1,352)
(61,781)
(41,409) 205,973
(61,001)
2,072
(36,721)
110,323
560,976
62,128 618,347
416,170 500,660
2,158,281
224,038
414,823
2,797,142
Investment in associates
–
2,658
1,167
–
–
3,825
301
–
4,126
Total assets
560,976
64,786 619,514
416,170 500,660
2,162,106
224,339
414,823 2,801,268
Liabilities
Segment liabilities
Total liabiltiies
other segment
information
Capital expenditure
158,070 40,548 173,894
36,291
79,150
487,953
158,070 40,548 173,894
36,291
79,150
487,953
18,534
18,534
817,979 1,324,466
817,979 1,324,466
21,013
1,392 30,440
9,504
6,707
69,056
3,457
3
72,516
66 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
5. Operating segments (continued)
Crop protection
technologies Corporate
Group
Australia and
New Zealand
$000
Asia
$000
Europe
$000
North
America
$000
South
America
$000
Total
$000
Global
$000
$000
Total
$000
Seed
674,827 142,297 435,794
418,931
324,544 1,996,393
87,196
– 2,083,589
114,907
24,926
61,211
24,185
8,902
234,131
27,840
(30,135) 231,836
underlying eBit(a)
94,723
22,319 38,346
16,456
4,107
175,951
(20,184) (2,607) (22,865)
(7,729)
(4,795)
(58,180)
(1,522)
26,318
(355) (60,057)
(30,490)
171,779
(143,690)
(31,789)
(28,848)
(32,548)
Operating
Segments
2011
Revenue
Total segment revenue
Results
Underlying EBITDA(a)
Depreciation and
amortisation excluding
material items
Material items included
in operating profit (refer
note 6)
Material items included in
net financing costs (refer
note 6)
Net financing costs
(excluding material items)
Profit/(loss) before tax
Assets
Segment assets
545,734
62,455 679,475 368,880
550,560
2,207,104
144,810
478,355 2,830,269
Investment in associates
–
6,236
995
–
–
7,231
336
–
7,567
Total assets
545,734
68,691 680,470 368,880
550,560
2,214,335
145,146
478,355 2,837,836
Liabilities
Segment liabilities
Total liabiltiies
other segment
information
Capital expenditure
116,036
36,895
168,282
39,163
96,796
457,172
116,036
36,895
168,282
39,163
96,796
457,172
12,618
12,618
803,928 1,273,718
803,928 1,273,718
21,506
919
6,285
6,387
21,469
56,566
10,007
19
66,592
(a) Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is underlying EBIT, before depreciation, amortisation
and impairments.
Nufarm Limited Annual Report 2012 | 67
NOTES TO ThE FINaNCIaL STaTEMENTS continued
5. Operating segments (continued)
Geographical information
Australia
New Zealand
Asia
Europe
USA
Rest of North America
Brazil
Rest of South America
Unallocated(b)
total
Revenue by location of customer
Non current assets by location
2012
$000
672,504
54,412
139,213
444,624
449,158
70,850
253,789
97,001
–
2,181,551
2011
$000
644,146
52,193
156,250
442,462
389,801
59,862
262,494
76,381
–
2012
$000
269,150
14,443
30,289
304,895
265,653
29,776
214,281
16,417
181,633
2011
$000
259,050
15,148
34,268
318,946
198,661
31,721
267,048
15,494
182,502
2,083,589
1,326,537
1,322,838
(b) Unallocated assets predominantly include deferred tax assets.
6. Items of material income and expense
Material items are those items where their nature and/or amount is considered material to the financial statements. Such items
included within the group’s profit for the year are detailed below.
Consolidated
Consolidated
2012
$000
Pre-tax
2012
$000
After-tax
2011
$000
Pre-tax
2011
$000
After-tax
Material items by category:
Class action settlement
Restructuring costs
Debt refinancing costs
Due diligence and litigation costs
Investment in associate write down
Goodwill impairment loss – Brazil
Intangibles write off – Brazil
Net foreign exchange gains/(losses) on Nufarm step-up securities financing
Receivable write down
Regulatory inquiry costs
(43,500)
(30,450)
(7,295)
(9,931)
(3,552)
(1,993)
–
(3,708)
11,050
–
–
(5,013)
(6,952)
(2,427)
(1,993)
–
(7,002)
(24,093)
(3,467)
(4,919)
–
(6,310)
(17,238)
(2,734)
(4,919)
–
(70,004)
(70,004)
(3,708)
7,697
–
–
(4,340)
(4,340)
(20,951)
(14,666)
(40,357)
(27,671)
(346)
(248)
(58,929)
(42,846)
(175,479)
(148,130)
class action settlement
On 1 August 2012 the company announced that it had entered into a conditional settlement agreement in relation to the class action
proceedings originally issued in January 2011 by Maurice Blackburn and Slater & Gordon. The company agreed to pay $43.500
million, which covers the claims, interest, costs of the litigation funders and the applicants’ legal fees. The settlement is subject to
court approval and, if court approval is obtained, the class action will be dismissed without the admission of liability by the company.
In accordance with Accounting Standards the settlement amount, along with related legal costs, has been provided for in the
financial statements in the current year.
Restructuring costs
After-tax restructuring costs of $5.013 million (2011: $6.310 million) mainly relate to the reorganisation of the European business.
The prior year costs related to the reorganisation of the sales force in Brazil.
68 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
6. Items of material income and expense (continued)
debt refinancing costs
The company incurred significant debt refinancing costs associated with a 12 month facility that was put in place in December 2010.
These costs were treated as a material item and were partially recognised in the prior year ($17.238 million) with the balance
recognised in the current year ($6.952 million). Costs associated with the new financing arrangements drawn down in November
2011 are being amortised over the respective terms of these arrangements and are included within net financing costs.
due diligence and litigation costs
The 2012 financial year due diligence and litigation costs largely relate to the settlement of the class action, the Seeds 2000
acquisition and arbitration proceedings against the previous owner of the Brazilian business. The prior year due diligence and
litigation costs largely relate to the settlement of the receivable dispute, the class action and arbitration proceedings against
the previous owner of the Brazilian business.
investment in associate write down
The company has written down by $1.993 million (2011: $4.919 million) the value of a minor equity investment in an Indian crop
protection company Excel Crop Care Ltd. The remaining carrying value of this investment at 31 July 2012 is $2.658 million.
net foreign exchange gains/(losses) on nufarm step-up securities financing
The company benefited from a net after-tax gain of $7.697 million (2011: $14.666 million net loss) associated with the year end
mark-to-market revaluation of proceeds from Nufarm step-up securities.
Goodwill impairment loss/intangibles write off – Brazil
In 2011 the company recognised an impairment of goodwill of the Brazil CGU due to a number of market, product and economic
factors that have impacted the business. Whilst the business did record a strong earnings recovery in the 2011 year relative to
the previous year, after discussions with advisors, it was determined that a higher discount rate should be applied to the business
projections in recognition of the risks attached to the acheivement of the forecast. A total impairment charge of $70.004 million
was recognised in the year ended 31 July 2011.
Several older insecticide products have been phased out of the Brazilian product portfolio due to regulatory requirements.
The company took a write down in the carrying value of the intangible assets associated with these products in the prior year
($4.340 million) with the balance of $3.708 million written down in the current financial year. Replacement products have been
introduced into the portfolio.
Receivable write down
In the prior year the company announced that it had executed a binding settlement agreement in relation to a receivables dispute.
The settlement resulted in a partial recovery and the subsequent write down of unrecovered funds resulting in an after-tax loss of
$27.671 million.
Material items are classified by function as follows
Year ended 31 July 2012
$000
Class action settlement
Restructuring costs
Debt refinancing costs
Due diligence and legal costs
Investment in associate write down
Intangibles write off – Brazil
Net foreign exchange gains/(losses) on
Nufarm step-up securities financing
Cost of sales
–
(805)
–
–
–
–
–
Selling,
marketing and
distribution
expense
General and
administrative
expense
–
(43,500)
(4,846)
–
–
–
–
–
(1,644)
(953)
(3,552)
(1,993)
(3,708)
–
(55,350)
(55,350)
Net
financing
costs
–
–
(8,978)
–
–
–
11,050
2,072
–
Total
Pre-tax
(43,500)
(7,295)
(9,931)
(3,552)
(1,993)
(3,708)
11,050
(58,929)
(61,001)
Total material items included operating profit
(805)
(805)
(4,846)
(4,846)
Nufarm Limited Annual Report 2012 | 69
Net
financing
costs
–
–
–
(10,838)
–
–
–
–
(20,951)
(31,789)
–
Total
Pre-tax
(70,004)
(4,340)
(7,002)
(24,093)
(3,467)
(4,919)
(40,357)
(346)
(20,951)
(175,479)
(143,690)
Consolidated
2012
$000
24
318
9,782
10,124
2011
$000
63
69
12,901
13,033
(65,489)
(2,966)
(64,397)
(3,203)
NOTES TO ThE FINaNCIaL STaTEMENTS continued
6. Items of material income and expense (continued)
Year ended 31 July 2011
$000
Goodwill impairment loss – Brazil
Intangibles write off – Brazil
Restructuring costs
Debt refinancing costs
Due diligence and legal costs
Investment in associate write down
Receivable write down
Regulatory inquiry costs
Net foreign exchange gains/(losses) on
Nufarm step-up securities financing
Selling,
marketing and
distribution
expense
–
General and
administrative
expense
(70,004)
Cost of sales
–
–
(606)
–
(4,558)
–
–
–
–
–
–
–
–
–
–
–
–
(4,340)
(1,838)
(13,255)
(3,467)
(4,919)
(40,357)
(346)
–
(138,526)
(138,526)
Total material items included operating profit
(606)
(606)
(4,558)
(4,558)
7. Other income
Dividend income
Rental income
Sundry income
Total other income
8. Other expenses
The following expenses were included in the period result:
Depreciation and amortisation
Inventory write down
70 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
9. Personnel expenses
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution superannuation funds
Expenses related to defined benefit superannuation funds
Short term employee benefits
Other long term employee benefits
Restructuring expense
Personnel expenses
Consolidated
2012
$000
(212,306)
(32,520)
(13,371)
(1,813)
(7,976)
(2,252)
(4,847)
2011
$000
(192,088)
(29,402)
(14,845)
(3,528)
(7,437)
(1,949)
(6,291)
(275,085)
(255,540)
The restructuring expense is mainly the restructuring of the group’s European operations (2011: Brazilian business sales force
restructuring). The restructuring expenses are included in material items in note 6.
