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5
ANNUAL
REPORT
2015
Building a better Nufarm
The company is making changes
and improvements that will
help Nufarm become a better,
more successful business.
While we have continued to grow in recent years, we must ensure that we are generating the level of profitability that we need
to fund future growth opportunities and reward our shareholders with a suitable return on their investment. We are lowering
our cost base and putting systems and processes in place that help us become more efficient and more competitive. And
we’ve set some ambitious targets to achieve over the next three years, with the aim of generating significant cost savings
and a return on funds employed (ROFE) of 16 per cent by the end of our 2018 financial year. Nufarm has a strong global
distribution platform; a broad product portfolio; a respected brand; and talented, committed employees who will continue
to contribute to the success of the company. It’s a challenging, but exciting time to be part of a business where things are
changing for the better.
CONTENTS
01 About Nufarm
02 Key events
03 Facts in brief
04 Managing director’s review
10 Business review
14 Sustainability
16 Board of directors
18 Executive management
20
Information on the company
22 Corporate governance
36 Financial report
37 Directors’ report
57 Lead auditor’s independence declaration
58
Income statement
59 Statement of comprehensive income
60 Balance sheet
61 Statement of cash flows
62 Statement of changes in equity
64 Notes to the financial statements
122 Directors’ declaration
123
Independent auditor’s report
125 Shareholder and statutory information
129 Directory
NUFARM LIMITED ABN 37 091 323 312
C U S
LTURE
T O M E R AND MAR
K
E
T
We understand our
customers and markets.
Our people, systems and
processes make us easy
to deal with.
U
C
V
A
L
U
E
S
WE BUILD
VALUE FOR
CUSTOMERS
AND NUFARM
We safely
manufacture high
quality products
and we deliver
those products in
full and on time
at the lowest
possible cost.
E
C
N
E
L
L
E
A L E XC
OPERAT I O N
We create unique
value propositions
for our customers
across our range
of high quality
products.
P
O
R
T
F
O
L
I
O
D
E
VELOPM E N T
PEOP L E
OUR VALUES
RESPECT, AGILITY, RESPONSIBILITY, EMPOWERMENT
ABOUT NUFARM
Nufarm is an established global agricultural inputs company,
competing worldwide in crop protection and seed technologies.
We are seen around the world as a supplier of quality products,
supported by high standards of service and strong customer
relationships.
Our mission is to grow a better tomorrow through the
products and services we provide that support the success
of our distributors and growers. This mission also reflects
our commitment to the communities in which we operate,
the ambition we have for our people and our collective
approach to success.
Global
headquarters
Regional
headquarters
Crop protection
production
Seeds
production
Sales
countries
NUFARM LIMITED ANNUAL REPORT 2015 | 01
KEY EVENTS
• Core crop protection business generates revenue growth and margin expansion
• Strong earnings recovery in Australia and the United States
• Performance improvement program delivers early benefits
• Continued positive progress on working capital efficiencies
02 | NUFARM LIMITED ANNUAL REPORT 2015
FACTS IN BRIEF
Trading results
Profit attributable to shareholders
Abnormal (gain)/loss
Underlying net profit after tax
Sales revenue
Total equity
Total assets
Ratios
Earnings per ordinary share (cents)
Earnings per ordinary share excluding abnormals (cents)
Gearing ratio (%)
Net tangible assets per ordinary share ($)
Distribution to shareholders
Annual dividend per ordinary share (cents)
People
Staff employed
12 months ended
31 July 2015
$000
12 months ended
31 July 2014
$000
43,220
73,839
117,059
2,737,163
1,636,795
3,574,188
11.7
39.6
25.0
2.58
10.0
37,707
48,704
86,411
2,622,704
1,608,700
3,171,446
9.6
28.1
24.2
2.84
8.0
3,349
3,445
The financial information contained within our financial statements has been prepared in accordance with IFRS. Refer to page 7 for definitions of the non-IFRS
measures used in the annual report. All references to the prior period are to the year end 31 July 2014 unless otherwise stated. Non-IFRS measures have not
been subject to audit or review.
NUFARM LIMITED ANNUAL REPORT 2015 | 03
MANAGING DIRECTOR’S REVIEW
The 2015 full year results reflect both the strength of our core
crop protection business and its growth potential and the early
benefits of changes we are making to the business that will help
drive stronger earnings and stronger returns.
The company generated a statutory
profit after tax of $43.2 million for
the 12 months to 31 July 2015. This
included $73.8 million in one-off costs
associated with restructuring initiatives
and asset rationalisation and compares
to a statutory profit after tax of
$37.7 million in the previous
financial year.
Group revenues increased by
four per cent to $2.74 billion (2014:
$2.62 billion), while underlying earnings
before interest and tax (EBIT) increased
by 18 per cent to $236.9 million
(2014: $200.6 million).
Underlying net profit after tax was
$117.1 million, up 35 per cent on
the $86.4 million reported in the
previous year.
Earnings per share were 11.7 cents
(2014: 9.6 cents per share). Excluding
material items, earnings per share were
39.6 cents (2014: 28.1 cents).
Despite challenging market conditions
in a number of regions, the group
generated a higher gross profit margin
of 28 per cent, which was a material
improvement on the prior year
(26.7 per cent) and reflected a strong
focus on higher margin products, cost
savings and restructuring initiatives,
and disciplined selling policies.
Average net working capital to
sales was 41.9 per cent, a significant
reduction on the prior 12-month
period (47.7 per cent) and represented
very positive progress towards the
company’s target of 40 per cent
by the end of financial year 2016.
Greg Hunt
Managing director and
chief executive officer
04 | NUFARM LIMITED ANNUAL REPORT 2015
MANAGING DIRECTOR’S REVIEW continued
Average net debt was $865 million,
down on the $913 million average
debt in 2014. Net debt at balance
date was slightly up on the prior year
($547 million versus $513 million),
but on a constant currency basis fell
by 18 per cent to $420 million.
Final dividend
Directors declared an unfranked
final dividend of six cents per share,
resulting in a full year dividend of
10 cents. This represents a 25 per cent
increase on the full year dividend of
eight cents per share (partially franked)
paid in the previous year.
The final dividend will be paid on
13 November 2015 to the holders of
all fully paid shares in the company as
at the close of business on 16 October
2015. The final dividend will be
100 per cent conduit foreign income.
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 2015.
Material items
The company has initiated a
restructuring program aimed
at lowering the fixed cost base
and permanently improving the
performance of the business. As part
of that program, under-utilised assets
are being rationalised. This program
resulted in one-off, after-tax costs
of $73.8 million in the 2015 financial
year. On a pre-tax basis, the cash
component of material items will
be $43 million, with the balance of
$44 million relating to non-cash items.
The majority of these costs related to
the European manufacturing footprint
rationalisation, which involves the
closure of the production facility in
Botlek (The Netherlands). Other
costs related to the rationalisation
of underperforming assets and product
intangibles, and various redundancy
and consulting costs.
Interest/tax/cash flow
While average net debt was lower
than in the prior year, higher base
rates in Brazil and increased interest
costs in Argentina resulted in net
external interest costs3 of $67.7 million
compared to $64.3 million in the
2014 year.
Total net financing costs were
$75.2 million, compared to $88.0 million
in the prior year. Foreign exchange
losses were $0.3 million, well down
on the $12.6 million loss recorded
in the 2014 year.
Profit/loss attributable
to shareholders
0
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1
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NUFARM LIMITED ANNUAL REPORT 2015 | 05
MANAGING DIRECTOR’S REVIEW continued
The underlying effective tax rate
was 27.7 per cent. This compared
to 23.5 per cent in the prior year,
which included a number of one-off
tax impacts.
The business generated strong net
operating cash inflows of $228.5 million.
expected to deliver $16 million
in annualised savings by the 2017
financial year.
The performance improvement
program covers a broad range
of initiatives across all areas of
the business. These include:
progressively over the next two
years. Investments will also be made
to support improved performance
in supply chain management,
procurement, marketing capabilities
and other areas.
While the majority of earnings benefits
associated with the program will accrue
in the 2017 and 2018 financial years,
early successes have resulted in
$15 million in benefit at an EBIT level
in the 2015 result, with an additional
benefit of at least $20 million forecast
in 2016. This will include further savings
associated with the manufacturing
platform rationalisation, efficiency
gains in retained production facilities,
procurement savings, and a reduction
in head office costs.
The company has also announced an
objective to achieve a return on funds
employed (ROFE) of 16 per cent
by the 2018 financial year. In 2015,
the company generated a ROFE of
11 per cent, up on the 9.1 per cent
generated in the previous year.
• the restructuring and rationalisation
of the company’s manufacturing
footprint, which will result in a
lower fixed cost base and improved
efficiencies;
• more effective procurement practices
that will change the way in which
key inputs are purchased, removing
duplication and inefficiency, and
leveraging Nufarm’s global scale;
• the establishment of a globally
integrated supply chain that
will deliver cost savings and help
support working capital objectives;
• changes to management structure
and the operating model to reduce
general expenses and better serve
the needs of an integrated global
business; and
• a review of the company’s product
People and organisation
portfolio, with the objective of
improving the strength and value
of Nufarm’s product positions, while
removing those products that do
not generate acceptable returns.
While the potential benefits of a
number of projects continue to be
validated, total estimated cost savings
and efficiencies – on a gross basis –
are well in excess of the targeted net
benefit announced by the company.
Any additional one-off costs associated
with further restructuring changes will
be reported within the period those
initiatives are approved and the
benefits have been validated.
To support sustainable business
improvement and to secure benefits
on an ongoing basis, some of these
savings will be reinvested in new
systems and capabilities. This has
included the implementation of a new
customer relationship management
(CRM) system in both Brazil and
Australia over the past 12 months,
which has contributed directly
to margin improvement in those
businesses. This system will be
implemented in other major markets
The past 12 months have involved some
significant changes in the business,
including in the leadership team.
While periods of significant change
can be challenging, it has been
encouraging to see the high level
of engagement and support from
Nufarm employees around the
world. The strong commitment
and capabilities of our people are
a key strength of the company.
The company recently launched a new
diversity policy, which recognises that
talent comes from all sections of the
community and across different age
groups, genders, cultural backgrounds
and experience. Our leadership team
is more culturally diverse than it has
ever been, and we have a commitment
to identify and grow talent to build
a better Nufarm with the expectation
that we will become a more diverse
organisation in the future.
We are also maintaining a strong focus
on and commitment to improving our
levels of safety and our performance
across other measures of sustainability.
We have strengthened our resources
in these areas.
Balance sheet management
Net debt at year end was $547 million
versus $513 million in the prior year.
Currency translation was a negative
impact on the net debt figure, with
the lower Australian dollar resulting
in increased interest costs associated
with the company’s US dollar
denominated high yield bond.
Average net debt was lower than in
the previous year ($865 million versus
$913 million).
Management continued to focus on
driving further efficiencies in working
capital management, with average
net working capital to sales down to
41.9 per cent (2014: 47.7 per cent).
The company’s objective is to bring
this ratio down to 40 per cent by
the end of the 2016 financial year.
The improved working capital outcome
was achieved despite the need to
build safety stock to ensure product
supply while manufacturing plant
closures take place in Australia,
New Zealand and Europe. The major
driver of the improved position was in
relation to payables, with the company
negotiating more favourable terms with
several key suppliers and implementing
supplier financing programs.
Gearing (net debt to net debt plus equity)
was 25 per cent (2014: 24.2 per cent).
Cost savings and performance
improvement program
In February, the company announced
a cost savings and performance
improvement program aimed at
delivering a net benefit of $100 million
in underlying EBIT by the end of the
2018 financial year. The benefit target
is in addition to earlier announced
gains associated with a restructuring
of the Australian and New Zealand
manufacturing platforms, which is
06 | NUFARM LIMITED ANNUAL REPORT 2015
MANAGING DIRECTOR’S REVIEW continued
Outlook
The combination of cost savings
benefits, margin expansion, and
revenue growth in a number of
the company’s businesses is expected
to result in another solid profit
performance in 2016. This is despite
an expectation that general market
conditions will continue to be subdued.
Initiatives associated with the cost
savings and performance improvement
program are forecast to contribute
an additional underlying EBIT benefit
of at least $20 million in 2016. These
will include savings relating to the
rationalisation of the manufacturing
footprint in both Australia and Europe
and benefits resulting from other
manufacturing efficiencies, improved
procurement practices, and expense
reductions in head office.
The company’s performance in
Australia is expected to continue to
improve, with restructuring initiatives
resulting in a lower and more flexible
cost base and a continued focus on
margin expansion.
The likely impacts of an El Niño
weather pattern have been factored
into the company’s forecasts for 2016.
This weather pattern typically results
in drier than normal spring conditions
in eastern Australia, more reliable
rainfall patterns in Western Australia,
and higher rainfall in South America.
Given Australia is cycling several years
of relatively dry spring conditions, the
additional impact on the Australian
business is expected to be marginal.
The impact in Brazil is likely to result
in stronger demand for both insecticide
and fungicide products.
Despite low, soft commodity prices
and tighter farm economics in the
Americas, the company expects to
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. This release 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 profit release:
1.
Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA
is underlying EBIT before depreciation and amortisation of $80.208 million for the year ended
31 July 2015 and $80.816 million for the year ended 31 July 2014. 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.
Underlying EBIT is used to reflect the underlying performance of Nufarm’s operations. Underlying
EBIT is reconciled to operating profit below.
2.
Year ended 31 July
Underlying EBIT
Material items impacting operating profit
Operating profit
3. Non-IFRS measures are defined as follows:
2015
$000
236,882
(86,664)
150,218
2014
$000
200,607
(50,761)
149,846
• underlying net profit after tax – comprises profit/(loss) for the period attributable to the equity
holders of Nufarm Limited less material items;
• 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 2015 Nufarm Limited
financial report;
• ROFE – defined as underlying EBIT divided by the average of opening and closing funds employed
(total equity plus net debt);
• net debt – total debt less cash and cash equivalents;
• average net debt – net debt measured at each month end as an average;
• net working capital – current trade and other receivables and inventories less current trade and
other payables; and
• average net working capital – net working capital measured at each month end as an average.
generate growth in the United States,
where our business will benefit from
new product introductions and stronger
support from local distribution.
While the US dollar value of the
Brazilian market may see further
declines over the next year, the area
planted to crops and the volume of
crop protection inputs are expected
to rise. Careful management of
inventories, positive exposure to
stronger market segments, and a
strengthening product portfolio result
in Nufarm’s Brazilian business being
well placed to achieve further market
share gains in the 2016 financial year.
Solid growth is forecast in Europe,
with the company well placed to
expand its position across a number
of European country markets.
The combination of important new
seed treatment product launches,
continued expansion of the European
sunflower business, and more
favourable market conditions in the
Australian canola segment should drive
earnings growth in seed technologies
over the next 12 months.
A strong focus will be maintained on
balance sheet objectives, in particular
working capital efficiencies, with the
aim of reducing average net working
capital to sales below 40 per cent by
July 2016.
Beyond the current 2016 financial year,
additional benefits resulting from the
ongoing performance improvement
program, along with profitable growth
opportunities across products, crop
segments and geographies, place
the company in a strong position to
deliver sustainable earnings growth
and improved shareholder returns
over the medium to long term.
Greg Hunt
Managing director and
chief executive officer
23 September 2015
NUFARM LIMITED ANNUAL REPORT 2015 | 07
MANAGING DIRECTOR’S REVIEW continued
Underlying net profit after tax
Group sales
Underlying EBITDA
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08 | NUFARM LIMITED ANNUAL REPORT 2015
MANAGING DIRECTOR’S REVIEW continued
Return on funds employed
Gearing ratio
Earnings per share
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NUFARM LIMITED ANNUAL REPORT 2015 | 09
BUSINESS REVIEW
Market conditions varied during the 2015 financial year, but
were generally weaker due to the fall in crop prices and lower
demand in a number of crop protection segments, in particular
insecticides. Despite this, the company achieved margin growth
in all of its major regional crop protection businesses.
Earnings recovery in the Australian and
the United States businesses and strong
results in Brazil and Europe more than
offset a weaker performance in the
seed technologies segment.
Together with growth in the crop
protection business, near term benefits
associated with the company’s cost
savings and performance improvement
program helped contribute to higher
underlying earnings. It is estimated
that the 2015 results include cost
savings and other efficiency benefits
of $15 million at an EBIT level.
Nufarm’s crop protection business grew
sales by four per cent to $2.58 billion
and underlying EBIT by 24 per cent to
$250.9 million. Crop protection sales
accounted for just over 94 per cent
of group revenues and generated an
average gross margin of 28 per cent,
which is a significant improvement on
the previous year.
The seed technologies segment
generated revenues of $159.6 million,
an increase of 10 per cent on the
previous year ($144.4 million) but
encountered more challenging market
conditions and posted a 14 per cent
decline in underlying EBIT of
$31.8 million. With market conditions
driving a lower value product mix, the
segment generated an average gross
margin of 44 per cent, which was well
down on the 51 per cent achieved in
2014 and below margin expectations
for future periods.
Corporate (head office) costs were
$45.9 million, up on the $37.2 million
in the prior year, a driver being higher
bonus/incentive payment accruals
that reflected the stronger financial
performance of the business.
The company’s continued focus on
working capital efficiencies helped
drive a significant improvement in the
net working capital to sales ratio and
contributed to a reduction in average
net debt over the 12-month period.
10 | NUFARM LIMITED ANNUAL REPORT 2015
BUSINESS REVIEW continued
Operating segments summary
The table below provides a summary of the performance of the operating
segments for the 2015 financial year and the prior corresponding period.
Year ended 31 July
Revenue
Underlying EBIT
($000s)
Crop protection
Australia and
New Zealand
Asia
Europe
North America
South America
Total crop
protection
Seed technologies
– global
Corporate
Nufarm group
2015
2014
Change
(%)
2015
2014
Change
(%)
582,391
155,233
544,775
588,650
706,533
605,761
140,885
555,521
513,596
662,512
-3.9 52,745 33,903
10.2 18,134 19,481
-1.9 64,426 56,420
14.6 38,921 20,638
6.6 76,684 71,622
55.6
-6.9
14.2
88.6
7.1
2,577,582 2,478,275
4.0 250,910 202,064
24.2
159,581
–
144,429
–
2,737,163 2,622,704
10.5 31,829 37,160
n/a (45,857)
(38,617)
4.4 236,882 200,607
-14.3
18.7
18.1
Australia/New Zealand
The Australian and New Zealand
businesses generated sales of
$582.4 million, down four per cent
on the previous year ($605.8 million).
Underlying EBIT, however, was up
by 56 per cent to $52.7 million.
Australia experienced another relatively
dry summer and autumn, which
negatively impacted on demand. While
Australian sales were slightly down on
the prior year, a focus on higher margin
products, more disciplined selling
policies, and a lower cost base resulted
in an improved operating profit.
The previously announced closure
of three manufacturing facilities
in Australia and New Zealand is
continuing on schedule, with capacity
now being relocated into other
facilities. The full benefit of these
NUFARM LIMITED ANNUAL REPORT 2015 | 11
BUSINESS REVIEW continued
changes will be realised in the 2017
financial year, with lower fixed costs,
better plant utilisation, and improved
efficiencies.
New Zealand sales were also down
on the prior year due to adverse
seasonal conditions and a depressed
dairy sector. However, some successful
new product launches and strong sales
into the horticultural segment helped
the business generate a higher
profit contribution.
Asia
Asian crop protection sales increased
by 10 per cent to $155.2 million.
Underlying EBIT was $18.1 million,
down on the $19.8 million generated
in the prior year.
In local currency, sales were up slightly
in the company’s major regional markets
of Indonesia and Malaysia. Additional
field staff and increased product
development helped support a
continued diversification of both the
product portfolio and the crop segments
into which products are sold. These
investments are forecast to drive local
earnings growth over coming years.
North America
North American crop protection
sales grew by 15 per cent in Australian
dollars ($588.7 million) and underlying
EBIT recovered strongly, up by
89 per cent to $38.9 million.
Sales in the United States were up
by five per cent in local currency with
improved marketing and a rephasing
of sales campaigns generating
increased demand in both the crop
segment and the turf and specialty
segment. Despite softer commodity
prices impacting all broad-acre crop
segments, Nufarm saw strong growth
in newer products that address the
increasing challenges associated with
resistant weeds.
More favourable spring conditions
and a successful early order program
also allowed the company to leverage
its broader portfolio in turf, nursery
and greenhouse markets, with the
business benefiting from a number
of new product launches.
Local currency sales in Canada were
down 11 per cent on the prior year,
with very dry conditions impacting
cropping activity in the western
provinces. The company launched
new products in a number of segments
and continues to strengthen its
position with differentiated offerings.
South America
While local market conditions were
more challenging in South America
and the value of the total crop
protection market contracted
(measured in US dollars), the company
posted another strong year with
seven per cent revenue growth
($706.5 million) and a similar increase
in underlying EBIT ($76.7 million).
Lower crop prices impacted overall
demand for inputs in Brazil. Despite
this, the company’s sales were up by
eight per cent in local currency and
generated a higher average margin
than in the prior year. The excellent
result was driven by a focus on newer
and higher margin products, along
with expanded reach into a number
of market segments. Higher beef prices
supported additional crop protection
investment in the pasture market
– where Nufarm has a strong position
– and the business capitalised on
stronger demand for fungicides in
some regions. The insecticide segment
was well down on the previous year.
Revenue growth was also achieved
in Argentina, Chile and Colombia,
and the company secured a number of
new product registrations in Uruguay.
Europe
European sales were slightly down in
Australian dollars (2015: $544.8 million
versus 2014: $555.5 million), but
underlying EBIT grew by 17 per cent
to $64.4 million. Seasonal conditions
were mixed, with unusually hot and dry
weather in central and southern Europe
impacting demand for some products
in the last quarter.
Nufarm’s branded sales grew when
measured in Euros, with France,
Spain, Portugal, Romania and Hungary
performing strongly. The company
also generated strong growth in its
expansion markets in the Middle East
and Africa.
New product introductions in the
cereal herbicides and cereal fungicides
segments helped drive margin
expansion.
The restructuring of the European
manufacturing base is proceeding on
schedule. The Botlek manufacturing
facility in The Netherlands is being
closed, with capacity relocated to
the Wyke facility in northern England.
Production capacity is also being
increased in the Gaillon facility (France).
These changes will permanently reduce
the company’s fixed cost base, improve
working capital management, and
support the continued growth of
the European business.
Major product segments
Crop protection
Nufarm’s crop protection business
generated $2.58 billion in revenues,
representing a four per cent increase
on the prior year. These sales
generated an average gross margin
of 28 per cent, significantly stronger
than the 26 per cent average gross
margin recorded in financial year 2014.
Herbicide sales were $1.75 billion, an
increase of almost five per cent on the
previous year. These sales generated
an improved average gross margin.
12 | NUFARM LIMITED ANNUAL REPORT 2015
BUSINESS REVIEW continued
Sales revenue by region 2015
Total business
Sales by product segment 2015
Crop protection
Sales by product segment 2015
Seed technologies
22%
24%
6%
21%
27%
Australia/New Zealand
North America
South America
Europe
Asia
$2,737.2 million
Phenoxy herbicide revenues and
margins were up, driven by stronger
sales in North America and a more
profitable product mix in Australia
and Europe. Careful management
of inventories and a focus on higher
margin formulations resulted in a
significant improvement in margin
generated from glyphosate sales.
Dicamba and flumioxazin sales were
also up on the prior year.