10. Finance income and expense
Interest income – external
Net foreign exchange gains/(losses) – other(a)
Financial income
Interest expense – external
Interest expense – debt establishment transaction costs(a)
Lease expense – finance charges
Financial expenses
Consolidated
2012
$000
7,910
8,187
16,097
(47,405)
(12,972)
(1,419)
(61,796)
2011
$000
7,518
20,006
27,524
(54,954)
(10,838)
(1,418)
(67,210)
Net foreign exchange gains/(losses) on Nufarm step-up securities financing(a)
11,050
(20,951)
Net financing costs
(34,649)
(60,637)
(a) Refer note 2(e) for an explanation of the prior year reclassification.
Nufarm Limited Annual Report 2012 | 71
NOTES TO ThE FINaNCIaL STaTEMENTS continued
11. Income tax expense
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 recognised tax losses utilised
Derecognition of tax losses/credits
Deferred tax expense/(benefit)
Total income tax expense/(benefit) in income statement
Attributable to:
Continuing operations
Total income tax expense/(benefit) in income statement
numerical reconciliation between tax expense and pre-tax net profit
Profit/(loss) 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/assets 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)
income tax recognised directly in 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
Relating to cost of issuing equity
Relating to equity based compensation
Income tax recognised in other comprehensive income
72 | Nufarm Limited Annual Report 2012
Consolidated
2012
$000
2011
$000
46,782
(690)
46,092
17,331
845
18,176
(16,024)
(8,953)
10
7,223
200
(8,591)
(190)
178
7,770
(1,195)
37,501
16,981
37,501
37,501
16,981
16,981
110,323
(32,548)
33,097
(9,764)
7,121
887
10
200
(1,476)
(385)
(1,267)
38,187
(686)
37,501
25,618
752
(190)
7,770
(2,391)
(3,065)
(2,594)
16,136
845
16,981
(5,038)
(5,038)
(4,910)
(4,910)
(1,596)
–
(93)
(1,689)
(492)
22
–
(470)
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
There were no assets held for sale in the current period.
In the year ended 31 July 2011, the Belvedere, UK manufacturing site was shut down and prepared for sale. A sale agreement for
the site was executed with sales proceeds of £6.1 million. The site demolition was completed, however, title could not pass until
remediation was complete and the necessary regulatory approvals received, which occurred post year end. The following assets
and liabilities related to the site were classified as assets held for sale in the period ended 31 July 2011.
Assets classified as held for sale
Property, plant and equipment including costs incurred in preparing site for sale
Total assets held for sale
Consolidated
2012
$000
–
–
2011
$000
8,830
8,830
14. acquisition of businesses and acquisition of non-controlling interests
Business acquisitions
On 1 December 2011, the group acquired 100 per cent of the shares in Seeds 2000 Inc at a total cost of US$55.2 million. Seeds 2000
is a sunflower seed research and production company based in Minnesota, USA and has activities in the USA, Canada, China,
Argentina, and a number of European markets.
On 31 March 2012 the group acquired 100 per cent of the shares in Seeds 2000 Argentina SRL, a related company of Seeds 2000 Inc,
at a total cost of US$1.4 million. On 24 October 2011, the group acquired the breeding and germplasm assets of the Super Seeds
sunflower business in Serbia. The Seeds 2000 Argentina SRL and Super Seeds acquisitions are individually immaterial.
These acquisitions have been made to expand the seeds business in the regions of North America, South America and Europe.
Management believes that the purchase of these will complement and result in synergies with the existing seeds businesses in
these regions and expand our market share.
Acquisitions for the year ended 31 July 2012
Acquiree’s net assets at acquisition date
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Deferred tax asset
Pre-acquistion intangibles assets
Other assets
Trade and other payables
Interest bearing loans and borrowings
Deferred tax liability
Other liabilities
Net identifiable assets and liabilities
Identifiable intangibles acquired on acquisition
Goodwill on acquisition
Consideration paid
Cash acquired
Net cash outflow
Seeds 2000 Inc
Fair value on
acquisition (restated)
$000
Individually immaterial
acquisitons
Fair value on
acquisition
$000
1,382
1,733
12,493
1,726
400
1,879
164
(1,041)
(2,074)
(14,392)
(4,213)
(1,943)
34,665
19,334
52,056
(1,382)
50,674
462
234
689
23
–
–
–
(234)
–
(8)
(108)
1,058
2,622
21
3,701
(462)
3,239
Nufarm Limited Annual Report 2012 | 73
NOTES TO ThE FINaNCIaL STaTEMENTS continued
14. acquisition of businesses and acquisition of non-controlling interests (continued)
Business acquisitions (continued)
The Seeds 2000 Inc net assets recognised in the 31 January 2012 interim financial statements were based on a provisional assessment
of fair value as the group sought an independent assessment of Seeds 2000 Inc’s taxation position. The results of the assessment had
not been received at the date the 31 January 2012 interim financial statements were approved for issue by the board of directors.
Subsequent to the issuance of the 31 January 2012 interim financial statements, the taxation assessment was completed and showed
that the fair value of income tax liability was $462,000 lower than the provisional value, and deferred tax assets were $284,000 lower
than the provisional value. There was a corresponding reduction in goodwill of $178,000, to give total goodwill arising on the acqusition
of $19,334,000.
For Seeds 2000 Inc, the trade receivables comprise gross contractual amounts due of $1,733,000.
Total goodwill of $19,355,000 from business acquisitons is attributable mainly to the synergies expected to be achieved from integrating
the respective companies into the group’s existing seeds business.
There were no business acquisitions for the year ended 31 July 2011.
Acquisition of non-controlling interest
On 1 May 2012, the group acquired an additional 49 per cent interest in the voting shares of Nufarm Technologies (M) Sdn Bhd,
increasing its ownership interest to 100 per cent. A cash consideration of $50,000 was paid to the non-controlling interest shareholders.
The carrying value of the net assets of Nufarm Technologies (M) Sdn Bhd at the acquisition date was $102,000, and the carrying value
of the additional interest acquired was $50,000. The group recognised a decrease in non-controlling interests of $50,000.
There were no acqusitions of non-controlling interests for the year ended 31 July 2011.
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
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
Prepayments
Other receivables
Current receivables
non-current
Receivables due from associates
Other receivables
Proceeds receivable from sale of businesses
Non-current receivables
Total trade and other receivables
74 | Nufarm Limited Annual Report 2012
Consolidated
2012
$000
103,522
87,795
191,317
–
191,317
2011
$000
129,020
128,686
257,706
(10,881)
246,825
688,059
(22,278)
665,781
–
7,196
3,363
11,484
42,672
730,496
614,810
(26,587)
588,223
450
74
5,695
26,811
44,871
666,124
38
39,420
1,637
41,095
38
41,748
5,398
47,184
771,591
713,308
NOTES TO ThE FINaNCIaL STaTEMENTS continued
17. Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence of finished goods
Total inventories
Consolidated
2012
$000
138,018
13,991
368,172
520,181
(4,927)
515,254
2011
$000
146,087
19,230
380,007
545,324
(3,645)
541,679
18. Tax assets and liabilities
Current tax assets and liabilities
The current tax asset for the group of $37,664,065 (2011: $40,659,419) represents the amount of income taxes recoverable in respect
of prior periods and that arose from the payment of tax in excess of the amounts due to the relevant tax authority. The current tax
liability for the group of $14,833,945 (2011: $2,297,832) 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:
Assets
Liabilities
Net
Consolidated
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
2012
$000
4,507
8,511
14,265
25,951
28,319
103,346
184,899
(3,266)
181,633
2011
$000
6,434
6,776
13,778
11,174
50,033
99,831
188,026
(5,524)
182,502
Movement in temporary differences during the year
2012
$000
(8,215)
(75,510)
–
–
2011
$000
(8,485)
2012
$000
(3,708)
2011
$000
(2,051)
(60,372)
(66,999)
(53,596)
(15,364)
(13,565)
–
–
(99,089)
(82,422)
3,266
5,524
–
–
14,265
25,951
12,955
103,346
85,810
–
13,778
11,174
36,468
99,831
105,604
–
(95,823)
(76,898)
85,810
105,604
Consolidated 2012
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
Consolidated 2011
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
(14,400)
(66,999)
Balance
31.07.11
$000
Recognised
in income
$000
Recognised
in equity
$000
Currency
adjustment
$000
Other
movement
$000
(2,051)
(53,596)
13,778
11,174
36,468
99,831
105,604
(1,917)
(2,131)
(1,109)
17,110
3,862
(7,223)
8,592
–
–
1,596
–
93
–
1,689
260
3,128
–
(2,333)
(5,313)
(10,956)
(15,214)
–
–
–
(22,155)
21,694
(14,861)
Balance
31.07.10
$000
(13,563)
Recognised
in income
$000
9,433
Recognised
in equity
$000
–
Currency
adjustment
$000
2,079
Other
movement
$000
–
(41,571)
14,446
9,641
34,292
99,188
102,433
(18,525)
616
2,135
7,714
(178)
1,195
–
492
–
(22)
–
470
6,500
(1,776)
(602)
(3,893)
(7,989)
(5,681)
–
–
–
(1,623)
8,810
7,187
Balance
31.07.12
$000
(3,708)
14,265
25,951
12,955
103,346
85,810
Balance
31.07.11
$000
(2,051)
(53,596)
13,778
11,174
36,468
99,831
105,604
Nufarm Limited Annual Report 2012 | 75
NOTES TO ThE FINaNCIaL STaTEMENTS continued
18. Tax assets and liabilities (continued)
Deferred tax assets and liabilities (continued)
The carrying value of deferred tax assets relating to tax losses and tax credits is largely dependent on the generation of sufficient
future taxable income. The Brazilian business carries total deferred tax assets of $59.1 million (2011: $72.1 million).