Group insecticide sales were slightly
down on the prior year ($282 million
versus $290 million), while margins
were steady. Lower insect pressure
and high channel inventories in South
America resulted in reduced demand
for these products, while North
American sales increased, in particular
in the turf and specialty segment.
Fungicide sales were up by 11 per cent
to $274 million and margins improved
on the prior year. All regions other
than Australia/New Zealand generated
higher fungicide revenues. Increased
disease pressure together with the
approval and launch of new products
drove a significant increase in
azoxystrobin sales, while a number of
other products also contributed to the
stronger performance in this segment.
68%
11%
11%
10%
Herbicides
Fungicides
Insecticides
Other*
$2,577.6 million
* Other includes machinery, adjuvants,
PGRs and industrial.
Sales of plant growth regulators (PGRs)
and biorational products were also
up, reflecting a consistent pattern of
relatively high margin growth in recent
years. New product introductions and
distribution arrangements with Valent
BioSciences, a subsidiary of Sumitomo
Chemical company, helped drive
growth across these portfolios.
The company continued to strengthen
its strategic relationship with Sumitomo
Chemical company and this was
reflected in significantly higher sales
of Sumitomo products across Nufarm’s
distribution platforms, particularly
in the United States, Canada and
Brazil, as well as the execution of
a new distribution agreement in
the United Kingdom.
Seed technologies
Revenues reported in the seed
technologies segment grew by
10 per cent to $159.6 million, but
underlying EBIT fell by 14 per cent
to $31.8 million.
Lower canola seed sales in Australia
was the major contributor to the fall
in earnings, with the area planted
to canola estimated to be down by
some 20 per cent on the previous
year, and an increase in the use of
farmer retained seed.
70%
30%
Seed
Seed treatment
$159.6 million
Nuseed continued to expand its
market presence in Europe with
increased sunflower sales, but this
was not sufficient to completely
offset the impact of the deterioration
in the confectionary sunflower segment
in China.
While sorghum sales were relatively
strong, a lower commodity price
impacted margins.
Seed treatment growth was impacted
by both adverse seasonal conditions
and lower crop prices. A number
of important new seed treatment
registrations were approved during
the latter part of the year, however,
and these new products will generate
strong future growth in this high
value segment. This included the
registration in France of a new
imidacloprid formulation on
winter cereals (Nuprid 600 FS).
The company’s omega-3 canola
program continued to advance
through field trials and is now in
the pre-registration phase of
development. Several significant
patents relating to this program were
published and/or granted during the
year, contributing to a very strong
intellectual property position.
NUFARM LIMITED ANNUAL REPORT 2015 | 13
SUSTAINABILITY
Sustainability underpins our approach to doing business and
provides assurance that we will act responsibly while providing
value for our stakeholders. This is our sustainability commitment.
investigating ways to recycle, harvest
and better utilise water in our systems
and processes.
In the 2015 financial year we launched
our company-wide sustainability
strategy. The strategy is focused
on delivering upon our commitment
to sustainability through a series of
actions guided by our strategic pillars,
for the benefit of all stakeholders.
By the end of our four-year strategy
period we expect and plan to see
a step change in our sustainability
maturity and impact.
We are actively encouraging innovative
thinking across all areas of our business,
including its successful application to
achieve safer working environments,
reductions in emissions and waste, and
more sustainable operations generally.
Increased discipline is also vital to
ensure we have the right processes
and structures in place and that we
are measuring and managing our
business in a way that allows us to
be accountable for our performance.
This year we have amended our
sustainability reporting period to
now report upon financial year
performance – consistent
with our reporting of
other metrics. As we transition to this
new reporting period, we have included
our performance for the seven months
up to 31 July 2014 in addition to our
2015 financial year data.
Nufarm’s full sustainability report for
the 2015 financial year can be found
on our corporate website.
Our health and safety data includes
permanent and casual employees as
well as contractors, with data collected
from Nufarm manufacturing sites,
offices and regional service centres. At
present, it does not include data from
eight offices in Asia and South America.
The company is making a significant
investment in terms of both capital
and resources to achieve improvements,
and we have restated our commitment
to work towards a zero target for health,
safety and environmental related
incidents in our workplaces.
Total greenhouse emissions decreased
in 2015 compared with 2013. Emissions
per tonne of production also decreased.
Air emissions result from the
production process and we
C O M M ITME
N
T
Sustainability underpins
our approach to doing
business and provides
assurance that we will
act responsibly while
providing value for
our stakeholders.
work to minimise emissions and
their impact. Emissions vary
depending on production
volumes and the product
mix. Overall our carbon
monoxide emissions
reduced significantly
from the previous period.
PILL A R S
(cid:127) Eliminating Incidents
(cid:127) Environmental Stewardship
(cid:127) Our People
(cid:127) Procurement Stewardship
(cid:127) Product Stewardship
(cid:127) Societal Contribution
C
I
G
E
T
A
STR
Water is used in many
of our production
processes with
the amount
ST
A
(cid:127) Communities
(cid:127) Customers
(cid:127) Government
(cid:127) Public
(cid:127) Shareholders
(cid:127) Staff
(cid:127) Suppliers
S
K
E
H
O
LDER
used directly
impacted by
production
volumes and
the product
mix. We aim
to reduce the
amount of
water we use
and waste water
created, with
many of our sites
SUSTAINABILITY AT NUFARM
14 | NUFARM LIMITED ANNUAL REPORT 2015
Total waste increased slightly in 2015
compared with 2013, as a result of
our increase in production volumes.
We continue to work towards reducing
waste generation from manufacturing
processes. Waste management systems
at many of our sites capture the nature
and quantity of waste produced on site
and track it through to recycling or
disposal. Waste generated per tonne
of production has remained consistent
due to efforts made in recent years to
improve practices.
Our goal is to have zero lost time and
medical treatment injuries. Our zero
harm aspiration was not achieved in
the reporting period with a LTIFR of
1.4, MTIFR of 3.2 and a severity rate
of 0.01 resulting from our operations.
This is a deterioration in performance
outcomes for the year compared to the
previous reporting period. This is driven
by a concerted effort on developing
a strong incident reporting culture and
correct classification of injuries across
our operations.
The 10 lost time injuries occurred across
eight separate sites. The most severe
of these occurred at our Linz site,
where a team member suffered two
broken toes as a result of trapping
his foot whilst operating a wrapping
machine.
There were 13 medical treatment
injuries, 10 of these occurring at
separate sites.
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.
SUSTAINABILITY continued
LTIFR 2011 to end of July 2015
Severity 2011 to end of July 2015
0.06
0.05
0.04
0.03
0.02
0.01
0
2011
2012
2013
2014
7 months*
2015
2011
2012
2013
2014
7 months*
2015
MITFR 2011 to end of July 2015
Unusual incident report/injury report
versus LTIFR 2011 to end of July 2015
16
14
12
10
8
6
4
2
0
2011
2012
2013
2014
7 months*
2015
2011
2012
2013
2014
7 months*
2015
LTIFR
UIR/IR ratio
Water efficiency 2011 to end of July 2015
Production volume 2011 to end of July 2015
500
s
e
n
n
o
t
0
0
0
’
350
200
2011
2012
2013
2014
7 months*
2015
2011
2012
2013
2014
7 months*
2015
CO2 released from energy use and
processes 2011 to end of July 2015
3.5
3
2.5
2
1.5
1
0.5
0
6
5
4
3
2
1
0
2.5
2
1.5
1
0.5
0
115
/
r
e
t
a
w
s
e
n
n
o
T
n
o
i
t
c
u
d
o
r
p
s
e
n
n
o
t
s
e
n
n
o
t
0
0
0
’
s
n
o
i
s
s
i
m
e
2
O
C
50
2011
2012
2013
2014
7 months*
2015
* Note: data covers a seven month period due to a change in the reporting period.
NUFARM LIMITED ANNUAL REPORT 2015 | 15
BOARD OF DIRECTORS
Donald McGauchie AO
Greg Hunt
Anne Brennan
Gordon Davis
Chairman
Donald McGauchie AO
joined the board in 2003
and was appointed chairman
on 13 July 2010.
He has wide commercial
experience within the
agricultural, 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 plc
and Graincorp Ltd.
Donald is chairman of the
nomination and governance
committee and a member
of the human resources
committee.
16 | NUFARM LIMITED ANNUAL REPORT 2015
Managing director and
chief executive officer
Greg Hunt joined the
board on 5 May 2015.
Greg joined Nufarm in 2012
and was group executive
commercial operations prior
to being appointed acting
chief executive officer in
February 2015. Greg was
appointed managing
director and chief executive
officer in May 2015.
He is a member of the
Australian Institute of
Company Directors and
holds the graduate
management qualification
from Australian Graduate
School of Management
and attended the advanced
management program
at Harvard University.
Greg has considerable
executive and agribusiness
experience. Greg had a
successful career at Elders
Australia Limited, holding
the position of managing
director between 2001–
2007. After leaving Elders,
he worked with various
private equity firms focused
on the agriculture sector
and has acted as a corporate
adviser to Australian and
international organisations in
agribusiness-related matters.
In the past three years,
Greg was a director of Costa
Group Holdings Limited.
Anne Brennan joined the
board on 10 February 2011.
Gordon Davis 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 is a director of
Primary Health Care Limited
and 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 and risk 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 was formerly the
executive finance director
for the Coates Group and
chief financial officer for
CSR. Prior to this Anne was
a partner in professional
services firms Ernst & Young,
Arthur Andersen and KPMG.
Anne is a director of
Myer Holdings Limited,
Charter Hall Group and
Argo Investments Limited.
She is also a director of
Rabobank Australia Limited
and Rabobank New Zealand
Limited. In the past three
years Anne was a director
and deputy chairperson of
Echo Entertainment Group
Limited and a director of
Cuscal Limited.
Anne is a member of the
audit and risk committee
and human resources
committee.
BOARD OF DIRECTORS continued
Frank Ford
Bruce Goodfellow
Peter Margin
Toshikazu Takasaki
Bruce Goodfellow 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 and food trading
business and in financial
and commercial business
management.
Bruce 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 Sulkem Co.
Ltd and a director of
Cambridge Clothing Co.
Ltd, all privately owned
companies.
Bruce is a member of
the nomination and
governance committee.
Frank Ford joined the
board on 10 October 2012.
Frank has a master of
taxation from the University
of Melbourne and a
bachelor of business,
accounting, from RMIT
University, and is a fellow
of the Institute of Chartered
Accountants. Frank is a
former managing partner
of Deloitte Victoria after a
long and successful career
as a professional adviser
spanning some 35 years.
During that period,
he was also a member
of the Deloitte global
board, global governance
committee and national
management committee.
Frank is a director of
Citigroup Pty Limited,
Tarrawarra Museum of
Art Limited and a former
non-executive director
of Manassen Foods Group.
In the past three years
Frank was a director of
Toll Holdings Limited.
Frank is the chairman
of the audit and risk
committee and a member
of the nomination and
governance committee.
Peter Margin joined the
board on 3 October 2011.
Toshikazu Takasaki joined
the board in 2012.
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 as chief executive
of Goodman Fielder Ltd
and, before that, Peter was
chief executive and chief
operating officer of National
Foods Ltd. He 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,
PMP Limited, PACT Group
Holdings Limited, Costa
Group Holdings Ltd and
Huon Aquaculture Group
Limited. In the past three
years Peter was a director
of Ricegrowers Limited.
Peter is chairman of the
human resources committee
and a member of the health,
safety and environment
committee and audit and
risk committee.
Mr Takasaki represents
the interests of 23 per cent
shareholder Sumitomo
Chemical Company (SCC).
He has a bachelor of
business administration
from the University of
Tokyo and is a former
executive of SCC, holding
senior management
positions in businesses
relating to crop protection,
both within Japan and in
the United States. He is
now a business consultant
with a national qualification
registered by the Japanese
Ministry of Economy, Trade
and Industry as a small and
medium sized enterprise
consultant.
He brings broad industry
and international experience
to the board.
Toshikazu is a member
of the health, safety and
environment committee.
NUFARM LIMITED ANNUAL REPORT 2015 | 17
EXECUTIVE MANAGEMENT
Greg Hunt
Paul Binfield
Valdemar Fischer
Elbert Prado
Managing director and
chief executive officer
Chief financial officer
Group executive marketing
and portfolio strategy
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
United Kingdom.
Valdemar Fischer joined
Nufarm in 2010 in the role
of general manager of
Nufarm’s Latin American
business. He has over
25 years’ experience in
the crop protection industry
and has held senior roles
with large international
companies including Zeneca
and Syngenta. Valdemar
was appointed to the
executive group in 2015
and is responsible for
global marketing and
portfolio strategy.
Greg Hunt joined Nufarm
in 2012 and was appointed
managing director and
chief executive officer
in May 2015. Greg has
considerable executive
and agribusiness experience
and had a successful career
at Elders Australia Limited,
holding the position of
managing director between
2001–2007. He has worked
with various private equity
firms focused on the
agriculture sector and
has acted as a corporate
adviser to Australian and
international organisations
on agribusiness-related
matters.
Group executive
manufacturing and
supply chain
Elbert Prado, a chemical
engineer, joined Nufarm
in July 2013 after extensive
international experience
in senior operations roles
within the chemical industry.
He has a strong focus
on safety, supply chain
and manufacturing
excellence. Elbert was
global manufacturing
and supply chain director
for Rohm and Haas.
18 | NUFARM LIMITED ANNUAL REPORT 2015
EXECUTIVE MANAGEMENT continued
Brent Zacharias
Group executive Nuseed
Brent Zacharias joined
Nufarm in 2006 after a
14-year career with Dow
AgroSciences. Brent has
a degree in agricultural
economics and held senior
roles in Nufarm’s Canadian
business prior to transferring
to Australia as Nuseed
general manager in 2008.
Now based in Canada,
Brent holds global
responsibility for Nuseed
– Nufarm’s agricultural
seed and traits division.
Retirement of Doug Rathbone, AM
Long-standing managing director and chief executive
Doug Rathbone stepped down from his position and
retired in February of this year.
Doug had a long and distinguished career at Nufarm,
joining the company in the early 1970s and being appointed
managing director in 1982. Nufarm became a subsidiary
of New Zealand-based Fernz Corporation in the 1980s and
when Fernz migrated its incorporation to Australia in 2000
– and changed its name to Nufarm Limited – Doug was
appointed group managing director and chief executive.
Doug is a past winner of the Rabobank agribusiness leadership
award, which is a reflection of his contribution to, and high
standing within, the Australian agribusiness sector.
Doug’s vision and leadership was instrumental in the
company’s development from a small Australian crop
protection business to one of the world’s leading crop
protection and seeds companies.
NUFARM LIMITED ANNUAL REPORT 2015 | 19
INFORMATION ON THE COMPANY
Our business
Nufarm is a leading global crop
protection and seed technologies
company and has operated in the
industry for almost 60 years.
We develop, manufacture and sell a
wide range of crop protection products,
including herbicides, insecticides and
fungicides, that help protect crops
against damage caused by weeds,
pests and disease. We operate primarily
in the off-patent segment of the crop
protection market, which consists of
products based on technical active
ingredients for which the patent has
expired. Our focus is on creating
products that use off-patent active
ingredients within a differentiated
formulation, delivery system or other
enhancements that provide additional
benefits to crop producers. We also
have a proprietary seed technologies
business with a portfolio covering
canola, sorghum and sunflower crops
and we are developing a global
presence in the fast growing and
high-value seed treatment segment.
We have crop protection manufacturing
and/or seeds facilities in 14 countries
and marketing operations in more
than 25 countries. We distribute our
products in more than 100 countries
across Australia and New Zealand,
Asia, North America, South America
and Europe.
Our competitive strengths
We believe our leading industry
position is based on a combination
of innovative product development,
comprehensive product registration
expertise and an integrated global
manufacturing, marketing and
distribution platform, which combine
to create a resilient business with
defendable market positions.
• Leading positions in targeted
markets and segments across a
range of geographies: we have
a diversified global business with
an established presence in major
cropping regions throughout the
world, including Australia, New
Zealand, Asia, North America,
South America and Europe.
20 | NUFARM LIMITED ANNUAL REPORT 2015
• Diversified business across
• Highly experienced management
team supported by a strong board
of directors: we have a highly
experienced management team
with extensive chemical engineering,
scientific and industry experience.
Our board combines a mix of long-
serving directors and more recent
appointees with industry, financial,
accounting, management and
governance expertise.
Our strategies
Our goal is to leverage our strong
product development, manufacturing
and distribution platform as well as our
established market positions to be a
leading global provider of innovative,
off-patent crop protection products,
seeds and seed traits. We aim to
achieve this through the following
strategies:
• Leverage our product development
and regulatory skills to generate
accelerated growth in higher-value
products and market segments: we
believe we have substantial potential
to expand our business and grow
market share in many of our markets.
We intend to continue growing our
sales and optimising our product mix
through new product development
and commercial partnering, which
will be focused on developing
value-added off-patent products
that generate higher margins. As part
of this strategy, we intend to continue
to grow our Nuseed business, which
is one of our fastest growing and
highest margin businesses.
• Optimise route to market
strategies: we constantly evaluate
our route to market strategies, which
are designed to ensure the delivery of
the right product to the right market
anywhere in our global operations.
Our global manufacturing,
formulation and logistics capabilities,
complemented by our network of
distribution relationships, are key
to the success of this strategy.
geographies and by products:
our geographic and product
diversification mitigates our exposure
to adverse weather conditions or
commercial pressures in any single
cropping region or for any single
type of crop or chemistry. We offer
a wide range of products across
all crop protection segments,
including herbicides, fungicides
and insecticides, as well as a range
of seeds and seed treatment
products. Our diverse portfolio
contains products designed to
be used at various stages of the
cropping cycle, from pre-planting
to post-harvest.
• Differentiated product portfolio
with proven expertise in bringing
new products to market: we have
significant product development
expertise, which enables us to create
a portfolio of value-added off-patent
products sold under a variety of
reputable brand names. We believe
this expertise, along with our ability to
respond quickly to evolving customer
needs with new, differentiated
products, represents one of
our key competitive strengths.
• Global manufacturing, marketing
and distribution platform: our ability
to deliver sufficient quantities of crop
protection products to end users with
short lead time is critical, particularly
given the seasonal nature of
cropping. We have established a
global platform across Australia, Asia,
North America, South America and
Europe that enables us to service our
existing customer base and support
the continued growth of our business.
• Established strategic alliance and
commercial relationships with major
crop protection companies: we have a
history of successful collaborations with
other major crop protection companies
and seed that provides opportunities
for expansion into new products and
geographic markets. Our strategic
alliance with Sumitomo Chemical,
which includes distribution agreements
in a number of geographic markets,
and our other commercial relationships
encompass a range of research and
development, manufacturing, supply
and distribution agreements.
INFORMATION ON THE COMPANY continued
• Use strategic alliances and other
commercial arrangements with
industry leaders to maximise the
value of our platform: we have
an important strategic alliance
with Sumitomo Chemical, as well
as a range of business relationships
with other major companies in
the sector, ranging from supply
agreements, licensing arrangements,
toll manufacturing and distribution
arrangements. We believe these
arrangements provide opportunities
to maximise the value of our product
development, manufacturing and
distribution platforms as well as
increasing our customer base by
providing access to additional
products or new markets or
creating supply chain efficiencies.
• Continue to maximise free cash
flow and strengthen our balance
sheet: we are focused on maximising
our free cash flow through our
continued disciplined approach to
financial management. In particular,
we are focused on further improving
our working capital management
as it relates to procurement as well
as management of inventory and
receivables.
Our risks
Due to the scope of our operations and
the industry in which we are engaged,
there are numerous factors that may
have an effect on our results and
operations. The following describes the
material risks that could affect Nufarm.
External risks
Weather conditions may significantly
affect our results of operations and
financial condition.
Fluctuations in commodity prices,
foreign currency exchange rates and
currency values could have a material
adverse effect on our results of
operation and financial condition.
We are subject to extensive regulation
and stringent environmental, health and
safety laws that may adversely affect
our operational and financial position.
Business, operational and financial risks
We sell our products in competitive
markets, and the success of our
competitive strategy depends
on developing new products and
retaining customers and distributors.
Principal risk area
Risk management approach
Our collaboration relationships with
other major crop protection companies
may change or be terminated.
We may not be able to obtain funding
on acceptable terms, or at all, due to
a deterioration of the credit and capital
markets. This may hinder or prevent us
from meeting our future capital needs
and from refinancing our existing
indebtedness.
We are dependent on effective
procurement strategies and on
the continuing efficient operation
of our manufacturing plants to be
able to deliver cost-competitive
products to market.
We may become involved in future
legal proceedings, which may result
in substantial expense and may divert
our attention from our business.
Management of principal risks
Our approach to managing key
risks is outlined below.
External risks
Risks arise from variable weather
conditions, fluctuations in commodity
prices and currency rates, actions by
governments or regulators.
Business, operational and financial risks
Risks arise from a competitive
marketplace, identifying and
developing innovative solutions,
legal proceedings, accessing and
sourcing capital from financial
markets, management of manufacturing
facilities and supply chain. In addition,
relationships with commercial
counterparties we transact with
may change.
The diversification of our portfolio of products, geographies and currencies is a
key strategy for reducing volatility. The managing director’s review and business
review describe external factors and trends affecting our results, and note 31 to
the financial statements outlines the group’s financial risk management strategy,
including market and currency risk. We engage with government authorities and
other key stakeholders to ensure the potential impacts of proposed regulatory
changes are understood and where possible, mitigated.
We support our growth strategy through established investment approval and
review processes that apply to all major capital decisions, and we invest in new
product development and innovation projects that help keep our businesses
competitive. We seek to establish a capital structure that is appropriate for our
business model and provides a platform to support our growth strategy. We
analyse risks to monitor volatilities and key financial ratios. Credit limits and review
processes are established for all customers and financial counterparties. Note 31
to the financial statements outlines our financial risk management strategy.
We engage expert advisers to ensure our intellectual property is protected and
potential impacts of legal proceedings are mitigated.
We seek to ensure that adequate operating margins are maintained through
operating cost-effective manufacturing facilities. Global sourcing arrangements
have been established to ensure continuity of supply and competitive costs for
key supply inputs. Through the application of our risk management processes,
we identify material catastrophic operational risks and implement appropriate
risk management controls and business continuity plans.
NUFARM LIMITED ANNUAL REPORT 2015 | 21
CORPORATE GOVERNANCE
Nufarm’s board processes have been reviewed to ensure
they represent and protect the interests of all stakeholders.
This includes detailed consideration of the third edition 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 viewed in the
corporate governance section
of our website: www.nufarm.com/
CorporateGovernance
Compliance with ASX principles
The ASX Listing Rules require Nufarm
to disclose the extent to which we have
adopted the ASX principles. During
this reporting period, Nufarm complied
with all of the ASX principles contained
in the third edition of the ASX
principles.
Management and oversight
of Nufarm
The board
The governing body of the company
is the board of directors. The board’s
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 defines the board’s
individual and collective responsibilities
and describes those responsibilities
delegated to the managing director
and senior executives. A copy of
the board charter is available on
the corporate governance section
of the company’s website.
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
• 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. The company
secretary has a direct reporting line
to the chairman, and all directors
have direct access to the company
secretary, who is appointed by,
and accountable to, the board
on all governance matters; and
• reviewing remuneration policy for
senior executives and Nufarm’s
general remuneration policy
framework.
There are six 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 2015, there are four board
committees: audit and risk; human
resources; nomination and governance;
and health, safety and environment.
All directors are entitled to attend
any committee meeting.
22 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
Details of the attendances at meetings
of board and committees during the
reporting period appear on page 38
of this report.
Nufarm undertakes appropriate
checks before appointing or putting
forward any director for election by
shareholders and provides shareholders
with all information relevant to their
decision whether or not to re-elect
the director.
In 2012, the company initiated:
• a review of policies and practices
to ensure they were free of bias and
that selection, development and
promotion were made purely on
the requirements of the job and
supportive of diverse candidature;
• a review of the board selection criteria
to build greater diversity; and
• the adoption of a formal diversity
policy.
All directors and senior executives
have a written agreement with the
company setting out the terms of
their appointment.
Diversity and inclusion
Nufarm believes diversity contributes
to the sustainable growth of our
company through positively developing
our talent and culture.
Over the past three years Nufarm has
made a number of steps to improve
diversity outcomes, especially in female
representation at senior levels of
the company and to promote an
inclusive culture.
In 2013 the global headcount report
was established with some basic
reporting of gender statistics. These
statistics were supplemented with
insights from the company’s employee
opinion survey (EOS) carried out in
October 2012.
In 2014 Nufarm began to analyse pay
parity between genders to determine
if there is any difference based on
gender or other non-work related
factors; undertook management
and leadership development activities
to encourage women to take on
managerial roles; and increased the
number of people involved in cross-
regional projects and assignments.
A good example of one of Nufarm’s
development activities aimed at
growing female talent is the company’s
participation in the NIDA (National
Institute of Dramatic Art) Influential
Women (formerly ‘Women in Business’)
program.
NIDA’s Influential Women program
is a two-day off site workshop
specifically designed for women
in business. The workshop aims
to enhance participants’
communication style and ability
to engage and influence both large
and small audiences. The workshops
include exercises that involve
listening and responding to
challenging communication
scenarios, physical and vocal
techniques, and increasing personal
awareness of communication style
and how this can be improved.
These skills are valuable to
overcoming some workplace
challenges regularly encountered
by women. In 2014 – 15, 25 women
from Nufarm participated in this
program. Employees are selected
to participate if they are currently
in a leadership position or if they
are identified as demonstrating
potential to progress into a
leadership position.
NUFARM LIMITED ANNUAL REPORT 2015 | 23
CORPORATE GOVERNANCE continued
Global diversity policy launch
In 2015, Nufarm launched a refreshed
global diversity policy. A copy of the
policy is available on the corporate
governance section of the company’s
website. The policy links actions in
support of diversity to the Nufarm
values of responsibility, agility, respect
and empowerment with the aim
of embedding it in our culture. An
extract of the policy is adjacent.
The policy was launched by the
managing director and chief executive
officer Greg Hunt who stated: ‘At
Nufarm we have a fundamental belief
that talent comes from all parts of
the community and to be the most
competitive we can be, we must
access and develop that talent
better than others’.
To complement the launch a number
of positive examples of diversity were
publicised, such as the story below.
This program of openly and regularly
celebrating diversity in company
newsletters and corporate messaging
is a key aspect of Nufarm’s
communications strategy in
the short term.
Leonie Hughes, Horsham Australia
– winner of 2014 Nufarm global
innovation award
Nufarm’s global sales and innovation
awards are an annual celebration
of employees who have made
exceptional contributions to Nufarm
whilst demonstrating our company
values in December 2014, Leonie
Hughes was awarded the Nufarm
global innovation award for her
work to create and launch a tool
now used on a daily basis by
Nuseed Australia’s sales team.
The technology titled ‘NuSTEP’
is a unique tool that allows sales
representatives to generate a report
on behalf of a customer that details
the most successful seed varieties
grown in their local area. The tool
has been exceptionally well received
by Nuseed customers.
24 | NUFARM LIMITED ANNUAL REPORT 2015
Responsibility
We are accountable for our decisions and our actions. We recognise trust is
at the foundation of relationships and acting ethically, safely and responsibly
creates that trust.
This means we:
• promote equal opportunity in the workplace and ensure decisions regarding
employment, including (but not limited to) recruitment, remuneration,
training, promotion and development, are made without regard for race,
gender, marital status, religion, age, sexual orientation or any other non-merit
related consideration;
• train our people to ensure they understand their rights and responsibilities
in relation to relevant equal employment opportunity, discrimination, human
rights and related legislation for each country in which we operate; and
• create an environment where people are comfortable to report inappropriate
or offensive behaviour and where complaints are treated in a sensitive, fair
and timely manner.
Agility
We are resourceful and adaptable in meeting the needs of our customers
and our organisation.
This means we:
• aim to reflect the diversity of the communities we serve. To us that means
we have been successful in attracting and retaining the best talent available
in the community;
• build a talent pipeline and develop the potential of those who show promise
to underpin our continued growth and contribution to the community; and
• develop policies and practices that help support our people to enjoy enriching
lives including a balance of work, family and personal fulfilment.
Respect
We respect others – colleagues, customers and stakeholders – and our
environment. We care for all our resources.
This means we:
• create an inclusive workplace culture where all people are treated with dignity
and respect;
• take opportunities to learn about different cultures and heritages, celebrating
their contribution to the richness of our workplace and our communities; and
• recognise and show respect to the traditional custodians of the land and the
waters where we operate.
Empowerment
We are an innovative, entrepreneurial organisation where individuals and teams
can do what is best for the customer, the organisation and our stakeholders
This means we:
• embrace the value that a range of perspectives and life experiences can
add to the quality of decision making and to innovation practices/processes,
which is fundamental to our future success; and
• seek to unlock the capabilities and potential of our people through our
talent and development frameworks and effective leadership behaviours.
CORPORATE GOVERNANCE continued
Cultural diversity
Nufarm employee representation
Nufarm supplies products in more
than 100 countries across five regions.
Each region represents a sizeable
percentage of our employees.
This global footprint provides the
opportunity to encourage a culturally
diverse workforce in five ways:
• local leadership and teams are
representative of local cultures;
• functions such as manufacturing,
supply chain, finance, procurement,
marketing, research and development
and human resources participate in
global teams to share information
and ideas;
• cross-regional and cross-functional
teams are formed to undertake major
business improvement projects;
• key individuals work in different
regions to gain broader knowledge;
and
• senior regional leaders meet regularly
to discuss global and cross-regional
strategic and operational matters.
On 1 August 2015, a Brazilian,
Valdemar Fischer, and a Canadian,
Brent Zacharias, joined the executive
management team, which now consists
of five nationalities, reflecting the
global nature of Nufarm.
Women in Nufarm
Twenty-four per cent of Nufarm’s
permanent employees are women,
slightly up from 23 per cent in 2014,
and 22 per cent in 2013.
The table above shows the percentages
of men and women working at Nufarm
by function. In particular, the company is
endeavouring to increase the proportion
of women in our sales function and is
engaging with women in the function
to inform and improve our attraction
and retention strategies.
Regionally, female participation has
increased in South America. Female
participation is strongest in Asia at
28 per cent.
24%
11%
Australia/New Zealand
Asia
18%
30%
17%
North America
Europe
South America
Female particpation by function
24%
76%
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NUFARM LIMITED ANNUAL REPORT 2015 | 25
CORPORATE GOVERNANCE continued
At a management level, results were
improved with female participation
up slightly over last year.
Employee opinion survey
feedback
Nufarm conducts the EOS every two
years and uses the feedback from that
survey to assist in refining practices for
both retaining and attracting talented
people to the business. This survey was
last conducted in September 2014.
The EOS provides valuable feedback,
which allows the company to track if
there are differences in the working
experience between men and women.
The pattern of engagement for male
and female employees in the 2014
survey was very similar, i.e. those items
that score more highly for woman also
score more highly for men. However,
when comparing the results for men
and women generally the female scores
were slightly lower than the male
scores. There were no items where
the female response was notably
greater than the male response.
The items where female responses
were more than six per cent less
favourable overall than male
responses were:
• the company does not tolerate
inappropriate behaviour;
• I feel my contributions are
valued; and
Regions
Group
Australia/New Zealand
Asia
Europe
North America
South America
Percentage distribution women
in full and part-time employment
Part-time
females
9
12
0
20
7
5
Full-time
females
91
88
100
80
93
95
Percentage of
females
24
25
28
19
25
23
Role
Non-executive directors
Executive/senior management
People manager/team leaders
Professionals
Manufacturing
Administration
Percentage distribution
of employees by role
Male
86
83
79
76
92
39
Female
14
17
21
24
8
61
• I am empowered to make decisions
• continued development of the
that enable me to work safely.
As a result of survey feedback overall,
and particularly relevant to the items
listed above, Nufarm is working on
the following initiatives:
• launch of an updated Nufarm code
of conduct setting out the standards
of behaviour that are acceptable and
not acceptable;
Nufarm awards program to attract
nominations across all parts of the
company and to celebrate success
locally and recognise excellence
globally; and
• dedicated focus on improving the
safety culture, starting with the launch
of the company-wide safety rules
and safety leadership training.
26 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
Progress against diversity and inclusion objectives for 2015
Last year Nufarm set three key measurable gender diversity objectives for the
upcoming reporting period. Progress against these objectives is listed below:
Objective
Progress
Nufarm aims to make one of the
next two board appointments a
suitably qualified woman.
Nufarm will actively seek to have
at least two appropriately qualified
female candidates for all board,
executive, management and key
professional roles.
Nufarm aims to annually improve the
percentage of female representation
in management roles.
Over the period there have been no
new board appointments; however,
gender continues to be a key criteria
for future board appointments.
Specifically, at least one board member
to be female and, mirroring Nufarm’s
diversity policy, ensuring that at least
two female candidates are included
in the shortlist of candidates whenever
a board vacancy occurs.
No change to this objective.
Over the past year, two females have
been appointed to positions that
report directly to the chief executive
officer. These are Donna Thibault,
group executive people and
performance, and Michelle Monteiro,
director of Nufarm’s performance
improvement program – a program
to deliver a significant improvement
in return on funds employed, with
an expected value of $100 million to
the business. Michelle Monteiro was
approached to lead this major program
after excelling in a number of projects,
including the roll-out of a creative
thinking program in all regions of the
organisation (a project that earned
her Nufarm’s managing director’s
award for innovation).
Female participation at the leadership
level (comprising 106 people) in the
company has increased slightly from
14 per cent in 2013 to 17 per cent.
This is still less than the overall
participation rate of 22 per cent.
In 2015 the Nufarm senior leadership
program was launched with five out
of the 14 initial alumni being female.
Diversity and inclusion objectives
for 2016
In addition to the further promotion
of the policy and positive examples
of diversity across all parts of the
company, Nufarm has committed
to the following diversity and inclusion
objectives for 2016:
1. continuing to drive the talent
planning process through the top
four levels of the company, actively
tracking the progress of female staff
with potential to go one or more
levels higher. The tracking will
include reporting on the progress
of talent planning, including the
identification of promotion and
advancement opportunities;
2. reviewing and revising the work
and family policy and practices
to increase retention of staff with
caring responsibilities, including
a review of the underlying reasons
why an employee has not returned
to work after parental leave. We
will also create a baseline to track
progress in improving return to
work following parental leave
outcomes; and
3. the global senior leadership team
will complete unconscious bias
training by July 2016.
These objectives are in addition to the
policies and practices already in place
to encourage diversity and inclusion
across the business.
Evaluating board and board
committee performance
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.
NUFARM LIMITED ANNUAL REPORT 2015 | 27
CORPORATE GOVERNANCE continued
In 2014, an independent consultant
completed a formal review of the
performance of the board and board
committees and a report outlining the
findings and recommendations of the
review was presented to the board.
In the current period, the board
undertook an internal survey of its
performance, the results of which
were analysed and reviewed to
improve performance. The board
skills capability matrix was also
updated to reflect the emerging
strategic needs of the company.
Evaluating the performance
of senior executives
As part of Nufarm’s annual
remuneration review, the performance
of the senior executive team is
reviewed first by the managing director,
then the human resources committee
and then by the board. 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 40 to 56 of this report.
Board of directors
Composition
There are eight members of the board
with a majority being independent
non-executive directors. The board has
an appropriate range of proficiencies,
experience and skills to ensure the
proper discharge of its responsibilities.
Profiles of each board member,
including terms in office, are on
pages 16 and 17 of this report.
The company’s constitution specifies
that the number of directors may be
neither less than three, nor more than
11. At present there are seven 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 has regard
to, and applies, the recommendations
and commentary in the ASX principles
concerning the independence of
directors.
At the date of this report, the majority
of directors are independent with the
exception of Dr Bruce Goodfellow
and Toshikazu Takasaki (non-executive
directors) and Greg Hunt (managing
director and chief executive officer).
Donald McGauchie has been a
member of the board for 11 years
and chairman of the board for five
years. The board unanimously
continues to support Donald as
chairman, believing this to be in
the clear interest of all stakeholders.
Donald applies judgement
independently of management
in all decision making. He discharges
his role with strong commitment
to considerations of governance
and disclosure.
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 and governance
committee reviews the performance
of directors who seek to offer
themselves for re-election at the
company’s annual general meeting.
The company’s constitution requires
directors to submit themselves for
re-election at least every three years.
The nomination and governance
committee then recommends to
the board whether or not it should
continue to support the nomination
of the retiring directors.
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.
28 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
The Nufarm board has stipulated
that the role of the chairman and
chief executive officer may not be
filled by the same person. The roles
of chairman and chief executive officer
are currently held by different people.
The nomination and governance
committee
Donald McGauchie is chairman of the
nomination and governance committee
and Bruce Goodfellow and Frank
Ford are members. A majority of
the nomination and governance
committee are independent directors,
and 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 to ensure the board is
composed of directors who comprise
an appropriate mix of skills to provide
the necessary breadth and depth of
knowledge and experience to meet
the board’s responsibilities and
objectives, as well as reviewing the
board to ensure it will be made up
of directors with a diversity of skills,
expertise, experience, backgrounds
and gender;
• developing a process for the
evaluation of the performance of the
board, its committees and directors;
In the current reporting period,
the nomination and governance
committee met on five occasions.
• 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.
A copy of the nomination and
governance committee charter and a
summary of the policy and procedure
for director appointments are available
on the corporate governance section
of the company’s website.
Nufarm recognises the valuable
contribution made by each board
member to the effective running of
the company. When board positions
become available, the company takes
the opportunity to review the mix of
skills and experience on the board in
considering the skills and experience
that a new director should possess.
This analysis forms the basis of
selection criteria, which includes
diversity, both as to gender and
experience.
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 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.
NUFARM LIMITED ANNUAL REPORT 2015 | 29
CORPORATE GOVERNANCE continued
In the current reporting period, the
capability matrix was reviewed and
updated to determine 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 by sharing
relevant industry knowledge, visits
to specific company operations
and briefings by key executives.
To assist in providing appropriate
development opportunities for
continuing directors to develop and
maintain their skills and knowledge
of the company, each year one of the
scheduled board meetings will be held
at one of the company’s international
locations, allowing directors to inspect
the relevant operation and meet local
management, customers and other
stakeholders. Furthermore, directors
are also provided with access to
regional general managers.
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 to the chairman.
Acting ethically and responsibly
Ethical standards
Nufarm operates in many countries and
does so in accordance with the social
and cultural beliefs of each country.
The company is politically impartial
except where the board believes
that it is necessary to comment due
to any perceived major impact on
the company, its business or any
of its stakeholders.
We require all directors, senior
executives and employees to adopt
standards of business conduct that
are ethical and that comply with the
law. Where there are no legislative
requirements, the company develops
policy statements to ensure appropriate
standards are maintained.
The company’s code of conduct is
available on the corporate governance
section of the company’s website.
Safeguard integrity in corporate
reporting
Financial reports
The company has put in place a
structure of review and authorisation
to independently verify and safeguard
the integrity of its financial reporting.
The audit and risk committee reviews
the company’s financial statements
and the independence of the external
auditors.
Audit and risk committee
Frank Ford is chairman of the board
audit and risk committee and Anne
Brennan, Gordon Davis and Peter
Margin are members of the committee.
The committee comprises independent
non-executive directors and is chaired
by an independent director.
Details of attendances at meetings
of the audit and risk committee are
set out on page 38 of this report.
Frank Ford has a master of taxation
from the University of Melbourne, a
bachelor of business, accounting from
RMIT University and is a fellow of the
Institute of Chartered Accountants.
Frank is a former managing partner
of Deloitte Victoria after a long and
successful career as a professional
adviser spanning approximately
35 years. During that period, he was
also a member of the Deloitte global
board, global governance committee
and national management committee.
30 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
Frank is also a director of Citigroup
Pty Limited and Tarrawarra Museum
of Art Limited.
Anne Brennan has a bachelor of
commerce (hons) from University
College Galway and she is a fellow
of both the Institute of Chartered
Accountants in Australia and the
Australian Institute of Company
Directors.
She was formerly the executive finance
director for the Coates Group and
chief financial officer for CSR. Prior to
this Anne was a partner in professional
services firms Ernst & Young, Arthur
Andersen and KPMG.
Anne is a director of Myer Limited,
Charter Hall Group, Argo Investments
Ltd, Rabobank Australia Limited and
Rabobank New Zealand Limited.
Gordon Davis has a bachelor of forest
science (hons), master of agricultural
science and he also holds a master
of business administration.
Gordon is a director of Primary Health
Care Limited and 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.
Peter Margin 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 as chief executive of
Goodman Fielder Ltd and before that
Peter was chief executive and chief
operating officer of National Foods Ltd.
He 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 Limited, PMP Limited,
PACT Group Holdings Limited,
Costa Group Holdings Limited and
Huon Aquaculture Group Limited.
The committee has a formal charter,
which is reviewed annually. A copy of
the audit and risk committee charter
and the committee’s duties are available
on the corporate governance section
of the company’s website.
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 and
risk committee approval.
The committee has recommended that:
• any former lead engagement partner
of the firm involved in the company’s
external audit should not be invited
to fill a vacancy on the board;
• 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 lead partner can again be
involved in the company’s audit.
Prior to the approval of the financial
statements for any financial period,
the board receives a declaration
from the chief executive officer
and chief financial officer that:
• the financial records of the company
have been properly maintained;
• the financial statements comply with
the appropriate accounting standards
and give a true and fair view of the
company’s financial position and
performance; and
• that opinion has been formed on
the basis of a sound system of risk
management and internal control,
which operates effectively.
The company’s external auditor attends
the company’s AGM and is available
to answer questions for shareholders
relevant to the audit.
NUFARM LIMITED ANNUAL REPORT 2015 | 31
CORPORATE GOVERNANCE continued
Disclosure
The company has a detailed written
policy and procedure to ensure
compliance with its disclosure
obligations under both the ASX Listing
Rules and the Corporations Act. This
policy is reviewed regularly with the
company’s legal advisers and was most
recently amended in September 2015.
The company secretary prepares a
schedule of compliance and disclosure
matters for directors to consider at
each board meeting.
A summary of the disclosure policy is
available on the corporate governance
section of the company’s website.
Rights of shareholders
Information about Nufarm, including
copies of:
but also to listen and understand
shareholders’ perspectives and
respond to their feedback. Nufarm’s
communication policy aims to:
• ensure that shareholders and the
financial markets are provided
with full and timely information
about our activities;
• ensure company compliance with
its continuous disclosure obligations
contained in the ASX Listing Rules
and the Corporations Act in Australia
as well as industry guidelines such
as the Australasian Investor Relations
Association’s Best Practice Guidelines
for Communication between Listed
Entities and the Investment
Community;
• ensure equality of access to briefings,
presentations and meetings for
shareholders, analysts and media; and
• encourage attendance and voting
• relevant market announcements
at shareholder meetings.
• notice of annual general meeting
and explanatory notes;
• archived half year and annual reports;
• ASX announcements and financial
results for at least the last three
years; and
• the company’s share price.
Management remains accessible to
shareholders, analysts, fund managers
and others with a potential interest in
the company. Communications with
external stakeholders are coordinated
via a central contact point within
the company.
Shareholders are encouraged to
attend and participate at general
meetings. To facilitate this, meetings
will be held during normal business
hours and at a place convenient
for the greatest possible number
of shareholders to attend.
The full text of notices and
accompanying materials will
appear on the company’s website.
Information is communicated to
shareholders:
• through the distribution of half year
and annual reports;
Information, including in relation to:
• whenever there are other significant
• the nature of the business
developments to report, by electronic
means as well as by post; and
• when shareholders are provided
with notice of the company’s AGM
and other general meetings.
Nufarm has a dedicated investor
centre on the company’s website
that contains:
• all market announcements and
related information that is posted
immediately after release to the ASX;
• a calendar of events relating to
shareholders;
• archived presentations made at
the AGM and analyst and media
briefings;
of the meeting;
• conflicts of interest;
• voting restrictions; and
• directors’ recommendations,
will be presented in a clear and
concise manner designed to provide
shareholders and the market with full
and accurate information. Proxy forms
will be provided in order to enable
shareholders unable to attend the
meeting to vote on the resolutions.
Nufarm encourages its shareholders
to receive communications from,
and to send communications to it
and its share registry electronically.
and related information;
• annual report and financial
statements; and
• presentations made to analysts
and investor briefings,
are immediately made available on
the company’s website. The corporate
governance section of the website
contains relevant corporate governance
information, including copies of
various policies.
Communication
Nufarm is committed to timely,
open and effective communication
with its shareholders and the general
investment community.
Nufarm values a direct, two-way
dialogue with shareholders and the
company believes it is important not
only to provide relevant information
as quickly and efficiently as possible,
32 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
Nufarm’s formal communications
policy is available on the corporate
governance section of the company’s
website.
Identifying and managing risk
The board is committed to identifying,
assessing, monitoring and managing
its material business risks. To that end,
the board has implemented a sound
risk management framework, which it
reviews at least annually to ensure its
effectiveness.
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
and primarily to its audit and risk
committee, which is chaired by an
independent director. The audit
and risk committee’s responsibilities
include providing an oversight of the
effectiveness of Nufarm’s enterprise-
wide risk management and internal
control framework.
Full details of the members of the
audit and risk committee are set out
on pages 30 and 31 of this report.
In the current reporting period the
audit and risk committee met on
four occasions.
A copy of the audit and risk committee
charter and its duties is available on
the corporate governance section
of the company’s website.
The company’s risk management
framework, policies and procedures
set out the roles, responsibilities and
guidelines for managing financial and
operational risks associated with the
business. The framework, policies
and procedures have been designed
to provide effective management of
material risks at a level appropriate to
Nufarm’s global business and are based
on concepts and principles identified in
the Australian/New Zealand Standard
on Risk Management (AS/NZ ISO
31000:2009). The risk framework,
policies and procedures will continue
to be enhanced as the group’s
operations develop and its range
of activities expands.
Nufarm’s group risk management
department, led by the general
manager global risk and assurance,
manages the implementation of this
framework across the group. Detailed
risk profiles for key operational
business units have been developed.
These risk profiles identify the:
• nature and likelihood of specific
material risks;
• key controls in place to mitigate
and manage the risk;
• sources and level of assurance
provided on the effective operation
of key controls; and
• responsibilities for managing
these risks.
The audit and risk committee charter
requires the committee and the general
manager global risk and assurance to
review, at least annually, the group’s
risk management framework. In the
current reporting period, the audit
and risk committee reviewed the
effectiveness of the company’s risk
management framework to ensure
that the framework remains sound.
Nufarm’s internal audit function is
headed by the general manager global
risk and assurance, who reports at each
audit and risk committee meeting on
the implementation and management of
the enterprise risk management policy.
As explained in the audit and risk
committee charter, the internal audit
is designed to:
• 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 the 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.
The nomination and governance
committee is responsible for ensuring
the company has appropriate
governance policies and practices
and appropriate ethical standards.