Based on the group’s accounting policy of recouping tax losses and tax credits within a maximum time frame of eight years, the
carrying value of the deferred tax asset would be impaired if aggregate earnings over the eight year period are 12 per cent below
management’s forecasts. The carrying value of this asset will continue to be assessed at each reporting date.
unrecognised deferred tax liability
At 31 July 2012, a deferred tax liability of $17,589,702 (2011: $21,060,570) relating to investments in subsidiaries has not been recognised
because the company controls the repatriation of retained earnings 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 2012, there are unrecognised tax losses and timing differences of $30,805,379 (2011: $38,888,650). 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:
Excel Crop Care Ltd
Agricultural chemicals manufacturer
Country
India
Balance date
of associate
31 March
Ownership and voting interest
2011
14.69%
2012
14.69%
F&N joint ventures
Agricultural chemicals distributor
Eastern Europe
31 December
50.00%
50.00%
The 14.69 per cent investment in Excel Crop Care Ltd is equity accounted as Nufarm has the ability to appoint two directors to the
board and, together with an unrelated partner, has significant influence over nearly 34 per cent of the shares of the company. The
relationship also extends to manufacturing and marketing collaborations.
The F&N joint ventures represents the group’s interest in three joint ventures with FMC Corporation, which operate in Poland, Czech
Republic and Slovakia. The joint ventures sell Nufarm and FMC products within their country.
Financial summary of material associates (at reporting date)
Revenues
(100%)
$000
130,561
49,948
180,509
157,320
59,780
217,100
Profit
after-tax
(100%)
$000
2,766
668
3,434
9,294
1,638
10,932
Total
assets
(100%)
$000
97,755
51,158
148,913
101,359
53,973
155,332
Net assets
as reported
by associates
(100%)
$000
Share of
associate’s
net assets
equity
accounted
$000
39,604
2,334
41,938
44,891
1,990
46,881
5,818
1,167
6,985
6,594
995
7,589
Total
liabilities
(100%)
$000
58,151
48,824
106,975
56,468
51,983
108,451
2012
Excel Crop Care Ltd
F&N joint ventures
2011
Excel Crop Care Ltd
F&N joint ventures
The financial summary information is as per the latest management accounts.
76 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
19. Investments accounted for using the equity method (continued)
Financial summary of material associates (at reporting date) (continued)
carrying value by major associate
Excel Crop Care Ltd
F&N joint ventures
Others
Carrying value of associates
Consolidated
2012
$000
2,658
1,167
301
4,126
2011
$000
5,760
995
812
7,567
At 31 July 2012, the carrying value of the Excel Crop Care Ltd investment was written down by $1.993 million (2011: $4.919 million).
Refer note 6.
Share of profit by major associate
Excel Crop Care Ltd
F&N joint ventures
Others
Share of net profits of associates
202
254
(78)
378
1,398
856
123
2,377
The share of net profits has been derived from the latest management reports as at 31 July 2012 for the F&N joint ventures. The Excel
Crop Care share of net profits is from the 30 June 2012 management accounts.
20. Other investments
investments – available-for-sale
Balance at the beginning of the year
New investments during the year
Exchange 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 instruments
5,324
–
244
5,568
6,481
–
(1,157)
5,324
645
645
6,213
5,969
–
–
–
–
Nufarm Limited Annual Report 2012 | 77
NOTES TO ThE FINaNCIaL STaTEMENTS continued
22. Property, plant and equipment
Consolidated 2012
cost
Balance at 1 August 2011
Additions
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2012
depreciation and impairment losses
Balance at 1 August 2011
Depreciation charge for the year
Additions through business combinations
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2012
Land
and
buildings
$000
Plant and
machinery
$000
Leased
plant and
machinery
$000
Capital
work in
progress
$000
192,698
554,660
2,328
1,303
(125)
3,677
(10,899)
188,982
22,075
2,283
(4,221)
11,329
(17,997)
568,129
Total
$000
775,204
47,575
3,586
(4,350)
–
9,644
6,048
–
–
(31)
(20)
18,202
17,124
–
(4)
(14,975)
(923)
(29,839)
15,641
19,424
792,176
(60,619)
(340,140)
(4,763)
(33,056)
(376)
75
(78)
(1,461)
3,855
48
3,842
12,097
(640)
(215)
–
–
30
5
(61,919)
(358,657)
(820)
–
–
–
–
–
–
–
(401,399)
(38,034)
(1,837)
3,930
–
15,944
(421,396)
Net property, plant and equipment at 31 July 2012
127,063
209,472
14,821
19,424
370,780
Consolidated 2011
cost
Balance at 1 August 2010
Additions
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2011
depreciation and impairment losses
Balance at 1 August 2010
Depreciation charge for the year
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2011
Land
and
buildings
$000
Plant and
machinery
$000
Leased
plant and
machinery
$000
Capital
work in
progress
$000
203,445
564,625
11,303
865
(874)
2,936
(13,674)
14,846
(8,198)
17,438
(34,051)
192,698
554,660
25,565
14,940
–
–
–
(124)
(20,250)
(1,535)
9,644
(2,053)
18,202
(59,804)
(331,367)
(6,895)
(33,558)
707
64
5,309
7,405
(141)
17,521
(532)
(233)
–
77
48
(60,619)
(340,140)
(640)
–
–
–
–
–
–
Total
$000
804,938
30,651
(9,072)
–
(51,313)
775,204
(391,703)
(40,686)
8,112
–
22,878
(401,399)
Net property, plant and equipment at 31 July 2011
132,079
214,520
9,004
18,202
373,805
Assets pledged as security for finance leases amount to $8.8 million (2011: $9.0 million).
78 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
Additions through business combinations
19,355
28,724
8,563
23. Intangible assets
Consolidated 2012
cost
Balance at 1 August 2011
Additions
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2012
Amortisation and impairment losses
Balance at 1 August 2011
Amortisation charge for the year
Impairment loss
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2012
Intellectual
Indefinite
life
$000
property
Finite
life
$000
Capitalised
development
costs
$000
Computer
software
$000
Goodwill
$000
327,610
391,948
77,063
–
13
548
–
(183)
–
(20,953) 25,730
(14,309)
(32,203)
(30,800)
(1,219)
(8,338)
124,151
29,029
1,857
(87)
(646)
27,357
2,052
22
(15)
–
(717)
Total
$000
948,129
31,642
58,521
(285)
(10,178)
(73,277)
300,453
368,749
110,685
145,966
28,699
954,552
(129,585)
(12,916) (44,508)
–
–
–
–
(3,708) (10,422)
–
–
–
–
–
(222)
18,995
1,730
1,804
(38,630)
(10,272)
(16,679)
(242,318)
(3,053)
(27,455)
–
(3)
10,314
4,491
–
–
86
716
–
(3)
10,178
27,736
(110,590)
(14,894) (53,348)
(34,100)
(18,930)
(231,862)
Intangibles carrying amount at 31 July 2012
189,863
353,855
57,337
111,866
9,769
722,690
Consolidated 2011
cost
Balance at 1 August 2010
Additions
Disposals
Other transfers
Exchange adjustment
Balance at 31 July 2011
Amortisation and impairment losses
Balance at 1 August 2010
Amortisation charge for the year
Impairment loss
Other transfers
Exchange adjustment
Balance at 31 July 2011
Intellectual
Indefinite
life
$000
property
Finite
life
$000
Capitalised
development
costs
$000
Computer
software
$000
Goodwill
$000
358,610
434,749
85,840
–
–
2,162
(33,162)
327,610
7,684
–
557
–
(5,485)
(103)
(45,000)
(9,231)
391,948
77,063
(67,102)
(9,296) (43,814)
–
(4,340)
(7,241)
(70,004)
234
7,287
–
(54)
774
–
3,246
3,301
114,696
20,840
(136)
(2,490)
(8,759)
124,151
(34,996)
(9,426)
–
2,490
3,302
23,187
5,943
(21)
(131)
(1,621)
27,357
(15,115)
(2,704)
–
131
1,009
Total
$000
1,017,082
35,024
(157)
(6,047)
(97,773)
948,129
(170,323)
(23,711)
(70,004)
6,047
15,673
(129,585)
(12,916) (44,508)
(38,630)
(16,679)
(242,318)
Intangibles carrying amount at 31 July 2011
198,025
379,032
32,555
85,521
10,678
705,811
Nufarm Limited Annual Report 2012 | 79
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,
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 operating unit 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 $158 million (2011: $202 million), US $146 million (2011: $142 million),
Seeds business $166 million (2011: $105 million), UK and Holland $76 million (2011: $82 million) and Australia $57 million (2011: $55
million). The balance of intangibles is spread across multiple CGUs, with no individual amount being material relative to the total
intangibles at balance date.