The health, safety and environment
(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
NUFARM LIMITED ANNUAL REPORT 2015 | 33
CORPORATE GOVERNANCE continued
group as they affect employees,
contractors, visitors, customers and
the communities in which the Nufarm
group operates. Gordon Davis is
chairman of the HSE committee and
Peter Margin and Toshikazu Takasaki
are members of the committee.
The committee has a majority
of independent directors.
All board committees report to the
board on risk management issues
within their area of responsibility.
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.
In the current reporting period Nufarm
adopted a formal sustainability strategy
to provide a globally aligned and
planned approach to manage
economic, social and environment
sustainability risks. The HSE committee
receives an update every six months
on the progress and development
of the sustainability strategy.
Nufarm publishes an annual sustainability
report. The most recent report is
available on the company’s website.
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 40 to 56 of this report.
Human resources committee
Peter Margin is chairman of the
human resources committee and
Gordon Davis, Donald McGauchie
and Anne Brennan are members. The
committee comprises independent
non-executive directors and is chaired
by an independent director.
The committee’s formal charter, a copy
of which is available on the corporate
governance section of the company’s
website, includes a 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 practices.
34 | NUFARM LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE continued
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;
• existing or proposed incentive
schemes;
• retirement and termination
benefits and payments for
senior management; and
• professional indemnity and
liability insurance policies.
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.
In the current reporting period the
human resources committee met on
five occasions.
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 40 to 56
of this report.
Nufarm has in place a short term
incentive plan (‘STI plan’). The rules
of the STI plan provide that participants
are not permitted to hedge any shares
issued to them under the STI plan
whilst those shares are held in trust.
Clause 10 of the company’s security
trading policy sets out the process by
which key management personnel may
seek approval to enter into a margin
loan or other security arrangement
in respect of Nufarm’s securities. A
copy of the security trading policy is
available on the corporate governance
section of the company’s website.
A copy of the human resources
committee charter is available
on the corporate governance
section of the company’s website.
NUFARM LIMITED ANNUAL REPORT 2015 | 35
FINANCIAL REPORT
36 | NUFARM LIMITED ANNUAL REPORT 2015
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 2015 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)
GA Hunt (managing director) (appointed 5 May 2015)
DJ Rathbone AM (managing director) (retired 4 February 2015)
AB Brennan
GR Davis
FA Ford
Dr WB Goodfellow
PM Margin
T Takasaki
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 16 and 17.
Company secretary
The company secretary is R Heath.
Mr Heath has a bachelor of laws and joined the company in 1980 initially as legal officer, later becoming assistant company
secretary. In 1989, Mr Heath moved from New Zealand to Australia to become company secretary of Nufarm Australia Limited.
In 2000, Mr Heath was appointed company secretary of Nufarm Limited.
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
FA Ford
Dr WB Goodfellow1
GA Hunt 2
DG McGauchie
PM Margin
DJ Rathbone 3
T Takasaki
Nufarm Ltd
ordinary shares
10,000
40,000
10,000
1,148,715
54,425
46,239
2,458
3,686,414
–
Nufarm Finance (NZ) Ltd
step-up securities
–
–
–
48,423
–
–
1,500
–
1. The shareholdings of Dr WB Goodfellow include:
(i)
shares issued under the company’s non-executive director share plan and held by Pacific Custodians Pty Ltd as trustee of the plan, and include his relevant
interests in:
(ii) 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;
(iii) Sulkem Company Limited (126,493 shares);
(iv) 531 Trust (400,861 shares). Dr Goodfellow and EW Preston are trustees of 531 Trust.
(v) Auckland Medical Research Foundation (26,558 step-up securities). Dr Goodfellow does not have a beneficial interest in these step-up securities.
(vi) 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.
(vii) Archem Trading (NZ) Ltd (700 step-up securities).
2. GA Hunt’s interest in 54,425 ordinary shares includes 31,563 deferred shares granted as remuneration that are not yet exercised or vested.
3. At the date of his resignation DJ Rathbone had (i) a direct interest in 312,173 shares and 305,163 unquoted performance rights, and (ii) an indirect interest
in 3,374,241 shares and 1,500 step-up securities.
NUFARM LIMITED ANNUAL REPORT 2015 | 37
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 and risk
committee
Committees
Human
resources
Nomination
and governance
AB Brennan3
GR Davis
FA Ford
Dr WB Goodfellow
GA Hunt2
DG McGauchie
PM Margin3
DJ Rathbone2
T Takasaki
Meetings
held1
8
8
8
8
2
8
8
3
8
Meetings
attended
8
8
8
8
2
8
8
3
8
Meetings
held1
4
4
4
–
–
–
2
–
–
Meetings
attended
4
4
4
–
–
–
2
–
–
Meetings
held1
3
5
–
–
–
5
5
–
–
Meetings
attended
2
5
–
–
–
5
5
–
–
Meetings
held1
–
–
5
5
–
5
–
–
–
Meetings
attended
–
–
5
5
–
5
–
–
–
1. Number of meetings held during the period the director held office.
2. Mr GA Hunt was appointed a director on 5 May 2015. Mr DJ Rathbone resigned as a director on 4 February 2015.
Health safety
and environment
Meetings
held1
–
3
–
–
–
–
3
–
3
Meetings
attended
–
3
–
–
–
–
3
–
3
3. Ms AB Brennan was appointed a member of human resource committee on 4 December 2014. Mr PM Margin was appointed a member of the audit and risk
committee on 4 December 2014.
Principal activities and changes
Details of Nufarm’s principal activities and changes are set out in the information on the company section on pages 20 and 21.
Nufarm employs approximately 3,349 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 2015 is $43.2 million. The comparable figure
for the 12 months to 31 July 2014 was $37.7 million.
Dividends
The following dividends have been paid declared or recommended since the end of the preceding financial year.
The final dividend for 2013–2014 of five cents paid 14 November 2014.
The interim dividend for 2014–2015 of four cents paid 8 May 2015.
$000
13,218
10,570
The final dividend for 2014 – 2015 of six cents as declared and recommended by the directors is payable 13 November 2015.
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 16 April 2014 – 15 October 2014
at the rate of 6.6267% per annum paid 15 October 2014
Distribution for the period 16 October 2014 – 15 April 2015
at the rate of 6.635% paid 15 April 2015
38 | NUFARM LIMITED ANNUAL REPORT 2015
$000
6,127
6,134
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 4 to 9.
State of affairs
The state of the group’s affairs is set out in the managing director’s review on pages 4 to 9 and the business review
on pages 10 to 13.
Operations, financial position, business strategies and prospects
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, the business review, and the information
on the company section on pages 20 and 21.
Events subsequent to reporting date
On 23 September 2015, the directors declared a final franked dividend of six cents per share payable 13 November 2015.
Likely developments
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 and 15. The group did not
incur any prosecutions or fines in the financial period relating to environmental performance. The group publishes annually
a sustainability report (formerly called 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 its statutory duties.
Details of the audit fee and non-audit services are set out in note 40 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 and risk 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 and risk committee to ensure they do not impact the integrity
and objectivity of the auditor.
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
that 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 57 and forms part of the directors’ report for the financial
year ended 31 July 2015.
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.
NUFARM LIMITED ANNUAL REPORT 2015 | 39
DIRECTORS’ REPORT continued
Remuneration report (audited)
A message from the chairman of the human resources committee (HRC) (unaudited)
Dear shareholder,
I am pleased to present our remuneration report for the year ending 31 July 2015.
Nufarm’s remuneration structure is designed to support our strategic objectives and help drive sustainable value creation.
The capabilities and commitment of our management and employees make a critical contribution to the success of the
company and our remuneration policies are based on principles that encourage and reward performance and outcomes.
2015 was a year of profitable growth, with good progress on working capital management efficiencies, which has been
reflected in the company’s overall performance result.
2015 was also a year of renewal within the leadership team and an ambitious program of restructuring, which is positioning
the business for sustainable success over the long term. As a result of the changes, the executive remuneration structure
was reviewed in terms of the mix between fixed and short and long term variable reward, to create stronger alignment
at the most senior levels within the organisation and greater consistency in approach. The roles and reporting lines of the
executive management team were also updated to align executive portfolios to the strategy of the business. As a result,
a smaller core group of executives with clearer designation of decision making authority and control of the major levers that
drive performance across the group was established. At the same time, structural changes have led to a flatter leadership
structure and more inclusive global approach to the way the organisation is managed on a day to day basis.
Fixed remuneration arrangements for incoming executives were determined according to nature and size of role and within
Nufarm’s usual benchmarking approach. Any increases that occurred for continuing incumbents since 2014 are reflective of
market pricing for roles that may have been previously under market, or where market movements were noted year on year.
This was the case with the increased responsibility of the group executive manufacturing and supply chain, which took on
more direct accountability for the manufacturing function and also global procurement.
The company’s improved performance has been reflected in the short term incentive outcomes received by the
chief executive officer and executives.
The long term incentives awarded in 2012 were tested in August 2015. Nufarm did not meet its average return on funds
employed (ROFE) target over the three-year performance period and so no award was earned against this measure.
Performance against the relative total shareholder return (TSR) target over the same period placed Nufarm above the
50th percentile and so 62.6 per cent of the TSR performance rights vested by this measure. This demonstrates alignment
between shareholder returns and executive long term incentives.
Effective 1 February 2015, there was a modest increase in board committee chair fees ranging from zero per cent to eight
per cent and an adjustment to committee members fees to move to 50 per cent of the committee chair fee, consistent with
market practice.
The human resources committee continues to have a strong focus on the relationship between business performance and
remuneration and in turn, each year the board reviews the financial metrics and individual objectives to ensure they remain
appropriate as a basis of reward given the objectives of the business strategy and the interests of shareholders.
Further detail is provided within the remuneration report.
Peter Margin
Chair – human resources committee
40 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
Basis for preparation
The remuneration report is designed to provide shareholders with an understanding of Nufarm’s remuneration policies and
the link between our remuneration strategy and performance. The report focuses on key management personnel (KMP) as
defined under the Corporations Act 2001.
The remuneration report for Nufarm for 2015 has been prepared in accordance with section 300A of the Corporations Act 2001.
Key developments in FY15
Change of managing director and chief executive officer
On 4 February 2015, Doug Rathbone ceased in his role as managing director and chief executive officer of the Nufarm group
and Greg Hunt, group executive commercial operations, was appointed on an acting basis. On 5 May 2015, Greg Hunt was
confirmed as managing director and chief executive officer of the Nufarm group.
Under his new chief executive officer contract, Mr Hunt is entitled to fixed annual remuneration (FAR) of $1,200,000 (inclusive
of superannuation), short term (STI) opportunity equivalent to 50 per cent of his FAR at target, half of which will be deferred into
shares and subject to an additional two-year trading restriction, and a long term (LTIP) opportunity equivalent to 50 per cent
of his FAR, vesting of which is subject to satisfaction of performance hurdles measured over a three-year performance period.
Mr Hunt’s employment contract can be terminated by either party giving six months’ notice, in which case he will be entitled
to a termination payment equivalent to 12 months’ fixed annual remuneration (inclusive of any payment in lieu of notice).
Further details of Mr Hunt’s remuneration for FY15 are set out in this report.
The former managing director and chief executive officer, Mr Rathbone, was entitled to FAR of $1,737,754 (inclusive of
superannuation), an STI opportunity equivalent to 100 per cent of his FAR at target, and an LTIP opportunity equivalent
to 48 per cent of his FAR, vesting of which was subject to satisfaction of performance hurdles measured over a three-year
performance period. Mr Rathbone’s employment contract could be terminated by either party giving 12 months’ notice, in
which case he was entitled to certain termination payments, subject to the provisions of the Corporations Act. On ceasing
employment, Mr Rathbone received a termination payment of $1,643,193 plus his statutory entitlements (comprising accrued
annual and long service leave). His deferred STI for FY13 and FY14 and his previous LTIP grants remain on foot in accordance
with their original terms. No other termination payments were made to Mr Rathbone.
Mr Rathbone had been employed by Nufarm for 41 years, 15 years as the group’s managing director and chief executive
officer. In order to ensure a smooth transition to the new managing director and chief executive officer and to benefit from
Mr Rathbone’s knowledge of the group, the company has entered into a 12-month consultancy agreement with Mr Rathbone.
Mr Rathbone will be paid a consultancy fee of $83,333 per month in return for agreed services, including his continued
assistance with specific transactions and legacy matters.
Further details of Mr Rathbone’s remuneration for FY15 are set out in this report.
Changes in executive management team
The 2015 reporting period saw a number of other changes to the executive management team as part of an ongoing,
broader restructuring of the business. The changes coincided with the alignment of executive portfolios to the strategy
of the business, as well as a clearer designation of decision making authority and control of the major levers that drive
performance across the group.
The changes to the executive management team were as follows:
• The group executive, corporate strategy and external affairs role changed in scope from 4 February 2015, at which time
the strategy component of that role became the shared responsibility of the acting chief executive officer and other group
executives. The group executive, corporate strategy and external affairs role, along with the group executive, corporate
services and company secretary role, and the group executive, people and performance role ceased to be KMP roles as
of the same date.
• The group executive, procurement and commercial services role and the group executive, innovation and development role
were realigned and ceased to report to the chief executive officer and managing director directly in FY14. Accordingly,
these roles ceased to be KMP roles from 31 July 2014.
NUFARM LIMITED ANNUAL REPORT 2015 | 41
DIRECTORS’ REPORT continued
Changes to executive remuneration framework and employment contracts
During FY15 the board made the following changes to the group’s remuneration framework for senior managers:
• Nufarm’s template senior manager employment agreement was revised and updated to bring it in line with market practice
and Corporations Act provisions. The new template presents a simplified all-inclusive salary package, with fixed and variable
components. FAR can be salary packaged at the election of the executive in different ways utilising Nufarm’s benefit
structure. Variable components (i.e. STI and LTIP) are represented as a percentage of FAR. The new template was applied
to the appointment of the new chief executive officer and managing director on 5 May 2015 and was implemented for all
other Australian-based executives effective 1 August 2015. (Note, as some KMP positions will be based outside of Australia
in the future, some differences in remuneration mix and the contract framework will exist according to local employment
practices and historical factors.)
• A review of Nufarm’s short term and long term incentive practices against market practice of ASX listed companies was
conducted. The review provided a point of reference for potential directions for change within a broader consideration of
Nufarm’s evolving strategy and the leadership behaviours required to deliver growth and build a better Nufarm. The review
confirmed that the STI and LTIP framework was consistent with market practice in general; however, noted a number of
opportunity areas to evolve the plans to further align reward to the strategy and promote desired leadership behaviours in
the future. The board made the following changes for the plan year FY16 and notes the following opportunities for further
investigation and exploration before FY17:
– STI: over the past year, the STI framework has been successful in driving improved management of net working capital
and profitability. The board therefore believes at this time consistency is important to continue the momentum of Nufarm’s
three-year business transformation journey. The board retained the overall framework of STI for FY16 with a 80:20 split
between financial and individual performance metrics maintaining an 85 per cent underlying NPAT threshold on the
individual component. A small adjustment will be made to the split of the STI financial measures of average net working
capital/sales and net profit after tax from 40:60 in FY15, to a simple 50:50 in FY16. The FY16 STI framework is shown below:
Underlying net profit
after tax (UNPAT)
40% weighting
Used to assess overall profitability
Group financial (80%)
Average net working
capital (ANWC)/sales
Individual (20%)
Strategic and business
improvement objectives
40% weighting
Used to assess net working
capital management
20% weighting
Assessed on merit basis
against objectives and living
the Nufarm values
The board reflected on the future opportunity to adapt the STI to a more balanced scorecard approach including safety,
sustainability and people measures and will explore opportunities to do so.
– LTIP: the board decided that the LTIP should continue in much the same form for FY16, with the two equally weighted
metrics of return on funds employed and total shareholder return. During the coming year, the fifth year of the LTIP
running in substantially the same form, the board will review alternatives to renew the design in light of recent changes
to legislation regarding the use of share options, trends in market practice, and future drivers of shareholder value
identified in the strategic review.
42 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
Further changes planned for FY16
In view of the growing strategic importance of Nufarm’s Nuseed business, and the increased focus on strengthening the
company’s product portfolio and marketing capabilities, it was decided that from 1 August 2015 the role of group executive
marketing and portfolio development held by Brian Benson would be split into two executive KMP roles described below.
Mr Benson’s last day with Nufarm was 31 July 2015.
This change has resulted in two new appointments to the executive team. After several years of strong performance
in building Nufarm’s Latin American business, Valdemar Fischer has agreed to take on the new role of group executive,
marketing and portfolio strategy. In this role, Mr Fischer will lead global marketing, partnerships and the product and
portfolio strategy in collaboration with Nufarm’s businesses and platforms. The strength of the global product portfolio
and the coordination of the product to market strategy worldwide is a fundamental growth driver for Nufarm.
Brent Zacharias (general manager Nuseed) has stepped up to the position of group executive Nuseed, reporting to the
managing director and chief executive officer. This appointment reflects the growing importance of the Nuseed platform
and the exciting opportunities ahead.
Key management personnel disclosed in this report
The following were KMP of the consolidated entity at any time during the reporting period and were key management
personnel for the entire period (except where denoted otherwise). For the purposes of this report, executive KMP will be
referred to as disclosed executives.
Non-executive directors
Name
DG McGauchie AO
GR Davis
Dr WB Goodfellow
PM Margin
AB Brennan
FA Ford
T Takasaki
Current executive KMP
G Hunt
P Binfield
E Prado
Former executive KMP
B Benson
DJ Rathbone AM
B Croft
R Heath
R Reis
Position
Chairman
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Term as KMP in 2015
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Managing director and chief executive officer
(5 May 2015 – 31 July 2015)
Acting chief executive officer
(5 February 2015 – 4 May 2015)
Group executive, commercial operations
(1 August 2014 – 4 February 2015)
Chief financial officer
Group executive, manufacturing and supply chain
Group executive, marketing and portfolio development
(ceased to be a KMP role from 1 August 2015)
Managing director and chief executive officer
(ceased employment 4 February 2015)
Group executive, people and performance
(ceased to be a KMP role from 4 February 2015)
Group executive, corporate services
(ceased to be a KMP role from 4 February 2015)
Group executive, corporate strategy and external affairs
(ceased to be a KMP role from 4 February 2015)
Full year
Full year
Full year
Full year
Part year
Part year
Part year
Part year
NUFARM LIMITED ANNUAL REPORT 2015 | 43
DIRECTORS’ REPORT continued
Remuneration governance
The HRC is responsible for reviewing and making recommendations to the Nufarm board on remuneration policies and
packages applicable to disclosed executives. The HRC is comprised of four 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 HRC charter can be found at www.nufarm.com
During 2015, the HRC reviewed information provided by Ernst & Young to assess whether existing frameworks remain
appropriate.
The HRC also sought external general market movement data for the 2015 year from Ernst & Young, Hay Group and other
reference points.
The board measures financial performance under the STI and LTIP using audited numbers. The relative total shareholder
return (TSR) is measured by an independent external adviser.
Within the remuneration framework, the board has discretion to ‘claw back’ LTIP and deferred STI prior to vesting where:
• payment is contrary to the financial soundness of the company;
• circumstances where the financial performance of Nufarm over the relevant period (including the initial STI performance
period) has been misstated; and/or
• for individual gross misconduct.
Executives are not permitted to hedge any shares issued to them under the STI while those shares remain held in trust.
The board considered all information in light of company performance, changes during the year to the scope and scale
of executive roles, individual performance and the motivation and retention of key individuals, in making its remuneration
decisions.
Remuneration strategy
Nufarm’s remuneration strategy and reward frameworks reflect the importance of improving the performance of the business
and lifting returns on funds employed, as well as supporting a goal of attracting, motivating and retaining a high-performing
workforce.
The core elements of Nufarm’s remuneration strategy and policy for the disclosed executives are as follows:
• an overall framework that supports attraction, motivation and retention of talent, shareholder value creation and reward
differentiation;
• an STI program that is biased to growth in profitability and a strong focus on balance sheet management. The program
also focuses individuals to achieve innovation 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; and
• an LTIP plan that is based on the principle of aligning executive interests and rewards with those of shareholders.
With a focus on growth and increased participation in high-value markets with sustainable returns, this improvement will
be driven by:
• continued growth in our revenues;
• a strengthening of our margins;
• a continued, relentless focus on driving down net working capital; and
• a cost savings and performance improvement program that is planned to deliver a net benefit of at least $100 million by 2018.
A focus on working capital and improving returns on funds employed is fundamental to the way in which Nufarm operates
and where it is heading with its organisational strategy, and is therefore a key element of the way performance is measured
and assessed at a group and individual level.
44 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
The STI and LTIP combine shared accountability for financial results with individual reward for strategic changes and improvements
within the individual’s function or business unit. Each year the board reviews the financial metrics and individual objectives to
ensure they remain appropriate as a basis of reward given the business strategy and the interest of shareholders.
The composition of remuneration at Nufarm
Until the appointment of the chief executive officer and managing director the company’s remuneration policy was based
on total target reward (TTR) structured to align overall remuneration spend with business performance.
Remuneration mix
For all current KMP, TTR was composed of FAR (55 per cent), a variable component of STI (25 per cent) linked to current
year performance and a LTIP (20 per cent) linked to longer term performance and business outcomes.
With the appointment of Mr Hunt, the board approved a change to the executive remuneration structure from the TTR
model, with fixed and variable components in aggregate equalling 100 per cent, to a more common structure of FAR
with additional short term and long term incentives (described as a percentage of FAR) available to be earned subject
to performance. Subsequently the executive employment agreements of current KMP Paul Binfield and Elbert Prado
were refreshed effective 1 August 2015 and their remuneration mix aligned to the new standard.
The graph below outlines the target remuneration mix for the chief executive officer and other disclosed executives
with the new structure applied.
Chief
executive
officer
Disclosed
executives
50.0%
12.5%
12.5%
25.0%
54.0%
13.5%
13.5%
19.0%
FAR
Cash STI
Deferred STI
LTIP
The differences in the remuneration mix from FY15 to FY16 with respect of the managing director and chief executive officer
position are described on page 41.
As part of aligning the corporate executive incentive potential and in conjunction with the change to new employment
contracts, effective 1 August 2015 the short term incentive potential of Mr E Prado and Mr PA Binfield increased slightly
from what was effectively 45.45 per cent of FAR in FY15 to 50 per cent of fixed annual remuneration effective from FY16.
New executives are employed on this basis. For longer serving executives, 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.
Fixed annual remuneration (FAR)
According to Nufarm’s policy, FAR is benchmarked with reference to the 62.5th percentile of fixed remuneration paid in the
industrial and chemicals sectors of the relevant country where the executive is based.
The 62.5th percentile positioning on the fixed remuneration component is important to be competitive in the market. With
short and long term incentive potential considered at maximum performance, fixed and variable potential remuneration is
comparable to the 75th percentile. This is a key part of Nufarm’s pay for performance culture and underpins Nufarm’s ability
to attract and retain high-calibre talent.
NUFARM LIMITED ANNUAL REPORT 2015 | 45
DIRECTORS’ REPORT continued
Short term incentive (STI)
Who participates in the STI?
When are awards made?
What measures are used
in the plan?
When and how are the STI
payments determined?
Plan participants include disclosed executives and senior managers globally.
Awards under the plan are made at the end of the financial year.
The board sets measures at the start of each year focused on profitability and balance sheet
management. Noted below are the measures used in 2015.
80% of the potential was based on underlying
net profit after tax (NPAT) and average net
working capital (ANWC)/sales.