Impairment testing for cash-generating units containing goodwill
For the impairment testing of these assets, the carrying amount of the asset is compared to its recoverable amount at a CGU level.
The group uses the value-in-use method to estimate the recoverable amount. In assessing value-in-use, the estimated future cash
flows are derived from the five year plan for each cash-generating unit with a growth factor applied to extrapolate a cash flow
beyond year five. A perpetuity factor is then applied to the normalised cash flow beyond year five in order to include a terminal
value in the value-in-use calculation. The terminal growth rate assumed for each CGU is generally a long term inflation estimate,
ranging from 1.4 per cent to 5.0 per cent (2011: 0 per cent to 5 per cent). The cash flow is then discounted to a present value using
a discount rate which is the company’s weighted average cost of capital, but then adjusted for country risk and asset-specific risk
associated with each CGU. The nominal post-tax discount rate applied to the group’s CGUs ranges from 8.5 per cent to 12.8 per cent
(2011: 9.8 per cent to 16.3 per cent).
Brazil cash-generating unit (CGU)
The Brazil CGU has the following intangible assets:
Goodwill
Indefinite life intangibles
Capitalised development costs
Computer software
Total
2012
$000
47,374
102,908
7,619
397
158,298
2011
$000
60,959
134,235
6,434
558
202,186
The indefinite life intangibles relate to the product registrations and trade marks acquired in June 2007.
In 2012, the company has assessed the recoverable amount of the Brazil CGU and determined the CGU’s recoverable amount
exceeds its carrying value.
In 2011, the company recognised an impairment of goodwill of the Brazil CGU due to a number of market, product and economic factors
that have impacted the business. Whilst the business did record a strong earnings recovery in the 2011 year relative to the 2010 year,
after discussions with advisors, it was determined that a higher discount rate should be applied to the business projections in recognition
of the risks attached to the achievement of the forecast. A total impairment charge of $70.004 million was recognised in the year ended
31 July 2011.
Considering the 2011 impairment of the Brazil CGU, the amount by which the CGU recoverable amount exceeds the carrying value in
2012 is minimal.
Should the Brazil CGU fail to meet its forecast operating result going forward, this may necessitate a revision to the future forecasts or
alternatively a further increase in the discount rate used in the value-in-use modelling. By way of sensitivity and all other things being
equal: (a) a one per cent increase in the discount rate would result in a reduction in recoverable amount of approximately $61 million; or
(b) a five per cent decrease in EBITDA compared to budget for all years in the forecast period and also in the terminal value calculation
would result in a reduction in recoverable amount of approximately $41 million.
80 | Nufarm Limited Annual Report 2012
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 – secured
Bank loans – unsecured
Deferred debt establishment costs
Other loans – unsecured
Finance lease liabilities – secured
Current liabilities
non-current liabilities
Bank loans – secured
Bank loans – unsecured
Deferred debt establishment costs
Other loans – unsecured
Finance lease liabilities – secured
Non-current liabilities
Consolidated
2012
$000
2011
$000
467,121
389,507
–
2,129
5,741
535
629
3,351
474,991
394,022
8,343
1,903
10,246
8,289
4,742
13,031
215,321
82,268
(5,995)
557
172
579,746
119,839
–
998
88
292,323
700,671
359,441
4,134
(7,993)
816
10,400
366,798
–
–
–
1,136
10,238
11,374
Financing facilities
On 22 November 2011, the company executed a $625 million senior secured syndicated bank facility (SFA) with a term of three
years. As at 31 July 2012, the amount of funding drawn under the syndicated bank facility was $336 million with loans being
advanced in multiple currencies.
On 23 August 2011, Nufarm executed a $300 million trade receivables securitisation facility. Subsequent to execution, the facility size
has been reduced to $250 million to reflect the current value of trade receivables being used to secure funding under this program.
As at 31 July 2012, the amount of funding drawn under the securitised facility by the participating Nufarm entities was $202 million.
Funding from the securitisation facility and the syndicated bank facility was used to repay the amount outstanding under the
previous 12 month $900 million bank facility that had been established on 15 December 2010.
The syndicated bank facility and trade receivables securitisation facility provide access to committed lines of credit to support the
group’s seasonal working capital demands and general corporate financing requirements. The SFA includes covenants of a type
normally associated with facilities of this kind, and the group was in compliance with these covenants throughout the financial year.
The majority of debt facilities that reside outside the SFA and the trade receivables securitisation facility are regional working capital
facilities, primarily located in Brazil and Europe, totalling $152 million (2011: $178 million).
Total net debt (interest bearing liabilities net of cash) at 31 July 2012 of $467.8 million (2011: $465.2 million) includes the draw down
of an additional US$55 million of debt funding for the Seeds 2000 acquisition.
Nufarm Limited Annual Report 2012 | 81
NOTES TO ThE FINaNCIaL STaTEMENTS continued
25. Interest-bearing loans and borrowings (continued)
2012
Bank loan facilities
Other facilities
Total financing facilities
2011
Bank loan facilities
Other facilities
Total financing facilities
Financing arrangements
Bank loans
Repayment of borrowings (excluding finance leases)
Period ending 31 July 2012
Period ending 31 July 2013
Period ending 31 July 2014
Period ending 31 July 2015 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
1,027,218
1,373
661,164
1,373
1,028,591
662,537
1,075,867
710,466
2,134
2,134
1,078,001
712,600
Consolidated
2012
$000
–
298,146
816
363,575
2011
$000
700,583
1,136
–
–
1,382
1,493
3,696
80,587
87,158
(76,586)
10,572
1,260
1,276
3,557
82,078
88,171
(77,845)
10,326
Consolidated
2012
%
7.60
4.28
11.33
12.13
2011
%
6.83
5.76
6.82
11.71
82 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
26. Employee benefits
current
Liability for short term employee benefits
Liability for current portion of other long term employee benefits
Current employee benefits
non-current
Defined benefit fund obligations
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 other long term employee benefits
Non-current employee benefits
Total employee benefits
Consolidated
2012
$000
15,066
3,101
18,167
4,768
112,005
(84,971)
31,802
12,740
44,542
62,709
2011
$000
15,646
6,456
22,102
4,713
104,104
(80,630)
28,187
8,998
37,185
59,287
The group makes contributions to defined benefit pension funds in the UK, Holland, France and Indonesia that provide defined
benefit amounts for employees upon retirement.
Historical information
Present value of defined benefit obligation
Fair value of plan assets
Surplus/(deficit)
Consolidated
2012
$000
(116,773)
84,971
(31,802)
2011
$000
(108,817)
80,630
(28,187)
2010
$000
(117,766)
87,900
(29,866)
2009
$000
(121,657)
89,829
(31,828)
2008
$000
(118,688)
93,786
(24,902)
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
(1,541)
(1,191)
(550)
3,591
1,103
6,013
(1,223)
(8,058)
700
(10,088)
Nufarm Limited Annual Report 2012 | 83
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
2012
$000
2011
$000
108,817
2,260
5,858
8,391
25
(1,066)
172
(5,067)
(2,617)
116,773
80,630
5,264
1,492
(191)
4,632
(4,876)
(1,980)
84,971
2,260
5,858
(5,264)
25
(1,066)
1,813
1,436
263
36
78
1,813
117,766
2,817
5,672
3,462
(16)
–
182
(5,235)
(15,831)
108,817
87,900
4,945
3,465
(2,057)
2,961
(4,720)
(11,864)
80,630
2,817
5,672
(4,945)
(16)
–
3,528
2,007
551
747
223
3,528
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
(11,504)
(5,494)
(16,998)
(9,805)
(1,699)
(11,504)
84 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
26. Employee benefits (continued)
The major categories of fund assets as a percentage of total fund assets are as follows:
European equities
European bonds
Property
Cash
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
Discount rate at 31 July
Expected return on fund assets at 31 July
Future salary increases
Future pension increases
Consolidated
2012
%
48.0
46.6
1.5
3.9
4.2
6.3
2.8
2.2
2011
%
62.8
34.9
1.6
0.7
5.4
6.4
3.6
2.8
The overall expected long term rate of return on assets is 6.3 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 $3,609,000 in contributions to defined benefit plans in 2013.
27. Share-based payments
Nufarm Executive Share Plan (2000)
The Nufarm Executive Share Plan (2000) offers shares to executives. The executives may select an alternative mix of shares (at no
cost) and options at a cost determined under the ‘Black Scholes’ methodology. These benefits are only given when a predetermined
return on capital employed is achieved over the relevant period. The shares and options are subject to forfeiture and dealing
restrictions. The executive cannot deal in the shares or options for a period of between three and 10 years without board approval.
An independent trustee holds the shares and options on behalf of the executives. At 31 July 2012 there were 61 participants
(2011: 70 participants) in the scheme and 989,830 shares (2011: 1,127,034) were allocated and held by the trustee on behalf of the
participants. The cost of issuing shares is expensed in the year of issue. From 1 August 2011, it was decided that there will be no
further awards under this share plan and that it would be replaced by the Nufarm short term incentive plan (refer below). Any
unvested equities held in the executive share plan will remain and be subject to the vesting conditions under the rules of the plan.
Nufarm Short Term Incentive Plan (STI)
The STI is available to key executives, senior managers and other managers globally. The first awards under the plan will be issued
at the end of the current financial year. The STI is measured as follows:
• 80 per cent of the potential is based on budget measures of EBIT and return on operating assets (ROA).
• 20 per cent of the potential is based on strategic and business improvement objectives.
A predetermined percentage of the STI is paid in cash at the time of performance testing and the balance is deferred into shares in
the company for nil consideration. The number of shares granted is based on the volume weighted average price (VWAP) of Nufarm
Limited shares in the five days subsequent to the results announcement. Vesting will occur after a two year period, although for the
first year 50 per cent of the shares will vest on the first anniversary and 50 per cent of the shares will vest on the second anniversary.
Nufarm Executive Long Term Incentive Plan (LTIP)
On 1 August 2011, the LTIP commenced and is available to key executives and certain selected senior managers. Awards are granted
to individuals in the form of performance rights, which comprise rights to acquire ordinary shares in the company for nil consideration,
subject to the achievement of global performance hurdles. Under the plan, individuals will receive an annual award of performance rights
as soon as practical after the announcement of results in the preceding year. The initial awards were granted to executives (excluding the
managing director) on 9 February 2012. The performance and vesting period for the awards will be three years. Awards will vest in two
equal tranches as follows:
• 50 per cent of the LTIP grant will vest subject to the achievement of a relative total shareholder return (TSR) performance hurdle
measured against a selected comparator group of companies; and
• the remaining 50 per cent will vest subject to meeting an absolute return on funds employed (ROFE) target.
Nufarm Limited Annual Report 2012 | 85
NOTES TO ThE FINaNCIaL STaTEMENTS continued
27. Share-based payments (continued)
Global Share Plan (2001)
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 2012 there were 722 participants (2011: 756 participants) in the scheme and 1,783,289 shares (2011:
1,602,481) were allocated and held by the trustee on behalf of the participants.
The power of appointment and removal of the trustees for the share purchase schemes is vested in the company.
Employee expenses
Total expense arising from share-based payment transactions
2012
$000
2011
$000
2,829
457
Measurement of fair values
nufarm Sti Plan
The grant date of the shares awarded under the STI Plan was subsequent to 31 July 2012. As the services received in consideration
for these shares commenced on 1 August 2011, an estimate of the fair value of the awards has been recognised as an expense in the
year ended 31 July 2012. The weighted average fair value and associated fair value assumptions of the awards granted subsequent
to 31 July 2012 will be disclosed in the 2013 annual report.
nufarm Lti Plan
The fair value of the rights granted through the LTI Plan was measured as follows:
Award type
Performance rights
Vesting conditions
Relative TSR
Valuation methodology
Monte Carlo simulation
ROFE performance condition
Binomial Tree
Vesting condition
Fair value at grant date
Share price at grant date
Grant date
Earliest vesting date
Exercise price
Expected life
Volatility
Risk free interest rate
Dividend yield
Reconciliation of outstanding performance rights
Outstanding at 1 August
Forfeited during the year
Exercised during the year
Expired during the year
Granted during the year
Outstanding at 31 July
Exercisable at 31 July
Number of
performance
rights
2012
000
Weighted
average
exercise price
2012
$000
–
–
–
–
465,677
465,677
–
–
–
–
–
$nil
$nil
–
Relative
TSR
$2.91
$4.86
9.2.2012
31.7.2014
–
ROFE
performance
condition
$4.51
$4.86
9.2.2012
31.7.2014
–
2.5 years
2.5 years
35%
3.59%
3.0%
35%
3.59%
3.0%
Number of
performance
rights
2011
000
–
Weighted
average
exercise price
2011
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
The performance rights outstanding at 31 July 2012 have a $nil exercise price and a weighted average contractual life of 2.5 years.
86 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
28. Provisions
current
Restructuring
Other
Current provisions
Consolidated
Movement in provisions
Balance at 1 August 2011
Provisions made during the year
Provisions used during the year
Exchange adjustment
Balance at 31 July 2012
Consolidated
2012
$000
3,747
2,995
6,742
Restructuring
$000
Other
provisions
$000
1,477
2,487
(114)
(103)
3,747
3,779
–
–
(784)
2,995
2011
$000
1,477
3,779
5,256
Total
$000
5,256
2,487
(114)
(887)
6,742
The provision for restructuring is mainly relating to the restructuring of the European operations. The restructuring provision
primarily consists of unpaid redundancy costs. The other provision consists of 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
2012
261,833,005
Number
of ordinary
shares
2011
261,775,731
309,242
57,274
262,142,247
261,833,005
The company does not have authorised capital or par value in respect of its issued shares.
On 23 November 2011, 114,560 shares at $4.15 were issued under the executive share plan. On 3 January 2012, 70,492 shares
at $4.16 were issued under the global share plan. On 30 April 2012, 124,190 shares at $4.85 were issued under the dividend
reinvestment program.
On 5 January 2011, 57,274 shares at $5.44 were issued under the global share plan.
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, were
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 3.9 per cent (2011: 1.9 per cent). On 23 September 2011, Nufarm announced that it would ‘step-up’ the NSS. This resulted in the
interest margin attached to the NSS being stepped up by 2.0 per cent, with the new interest margin being set at 3.9 per cent as
at 24 November 2011. No other terms were adjusted and there are no further step-up dates. Nufarm retains the right to redeem
or exchange the NSS on future distribution dates.
Nufarm Limited Annual Report 2012 | 87
NOTES TO ThE FINaNCIaL STaTEMENTS continued
29. Capital and reserves (continued)
translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations where their functional currency is different from the presentation currency of the reporting entity.
capital profit reserve
This reserve is used to accumulate realised capital profits.
other reserve
This reserve represents the accrued employee entitlements to share awards that have been charged to the income statement
and have not yet been exercised.
dividends
An interim dividend of three cents per share, totalling $7,864,874 was declared on 27 March 2012 and was paid on 30 April 2012
(2011: Nil).
distributions
Distributions recognised in the current year by Nufarm Finance (NZ) Ltd on the Nufarm step-up securities are:
2012
Distribution
Distribution
2011
Distribution
Distribution
Distribution rate
%
Total amount
$000
Payment
date
Consolidated
6.61% and 8.61*
6.94
10,253
16 April 2012
8,829
17 October 2011
19,082
6.94
6.71
8,686
15 April 2011
8,444 15 October 2010
17,130
* Refer to discussion titled ‘Nufarm step-up securities’ above.
The distribution on the Nufarm step-up securities reported on the equity movement schedule has been reduced by the tax benefit
on the gross distribution, giving an after-tax amount of $14.044 million (2011: $12.220 million).
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 (2011: 30 per cent)
30,421
25,746
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
(4,923)
25,498
(9,971)
15,775
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. In accordance
with the tax consolidation legislation, the company as the head entity in the tax-consolidated group has also assumed the benefit of
$25,498,018 (2011: $15,775,833) franking credits.
2012
$000
2011
$000
88 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
30. Earnings per share
Net profit for the year
Net profit attributable to minority interest
Net profit attributable to equity holders of the parent
Nufarm step-up securities distribution
Earnings used in the calculations of basic and diluted earnings per share
Earnings from continuing operations
Subtract items of material income/(expense) (refer note 6)
Earnings excluding items of material income/(expense) used in the calculation of earnings
per share excluding material items
Consolidated
2012
$000
72,822
(228)
72,594
(14,044)
58,550
2011
$000
(49,529)
(322)
(49,851)
(12,220)
(62,071)
58,550
58,550
(62,071)
(62,071)
(42,846)
(148,130)
101,396
86,059
For the purposes of determining basic and diluted earnings per share, the after-tax distributions on NSS are deducted from net profit.
Weighted average number of ordinary shares used in calculation of basic earnings per share
Weighted average number of ordinary shares used in calculation of diluted earnings per share
Number of shares
2012
261,983,233
2011
261,808,212
262,203,348
261,808,212
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 per share
From continuing operations
Diluted earnings 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
2012
2011
22.3
22.3
22.3
22.3
38.7
38.7
(23.7)
(23.7)
(23.7)
(23.7)
32.9
32.9
Nufarm Limited Annual Report 2012 | 89
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 of the above risks, the 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 chairman of the audit committee and functionally to the chief financial
officer. He 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 represents the maximum open amount without requiring further management approval.
The group’s maximum exposure to credit risk at the reporting date was:
carrying amount
Trade and other receivables
Cash and cash equivalents
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
Australia/New Zealand
Asia
Europe
North America
South America
Trade and other receivables
Consolidated
2012
$000
2011
$000
764,395
191,317
713,234
257,706
7,196
74
962,908
971,014
199,740
22,476
192,943
122,663
226,573
764,395
173,917
22,825
223,998
52,513
239,981
713,234
The group’s top five customers account for $150.6 million of the trade receivables carrying amount at 31 July 2012 (2011: $110.1 million).