20% of the potential was based on
individual strategic and business
improvement objectives aligned to the
role and contribution of the executive.
This structure reflects Nufarm’s strong focus on the use of capital and ensures alignment
of reward to business outcomes and shareholder returns.
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
<85%
85%
100% 120% underlying NPAT
110% ANWC/Sales
150%
Percentage of STI target
award realised
Straight-line vesting between 85% and budget and between budget (target) and 120%
budget achievement (stretch).
100%
25%
Nil
Are payments in cash
or shares?
When do the shares vest?
Is there a clawback provision
in the plan?
What happens if the
executive leaves Nufarm?
Strategic and business improvement objectives are assessed on a merit basis against
stated objectives.
50% of executives’ STI is paid in cash at the time of performance testing and 50% deferred
into shares in the company for nil consideration.
Vesting will occur on the second anniversary of the grant date of the deferred equity,
subject to continued employment, or otherwise if the participant has left employment
for a qualifying reason.
The rules of the plan provide for clawback of deferred STI prior to vesting with board
discretion 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 misstated; and/or for individual
gross misconduct.
If an executive leaves before the vesting anniversary, under ‘qualifying leaver’ provisions the
equity will remain in the plan until the vesting date. If the executive leaves under other than
‘qualifying leaver’ circumstances, the equity will be forfeited. ‘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 plan provide the flexibility, in special circumstances (e.g. health or severe
personal hardship), to accelerate the vesting. This would result in the shares being released
from the trust to the executive.
46 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
Long term incentive plan (LTIP)
Why have an LTIP?
This plan aligns executive interests and earnings with the longer term Nufarm strategy
and the interests of shareholders.
Who participates in the LTIP? The current participants in the plan are disclosed executives and other selected senior
Are the awards cash
or shares?
managers (together, the LTIP participants).
The plan rules provide the flexibility to use a number of different instruments provided they
comply with local regulations and sound practice. FY12 and FY13 awards were granted to
executives in the form of share rights, which comprise rights to acquire ordinary shares in the
company for nil consideration, subject to the achievement of global performance hurdles.
From FY14, rights allocations have been indeterminate. At the time of vesting the board
will determine if the rights convert to ordinary shares or cash or other instruments that
may be in use at the time.
When are the awards made? Under the plan, LTIP participants receive an annual award of rights as soon as practical
How is the number
of rights calculated?
When do the awards vest?
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?
What is the relative TSR
performance required
for vesting?
after the announcement of results for the preceding year.
The number of rights to be granted is calculated by dividing the individual’s LTI grant
opportunity for the performance year by the volume weighted average price (VWAP)
of the company’s shares over the five trading days immediately following the prior year’s
annual results announcement.
The performance/vesting period for awards is three years. Awards will vest in two equal
tranches as follows:
• 50% 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% 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, at the
inception of the plan 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 that is large enough for sound measurement with exclusions
that reduce the volatility by removing companies that are in significantly different industries
to Nufarm. Commencing from FY16, the board approved the inclusion of Dulux (DLX),
Incitec Pivot (IPL) and Orica (ORI) on the basis of their similarity as chemical companies
even though they appear in the materials index. The TSR 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 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.
TSR of Nufarm relative to the TSR of
comparator group companies
Proportion of TSR grant vesting
Less than 50th percentile
50th percentile
Between 51st percentile and 75th percentile
75th percentile
0%
50%
Straight-line vesting between 50% and 100%
100% vesting
How is the ROFE target set? ROFE objectives are set by the board at the beginning of each year. There is both a
How is ROFE measured?
‘target’ and a ‘stretch’ hurdle. These numbers are based on the budget and growth strategy.
‘Target’ represents a sustainable return to acceptable ROFE levels. Stretch recognises
achievement well above budget. This ensures that full vesting of the LTIP is truly reliant
on outstanding performance.
Return is calculated on the group’s earnings before interest and taxation and adjusted
for any material items. Funds employed are represented by shareholders’ 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.
NUFARM LIMITED ANNUAL REPORT 2015 | 47
DIRECTORS’ REPORT continued
What ROFE result is
required for vesting?
Percentage of ROFE target achieved
Proportion of ROFE grant vesting
What was the result
for the 2015 year?
What happens if the
awards do not vest?
Is there a clawback
provision in the plan?
What happens if an
executive leaves?
Less than target
Target
Between target and stretch
Stretch
The table below shows the performance against target for the last three years of the plan.
0%
50%
Straight-line vesting between 50% and 100%
100%
Outcome %
8.8
9.1
11.0
9.6
Target %
10.9
10.0
10.8
10.6
2013
2014
2015
Cumulative three-year average
The 2011 award, which matured on 31 July 2014, did not vest on either the ROFE or the
relative TSR and the rights have been forfeited. The 2012 award, which matured in 2015,
did not meet the ROFE hurdle rate over the three-year performance period but performance
against the relative total shareholder return (TSR) target was above the 50th percentile
over the same period and so 62.6% of performance rights vested by this measure.
To the extent that the TSR and ROFE performance hurdles are not met at the end of the
three-year performance period and full vesting is not achieved, performance will not be
retested and the award will lapse. There is no partial vesting of the LTIP before the third
anniversary.
The rules of the plan provide for clawback of unvested LTIP rights where: payment is
contrary to the financial soundness of the company; in circumstances where the financial
performance of Nufarm over the relevant period has been misstated; and/or for individual
gross misconduct.
To be eligible under the LTIP, the executive 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, (refer STI section
above for definition of ‘qualifying leaver’) 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 to certain overriding discretions set out in the plan.
The rules of the plans provide the flexibility, in special circumstances (e.g. health or severe
personal hardship), to accelerate the vesting. The qualifying allocation will be tested against
the hurdles to determine the value (if any) of the allocation.
Link between performance and disclosed executive remuneration outcomes
The table below summarises the company’s performance and shareholder wealth statistics that influence disclosed executives’
variable remuneration. These are listed over the last five years.
Underlying
EBIT*
$M
171.8
206.0
186.8
200.6
236.9
ANWC/
Underlying
sales***
%
n/a
45.3
46.8
47.7
41.9
NPAT**
$M
n/a
115.4
83.2
86.4
117.1
ROFE
achieved
%
7.6
10.4
8.8
9.1
11.0
Closing
share price
31 July
$
4.34
5.47
4.50
4.35
7.72
Total
shareholder
return
%
13.6
26.8
(16.5)
(1.7)
80.2
2011
2012
2013
2014
2015
* and ** Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying NPAT is net profit after tax before material items.
Underlying NPAT and underlying EBIT are used internally by management to assess performance of the business and make decisions on the allocation
of our resources. NPAT, rather than EBIT, is used to assess management’s STI to ensure rewarded business outcomes are aligned with shareholder returns.
***
Average net working capital/sales is used throughout the business and highlights the strong business-wide focus on the management of working capital
over the full year.
48 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
STI performance and outcomes
Based on an underlying NPAT result of $117.1 million, an ANWC/sales result at 41.9 per cent and performance against
individual strategic and business improvement objectives, disclosed executives employed for the performance period
FY16 were awarded an incentive in accordance with the rules of the plan.
Individual objectives were driven by Nufarm’s strategy and the goals to deliver on sustainable innovation and business
discipline across the business. These objectives were specific to the role of each executive and included organisation
restructuring, management of risk, efficiency improvements, partnership development, portfolio enhancement, business
process and systems improvements and the implementation of initiatives to support growth in higher value segments.
The chief executive officer’s incentive outcome for 2015 was calculated on the aforementioned achievement of financial
results as well as achievement of strategic objectives, including development and delivery of regional business plans,
restructuring and EBIT improvement of the Australian and North American businesses, improvement in the gross profit
margin and implementation of net working capital management disciplines. The outcome was pro-rated according to
the time Mr Hunt spent in each position during the plan year.
LTIP performance and outcomes
The LTIP vests on the third anniversary. Nufarm did not meet its ROFE target over the three-year performance period and
so no award was earned against this measure. Performance against the relative TSR target was above the 50th percentile
over the same period, so 62.6 per cent performance rights vested by this measure.
FY15 STI and LTIP outcomes
2015 STI potential
Disclosed executive
Greg Hunt
Paul Binfield
Elbert Prado
Brian Benson
Robert Reis*
Rodney Heath*
At target At maximum
$
658,491
503,475
409,091
804,798
703,301
369,269
$
438,994
335,650
272,727
536,532
468,867
246,179
Total award
as a % of
target
potential**
100
100
100
95
100
100
Total award
$
439,188
335,798
272,848
509,943
469,074
246,288
To be paid
in cash in
October 2015
$
219,594
167,899
136,424
254,971
234,537
123,144
Retained in
shares vesting
2nd anniversary
31 July 2017
$
219,594
167,899
136,424
254,971
234,537
123,144
* Amounts shown represent the full year outcome. Note that amounts shown in the remuneration table represent the remuneration earned whilst acting as a KMP.
** The total award was more precisely 95.04 per cent in the case of Mr Benson and 100.04 per cent for all other disclosed executives. The fact that the result was
close to 100 per cent for most was purely coincidental due to some measures vesting at stretch and others vesting below target.
2012 LTI award due to vest 31 July 2015
Disclosed executive
Current KMP
Greg Hunt
Paul Binfield
Elbert Prado
Former KMP
Brian Benson
Robert Reis
Rodney Heath
Doug Rathbone*
Total number of
rights available
Total number of
rights awarded
Total award as a
% of potential
Grant date
fair value of
rights awarded
Total award
$
38,288
42,578
–
25,562
22,770
11,954
112,576
11,984
13,327
–
8,001
7,127
3,742
35,236
31
31
0
31
31
31
31
$3.86
$3.86
$3.86
$3.86
$3.86
$3.86
$3.50
46,258
51,442
–
30,884
27,510
14,444
123,326
* Amounts net of rights forgone upon departure from Nufarm in accordance with plan rules, whereby rights are pro-rated for service during performance period.
NUFARM LIMITED ANNUAL REPORT 2015 | 49
DIRECTORS’ REPORT continued
FY15 LTIP grant offered
Disclosed executive
Current KMP
Greg Hunt
Paul Binfield
Elbert Prado
Former KMP
Brian Benson
Robert Reis
Rodney Heath
LTI grant
opportunity
$
Number of
performance
rights*
Effective
grant
date
Fair value at grant date**
Vesting
date
TSR tranche
(50% of award)
ROFE tranche
(50% of award)
241,227
268,253
181,654
159,498
142,077
74,590
49,778
55,355
37,485
32,913
29,318
15,392
1.08.2014
1.08.2014
1.08.2014
1.08.2014
1.08.2014
1.08.2014
31.7.2017
31.7.2017
31.7.2017
31.7.2017
31.7.2017
31.7.2017
$3.12
$3.12
$3.12
$3.12
$3.12
$3.12
$4.62
$4.62
$4.62
$4.62
$4.62
$4.62
* Rights were valued at $4.846, being the five-day VWAP post the announcement of the 2014 annual results.
** In accordance with Australian Accounting Standards.
Service contracts
The company has employment contracts with the disclosed executives. These contracts formalise the terms and conditions
of employment. The contracts are for an indefinite term. The contracts of the chief executive officer and most other disclosed
executives have been structured to be compliant with the termination benefits cap under the Corporations Act.
The company may terminate the contract of the chief executive officer and managing director by giving six months’ notice,
in which case the chief executive officer would be entitled to a termination payment of 12 months FAR inclusive of any notice
paid in lieu. The contract also provides for payment of applicable statutory entitlements.
The chief executive officer may terminate the contract by giving the company six months’ notice.
The company may terminate the contract of most other executives by six months’ notice, in which case a termination payment
equivalent to 12 months FAR will be paid including notice period paid in lieu.
The company may terminate the employment contracts immediately for serious misconduct.
50 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
Non-executive directors (NED)
The board’s policy with regard to NED remuneration is to position board remuneration at the market median with
comparable-sized listed entities. The board determines the fees payable to non-executive directors within the aggregate
amount approved from time to time by shareholders. At the company’s 2014 AGM, shareholders approved an aggregate
of $1,760,000 per year (including superannuation costs).
Set out below are details of the annual fees payable for the year ended 31 July 2015 (including superannuation costs).
Non-executive director fees were reviewed and changed effective from 1 February 2015. This review saw a modest increase
in board committee chair fees ranging from zero per cent to eight per cent, and an adjustment to committee members’ fees
to move to 50 per cent of the committee chair fee, consistent with market practice.
The total fees for the 2015 year remained within the approved cap. Board fees are reviewed every 18 months. These fees will
be reviewed again in July 2016.
Chairman*
General board
Audit committee chair
Audit committee member
Health, safety and environment committee chair
Health, safety and environment risk committee member
Human resources committee chair
Human resources committee member
Nominations committee chair
Nominations committee member
* The chairman receives no fees as a member of any committee.
Fees applicable from
1 August 2014
to 31 January 2015
($) per annum
346,500
141,750
28,875
11,550
17,325
5,775
23,100
8,663
11,550
1,444 per meeting
Fees applicable from
1 February 2015
to 31 July 2015
($) per annum
363,825
148,838
30,000
15,000
17,500
8,750
25,000
12,500
11,550
1,500 per meeting
NUFARM LIMITED ANNUAL REPORT 2015 | 51
DIRECTORS’ REPORT continued
Remuneration of directors and disclosed executives
Details follow of the nature and amount of each major element of remuneration in respect of the NED and disclosed executives.
In AUD
Directors’ non-executive
AB Brennan
GR Davis
Dr WB Goodfellow
DG McGauchie
P Margin
F Ford
T Takasaki
Sub total non-executive directors remuneration
Executive director DJ Rathbone2
Executive director GA Hunt9
Total directors’ remuneration
Group executives – current KMP
PA Binfield
E Prado3
Group executives – former KMP
BF Benson4
BJ Croft 7,8
R Heath 7
RG Reis 7
DA Mellody5
MJ Pointon6
Sub total – total executive remuneration
Total directors and executive remuneration
1. Represents total remuneration in the financial year.
Short term
Salary and fees
$
Cash bonus
(vested)
$
Non-
monetary
benefits
$
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
151,148
143,301
169,886
162,988
138,852
132,801
322,875
315,000
169,120
155,114
165,613
159,051
138,688
130,718
1,256,182
1,198,973
828,659
1,581,554
835,581
606,730
2,920,422
3,387,257
694,369
677,492
513,759
443,055
778,788
753,818
166,510
333,042
162,845
290,654
324,815
657,587
–
561,743
–
410,026
2,641,086
4,127,417
5,561,508
7,514,674
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
124,265
440,339
219,594
48,550
343,859
488,889
167,899
54,141
136,424
34,625
254,971
87,385
–
41,112
63,428
40,095
120,803
76,365
–
65,576
–
48,024
743,525
447,323
1,087,384
936,212
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
120,045
55,027
–
8,636
120,045
63,663
–
–
20,031
57,378
3,785
16,557
134,409
43,207
31,774
34,097
23,375
22,199
–
16,479
–
18,381
213,374
208,298
333,419
271,961
Total
$
151,148
143,301
169,886
162,988
138,852
132,801
322,875
315,000
169,120
155,114
165,613
159,051
138,688
130,718
1,256,182
1,198,973
1,072,969
2,076,920
1,055,175
663,916
3,384,326
3,939,809
862,268
731,633
670,214
535,058
1,037,544
857,760
300,919
417,361
258,047
364,846
468,993
756,151
–
643,798
–
476,431
3,597,985
4,783,038
6,982,311
8,722,847
2. Mr DJ Rathbone’s termination payment is as disclosed to the ASX on 4 February 2015. Mr Rathbone has been retained on a consulting arrangement to
continue to assist with specific transactions and legacy matters. The total sum of fees paid to Mr Rathbone will be $1 million over a 12-month period.
3. Mr E Prado was appointed to the role of group executive manufacturing and supply chain on 1 July 2013. He has progressively assumed direct global
responsibility for the manufacturing and supply chain functions previously managed on a regional basis. Mr Prado’s fixed remuneration was increased by
16 per cent in 2015 in light of his increased responsibilities and market comparisons.
4. Mr BF Benson – ‘other long term’ 2014 includes partial payout of annual leave accrued. Mr Benson’s role became redundant effective 31 July 2015 with his
responsibilities split across two executive positions. In accordance with his contract, he was paid the Nufarm Australia redundancy policy and a proportion of
notice in lieu. Mr Benson’s deferred STI for FY13, FY14 and FY15 and his LTIP grants for all years up to and including 2015 remain on foot in accordance with
their original terms. His termination benefits are under the Corporations Act cap.
5. As noted in section 2, Mr DA Mellody, group executive procurement and commercial services ceased to be a KMP from 1 August 2014. Mr Mellody’s
responsibilities were transitioned to the group executive manufacturing and supply chain held by Mr E Prado and the position became redundant effective
27 February 2015. Mr Mellody received entitlements consistent with his contract and the Nufarm Australia redundancy policy and subject to the provisions
of the Corporations Act.
52 | NUFARM LIMITED ANNUAL REPORT 2015
Post-
employment
Share-based
payments
Other
long term
Total1
Superannuation
Termination
benefits
Equity
settled
Total
remuneration
$
Percentage of
Value of options
remuneration
performance
as a proportion
of total
based
remuneration
%
%
$
15,115
14,330
16,989
16,299
13,885
13,280
32,287
31,500
16,912
15,511
16,561
15,905
13,869
13,071
125,618
119,896
17,261
33,416
34,983
25,832
177,862
179,144
34,200
24,650
30,843
23,180
66,350
24,850
17,917
35,000
17,507
34,017
17,507
24,850
24,175
–
–
24,850
184,324
215,572
362,186
394,716
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,643,193
1,643,193
1,196,954
425,600
1,622,554
3,265,747
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(213,840)
192,602
175,682
112,038
(38,158)
304,640
170,030
126,562
139,147
43,441
372,067
141,108
(86,857)
66,792
45,910
65,223
87,442
124,230
106,058
–
–
82,320
727,739
755,734
689,581
1,060,374
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
101,717
75,383
101,717
75,383
87,904
229,130
69,319
17,101
22,335
23,266
5,588
–
–
10,992
179,558
286,077
281,275
361,460
166,263
157,631
186,875
179,287
152,737
146,081
355,162
346,500
186,032
170,625
182,174
174,956
152,557
143,789
1,381,800
1,318,869
2,621,300
2,378,321
1,265,840
801,786
5,268,940
4,498,976
1,066,498
882,845
840,204
601,679
2,760,819
1,252,848
657,579
519,153
390,783
481,187
596,277
928,497
779,619
–
–
594,593
6,312,160
6,040,421
11,581,100
10,539,397
-3
27
31
20
32
20
33
13
23
18
-13
21
28
22
35
22
22
–
–
22
-8
8
6
8
-7
7
8
6
8
1
3
4
3
4
4
4
–
4
–
5
Remuneration of directors and disclosed executives
Details follow of the nature and amount of each major element of remuneration in respect of the NED and disclosed executives.
Post-
employment
Share-based
payments
Other
long term
Total1
DIRECTORS’ REPORT continued
Superannuation
$
Termination
benefits
$
15,115
14,330
16,989
16,299
13,885
13,280
32,287
31,500
16,912
15,511
16,561
15,905
13,869
13,071
125,618
119,896
17,261
33,416
34,983
25,832
177,862
179,144
34,200
24,650
30,843
23,180
66,350
24,850
17,917
35,000
17,507
34,017
17,507
24,850
–
24,175
–
24,850
184,324
215,572
362,186
394,716
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,643,193
–
–
–
1,643,193
–
–
–
–
–
1,196,954
–
425,600
–
–
–
–
–
–
–
–
–
1,622,554
–
3,265,747
–
Equity
settled
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(213,840)
192,602
175,682
112,038
(38,158)
304,640
170,030
126,562
139,147
43,441
372,067
141,108
(86,857)
66,792
45,910
65,223
87,442
124,230
–
106,058
–
82,320
727,739
755,734
689,581
1,060,374
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
101,717
75,383
–
–
101,717
75,383
–
–
–
–
87,904
229,130
–
–
69,319
17,101
22,335
23,266
–
5,588
–
10,992
179,558
286,077
281,275
361,460
Total
remuneration
$
Percentage of
remuneration
performance
based
%
Value of options
as a proportion
of total
remuneration
%
166,263
157,631
186,875
179,287
152,737
146,081
355,162
346,500
186,032
170,625
182,174
174,956
152,557
143,789
1,381,800
1,318,869
2,621,300
2,378,321
1,265,840
801,786
5,268,940
4,498,976
1,066,498
882,845
840,204
601,679
2,760,819
1,252,848
657,579
519,153
390,783
481,187
596,277
928,497
–
779,619
–
594,593
6,312,160
6,040,421
11,581,100
10,539,397
-3
27
31
20
32
20
33
13
23
18
-13
21
28
22
35
22
–
22
–
22
-8
8
6
8
7
8
6
8
1
3
-7
4
3
4
4
4
–
4
–
5
6. As noted in section 2, Mr MJ Pointon ceased to be a KMP from 1 August 2014. Mr MJ Pointon is currently employed as general manager innovation and
development reporting to the group executive marketing and portfolio strategy.
7. As noted in section 2, Mr RG Reis, Mr R Heath and Ms BJ Croft were no longer KMP from 4 February 2015.
8. Ms BJ Croft’s termination payment was subject to the provisions of the Corporations Act. For a short time, the group entered into a consulting arrangement
with Ms BJ Croft after employment to support change management activities on a business improvement project until alternative resourcing arrangements
were put in place.
9. Mr GA Hunt’s remuneration was pro-rated for the time he spent in the position of group executive commercial operations, acting managing director and
chief executive officer and the subsequent permanent appointment to the same position.
Note: apart from the adjustment of Mr Prado’s remuneration in view of his increased responsibilities, and Mr GA Hunt’s increase due to stepping up into the
managing director and chief executive officer role, disclosed executives were granted increases in fixed remuneration and short term incentive potential of
between three per cent and four per cent. Percentage increases reflected individual performance and alignment to market comparators.
NUFARM LIMITED ANNUAL REPORT 2015 | 53
Sub total non-executive directors remuneration
In AUD
Directors’ non-executive
AB Brennan
GR Davis
Dr WB Goodfellow
DG McGauchie
P Margin
F Ford
T Takasaki
Executive director DJ Rathbone2
Executive director GA Hunt9
Total directors’ remuneration
Group executives – current KMP
Group executives – former KMP
PA Binfield
E Prado3
BF Benson4
BJ Croft 7,8
R Heath 7
RG Reis 7
DA Mellody5
MJ Pointon6
Short term
Salary and fees
$
Cash bonus
(vested)
Non-
monetary
benefits
151,148
143,301
169,886
162,988
138,852
132,801
322,875
315,000
169,120
155,114
165,613
159,051
138,688
130,718
1,256,182
1,198,973
828,659
1,581,554
835,581
606,730
2,920,422
3,387,257
694,369
677,492
513,759
443,055
778,788
753,818
166,510
333,042
162,845
290,654
324,815
657,587
–
–
410,026
2,641,086
4,127,417
5,561,508
7,514,674
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
124,265
440,339
219,594
48,550
343,859
488,889
167,899
54,141
136,424
34,625
254,971
87,385
–
41,112
63,428
40,095
120,803
76,365
–
–
48,024
743,525
447,323
1,087,384
936,212
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
120,045
55,027
8,636
120,045
63,663
20,031
57,378
3,785
16,557
134,409
43,207
31,774
34,097
23,375
22,199
–
–
18,381
213,374
208,298
333,419
271,961
Total
$
151,148
143,301
169,886
162,988
138,852
132,801
322,875
315,000
169,120
155,114
165,613
159,051
138,688
130,718
1,256,182
1,198,973
1,072,969
2,076,920
1,055,175
663,916
3,384,326
3,939,809
862,268
731,633
670,214
535,058
1,037,544
857,760
300,919
417,361
258,047
364,846
468,993
756,151
–
–
476,431
3,597,985
4,783,038
6,982,311
8,722,847
561,743
65,576
16,479
643,798
Sub total – total executive remuneration
Total directors and executive remuneration
1. Represents total remuneration in the financial year.
2. Mr DJ Rathbone’s termination payment is as disclosed to the ASX on 4 February 2015. Mr Rathbone has been retained on a consulting arrangement to
continue to assist with specific transactions and legacy matters. The total sum of fees paid to Mr Rathbone will be $1 million over a 12-month period.
3. Mr E Prado was appointed to the role of group executive manufacturing and supply chain on 1 July 2013. He has progressively assumed direct global
responsibility for the manufacturing and supply chain functions previously managed on a regional basis. Mr Prado’s fixed remuneration was increased by
16 per cent in 2015 in light of his increased responsibilities and market comparisons.
4. Mr BF Benson – ‘other long term’ 2014 includes partial payout of annual leave accrued. Mr Benson’s role became redundant effective 31 July 2015 with his
responsibilities split across two executive positions. In accordance with his contract, he was paid the Nufarm Australia redundancy policy and a proportion of
notice in lieu. Mr Benson’s deferred STI for FY13, FY14 and FY15 and his LTIP grants for all years up to and including 2015 remain on foot in accordance with
their original terms. His termination benefits are under the Corporations Act cap.
5. As noted in section 2, Mr DA Mellody, group executive procurement and commercial services ceased to be a KMP from 1 August 2014. Mr Mellody’s
responsibilities were transitioned to the group executive manufacturing and supply chain held by Mr E Prado and the position became redundant effective
27 February 2015. Mr Mellody received entitlements consistent with his contract and the Nufarm Australia redundancy policy and subject to the provisions
of the Corporations Act.
DIRECTORS’ REPORT continued
Equity instruments held by disclosed executives
The following tables show the number of:
• options/performance rights over ordinary shares in the company;
• right to deferred shares granted under the STI scheme; and
• shares in the company
that were held during the financial year by disclosed executives of the group, including their close family members and
entities related to them.
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.
Options/rights over ordinary shares in Nufarm Limited
Scheme
Balance at
1 August
2014
Granted as
remuneration Exercised
Forfeited
or lapsed(d)
Net
change
other(f)
Balance
at 31 July
2015 (e)
Vested
during
2015
Vested
at 31 July
2015(a)
Value at
date of
forfeiture(d)
Directors
DJ Rathbone(b) LTI performance
LTI performance
GA Hunt
STI deferred(c)
305,163
87,153
21,545
–
49,778
10,018
–
–
–
(26,304)
–
Executives
Current KMP
P Binfield
E Prado
Former KMP
BF Benson
BJ Croft
R Heath
DA Mellody
MJ Pointon
RG Reis
Total
Total
LTI performance
STI deferred(c)
LTI performance
STI deferred (c)
LTI performance
STI deferred(c)
LTI performance
STI deferred(c)
LTI performance
STI deferred(c)
LTI performance
STI deferred(c)
LTI performance
STI deferred(c)
LTI performance
STI deferred(c)
LTI performance
STI deferred
96,919
10,894
34,786
–
58,186
17,582
27,902
8,272
27,211
27,341
44,505
13,194
37,037
9,663
51,831
15,366
770,693
123,857
(183,708) (121,455)
–
35,236
35,236 1,418,226
–
–
–
–
–
–
–
–
–
–
110,627
11,984
11,984
203,067
31,563
9,769
21,545
–
123,023
13,327
13,327
225,818
11,172
10,894
72,271
7,145
–
–
–
–
–
–
–
–
40,721
8,001
8,001
388,918
18,032
17,582
–
–
–
–
–
–
215,403
129,356
3,742
3,742
63,397
8,067
27,341
–
–
–
–
–
–
–
–
–
–
–
–
–
7,127
7,127
120,764
15,366
–
–
–
–
–
–
–
–
–
–
–
–
55,355
–
(29,251)
11,172
(10,894)
37,485
7,145
–
–
–
–
–
32,913
–
(50,378)
18,032
(17,582)
–
–
8,484
15,392
8,274
–
–
–
–
29,318
–
–
–
–
–
–
–
–
–
(27,902)
(16,756)
(8,212)
(34,391)
–
–
–
–
–
(35,615)
(44,505)
(13,194)
(37,037)
(9,663)
(15,643)
(65,506)
15,758
(15,366)
–
(15,758)
220,241
–
(341,398) (302,894)
346,642
79,417
79,417 2,635,593
78,883
(43,842)
(16,756)
(74,230)
67,912
61,678
48,886
129,356
894,550
299,124
(43,842)
(358,154) (377,124)
414,554
141,095
128,303
2,764,949
(a) All options/rights that are vested are exercisable.
(b) On ceasing employment, DJ Rathbone forfeited rights pro-rated for service during performance period. ‘Net change other’ captures rights that remain
on foot (86,219) and vested rights (35,236).
(c) The grant date fair value of deferred shares granted as remuneration in 2015 was $4.846. 100 per cent of STI deferred shares available to vest in 2015 vested
as the necessary service condition was satisfied. 100 per cent of non-vested STI deferred shares are due to vest in 2016. Note those deferred shares granted
as remuneration during FY15 relate to the FY14 STI outcomes. Deferred shares granted as remuneration on the back of the FY15 STI outcomes will be
determined and allocated in October 2015.
(d) LTIP performance rights forfeited due to a failure to satisfy service or performance conditions during 2015 are disclosed in column ‘forfeited or lapsed’.
69 per cent of rights due to vest in 2015 were forfeited. The value of LTIP performance rights forfeited is expressed in the table above using the share
price of the company at 31 July 2015 of $7.72.
(e) 174,998 of total LTIP performance rights held by disclosed executives are due to vest in 2016, with the balance due to vest in 2017.
(f) ‘Net change other’ reflects changes to KMP during the period.
54 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT continued
Shares held in Nufarm Limited
Balance
at 1 August
2014
Note
Granted as
remuneration
On exercise
of rights
Net
change
other
Balance
at 31 July
2015
Directors
DG McGauchie
GA Hunt
DJ Rathbone
AB Brennan
GR Davis
FA Ford
Dr WB Goodfellow
PM Margin
T Takasaki
Executives
Current KMP
P Binfield
E Prado
Former KMP
BF Benson
BJ Croft
R Heath
DA Mellody
MJ Pointon
RG Reis
Total
2
1
3
3
3
3
3
46,239
10,000
3,368,241
10,000
40,000
10,000
1,146,138
2,458
–
74,624
–
113,187
45,882
218,300
38,306
59,320
168,525
5,351,220
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,862
(3,368,241)
–
–
–
2,577
–
–
46,239
22,862
–
10,000
40,000
10,000
1,148,715
2,458
–
10,894
–
17,582
–
–
–
–
15,366
–
–
85,518
–
–
(45,882)
(218,300)
(38,306)
(59,320)
(183,891)
130,769
–
–
–
–
–
43,842
(3,901,363)
1,496,561
1. 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 (126,493 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).
(vii) Shares issued under the company’s non-executive director share plan and held by Pacific Custodians Pty Ltd as trustee of the plan.
2. DJ Rathbone ceased employment on 4 February 2015.
3. The roles held by BJ Croft, R Heath, DA Mellody, MJ Pointon and RG Reis ceased to be KMP during the year ended 31 July 2015, and therefore their
shareholdings at 31 July 2015 have been removed from this disclosure.
NUFARM LIMITED ANNUAL REPORT 2015 | 55
DIRECTORS’ REPORT continued
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 131,681 (2014: nil) unissued shares under option. The unissued shares under option have been provided
to Nufarm employees as performance rights and the exercise price of such options is nil.
Loans to key management personnel
There were no loans to key management personnel at 31 July 2015 (2014: nil).
Other key management personnel transactions with the company or its controlled entities
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.
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 arm’s 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.
This report has been made in accordance with a resolution of directors.
DG McGauchie AO
Director
GA Hunt
Director
Melbourne
23 September 2015
56 | NUFARM LIMITED ANNUAL REPORT 2015
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 2015 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
Gordon Sangster
Partner
Melbourne
23 September 2015
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 2015 | 57
INCOME STATEMENT
For the year ended 31 July 2015
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Sales, marketing and distribution expenses
General and administrative expenses
Research and development expenses
Share of net profits/(losses) of equity accounted investees
Operating profit
Financial income excluding foreign exchange gains/(losses)
Net foreign exchange gains/(losses)
Net financing income
Financial expenses
Net financing costs
Profit/(loss) before income tax
Income tax benefit/(expense)
Consolidated
2015
$000
2014
$000
Note
2,737,163
(2,020,290)
716,873
2,622,704
(1,955,363)
667,341
7
19
10
10
10
11,710
(348,120)
(198,620)
(32,745)
1,120
150,218
7,423
(302)
7,121
(82,329)
(75,208)
10,882
(321,912)
(168,489)
(40,184)
2,208
149,846
5,050
(12,609)
(7,559)
(80,436)
(87,995)
75,010
61,851
11
(31,961)
(24,104)
Profit/(loss) for the period from continuing operations
43,049
37,747
Attributable to:
Equity holders of the company
Non-controlling interests
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.
43,220
(171)
37,707
40
43,049
37,747
30
30
11.7
11.6
9.6
9.6
58 | NUFARM LIMITED ANNUAL REPORT 2015
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 July 2015
Profit/(loss) for the period
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences for foreign operations
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of net investment hedges
Items that will not be reclassified to profit or loss:
Actuarial gains/(losses) on defined benefit plans
Income tax on share-based payment transactions
Note
Consolidated
2015
$000
43,049
2014
$000
37,747
36,352
1,437
(7,572)
(62,136)
(860)
10,314
(19,323)
(201)
(15,321)
(71)
Other comprehensive profit/(loss) for the period, net of income tax
10,693
(68,074)
Total comprehensive profit/(loss) for the period
53,742
(30,327)
Attributable to:
Equity holders of the company
Non-controlling interest
Total comprehensive profit/(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.
53,913
(171)
(30,367)
40
53,742
(30,327)
NUFARM LIMITED ANNUAL REPORT 2015 | 59
BALANCE SHEET
As at 31 July 2015
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
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
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.
60 | NUFARM LIMITED ANNUAL REPORT 2015
Consolidated
2015
$000
2014
$000
Note
15
16
17
18
16
19
20
18
22
23
15
24
25
26
18
28
24
25
18
26
391,418
732,391
753,690
39,259
1,916,758
241,638
724,555
632,901
30,362
1,629,456
73,123
10,552
466
250,942
369,883
952,464
1,657,430
3,574,188
67,481
7,786
477
235,741
371,055
859,450
1,541,990
3,171,446
1,282
671,483
380,426
19,552
5,919
33,174
1,111,836
–
515,933
318,948
19,423
20,605
15,701
890,610
22,691
556,427
151,807
94,632
825,557
1,937,393
1,636,795
42,326
436,057
124,562
69,191
672,136
1,562,746
1,608,700
1,074,119
(213,134)
524,089
1,385,074
246,932
4,789
1,636,795
1,068,871
(248,573)
536,241
1,356,539
246,932
5,229
1,608,700
STATEMENT OF CASH FLOWS
For the year ended 31 July 2015
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Material items
Net cash from operating activities
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
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.
Consolidated
2015
$000
2014
$000
Note
2,841,147
(2,484,368)
356,779
7,423
538
(73,182)
(43,149)
(19,899)
228,510
2,698,423
(2,316,894)
381,529
5,050
254
(68,937)
(45,028)
(4,771)
268,097
6
38
6,806
–
(46,654)
–
(64,251)
(104,099)
689
2,088
(44,460)
–
(59,668)
(101,351)
(1,536)
1,071,244
(1,023,581)
(16,689)
(20,913)
8,525
(6,558)
910,991
(1,047,435)
(16,905)
(18,371)
(178,278)
132,936
241,638
15,562
390,136
(11,532)
264,972
(11,802)
241,638
15
NUFARM LIMITED ANNUAL REPORT 2015 | 61
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2015
Consolidated
Balance at 1 August 2013
Profit/(loss) for the period
Other comprehensive income
Actuarial gains/(losses) on defined benefit plans
Foreign exchange translation differences
Gains/(losses) on cash flow hedges taken to equity
Gains/(losses) on net investment hedges taken to equity
Income tax on share-based payment transactions
Total comprehensive income/(loss) for the period
Transactions with owners, recorded directly in equity
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
Remeasurement of non-controlling interest option
Share
capital
$000
1,063,992
Translation
reserve
$000
(196,643)
Capital profit
reserve
$000
33,627
–
–
–
–
–
–
–
–
2,172
–
2,707
–
–
–
–
(62,136)
–
–
–
(62,136)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2014
1,068,871
(258,779)
33,627
(23,421)
536,241
1,356,539
246,932
5,229
1,608,700
Balance at 1 August 2014
1,068,871
(258,779)
33,627
(23,421)
536,241
1,356,539
246,932
5,229
1,608,700
Profit/(loss) for the period
Other comprehensive income
Actuarial gains/(losses) on defined benefit plans
Foreign exchange translation differences
Gains/(losses) on cash flow hedges taken to equity
Gains/(losses) on net investment hedges taken to equity
Income tax on share-based payment transactions
Total comprehensive income/(loss) for the period
Transactions with owners, recorded directly in equity
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
Remeasurement of non-controlling interest option
–
–
–
–
–
–
–
–
2,104
–
3,144
–
–
–
–
36,352
–
–
–
36,352
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2015
1,074,119
(222,427)
33,627
(24,334)
524,089
1,385,074
246,932
4,789
1,636,795
The statement of changes in equity is to be read in conjunction with the attached notes.
62 | NUFARM LIMITED ANNUAL REPORT 2015
Retained
earnings
$000
547,302
Nufarm step-up
Non-controlling
Total
$000
1,412,624
securities
$000
246,932
interest
$000
5,189
Total
equity
$000
1,664,745
37,707
37,707
Other
reserve
$000
(35,654)
–
–
–
(860)
10,314
(71)
9,383
1,782
(2,172)
–
–
–
3,240
–
–
–
1,437
(7,572)
(201)
(6,336)
4,304
(2,104)
–
–
–
3,223
(15,321)
22,386
(21,078)
(12,369)
(19,323)
23,897
(23,788)
(12,261)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15,321)
(62,136)
(860)
10,314
(71)
(30,367)
1,782
–
(21,078)
2,707
(12,369)
3,240
(19,323)
36,352
1,437
(7,572)
(201)
53,913
4,304
–
(23,788)
3,144
(12,261)
3,223
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40
–
–
–
–
–
40
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(171)
(269)
37,747
(15,321)
(62,136)
(860)
10,314
(71)
(30,327)
1,782
–
(21,078)
2,707
(12,369)
3,240
(19,323)
36,352
1,437
(7,572)
(201)
53,742
4,304
–
(24,057)
3,144
(12,261)
3,223
43,220
43,220
(171)
43,049
STATEMENT OF CHANGES IN EQUITY continued
For the year ended 31 July 2015
Share
capital
$000
1,063,992
Translation
Capital profit
reserve
$000
(196,643)
reserve
$000
33,627
Other
reserve
$000
(35,654)
Retained
earnings
$000
547,302
Total
$000
1,412,624
Nufarm step-up
securities
$000
246,932
Non-controlling
interest
$000
5,189
Total
equity
$000
1,664,745
–
37,707
37,707
–
–
(860)
10,314
(71)
9,383
1,782
(2,172)
–
–
–
3,240
(15,321)
–
–
–
–
22,386
–
–
(21,078)
–
(12,369)
–
(15,321)
(62,136)
(860)
10,314
(71)
(30,367)
1,782
–
(21,078)
2,707
(12,369)
3,240
–
–
–
–
–
–
–
–
–
–
–
–
–
40
–
–
–
–
–
40
–
–
–
–
–
–
37,747
(15,321)
(62,136)
(860)
10,314
(71)
(30,327)
1,782
–
(21,078)
2,707
(12,369)
3,240
Balance at 31 July 2014
1,068,871
(258,779)
33,627
(23,421)
536,241
1,356,539
246,932
5,229
1,608,700
Balance at 1 August 2014
1,068,871
(258,779)
33,627
(23,421)
536,241
1,356,539
246,932
5,229
1,608,700
–
43,220
43,220
–
–
1,437
(7,572)
(201)
(6,336)
4,304
(2,104)
–
–
–
3,223
(19,323)
–
–
–
–
23,897
–
–
(23,788)
–
(12,261)
–
(19,323)
36,352
1,437
(7,572)
(201)
53,913
4,304
–
(23,788)
3,144
(12,261)
3,223
–
–
–
–
–
–
–
–
–
–
–
–
–
(171)
–
–
–
–
–
(171)
–
–
(269)
–
–
–
43,049
(19,323)
36,352
1,437
(7,572)
(201)
53,742
4,304
–
(24,057)
3,144
(12,261)
3,223
Consolidated
Balance at 1 August 2013
Profit/(loss) for the period
Other comprehensive income
Actuarial gains/(losses) on defined benefit plans
Foreign exchange translation differences
Gains/(losses) on cash flow hedges taken to equity
Gains/(losses) on net investment hedges taken to equity
Income tax on share-based payment transactions
Total comprehensive income/(loss) for the period
Transactions with owners, recorded directly in equity
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
Remeasurement of non-controlling interest option
Profit/(loss) for the period
Other comprehensive income
Actuarial gains/(losses) on defined benefit plans
Foreign exchange translation differences
Gains/(losses) on cash flow hedges taken to equity
Gains/(losses) on net investment hedges taken to equity
Income tax on share-based payment transactions
Total comprehensive income/(loss) for the period
Transactions with owners, recorded directly in equity
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
Remeasurement of non-controlling interest option
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,172
2,707
2,104
3,144
(62,136)
(62,136)
36,352
36,352
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2015
1,074,119
(222,427)
33,627
(24,334)
524,089
1,385,074
246,932
4,789
1,636,795
The statement of changes in equity is to be read in conjunction with the attached notes.
NUFARM LIMITED ANNUAL REPORT 2015 | 63
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 2015 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, and seed treatment products.
2. Basis of preparation
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements that 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 23 September 2015.
(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.
(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.
64 | NUFARM LIMITED ANNUAL REPORT 2015
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 that 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
Comparatives have been adjusted to present them on the same basis as current period figures.
3. Significant accounting policies
Except as described immediately below, the group’s accounting policies have been applied consistently to all periods
presented in these consolidated financial statements, and have been applied consistently by group entities.
During the current reporting period, a number of new or amended standards became applicable for the first time, IFRIC21
Levies, Annual Improvements to IFRSs 2010-2012 and 2011-2013 Cycle and Novation of Derivatives and Continuation of
Hedge Accounting (Amendments to IAS 39). These standards did not materially effect the entity’s accounting policies or
any of the amounts recognised in the financial statements.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning
after 1 July 2015, and have not been applied in preparing these financial statements. None of these are 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 2019 consolidated financial statements, and IFRS 15 Revenue from Contracts with
Customers, which becomes mandatory for the 2018 consolidated financial statements. AASB 9 could change the classification
and measurement of financial assets and IFRS 15 could change revenue recognition practices. The group does not currently
plan to adopt these standards early and the extent of the impact (if any) has not been determined.
NUFARM LIMITED ANNUAL REPORT 2015 | 65
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(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.
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.
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.
(ii) Non-controlling interests (NCI)
NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition data.
When a written put option is established with non-controlling shareholders in an existing subsidiary, then the group will
recognise a liability for the present value of the exercise price of the option. When the NCI still has present access to the
returns associated with the underlying ownership interest, NCI continues to be recognised and accordingly the liability is
considered a transaction with owners and recognised via a reserve. Any changes in the carrying value of the put liability
over time is recognised directly in reserves.
(iii) Subsidiaries
Subsidiaries are entities controlled by the group. The group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date
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.
(iv) Investments in equity accounted investees
The group’s interests in equity accounted investees comprise interests in associates and a joint venture.
Associates are those entities in which the group has significant influence, but not control or joint control, over the financial
and operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights
to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
66 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iv) Investments in equity accounted investees (continued)
Investments in associates and joint ventures 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 investees,
after adjustments to align the accounting policies with those of the group, from the date that significant influence of equity
accounted 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 discontinue except to the extent
that the group has an obligation or has made payments on behalf of the investee.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity
accounted investees are eliminated against the investment to the extent of the group’s interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(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.
The group has on issue a hybrid security called Nufarm step-up securities (NSS). Proceeds from the NSS (note 29) have
been utilised to provide funding throughout the group. This creates a foreign currency exposure when the funding currency
denomination differs from the respective entity’s functional currency.
(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 IFRS, such differences have been recognised in the foreign currency translation reserve (FCTR). When a foreign
operation is disposed of, in part or in full, the relevant amount in 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.
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NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(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.
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 purchase 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 initially 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.
68 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Non-derivative financial liabilities (continued)
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. This includes trade payables that represent liabilities for goods and services provided to the group prior to the
end of the year, which are unpaid.
(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 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. Further details can be found in note 29.
(iv) Derivative financial instruments, including hedge accounting
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The group designates certain derivatives as either:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges);
• hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges); or
• hedges of a net investment in a foreign operation (net investment hedges).
The group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows
of hedged items.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months. Trading derivatives are classified as a current asset or liability.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain
or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in profit or loss
within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate
risk. The gain or loss relating to the ineffective portion is recognised in profit or loss within other income or other expenses.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item
for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated
effective interest rate.
NUFARM LIMITED ANNUAL REPORT 2015 | 69
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(c) Financial instruments (continued)
(iv) Derivative financial instruments, including hedge accounting (continued)
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss within other income or other expense.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss
(for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest
rate swaps hedging variable rate borrowings is recognised in profit or loss within ‘finance costs’. The gain or loss relating
to the effective portion of forward foreign exchange contracts hedging export sales is recognised in profit or loss within
‘sales’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example,
inventory or fixed assets), the gains and losses previously deferred in equity are reclassified from equity and included in the
initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in profit or loss as cost of goods
sold in the case of inventory, or as depreciation or impairment in the case of fixed assets.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss.
Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately
in profit or loss within other income or other expenses.
Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed
of or sold.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for hedge accounting are recognised immediately in profit or loss.
(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 profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(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
• computer equipment
5 years
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.
(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.
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NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(e) Intangible assets (continued)
(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.
(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.
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NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(h) Impairment (continued)
(i) Non-derivative financial assets (continued)
Objective evidence of impairment includes default or delinquency 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.
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.
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NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(i) Non-current assets held for sale (continued)
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
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 the current and prior periods, discounting that amount and deducting the fair
value of any assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the group, the recognised asset is limited to the present value
of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
To calculate the present value economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan asset
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The
group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying
the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net
defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period
as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans
are recognised in profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service
or the gain or loss on curtailment is recognised immediately in profit or loss. The group recognises gains and losses on the
settlement of a defined benefit plan when the settlement occurs.
(iii) Other long term employee benefits
The group’s net obligation in respect of long term employee benefits, other than defined benefit plans, is the amount of
future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs;
that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount
rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the group’s
obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised
in profit or loss in the period in which they arise.