These top five customers represents 22 per cent (2011: 17 per cent) of the total receivables.
90 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
Credit risk (continued)
impairment losses
The ageing of the group’s customer 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
2012
$000
578,876
85,681
1,801
4,809
16,892
688,059
(22,278)
665,781
2011
$000
511,303
58,280
8,906
6,145
30,176
614,810
(26,587)
588,223
Some of the past due receivables are secured by collateral from customers 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 nine years, the bad debt write-off
amount has averaged 0.03 per cent of sales, with no greater than 0.11 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
2012
$000
26,587
410
(410)
–
(4,309)
22,278
2011
$000
26,677
2,413
(346)
–
(2,157)
26,587
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.
On 23 August 2011, Nufarm executed a $300 million trade receivables securitisation facility. Subsequent to execution, the facility size
has been reduced to $250 million to reflect the current value of trade receivables being used to secure funding under this program.
The facility provides funding that aligns with the working capital cycle of the company.
In November 2011, the group finalised a three year $625 million syndicated bank facility. The amount drawn down under the facility
at 31 July 2012 is $336 million.
At 31 July 2012, the group had access to facilities of $1,029 million (2011: $1,078 million) under the SFA, trade receivables
securitisation facility and with other lenders.
The majority of debt facilities that reside outside the SFA and the trade receivables securitisation facility are regional working
capital facilities, primarily located in Brazil and Europe, totalling $152 million (2011: $178 million).
The SFA is secured by assets in the primary geographies in which Nufarm operates including Australia, United States, Canada,
United Kingdom and France. A parent guarantee is provided to support working capital facilities in Brazil. Total net debt (net of
cash) at 31 July 2012 was $467.8 million (2011: $465.2 million). The Senior Facility Agreement (SFA) includes covenants of a type
normally associated with facilities of this kind, and the group was in compliance with these covenants throughout the financial year.
Nufarm Limited Annual Report 2012 | 91
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
Liquidity risk (continued)
The following are the contractual maturities of the group’s financial liabilities:
Consolidated 2012
non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – secured
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
Consolidated 2011
non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – secured
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
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1–2
years
$000
More than
2 years
$000
–
483,108
574,762
86,402
1,373
10,572
–
483,108
604,435
86,402
1,373
87,158
–
472,862
228,038
82,268
557
1,382
–
1,903
12,717
–
816
–
8,343
363,680
4,134
–
1,493
84,283
2,129
179,158
179,158
–
(177,029)
(177,029)
–
183,880
183,880
(7,196)
(191,076)
(191,076)
–
–
–
–
–
–
–
–
1,151,150
1,257,409
780,040
16,929
460,440
10,881
10,881
406,424
406,978
579,746
119,839
2,134
10,326
579,746
119,839
2,134
88,171
10,881
393,393
579,746
119,839
998
1,260
–
4,742
–
–
1,136
1,276
–
8,289
–
–
–
85,635
629
–
12,439
(11,810)
12,439
(11,810)
–
(74)
4,005
(4,079)
4,005
(4,079)
–
–
–
–
–
–
–
–
1,129,905
1,208,304
1,106,672
7,154
93,924
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 used to manage the exposure.
92 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
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 group uses forward exchange
contracts and options to hedge its foreign currency risk.
The group uses foreign exchange contracts and options 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.
During the period, the funding, which was previously advanced to these jurisdictions in US dollars, the Euro and the British pound,
was converted to Australian dollars. The foreign currency contracts therefore primarily cover the exposure of the lenders to
movements in the Australian dollar against their local currencies.
For accounting purposes, the group has not designated any derivatives in hedge relationships and all movements in fair value
are 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 2012 was a $5,067,000 asset (2011: $555,080 liability) comprising assets of $7,196,000
(2011: $74,300) and liabilities of $2,129,000 (2011: $629,380) that were recognised as derivatives measured at fair value.
exposure to currency risk
The group’s translation exposure to major foreign currency risks at balance date was as follows, based on notional amounts:
Net financial assets/(liabilities) – by currency of denomination
Consolidated
2012
Functional currency of group operation
Australian dollars
US dollars
Euro
UK pounds sterling
Consolidated
2011
Functional currency of group operation
Australian dollars
US dollars
Euro
UK pounds sterling
AUD
$000
USD
$000
–
(24,448)
39,618
336
–
39,954
AUD
$000
–
–
–
–
–
–
38,132
56,172
69,856
USD
$000
130,473
–
(11,557)
22,770
141,686
Euro
$000
(12,396)
(1,715)
–
(5,682)
(19,793)
Euro
$000
14,156
–
–
5,584
19,740
GBP
$000
(24,665)
–
(9,498)
–
(34,163)
GBP
$000
8,435
–
(639)
–
7,796
Sensitivity analysis
Based on the aforementioned group’s net financial assets/(liabilities) at 31 July, a one per cent strengthening or weakening of 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 is performed on the same basis for 2011.
Nufarm Limited Annual Report 2012 | 93
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Sensitivity analysis (continued)
currency movement
1 per cent change in the Australian dollar exchange rate
1 per cent change in the US dollar exchange rate
1 per cent change in the Euro exchange rate
1 per cent change in the GBP exchange rate
Strengthening Weakening
Strengthening Weakening
Profit
or (loss)
after-tax
2012
$000
Profit
or (loss)
after-tax
2012
$000
Profit
or (loss)
after-tax
2011
$000
Profit
or (loss)
after-tax
2011
$000
185
(728)
(54)
(139)
(189)
743
55
142
(1,061)
(992)
(58)
(259)
1,082
1,012
59
264
The group’s financial asset and liability profile may not remain constant, and therefore these sensitivities should be used with care.
The following significant exchange rates applied during the year:
AUD
US dollar
Euro
GBP
BRL
Average rate
Reporting date
2012
1.033
0.783
0.654
1.900
2011
1.017
0.733
0.634
1.669
2012
1.051
0.854
0.671
2.151
2011
1.099
0.763
0.669
1.704
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
2012 and at 31 July 2011, 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 3.90 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
2012
$000
2011
$000
87,795
128,686
(673,109)
(585,314)
(722,926)
(594,240)
There were no fixed interest rate instruments during the year ended 31 July 2012 (2011: 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 2011.
94 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Sensitivity analysis for variable rate instruments (continued)
2012
Variable rate instruments
Total sensitivity
2011
Variable rate instruments
Total sensitivity
Fair values
Profit or loss
100bp
increase
$000
100bp
decrease
$000
(5,853)
(5,853)
5,853
5,853
(5,942)
(5,942)
5,942
5,942
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
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts:
Assets
Liabilities
Trade and other payables
Bank overdraft
Secured bank loans
Unsecured bank loans
Other loans
Finance leases
Carrying
amount
2012
$000
Fair
value
2012
$000
191,317
191,317
764,395
764,395
Carrying
amount
2011
$000
257,706
713,234
Fair
value
2011
$000
257,706
713,234
7,196
(2,129)
7,196
(2,129)
74
(629)
74
(629)
(483,108)
(483,108)
(406,424)
(406,424)
–
–
(10,881)
(10,881)
(574,762)
(574,762)
(579,746)
(579,746)
(86,402)
(86,402)
(119,839)
(119,839)
(1,373)
(1,373)
(10,572)
(10,572)
(2,134)
(10,326)
(2,134)
(10,326)
(195,438)
(195,438)
(158,965)
(158,965)
Note
15
16
16
24
24
15
25
25
25
25
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).
Nufarm Limited Annual Report 2012 | 95
NOTES TO ThE FINaNCIaL STaTEMENTS continued
31. Financial risk management and financial instruments (continued)
Fair values (continued)
Fair value hierarchy (continued)
2012
Derivative financial assets
Derivative financial liabilities
2011
Derivative financial assets
Derivative financial liabilities
Level 1
$000
–
–
–
–
Level 1
$000
–
–
–
–
Consolidated
Level 2
$000
7,196
7,196
(2,129)
5,067
Level 3
$000
–
–
–
–
Consolidated
Level 2
$000
74
74
(629)
(555)
Level 3
$000
–
–
–
–
Total
$000
7,196
7,196
(2,129)
5,067
Total
$000
74
74
(629)
(555)
There have been no transfers between levels in either 2012 or 2011.
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 material 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 and reviews the
group’s total shareholder return with similar 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. ROFE
objectives are set by the board at the beginning of each year. There is a target and a stretch hurdle. These numbers will be based
on the budget and growth strategy. The ROFE return for the year ended 31 July 2012 was 10.4 per cent (2011: 8.5 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
Consolidated
2012
$000
8,569
9,429
17,956
127,427
163,381
2011
$000
10,474
9,797
13,955
127,234
161,460
Operating leases are generally entered into 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.
96 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
33. Capital commitments
The group had contractual obligations to purchase plant and equipment for $8.253 million at 31 July 2012 (2011: $10.828 million).
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.
Shareholder class action proceedings (refer to note 41).
Consolidated
2012
$000
N/A
2011
$000
–
Guarantee facility for Eastern European joint ventures with FMC Corporation.
6,983
6,279
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.
9,953
11,136
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 and expires in December 2013.
Brazilian taxation proceedings(a)
Contingent liabilities
3,182
3,560
86,163
60,312
106,281
81,287
(a) The group has a contingent liability for an amount of $86.163 million (July 2011: $60.312 million) in respect of arbitration proceedings against the previous
owner of the Brazil business (acquired in 2007). The arbitration is in regard to potential pre-acquisition related tax liabilities and seeks to confirm that the
tax indemnification clauses contained in the initial Investment Agreement are effective in allowing Nufarm to recover amounts from the previous owner.
Based on indemnification clauses in the agreement together with related legal advice, management is confident that the Arbitration Tribunal will find
the previous owner responsible for indemnifying Nufarm in respect of the potential liabilities. The Arbitration Tribunal hearing has been completed and
the outcome is expected to be known within the calendar year. The contingent liability comprises potential primary tax liabilities, inflation and interest
adjustments.
Advice obtained by the company to date indicates that there is a high likelihood of successfully defending the claims made by the tax authorities. Nufarm
will only be liable to the extent that the tax authorities are ultimately successful in pursuing the claims for primary tax and related interest and inflation
adjustments, and the company is unsuccessful in enforcing the tax indemnities provided by the former owner.
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
New Zealand
Notes
Place of incorporation
2012
2011
Percentage of shares held
(a)
(a)
Australia
Australia
Australia
USA
Australia
Australia
USA
100
100
70
100
100
100
100
100
100
100
70
100
100
100
100
100
Nufarm Limited Annual Report 2012 | 97
NOTES TO ThE FINaNCIaL STaTEMENTS continued
35. group entities (continued)
AH Marks Australia Pty Ltd
AH Marks Holdings Limited
Artfern Pty Ltd
Australis Services Pty Ltd
Bestbeech Pty Ltd
Chemicca Limited
CNG Holdings BV
Crop Care Australasia Pty Ltd
Crop Care Holdings Limited
Croplands Equipment Limited
Croplands Equipment Pty Ltd
Danestoke Pty Ltd
Edgehill Investments Pty Ltd
Fchem (Aust) Limited
Fernz Canada Limited
Fernz Singapore Pte Ltd
Fidene Limited
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
98 | Nufarm Limited Annual Report 2012
Notes
Place of incorporation
2012
2011
Percentage of shares held
(a)
(a)
(a)
(a)
Australia
United Kingdom
Australia
Australia
Australia
Australia
Netherlands
(a)
Australia
(a)
(a)
(a)
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Canada
Singapore
New Zealand
Australia
Egypt
USA
Greece
United Kingdom
Guatemala
France
France
Australia
France
Malaysia
USA
Guatemala
Mexico
USA
Australia
Malaysia
Australia
Malaysia
Malaysia
N. Antillies
Australia
Mexico
USA
USA
Singapore
Morocco
South Africa
Canada
USA
Zimbabwe
USA
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
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
100
100
100
100
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
NOTES TO ThE FINaNCIaL STaTEMENTS continued
35. group entities (continued)
Nufarm Americas Inc
Nufarm Asia Sdn Bhd
Nufarm Australia Limited
Nufarm BV
Nufarm Canada Receivables Partnership
Nufarm Chemical (Shanghai) Co Ltd
Nufarm Chile Limitada
Nufarm Colombia SA
Notes
Place of incorporation
2012
2011
Percentage of shares held
(a)
USA
Malaysia
Australia
Netherlands
Canada
China
Chile
Colombia
Nufarm Crop Products UK Limited
United Kingdom
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 BV
Nufarm Finance (NZ) Limited
Nufarm GmbH
Nufarm GmbH & Co KG
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
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
Nufarm Technologies USA
Nufarm Technologies USA Pty Ltd
Costa Rica
Guatemala
Mexico
Panama
Venezuela
Ecuador
Germany
Brazil
Spain
Netherlands
New Zealand
Austria
Austria
Mexico
New Zealand
Netherlands
France
Hong Kong
Hungary
USA
Brazil
Singapore
Netherlands
Italy
Japan
Malaysia
(a)
United Kingdom
Malaysia
Australia
New Zealand
Peru
Australia
Portugal
Romania
France
Argentina
Switzerland
Malaysia
New Zealand
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
Nufarm Limited Annual Report 2012 | 99
NOTES TO ThE FINaNCIaL STaTEMENTS continued
35. group entities (continued)
Percentage of shares held
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
Seeds 2000 Inc
Seeds 2000 Argentina SRL
Selchem Pty Ltd
Notes
Place of incorporation
2012
(a)
Australia
United Kingdom
Ukraine
USA
Australia
USA
USA
Australia
Argentina
Australia
Australia
Australia
Australia
Indonesia
Indonesia
USA
USA
Argentina
Australia
(a)
(a)
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
100
2011
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
–
–
100
(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.
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 2012 is set out as
follows:
100 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
36. Deed of cross guarantee (continued)
Summarised income statement and retained profits
Loss before income tax expense
Income tax expense
Net loss attributable to members of the closed group
Retained profits at the beginning of the period
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
equity
Share capital
Reserves
Retained earnings
totAL eQuitY
Consolidated
2012
$000
2011
$000
(32,368)
(3,039)
(35,407)
(87,425)
3,253
(84,172)
169,628
253,800
(7,865)
126,356
–
169,628
29,073
407,800
159,509
13,327
66,771
514,894
174,514
19,625
609,709
775,804
2,658
6,237
1,120,632
930,856
38,019
159,337
23,806
1,344,452
1,954,161
24,347
157,879
25,158
1,144,477
1,920,281
512,574
–
11,656
–
216,939
365,505
10,167
–
524,230
592,611
131,914
7,126
9,464
–
148,504
672,734
1,281,427
–
4,390
8,998
–
13,388
605,999
1,314,282
1,059,522
95,549
126,356
1,058,151
86,503
169,628
1,281,427
1,314,282
Nufarm Limited Annual Report 2012 | 101
NOTES TO ThE FINaNCIaL STaTEMENTS continued
37. Parent entity disclosures
Result of the parent entity
Profit/(loss) for the period
Other comprehensive income
Total comprehensive profit/(loss) 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
Accumulated losses
Retained earnings
total equity
Company
2012
$000
2011
$000
(30,344)
(1,205)
(31,549)
25,597
(930)
24,667
1,096,826
1,104,438
1,432,484
1,430,798
173,448
173,714
135,980
136,138
1,059,522
36,355
(30,344)
193,237
1,058,151
35,407
–
201,102
1,258,770
1,294,660
Parent entity contingencies
The parent entity is one of the guarantors of the Senior Facility Agreement (SFA) and would be obliged, along with the other
guarantors, to make payment on the SFA in the unlikely event of a default by one of the borrowers. The parent entity also
provides corporate guarantees to support several of the regional working capital facilities located in Brazil and Europe.
In the prior year, the parent entity had a contingent liability as a result of the class action proceedings.
On 1 August 2012, Nufarm Limited entered into a conditional settlement agreement in relation to the class action proceedings. Subject
to court approval, Nufarm has agreed to pay $43.5 million, which has been recorded as a expense at 31 July 2012. Refer note 6.
Parent entity capital commitments for acquisition of property, plant and equipment
There are no capital commitments for the parent entity in 2012 or 2011.
Restatement of prior year comparatives
The prior year parent entity comparatives have been restated as a result of the omission of the AUD 4.919 million impairment in
Excel Crop Care Ltd, an equity investment held by the parent. This has resulted in a restatement of total comprehensive income
from $29.586 million to $24.667 million and total assets from $1,435.717 million to $1,430.798 million.
102 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
38. Reconciliation of cash flows from operating activities
cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Dividend from associated company
Amortisation of intangibles
Depreciation
Impairment loss – Brazil
Investment in associates write down
Gain on disposal of non-current assets
Share of profits of associates net of tax
Financial expense
Interest paid
Tax expense
Taxes paid
Movements in working capital items:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
Increase/(decrease) in payables
Exchange rate change on foreign controlled entities working capital items
net operating cash flows
Consolidated
2012
$000
2011
$000
72,822
(49,529)
151
27,455
38,034
–
1,993
(333)
(378)
61,796
(48,824)
37,501
(28,127)
162,090
(61,231)
39,607
84,830
(58,791)
4,415
166,505
234
23,711
40,686
70,004
4,919
(273)
(2,377)
67,210
(56,372)
16,981
(25,434)
89,760
152,935
11,754
(10,942)
(78,274)
75,473
165,233
Nufarm Limited Annual Report 2012 | 103
NOTES TO ThE FINaNCIaL STaTEMENTS continued
39. Key management personnel disclosures
The following were key management personnel of the consolidated entity at any time during the reporting period and were key
management personnel for the entire period (except where denoted otherwise).
non-executive directors
DG McGauchie AO (Chairman)
AB Brennan
GR Davis
Dr RJ Edgar (retired 27 March 2012)
Dr WB Goodfellow
GA Hounsell
PM Margin (appointed 3 October 2011)
executives
BF Benson
P Binfield(1)
BJ Croft
R Heath
G Hunt(2)
DA Mellody(3)
RF Ooms(4)
title
Group general manager agriculture
Chief financial officer
Group executive human resources and organisation development
Group general manager corporate services and company secretary
Group general manager global marketing and business development
Group general manager supply chain and strategic procurement
Group general manager chemicals
Dr JW Stocker AO (retired 1 December 2011) MJ Pointon
Group general manager innovation and development
DA Pullan
RG Reis
Group general manager operations
Group general manager corporate strategy and external affairs
executive director
DJ Rathbone AM – Managing director and chief executive
1. P Binfield was appointed as CFO with effect from 7 November 2011.
2. G Hunt was appointed as group general manager of global marketing and business development with effect from 6 February 2012.