(iv) Termination benefits
Termination benefits are recognised as an expense when the group is demonstrably committed, without a realistic possibility
of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide
termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary
redundancies are recognised as an expense if the group has made an offer encouraging voluntary redundancy, it is probable
that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than
12 months after the reporting period, then they are discounted to their present value.
74 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(j) Employee benefits (continued)
(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 pre-determined percentage of the STI is paid in cash with the remainder deferred into shares that 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) that is available to key executives and certain selected senior managers.
Performance 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 to
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.
NUFARM LIMITED ANNUAL REPORT 2015 | 75
NOTES TO THE FINANCIAL STATEMENTS continued
3. Significant accounting policies (continued)
(m) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of
the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising
the minimum lease payments over the remaining term of the lease when the 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.
76 | NUFARM LIMITED ANNUAL REPORT 2015
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 (refer below). Any difference
between these amounts is recognised by the company as an equity contribution amounts 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 are 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 that 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 (GST)
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 tax authority 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 that 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 2015 | 77
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 chief executive officer to make decisions about resources
to be allocated to the segment and to assess its performance.
Segment results that are reported to the chief executive officer 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.
4. Determination of fair values
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.
78 | NUFARM LIMITED ANNUAL REPORT 2015
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.
(vi) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate
of interest is determined by reference to similar lease agreements.
(vii) Share-based payment transactions
The fair value of the performance rights issued under the Nufarm long term incentive plan has 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 VWAP 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, the United States,
Mexico and the Central American countries. The South America region includes Brazil, Argentina, Chile, Uruguay, Paraguay,
Bolivia, Columbia 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 chief executive officer. 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.
NUFARM LIMITED ANNUAL REPORT 2015 | 79
NOTES TO THE FINANCIAL STATEMENTS continued
5. Operating segments (continued)
Crop protection
technologies Corporate
Group
Seed
Australia
and
New
Zealand
$000
Asia
$000
Europe
$000
North
America
$000
South
America
$000
Total
$000
Global
$000
$000
Total
$000
582,391 155,233 544,775 588,650 706,533 2,577,582
159,581
– 2,737,163
69,952
21,661
98,565
54,579
79,604
324,361
37,648
(44,919)
317,090
(17,207)
52,745
(3,527) (34,139) (15,658)
38,921
64,426
18,134
(2,920)
76,684
(73,451)
250,910
(5,819)
31,829
(938)
(45,857)
(80,208)
236,882
2015
Operating
segments
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
(86,664)
–
(75,208)
75,010
Assets
Segment assets
Investment in
associates
Total assets
Liabilities
Segment liabilities
Total liabilities
Other segment
information
Capital
expenditure
440,197
97,380 751,869 531,119 671,788 2,492,353
375,982
695,301 3,563,636
–
10,202
440,197 106,141 753,310 531,119 671,788 2,502,555
1,441
8,761
–
–
350
376,332
–
10,552
695,301 3,574,188
146,079 110,567 257,625 103,421 194,533
146,079 110,567 257,625 103,421 194,533
812,225
812,225
26,914 1,098,254 1,937,393
26,914 1,098,254 1,937,393
14,727
1,316
40,282
22,969
6,844
86,138
25,580
–
111,718
(a) Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is underlying EBIT, before depreciation, amortisation
and impairments.
80 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
5. Operating segments (continued)
Crop protection
technologies Corporate
Group
Seed
Australia
and
New
Zealand
$000
Asia
$000
Europe
$000
North
America
$000
South
America
$000
Total
$000
Global
$000
$000
Total
$000
605,761 140,885 555,521 513,596 662,512
2,478,275
144,429
– 2,622,704
53,869
22,418
89,629
35,879
75,286
277,081
41,963
(37,621)
281,423
(19,966)
33,903
(2,937)
19,481
(33,209)
56,420
(15,241)
20,638
(3,664)
71,622
(75,017)
202,064
(4,803)
37,160
(996)
(38,617)
(80,816)
200,607
2014
Operating
segments
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
(50,761)
–
(87,995)
61,851
Assets
Segment assets
Investment in
associates
Total assets
Liabilities
Segment liabilities
Total liabilities
Other segment
information
Capital
expenditure
417,599
85,878 753,554 442,360 645,914
2,345,305
316,316
502,039
3,163,660
–
417,599
5,409
–
91,287 755,547 442,360 645,914
1,993
–
7,402
2,352,707
384
316,700
–
502,039
7,786
3,171,446
134,764
134,764
98,342 186,768
98,342 186,768
56,022 133,211
56,022 133,211
609,107
609,107
31,307
31,307
922,332
922,332
1,562,746
1,562,746
12,834
5,102
37,675
13,979
7,175
76,765
16,900
–
93,665
(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 2015 | 81
NOTES TO THE FINANCIAL STATEMENTS continued
5. Operating segments (continued)
Geographical information
Australia
New Zealand
Asia
Europe
US
Rest of North America
Brazil
Rest of South America
Unallocated (b)
Total
Revenue by location
of customer
Non-current assets
by location
2015
$000
548,307
59,391
155,233
567,446
561,674
105,913
556,475
182,724
–
2,737,163
2014
$000
570,396
67,866
151,065
579,131
459,625
105,100
552,391
137,130
–
2,622,704
2015
$000
250,651
5,429
43,607
437,265
405,718
14,311
231,166
18,341
250,942
1,657,430
2014
$000
228,520
7,051
39,915
393,527
321,470
24,050
272,202
19,513
235,742
1,541,990
(b) Unallocated assets predominately 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.
Material items by category:
Asset rationalisation and restructure
Consolidated
Consolidated
2015
$000
Pre-tax
2015
$000
After-tax
2014
$000
Pre-tax
2014
$000
After-tax
(86,664)
(86,664)
(73,839)
(73,839)
(50,761)
(50,761)
(48,704)
(48,704)
2015 asset rationalisation and restructure
The 2015 asset rationalisation and restructuring program has resulted in the rationalisation of under-utilised assets and
an organisational restructure throughout the Nufarm group. Asset rationalisation and restructure costs amounting to
$86.664 million mainly relate to the rationalisation of European manufacturing assets, whereby the Botlek manufacturing
facilities will be closed and manufacturing consolidated. A breakdown of the nature of the costs incurred are further
described below. Asset rationalisation costs have only been tax benefited to the extent that it is probable that the
benefit will be utilised.
Summary of nature of cost
Organisational restructuring costs
European manufacturing asset rationalisation
Other asset rationalisation costs
Note
2015
$000
Further explanation of nature of cost
(a) (14,335) Primarily redundancy and consultancy costs.
(46,349) Primarily redundancies, consultancy and plant closure costs.
(b) (25,980)
(86,664)
(a) Costs associated with the departure of Doug Rathbone (managing director) in February 2015 form a part of this material item. Refer to the remuneration
report for further information regarding termination payments made to Doug Rathbone during the year ended 31 July 2015.
(b) Primarily costs associated with the rationalisation and outsourcing of underperforming assets such as low yielding stock lines, product-related intangibles
and other fixed assets.
82 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
6. Items of material income and expense (continued)
2014 asset rationalisation and restructure
Asset rationalisation and restructure costs of $50.761 million mainly relate to the rationalisation of Australian and New Zealand
manufacturing assets, whereby three manufacturing facilities will be closed and manufacturing consolidated. The program has
resulted in the rationalisation of under-utilised assets and an organisational restructure. Asset rationalisation costs have only
been tax benefited to the extent that it is foreseeable that the benefit will be utilised.
Material items are classified by function as follows:
Year ended 31 July 2015
$000
Asset rationalisation and restructure
Total material items included
operating profit
Selling,
marketing and
distribution
expense
(5,142)
(5,142)
Cost of
sales
(48,349)
(48,349)
General and
administrative
expense
(33,111)
(33,111)
Research and
development
expenses
(62)
(62)
Net
financing
costs
–
–
Total
pre-tax
(86,664)
(86,664)
(48,349)
(5,142)
(33,111)
(62)
–
(86,664)
Selling,
marketing and
distribution
expense
General and
administrative
expense
Research and
development
expenses
Net
financing
costs
Cost of
sales
(33,612)
(33,612)
(7,322)
(7,322)
(8,674)
(8,674)
(1,153)
(1,153)
(33,612)
(7,322)
(8,674)
(1,153)
Total
pre-tax
(50,761)
(50,761)
(50,761)
–
–
–
Year ended 31 July 2014
$000
Australia/New Zealand asset
rationalisation and restructure
Total material items included
operating profit
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
Consolidated
2015
$000
137
241
11,332
11,710
2014
$000
134
199
10,549
10,882
Consolidated
2015
$000
(80,208)
(11,104)
2014
$000
(80,816)
(5,693)
NUFARM LIMITED ANNUAL REPORT 2015 | 83
NOTES TO THE FINANCIAL STATEMENTS continued
9. Personnel expenses
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution superannuation funds
Expense/(gain) related to defined benefit superannuation funds
Short term employee benefits
Other long term employee benefits
Restructuring
Personnel expenses
Consolidated
2015
$000
(261,896)
(46,583)
(15,398)
2,528
(9,975)
(2,597)
(22,162)
(356,083)
2014
$000
(242,767)
(42,580)
(13,742)
(4,002)
(9,681)
(2,091)
(14,732)
(329,595)
The restructure expense relates to the rationalisation and restructure of the group’s European manufacturing assets.
These costs are included in material items in note 6.
10. Finance income and expense
Financial income excluding foreign exchange gains/(losses)
Net foreign exchange gains/(losses)
Financial income
Interest expense – external
Interest expense – debt establishment transaction costs
Lease expense – finance charges
Financial expenses
Net financing costs
Consolidated
2015
$000
7,423
(302)
7,121
(73,054)
(7,175)
(2,100)
(82,329)
2014
$000
5,050
(12,609)
(7,559)
(67,527)
(11,129)
(1,780)
(80,436)
(75,208)
(87,995)
84 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
11. Income tax expense
Recognised in the income statement
Current tax expense
Current period
Non-recognition of tax assets on material items
Adjustments for prior periods
Current tax expense
Deferred tax expense
Origination and reversal of temporary differences and tax losses
Reduction in tax rates
Initial (recognition)/derecognition of tax assets
Deferred tax expense/(benefit)
Consolidated
2015
$000
2014
$000
Note
24,567
11,272
489
36,328
(1,602)
25
(2,790)
(4,367)
24,275
12,961
(4,013)
33,223
(9,974)
(221)
1,076
(9,119)
Total income tax expense/(benefit) in income statement
31,961
24,104
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%
Increase/(decrease) in income tax expense due to:
Non-deductible expenses
Other taxable income
Effect of changes in the tax rate
Initial (recognition)/derecognition of tax assets
Non-recognition of tax assets on material items
Settlement of Brazilian tax proceedings
Utilisation of tax losses on settlement of Brazilian tax proceedings
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/(losses) on defined benefit plans
Relating to equity-based compensation
Income tax recognised in other comprehensive income
18
18
31,961
31,961
24,104
24,104
75,010
61,851
22,503
18,555
5,102
2,668
25
(2,790)
11,272
–
–
(2,195)
(2,607)
(2,506)
31,472
489
31,961
2,642
1,939
(221)
1,076
12,961
21,053
(21,053)
(4,349)
(1,747)
(2,739)
28,117
(4,013)
24,104
(4,428)
(4,428)
(4,536)
(4,536)
(4,997)
201
(4,796)
(4,052)
71
(3,981)
NUFARM LIMITED ANNUAL REPORT 2015 | 85
NOTES TO THE FINANCIAL STATEMENTS continued
12. Discontinued operations
There were no discontinued operations in current or prior period.
13. Non-current assets held for sale
There were no assets held for sale in the current or prior period.
Assets classified as held for sale
Property, plant and equipment including costs incurred in preparing site for sale
Total assets held for sale
14. Acquisition of businesses and acquisition of non-controlling interests
There were no businesses acquired in the current or prior period.
Acquisition of non-controlling interest
There was no acquisition of non-controlling interest in the current or prior period.
15. Cash and cash equivalents
Bank balances
Call deposits
Bank overdraft
Total cash and cash equivalents
Consolidated
2015
$000
–
–
2014
$000
–
–
Consolidated
2015
$000
292,770
98,648
391,418
(1,282)
390,136
2014
$000
194,121
47,517
241,638
–
241,638
86 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
16. Trade and other receivables
Current
Trade receivables
Provision for impairment losses
Derivative financial instruments
Proceeds receivable from sale of businesses
Prepayments
Other receivables
Current receivables
Non-current
Derivative financial instruments
Other receivables
Non-current receivables
Total trade and other receivables
17. Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence of finished goods
Total inventories
Consolidated
2015
$000
2014
$000
682,846
(42,766)
640,080
696,434
(26,591)
669,843
7,261
–
37,793
47,257
732,391
184
–
19,443
35,085
724,555
17,760
55,363
73,123
–
67,481
67,481
805,514
792,036
Consolidated
2015
$000
214,682
26,527
517,222
758,431
(4,741)
753,690
2014
$000
193,323
29,983
415,231
638,537
(5,636)
632,901
NUFARM LIMITED ANNUAL REPORT 2015 | 87
NOTES TO THE FINANCIAL STATEMENTS continued
18. Tax assets and liabilities
Current tax assets and liabilities
The current tax asset for the group of $39.259 million (2014: $30.362 million) represents the amount of income taxes
recoverable in respect of prior periods and that which 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 $5.919 million (2014: $20.605 million) 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)
2015
$000
1,512
13,846
23,333
27,039
22,447
162,765
250,942
–
250,942
2014
$000
6,222
8,470
17,703
17,137
17,109
172,703
239,344
(3,603)
235,741
2015
$000
(8,750)
(121,070)
–
–
(21,987)
–
(151,807)
–
(151,807)
2014
$000
(10,516)
(102,089)
–
–
(15,560)
–
(128,165)
3,603
(124,562)
2015
$000
(7,238)
(107,224)
23,333
27,039
460
162,765
99,135
–
99,135
Movement in temporary differences during the year
Consolidated 2015
Property, plant and equipment
Intangibles assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
Consolidated 2014
Property, plant and equipment
Intangibles assets
Employee benefits
Provisions
Other items
Tax value of losses carried forward
Balance
31.07.14
$000
(4,294)
(93,619)
17,703
17,137
1,549
172,703
111,179
Recognised
in income
$000
(594)
(1,028)
8,805
10,775
(1,682)
(11,909)
4,367
Recognised
in equity
$000
–
–
(4,997)
–
201
–
(4,796)
Currency
adjustment
$000
(2,350)
(12,577)
1,822
(873)
392
1,971
(11,615)
Balance
31.07.13
$000
(6,534)
(88,990)
14,613
10,654
11,897
138,888
80,528
Recognised
in income
$000
2,201
(8,014)
(1,195)
6,903
(9,159)
18,383
9,119
Recognised
in equity
$000
–
–
4,052
–
(71)
–
3,981
Currency
adjustment
$000
39
3,385
233
(420)
(1,118)
(3,698)
(1,579)
Other
movement
$000
–
–
–
–
–
–
–
Other
movement
$000
–
–
–
–
–
19,130
19,130
2014
$000
(4,294)
(93,619)
17,703
17,137
1,549
172,703
111,179
–
111,179
Balance
31.07.15
$000
(7,238)
(107,224)
23,333
27,039
460
162,765
99,135
Balance
31.07.14
$000
(4,294)
(93,619)
17,703
17,137
1,549
172,703
111,179
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 carrying value of this asset will continue to be assessed at each reporting date.
88 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
18. Tax assets and liabilities (continued)
Deferred tax assets and liabilities
Unrecognised deferred tax liability
At 31 July 2015, a deferred tax liability of $32,099,309 (2014: $25,743,684) 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 2015, there are unrecognised deferred tax assets in respect of tax losses and timing differences of $20,400,996
(2014: $13,884,125).
During December 2013, the company elected to participate in a federal tax program instigated by the Brazilian government
that allows taxpayers to reduce their tax liabilities by offering discounts on claims (including penalties and interest). The
company elected to enter into the program, and was able to offset the resulting tax liability by recognising previously
unrecognised tax assets. The amount of previously unrecognised deferred tax assets offset in this way was $21,053,467.
Refer note 34.
19. Investments accounted for using the equity method
The group accounts for investments in associates and joint ventures using the equity method.
The group had the following individually immaterial associates and joint ventures during the year:
Ownership and
voting interest
Carrying
amount
Share
of profit
Nature of
relationship
Excel Crop Care Ltd Associate1
F&N joint ventures
Lotus Agrar GmbH
Others
Joint ventures 2
Joint venture3
Associates4
Country
India
Europe
Germany
Balance date
of associate
31 March
31 December
31 December
2015
%
14.69
50.00
0.00
2014
%
14.69
50.00
50.00
2015
$000
8,760
1,441
–
351
10,552
2014
$000
5,409
1,142
851
384
7,786
2015
$000
1,737
266
(848)
(35)
1,120
2014
$000
2,081
651
(614)
90
2,208
1. Excel Crop Care Ltd is an agricultural chemicals manufacturer. Nufarm’s investment in Excel Crop Care Ltd is equity accounted due to Nufarm holding
14.69 per cent of voting rights in Excel Crop Care Ltd, the transactions undertaken between the parties and Nufarm’s ability to appoint two directors
to the board. The relationship extends to manufacturing and marketing collaborations and the sale/purchase of crop protection products.
2. F&N joint ventures are agricultural chemicals distributors. 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.
3. Lotus Agrar GmbH is a joint venture established in Germany to sell generic agrochemicals. During the year ended 31 July 2015, Nufarm divested of its interest
in this joint venture.
4. Aggregate of other individually immaterial associates.
The share of net profits has been derived from the latest management reports as at 31 July 2015 for the F&N joint ventures.
The Excel Crop Care share of net profits is from the 30 June 2015 management accounts.
NUFARM LIMITED ANNUAL REPORT 2015 | 89
Consolidated
2015
$000
2014
$000
–
–
–
–
–
–
–
–
466
477
466
477
Consolidated
2015
$000
–
–
2014
$000
–
–
NOTES TO THE FINANCIAL STATEMENTS continued
20. Other investments
Investments – available-for-sale
Balance at the beginning of the year
Disposals during the year
Exchange adjustment
Balance at the end of the year
Other investments
Other investments
Total other investments
21. Other non-current assets
Other non-current assets
90 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
22. Property, plant and equipment
Consolidated 2015
Cost
Balance at 1 August 2014
Additions
Additions through business combinations
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2015
Depreciation and impairment losses
Balance at 1 August 2014
Depreciation charge for the year
Additions through business combinations
Impairment loss
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2015
Land
and
buildings
$000
Plant
and
machinery
$000
Leased
plant and
machinery
$000
Capital
work in
progress
$000
213,148
821
–
(9,153)
1,230
7,687
213,733
666,612
15,527
–
(92,955)
28,205
36,759
654,148
(87,859)
(6,637)
–
–
4,316
1,652
(4,888)
(93,416)
(463,818)
(37,199)
–
(19,347)
89,896
(1,590)
(20,675)
(452,733)
19,745
540
–
(26)
(36)
4,017
24,240
(2,510)
(1,424)
–
–
17
32
(614)
(4,499)
25,737
29,766
–
(20)
(30,160)
3,087
28,410
–
–
–
–
–
–
–
–
Total
$000
925,242
46,654
–
(102,154)
(761)
51,550
920,531
(554,187)
(45,260)
–
(19,347)
94,229
94
(26,177)
(550,648)
Net property, plant and equipment at 31 July 2015
120,317
201,415
19,741
28,410
369,883
Consolidated 2014
Cost
Balance at 1 August 2013
Additions
Additions through business combinations
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2014
Depreciation and impairment losses
Balance at 1 August 2013
Depreciation charge for the year
Additions through business combinations
Impairment loss
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2014
Land
and
buildings
$000
Plant
and
machinery
$000
Leased
plant and
machinery
$000
Capital
work in
progress
$000
214,121
1,220
–
(463)
2,690
(4,420)
213,148
(77,338)
(6,583)
–
(6,593)
391
188
2,076
(87,859)
647,143
17,895
–
(7,303)
14,608
(5,731)
666,612
(422,386)
(38,010)
–
(17,808)
6,720
2,204
5,462
(463,818)
18,637
723
–
–
385
19,745
(1,337)
(1,147)
–
–
–
(26)
(2,510)
23,858
24,622
–
(2,122)
(20,511)
(110)
25,737
–
–
–
–
–
–
–
–
Total
$000
903,759
44,460
–
(9,888)
(3,213)
(9,876)
925,242
(501,061)
(45,740)
–
(24,401)
7,111
2,392
7,512
(554,187)
Net property, plant and equipment at 31 July 2014
125,289
202,794
17,235
25,737
371,055
Assets pledged as security for finance leases amount to $12.433 million (2014: $10.714 million).
NUFARM LIMITED ANNUAL REPORT 2015 | 91
NOTES TO THE FINANCIAL STATEMENTS continued
23. Intangible assets
Consolidated 2015
Cost
Balance at 1 August 2014
Additions
Additions through business combinations
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2015
Amortisation and impairment losses
Balance at 1 August 2014
Amortisation charge for the year
Impairment loss
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2015
Intellectual
property
Indefinite
life
$000
Finite
life
$000
Capitalised
development
costs
$000
Computer
software
$000
Total
$000
408,737
–
–
–
–
34,334
443,071
147,276
6,681
–
(35,743)
–
16,585
134,799
(16,204)
–
–
–
–
461
(15,743)
(87,414)
(11,596)
–
18,865
14
(9,455)
(89,586)
230,122
52,971
–
(11,624)
–
32,411
303,880
(59,080)
(20,010)
–
8,559
(270)
(8,583)
(79,384)
36,749 1,167,444
65,064
5,412
–
–
(47,466)
(99)
93
761
96,836
2,737
45,560 1,281,971
(27,547) (307,994)
(34,948)
–
27,520
574
(14,659)
(32,216) (329,507)
(3,342)
–
96
162
(1,585)
Goodwill
$000
344,560
–
–
–
(668)
10,769
354,661
(117,749)
–
–
–
668
4,503
(112,578)
Intangibles carrying amount at 31 July 2015
242,083
427,328
45,213
224,496
13,344
952,464
Consolidated 2014
Cost
Balance at 1 August 2013
Additions
Additions through business combinations
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2014
Amortisation and impairment losses
Balance at 1 August 2013
Amortisation charge for the year
Impairment loss
Disposals and write-offs
Other transfers
Exchange adjustment
Balance at 31 July 2014
Intellectual
property
Goodwill
$000
Indefinite
life
$000
Finite
life
$000
Capitalised
development
costs
$000
Computer
software
$000
Total
$000
357,906
–
–
–
(5,840)
(7,506)
344,560
(120,779)
–
(5,649)
–
5,840
2,839
(117,749)
419,751
2,842
–
(213)
(1,534)
(12,109)
408,737
146,741
4,612
–
–
1,534
(5,611)
147,276
(16,673)
(25)
(166)
166
1
493
(16,204)
(77,102)
(12,542)
(20)
(135)
–
2,385
(87,414)
195,342
42,264
–
(12,527)
1,285
3,758
230,122
(51,510)
(19,114)
(987)
12,381
28
122
(59,080)
36,778 1,156,518
51,317
1,599
–
–
(12,771)
(31)
(5,049)
(494)
(22,571)
(1,103)
36,749 1,167,444
(24,699)
(3,395)
–
24
1
522
(27,547)
(290,763)
(35,076)
(6,822)
12,436
5,870
6,361
(307,994)
Intangibles carrying amount at 31 July 2014
226,811
392,533
59,862
171,042
9,202
859,450
92 | NUFARM LIMITED ANNUAL REPORT 2015
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.