3. DA Mellody, formerly the group general manager global marketing, moved into a new executive role of group general manager supply chain and strategic
procurement with effect from 1 February 2012.
4. RF Ooms resigned as group general manager chemicals with effect from 29 February 2012.
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
Termination benefits
Other long term benefits
Consolidated
2012
$
10,051,964
483,344
1,141,807
2011
$
7,049,406
480,384
720,000
1,525,000
2,026,238
267,505
256,927
13,469,620
10,532,955
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 entities in the
group 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 2012 (2011: 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.
104 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
39. Key management personnel disclosures (continued)
Options and rights over equity instruments granted as compensation
The movement during the reporting period in the number of rights over ordinary shares in Nufarm Limited held directly, indirectly
or beneficially, by each key management person, including their related parties, is as follows
Options/rights over ordinary
shares in Nufarm Ltd
Balance
at 1 August
2011
Granted as
remuneration
Exercised
Net
change
other
Balance at
31 July
2012
2012
directors
DJ Rathbone
executives
BF Benson
P Binfield
BJ Croft
R Heath
G Hunt
DA Mellody
MJ Pointon
DA Pullan
RG Reis
Total
–
–
–
–
–
–
–
–
–
–
–
180,749
34,740
54,710
16,040
15,790
52,588
26,320
18,340
36,320
30,080
465,677
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
180,749
34,740
54,710
16,040
15,790
52,588
26,320
18,340
36,320
30,080
465,677
No options held by key management personnel vested during the year, nor were they vested and exercisable or vested but not
exercisable as at 31 July 2012.
No options/rights over the ordinary shares of Nufarm Limited were granted or held, directly, indirectly or beneficially by key
management persons during 2011 or as at 31 July 2011.
Movements in shares
The movement during the reporting period in the number of ordinary shares in Nufarm Limited held, directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
Shares held in Nufarm Ltd
2012
directors
DG McGauchie1
DJ Rathbone4
AB Brennan
GR Davis
Dr RJ Edgar (resigned 27 March 2012)
Dr WB Goodfellow 1, 2
GA Hounsell 1
PM Margin (appointed 3 October 2011)
Dr JW Stocker (retired 1 December 2011) 1, 3
executives
BF Benson
P Binfield (appointed 7 November 2012)
BJ Croft
R Heath
G Hunt (appointed 6 February 2012)
DA Mellody
RF Ooms (retired 27 March 2012)
MJ Pointon
DA Pullan
RG Reis
Total
Balance
at 1 August
2011
Granted as
remuneration
Exercise
of options
Net
change
other
Balance at
31 July
2012
31,239
11,676,031
10,000
20,000
13,000
1,120,551
43,723
–
41,521
33,068
–
19,990
206,250
–
16,773
333,409
19,217
159,527
104,096
13,848,395
–
–
–
–
–
–
–
–
–
27,715
–
12,050
12,050
–
18,075
18,075
18,075
27,715
27,715
161,470
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20,000
(13,000)
20,940
–
2,458
(41,521)
31,239
11,676,031
10,000
40,000
–
1,141,491
43,723
2,458
–
10,000
30,000
4,000
–
10,000
–
(351,484)
–
–
–
(308,607)
70,783
30,000
36,040
218,300
10,000
34,848
–
37,292
187,242
131,811
13,701,258
Nufarm Limited Annual Report 2012 | 105
NOTES TO ThE FINaNCIaL STaTEMENTS continued
39. Key management personnel disclosures (continued)
Movements in shares (continued)
Shares held in Nufarm Ltd
2011
directors
DG McGauchie1
DJ Rathbone
AB Brennan (appointed 10 February 2011)
GDW Curlewis (retired 2 December 2010)3
GR Davis (appointed 31 May 2011)
Dr RJ Edgar
Dr WB Goodfellow 1, 2
GA Hounsell1
Dr JW Stocker1
executives
BF Benson
BJ Croft
R Heath
KP Martin3
DA Mellody
RF Ooms
MJ Pointon
DA Pullan
RG Reis
Total
Balance
at 1 August
2010
Granted as
remuneration
Exercise
of options
Net
change
other
Balance
at 31 July
2011
31,239
16,144,890
–
45,913
–
–
1,120,551
43,723
41,521
63,162
–
206,250
394,135
20,128
333,409
19,217
159,527
104,096
–
–
–
–
–
–
–
–
–
–
10,990
–
–
–
–
–
–
–
18,727,761
10,990
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31,239
(4,468,859)
11,676,031
10,000
(45,913)
20,000
13,000
–
–
–
10,000
–
20,000
13,000
1,120,551
43,723
41,521
(30,094)
9,000
33,068
19,990
–
206,250
(394,135)
(3,355)
–
–
–
–
–
16,773
333,409
19,217
159,527
104,096
(4,890,356)
13,848,395
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 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.
(v) Trustees of the Goodfellow Foundation (33,854 shares and 1,338 step-up securities). Dr Goodfellow is chairman of the Foundation Board and does
not have a beneficial interest in these shares or step-up securities.
(vi) Archem Trading (NZ) Ltd (700 step up securities)
3. The shareholding of Dr JW Stocker, Dr RJ Edgar and GDW Curlewis has been removed under the ‘net change other’ column due to their retirement as a
director on 1 December 2011, 27 March 2012 and 2 December 2010 respectively. The shareholding of KP Martin has been removed under the ‘net change
other’ column due to his resignation from the company on 30 June 2011.
4. DJ Rathbone holds 1,500 step-up securities at 31 July 2012 (2011: nil).
106 | Nufarm Limited Annual Report 2012
NOTES TO ThE FINaNCIaL STaTEMENTS continued
40. Non-key management personnel disclosures
(a) Transactions with related parties in the wholly-owned group
The parent entity entered into the following transactions during the year with subsidiaries of the group:
• loans were advanced and repayments received on short term intercompany accounts; and
• management fees were received from several wholly-owned controlled entities.
These transactions were undertaken on commercial terms and conditions.
(b) Transactions with associated parties
Excel Crop Care Ltd
F&N joint ventures
Sumitomo Chemical Company Ltd
Purchases from
Trade payable
Sales to
Trade payable
Trade receivable
Sales to
Purchases from
Trade receivable
Trade payable
Consolidated
2012
$000
–
–
2011
$000
2,860
99
32,454
43,376
99
25,554
15,737
27,545
5,868
14,675
118
31,696
9,885
28,542
1,435
13,507
These transactions were undertaken on commercial terms and conditions.
41. Subsequent events
On 1 August 2012 the company announced that it had entered into a conditional settlement agreement in relation to the class action
proceedings originally issued in January 2011 by Maurice Blackburn and Slater & Gordon.
In accordance with Accounting Standards the class action settlement amount, along with related legal costs, has been provided
for in the financial statements and is reported in the items of material income and expense (refer to note 6 for further information).
On 21 September 2012, Nufarm announced that it intended to offer, subject to market and other conditions, US$300 million
aggregate principal amount of senior unsecured notes. If successful, the net proceeds would be used to repay existing
indebtedness outstanding under the $625 million senior Secured Syndicated Bank Facility (SFA) entered into in November
2011. Concurrent with this, US$250 million of the commitments under the $625 million SFA would be cancelled.
Nufarm Limited Annual Report 2012 | 107
Consolidated
2012
$000
2011
$000
615
592
617
405
1,637
259
1,896
356
41
2
399
675
386
1,653
81
1,734
–
36
36
72
NOTES TO ThE FINaNCIaL STaTEMENTS continued
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
Other assurance services
Other advisory services
Overseas KPMG firms
Other assurance services
Other services remuneration
108 | Nufarm Limited Annual Report 2012
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 2012 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 2012.
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 24th day of September 2012
DG McGauchie
Director
DJ Rathbone
Director
Nufarm Limited Annual Report 2012 | 109
INDEPENDENT aUDITOR’S REPORT
TO THE MEMBERS OF NUFARM LIMITED
Report on the financial report
We have audited the accompanying financial report of Nufarm Limited (the company), which comprises the consolidated balance
sheet as at 31 July 2012, consolidated income statement and consolidated statement of comprehensive income, consolidated
statement of changes in equity and statement of cash flows for the year ended on that date, notes 1 to 42 comprising a summary
of significant accounting policies and other explanatory information and the directors’ declaration of the group comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error.
In note 2(a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements of the Group comply 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 of the financial report that gives a true and fair view 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, a true and fair 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.
110 | Nufarm Limited Annual Report 2012
KPMG, an Australian partnership and a
member firm of the KPMG network of
independent member firms affiliated
with KPMG International Cooperative
(KPMG International), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards Legislation.
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 2012 and of its performance for the year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a).
Report on the remuneration report
We have audited the remuneration report included under the heading ‘remuneration report’ of the directors’ report for the year
ended 31 July 2012. 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 2012, complies with Section 300A of the
Corporations Act 2001.
KPMG
BW Szentirmay
Partner
Melbourne
24 September 2012
Nufarm Limited Annual Report 2012 | 111
ShaREhOLDER aND STaTUTORy INFORMaTION
Details of shareholders, shareholdings and top 20 shareholders
Listed securities – 24 September 2012
Fully paid ordinary shares
Twenty largest shareholders
Sumitomo Chemical Company Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Amalgamated Dairies Limited
Falls Creek No 2 Pty Ltd
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
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