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/CGU).
The group has determined that operating unit by country or region (i.e. Europe) 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 or region specific
in nature. There is no allocation of goodwill between CGUs.
The major CGUs and their intangible assets are as follows: North America $253 million (2014: $209 million); Brazil $168 million
(2014: $186 million); seeds business $245 million (2014: $211 million); Europe $210 million (2014: $188 million); and Australia
and New Zealand (ANZ) $36 million (2014: $26 million). The balance of intangibles is spread across multiple CGUs, with no
individual amount being material relative to the total intangibles balance 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 three-year plan for each CGU, with a growth factor applied to extrapolate
a cash flow beyond year three. 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. The cash flow is then discounted to a present value using a discount rate, which is the company’s
weighted average cost of capital, adjusted for country risk and asset-specific risk associated with each CGU.
The range of terminal growth rates and nominal post-tax discount rates applied for impairment testing purposes is as follows:
Terminal
growth rate
Discount
rate
2015
%
2014
%
2015
%
2014
%
Total goodwill
and indefinite
life assets
2015
$000
2014
$000
Material crop protection CGUs (North America,
Brazil, Europe and Australia/New Zealand)
1.7 to 3.5 1.6 to 3.5 8.1 to 12.4 7.3 to 13.3
465,869
430,492
Seeds CGU
2.3
2.0
8.9
8.8
178,195
162,796
NUFARM LIMITED ANNUAL REPORT 2015 | 93
NOTES TO THE FINANCIAL STATEMENTS continued
Consolidated
2015
$000
2014
$000
664,768
6,548
167
671,483
510,961
2,628
2,344
515,933
12,652
4,150
5,889
22,691
10,537
21,092
10,697
42,326
Consolidated
2015
$000
2014
$000
346,751
37,569
(5,003)
543
566
380,426
44,593
62,802
438,357
(5,895)
2,111
14,459
556,427
294,898
29,136
(6,079)
489
504
318,948
78,524
14,739
339,271
(10,458)
1,589
12,392
436,057
(390,136)
(241,638)
546,717
513,367
24. Trade and other payables
Current payables – unsecured
Trade creditors and accruals – unsecured
Derivative financial instruments
Payables – acquisitions
Current payables
Non-current payables – unsecured
Creditors and accruals
Derivative financial instruments
Payables – acquisitions
Non-current payables
25. Interest-bearing loans and borrowings
Current liabilities
Bank loans – secured
Bank loans – unsecured
Deferred debt establishment costs
Other loans – unsecured
Finance lease liabilities – secured
Loans and borrowings – current
Non-current liabilities
Bank loans – secured
Bank loans – unsecured
Senior unsecured notes
Deferred debt establishment costs
Other loans – unsecured
Finance lease liabilities – secured
Loans and borrowings – non-current
Net cash and cash equivalents
Net debt
94 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
25. Interest-bearing loans and borrowings (continued)
Financing facilities
Refer to the section entitled ‘Liquidity risk’ in note 31 for detail regarding the group’s financing facilities.
2015
Bank loan facilities and senior unsecured notes
Other facilities
Total financing facilities
2014
Bank loan facilities and senior unsecured notes
Other facilities
Total financing facilities
Financing arrangements
Repayment of borrowings (excluding finance leases)
Period ending 31 July 2015
Period ending 31 July 2016
Period ending 31 July 2017
Period ending 31 July 2018 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 (refer note 29)
Syndicated bank facility
Group securitisation program facility
Other bank loans
Finance lease liabilities – secured
Senior unsecured notes
Accessible
$000
Utilised
$000
1,804,163
2,654
1,806,817
930,072
2,654
932,726
1,741,340
2,078
1,743,418
756,568
2,078
758,646
Consolidated
2015
$000
–
384,863
50,158
497,705
2014
$000
324,522
7,138
426,986
2,117
2,052
5,612
109,751
119,532
(104,507)
15,025
1,781
1,706
4,804
94,974
103,265
(90,369)
12,896
Consolidated
2015
%
6.16
3.54
2.38
7.30
12.57
6.38
2014
%
6.63
4.34
3.33
7.70
12.49
6.38
NUFARM LIMITED ANNUAL REPORT 2015 | 95
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
2015
$000
2014
$000
16,278
3,274
19,552
16,051
3,372
19,423
6,598
221,728
(147,351)
80,975
5,866
170,495
(121,773)
54,588
13,657
94,632
114,184
14,603
69,191
88,614
The group makes contributions to defined benefit pension funds in the United Kingdom, the Netherlands, France and Indonesia
that provide defined benefit amounts for employees upon retirement.
Changes in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation
Service cost
Interest cost
Actuarial losses/(gains)
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
Interest income
Actuarial gains/(losses) – return on plan assets excluding interest income
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).
96 | NUFARM LIMITED ANNUAL REPORT 2015
Consolidated
2015
$000
2014
$000
176,361
2,861
7,353
26,557
(4,469)
(2,416)
171
(6,639)
28,547
228,326
121,773
5,857
2,237
–
5,368
(6,284)
18,400
147,351
146,584
3,326
7,730
18,096
(923)
–
54
(5,428)
6,922
176,361
111,361
6,131
(1,277)
–
5,147
(4,736)
5,147
121,773
NOTES TO THE FINANCIAL STATEMENTS continued
26. Employee benefits (continued)
Expense/(gain) recognised in profit or loss
Current service costs
Interest on obligation
Interest income
Losses/(gains) on curtailment
Past service cost/(gain)
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
Actuarial gains/(losses) recognised in other comprehensive income (net of tax)
Cumulative amount at 1 August
Recognised during the period
Cumulative amount at 31 July
The major categories of fund assets as a percentage of total fund assets are as follows:
Equities
Bonds
Property
Cash
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
Discount rate at 31 July
Future salary increases
Future pension increases
Consolidated
2015
$000
2,861
7,353
(5,857)
(2,416)
(4,469)
(2,528)
2,686
1,158
(6,555)
183
(2,528)
2014
$000
3,326
7,730
(6,131)
–
(923)
4,002
2,315
763
618
306
4,002
(33,002)
(19,323)
(52,325)
(17,681)
(15,321)
(33,002)
Consolidated
2015
%
60.2
34.5
1.6
3.7
3.6
0.4
2.6
2014
%
62.4
35.4
1.4
0.8
4.2
3.1
2.5
The group expects to pay $4,187,000 in contributions to defined benefit plans in 2016 (2014: $4,729,000).
NUFARM LIMITED ANNUAL REPORT 2015 | 97
NOTES TO THE FINANCIAL STATEMENTS continued
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 granted 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
2015 there were 32 participants (2014: 40 participants) in the scheme and 299,978 shares (2014: 387,076) 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 were
issued in October 2012. The STI is measured on the following metrics, relevant to an individual:
• budget measures of EBIT or net profit after tax and net working capital; and
• strategic and business improvement objectives.
A pre-determined 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 VWAP of Nufarm Limited
shares in the five days subsequent to the results announcement. Vesting will occur after a two-year period.
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 performance
and vesting period for the awards will be three years. Awards vest in two equal tranches as follows:
• fifty 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.
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 2015 there were 823 participants (2014:
872 participants) in the scheme and 1,938,372 shares (2014: 2,013,567) 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.
98 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
27. Share-based payments (continued)
Employee expenses
Total expense arising from share-based payment transactions
Consolidated
2015
$000
4,304
2014
$000
1,782
Measurement of fair values
The fair value of performance rights granted through the LTIP and deferred shares granted through the STIP were measured
as follows:
Plan
Weighted average 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
Nufarm STI
2015
deferred
shares
$4.85
$4.93
30 Sep 2014
31 Jul 2016
–
1 year
n/a
n/a
n/a
Nufarm LTI
2015
performance
rights
Sep 2014
$3.87
$4.93
30 Sep 2014
31 Jul 2017
–
2.8 years
35%
2.7%
2.3%
Nufarm STI
2014
deferred
shares
$4.75
$4.54
9 Oct 2013
31 Jul 2015
–
1 year
n/a
n/a
n/a
Nufarm LTI
2014
performance
rights
Dec 2013
$3.25
$4.40
5 Dec 2013
31 Jul 2016
–
2.7 years
35%
2.9%
2.7%
Nufarm LTI
2014
performance
rights
Oct 2013
$3.35
$4.54
9 Oct 2013
31 Jul 2016
–
2.8 years
35%
3.0%
2.7%
The fair values of awards granted were estimated using a Monte Carlo Simulation methodology and a Binomial Tree methodology.
Reconciliation of outstanding share awards
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
Nufarm LTI
number of
performance
rights
2015
996,934
(182,901)
–
–
394,079
1,208,112
–
Nufarm STI
number of
deferred
shares
2015
841,942
(49,859)
(161,850)
–
348,420
978,653
571,767
Nufarm LTI
number of
performance
rights
2014
1,021,128
(593,187)
–
–
568,993
996,934
–
Nufarm STI
number of
deferred
shares
2014
513,962
–
(53,257)
–
381,237
841,942
404,025
The performance rights outstanding at 31 July 2015 have a nil exercise price and a weighted average contractual life
of three years (2014: three years). All performance rights granted to date have a nil exercise price.
NUFARM LIMITED ANNUAL REPORT 2015 | 99
NOTES TO THE FINANCIAL STATEMENTS continued
28. Provisions
Current
Restructuring
Other
Current provisions
Consolidated
Movement in provisions
Balance at 1 August 2014
Provisions made during the year
Provisions used during the year
Exchange adjustment
Balance at 31 July 2015
Consolidated
2015
$000
2014
$000
29,481
3,693
33,174
12,642
3,059
15,701
Restructuring
$000
Other
provisions
$000
12,642
43,691
(28,973)
2,121
29,481
3,059
1,322
(246)
(442)
3,693
Total
$000
15,701
45,013
(29,219)
1,679
33,174
The provision for restructuring is mainly relating to the asset rationalisation and restructure costs of European manufacturing
assets, whereby the Botlek manufacturing facilities will be closed and manufacturing consolidated. 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
2015
264,021,627
1,045,797
265,067,424
Number of
ordinary shares
2014
262,954,040
1,067,587
264,021,627
The company does not have authorised capital or par value in respect of its issued shares.
On 9 October 2014, 346,119 shares at $4.85 were issued under the executive share plan.
On 14 November 2014, 490,843 shares at $4.80 were issued under the dividend reinvestment program.
On 6 January 2015, 89,543 shares at $4.75 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.
On 9 May 2015, 119,292 shares at $6.60 were issued under the dividend reinvestment program.
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.
100 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
29. Capital and reserves (continued)
Nufarm step-up securities (continued)
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 (2014: 3.9 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.
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. This reserve also holds the debit balance related to the written put option of the 49 per cent
interest held by the non-controlling shareholders of Atlantica Sementes Ltda (Atlantica). As the non-controlling shareholders
still have present access to the economic benefits with their underlying ownership interest, their non-controlling interest
continues to be recognised. In the event the written put option is exercised, this debit reserve will be utilised to complete
the transaction. This reserve also holds the balances related to hedging.
Dividends
An interim dividend of four cents per share, totalling $10,570,585, was declared on 25 March 2015, and was paid (net of
dividend reinvestment program) on 8 May 2015 (2014: three cents per share, totalling $7,912,359).
A final dividend of six cents per share, totalling $15,904,045, was declared on 23 September 2015, and will be paid on
13 November 2015 (2014: five cents per share, totalling $13,217,663).
Distributions
Distributions recognised in the current year by Nufarm Finance (NZ) Limited on the Nufarm step-up securities* are:
2015
Distribution
Distribution
2014
Distribution
Distribution
* Refer to discussion titled ‘Nufarm step-up securities’ above.
Distribution rate
%
Total amount
$000
Payment
date
Consolidated
6.64
6.63
6.52
6.95
8,350
8,339
16,689
8,156
8,749
16,905
15 April 2015
15 October 2014
15 April 2014
15 October 2013
NUFARM LIMITED ANNUAL REPORT 2015 | 101
NOTES TO THE FINANCIAL STATEMENTS continued
29. Capital and reserves (continued)
Distributions (continued)
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 $12.261 million (2014: $12.369 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% (2014: 30%)
Franking credits/(debits) that will arise from the payment of income
tax payable/(refund) as at the end of the year
Credit/(debit) balance at 31 July
2015
$000
2014
$000
3,503
4,973
(4,437)
(934)
(3,262)
1,711
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/(obligation) of $934,467 (2014: $1,710,802) franking credits/(debits).
30. Earnings per share
Net profit for the year
Net profit attributable to non-controlling 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
Consolidated
2015
$000
43,049
171
43,220
(12,261)
30,959
2014
$000
37,747
(40)
37,707
(12,369)
25,338
30,959
30,959
25,338
25,338
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
(73,839)
(48,704)
104,798
74,042
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
2014
2015
264,727,654 263,587,507
266,019,789 265,033,403
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.
102 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
30. Earnings per share (continued)
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
31. Financial risk management and financial instruments
The group has exposure to the following financial risks:
• credit risk;
• liquidity risk; and
• market risk.
Cents per share
2015
2014
11.7
11.7
11.6
11.6
39.6
39.4
9.6
9.6
9.6
9.6
28.1
27.9
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 ongoing 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.
NUFARM LIMITED ANNUAL REPORT 2015 | 103
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Credit risk (continued)
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
Derivative contracts:
Assets
Consolidated
2015
$000
2014
$000
780,493
391,418
791,852
241,638
25,021
1,196,932
184
1,033,674
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
2015
$000
2014
$000
98,591
39,148
214,423
80,299
348,032
780,493
106,699
32,223
251,058
95,781
306,091
791,852
The group’s top five customers account for $94.7 million of the trade receivables carrying amount at 31 July 2015
(2014: $107.4 million). These top five customers represent 15 per cent (2014: 15 per cent) of the total receivables.
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
104 | NUFARM LIMITED ANNUAL REPORT 2015
Consolidated
2015
$000
538,817
75,232
22,252
10,250
36,295
682,846
(42,766)
640,080
2014
$000
572,214
71,151
18,482
9,225
25,362
696,434
(26,591)
669,843
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Credit risk (continued)
Impairment losses (continued)
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 0.05 per cent of sales, with no greater than 0.12 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
2015
$000
26,591
18,447
(821)
–
(1,451)
42,766
2014
$000
24,172
5,437
(2,080)
–
(938)
26,591
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 encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. 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 A$300 million group trade receivables securitisation facility. Subsequent to execution,
the facility limit was reduced to A$250 million. On 13 June 2013, the facility limit was increased to A$300 million. On 15 April
2015, a monthly facility limit was introduced to reflect the cyclical nature of the trade receivables being used to secure funding
under the program. The monthly facility limit is set at A$300 million for four months of the financial year, at A$375 million
for three months of the financial year, and at A$225 million for five months of the financial year (2014: facility limit was
A$300 million). The facility provides funding that aligns with the working capital cycle of the company.
On 8 October 2012, the group completed a US$325 million senior unsecured notes offering due in October 2019 (the ‘notes’).
On the 23 February 2015, the senior secured syndicated bank facility (SFA) was partially refinanced such that the total facility
amount has increased to A$540 million (2014: A$530 million), of which A$150 million is due in February 2018, A$30 million is
due in December 2017, A$350 million is due in December 2016, and A$10 million is due in December 2015 (2014: A$520 million
due in December 2016, A$10 million due in December 2014). The SFA is secured by assets in Australia, New Zealand and the
United States (2014: Australia, New Zealand and the United States). 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 amount
drawn down under the facility at 31 July 2015 is $10 million (2014: $51 million).
The majority of debt facilities that reside outside the notes, SFA and the group trade receivables securitisation facility
are regional working capital facilities, primarily located in Brazil and Europe, which at 31 July totalled $526 million
(2014: $572 million).
At 31 July 2015, the group had access to debt of $1,807 million (2014: $1,743 million) under the notes, SFA, group trade
receivables securitisation facility and with other lenders.
A parent guarantee is provided to support working capital facilities in Europe, South America and the notes.
NUFARM LIMITED ANNUAL REPORT 2015 | 105
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 2015
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – secured
Bank loans – unsecured
Senior unsecured notes
Other loans – unsecured
Finance lease liabilities – secured
Derivative financial liabilities
Derivatives used for hedging:
Outflow
Inflow
Other derivative contracts:
Outflow
Inflow
Derivative financial assets
Derivatives used for hedging:
Outflow
Inflow
Other derivative contracts:
Outflow
Inflow
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1– 2
years
$000
More than
2 years
$000
1,282
683,476
391,344
100,371
438,357
2,654
15,025
1,282
683,476
405,326
117,313
565,483
2,654
119,532
1,282
664,935
357,381
48,294
28,250
543
2,117
–
1,083
3,050
51,880
28,250
2,111
2,052
–
17,458
44,895
17,139
508,983
–
115,363
7,861
–
73,183
(78,473)
73,183
(72,012)
–
(2,012)
–
(4,449)
2,837
–
267,238
(264,458)
267,238
(264,458)
–
–
–
–
–
(17,760)
211,937
(232,466)
13,252
(10,494)
12,353
(10,390)
186,332
(211,582)
–
(7,261)
1,618,186
313,734
(320,745)
1,865,016
313,734
(320,745)
1,102,500
–
–
88,377
–
–
674,139
106 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Liquidity risk (continued)
Consolidated 2014
Non-derivative financial liabilities
Bank overdrafts
Trade and other payables
Bank loans – secured
Bank loans – unsecured
Unsecured note issues
Other loans – unsecured
Finance lease liabilities – secured
Derivative financial liabilities
Derivatives used for hedging:
Outflow
Inflow
Other derivative contracts:
Outflow
Inflow
Derivative financial assets
Derivatives used for hedging:
Outflow
Inflow
Other derivative contracts:
Outflow
Inflow
Carrying
amount
$000
Contractual
cash flows
$000
Less than
1 year
$000
1– 2
years
$000
More than
2 years
$000
–
534,539
373,422
43,875
339,271
2,078
12,896
–
534,539
397,202
47,368
461,801
2,078
103,265
–
513,305
301,714
30,833
22,278
489
1,781
–
1,063
5,783
8,493
22,278
1,589
1,706
–
20,171
89,705
8,042
417,245
–
99,778
21,817
–
230,879
(232,876)
22,177
(22,815)
21,452
(22,815)
187,250
(187,246)
1,903
–
252,666
(250,933)
252,666
(250,933)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(184)
1,329,617
52,885
(53,064)
1,545,810
52,885
(53,064)
871,316
–
–
39,549
–
–
634,945
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.
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 include the US dollar, the euro, the British pound, the Australian dollar, the New Zealand
dollar and the Brazilian real. The group uses foreign exchange contracts, cross currency interest rate swaps and options to
manage currency risk. The group designates select derivatives for hedge accounting as cash flow hedges where it is deemed
appropriate to do so.
NUFARM LIMITED ANNUAL REPORT 2015 | 107
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Currency risk (continued)
In October 2012, the group completed a US$325 million senior unsecured notes offering due in October 2019 (the ‘notes’).
Currency risk related to the principal amount of the notes has been hedged using cross currency interest rate swap contracts
that mature on the same date as the notes are due for repayment. These contracts have been designated for hedge accounting.
The group uses derivative financial instruments to manage foreign currency translation risk arising from the group’s net
investments in foreign currency subsidiary entities. These contracts have been designated as net investment hedges for
hedge accounting purposes. No ineffectiveness was recognised from the net investment hedge.
For accounting purposes, other than the contracts referred to previously, the group has not designated any other 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, not designated as being in a hedge relationship, used as economic hedges
of forecast transactions at 31 July 2015 was a $4.424 million asset (2014: $1.719 million liability) comprising assets of
$7.261 million (2014: $0.184 million) and liabilities of $2.837 million (2014: $1.903 million).
Exposure to currency risk
The group’s translation exposure to major foreign currency risks at balance date was as follows, based on notional amounts:
Consolidated 2015
Functional currency of group operation
Australian dollars
US dollars
Euro
UK pounds sterling
Consolidated 2014
Functional currency of group operation
Australian dollars
US dollars
Euro
UK pounds sterling
Net financial assets/(liabilities) – by currency
of denomination
AUD
$000
–
(69,342)
18,526
–
(50,816)
AUD
$000
–
(83,268)
15,524
(14,768)
(82,512)
USD
$000
16,723
–
22,122
16,036
54,881
USD
$000
(44,765)
–
11,489
9,351
(23,925)
Euro
$000
18,181
754
–
(13,271)
5,664
Euro
$000
21,379
(730)
–
5,298
25,947
GBP
$000
(13,598)
–
8,240
–
(5,358)
GBP
$000
(17,464)
–
10,596
–
(6,868)
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 on page 109.
This analysis assumes all other variables, including interest rates, remain constant. The analysis is performed on the same
basis for 2014.
108 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Currency risk (continued)
Sensitivity analysis (continued)
Currency movement
1% change in the Australian dollar exchange rate
1% change in the US dollar exchange rate
1% change in the Euro exchange rate
1% change in the GBP exchange rate
Strengthening
Profit/(loss)
after tax
2015
$000
Weakening
Profit/(loss)
after tax
2015
$000
Strengthening
Profit/(loss)
after tax
2014
$000
Weakening
Profit/(loss)
after tax
2014
$000
(500)
864
(303)
(57)
505
(856)
300
56
(289)
421
(82)
(47)
292
(416)
81
47
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
2015
0.811
0.693
0.519
2.266
2014
0.917
0.673
0.556
2.092
2015
0.733
0.665
0.469
2.489
2014
0.930
0.694
0.551
2.105
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.
The majority of the group’s debt is raised under central borrowing programs. The A$540 million syndicated bank
facility and the group trade receivables securitisation facility are considered floating rate facilities. On 8 October 2012,
the group completed a US$325 million notes issue with a fixed coupon component. Concurrent with the completion of
the US$325 million notes issue, the group entered into interest rate swaps to manage specifically identified interest rate
risks associated with the fixed coupon component of the notes. These swaps effectively converted a majority of the fixed
interest payable on the notes to floating interest, and have been designated for hedge accounting. During the year ended
31 July 2014, the group entered into interest rate swaps to manage the level of floating rate debt held by the group.
These swaps effectively converted a portion of floating rate debt to fixed rate debt, and have been designated for hedge
accounting. The group’s earnings are sensitive to changes in interest rates on the floating interest rate component of the
group’s net borrowings.
Interest rate risk on Nufarm step-up securities
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
(2014: 3.90 per cent).
NUFARM LIMITED ANNUAL REPORT 2015 | 109
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Interest rate risk (continued)
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
Fixed rate instruments
Financial assets
Financial liabilities
Consolidated
Carrying amount
2015
$000
2014
$000
98,648
(713,377)
(614,729)
47,517
(554,003)
(506,486)
–
(234,374)
(234,374)
–
(217,539)
(217,539)
Sensitivity analysis for variable rate instruments
A change of 100 basis points (bp) 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 2014.
2015
Variable rate instruments
Total sensitivity
2014
Variable rate instruments
Total sensitivity
Fair values
Profit/(loss)
100bp
increase
$000
100bp
decrease
$000
(6,147)
(6,147)
6,147
6,147
(5,065)
(5,065)
5,065
5,065
All financial assets and financial liabilities, other than derivatives, are initially recognised at the fair value of consideration paid
or received, net of transaction costs as appropriate, and subsequently carried at fair value or amortised cost, as indicated in
the tables below. Derivatives are initially recognised at fair value on the date the contract is entered into and are subsequently
remeasured at their fair value.
The financial assets and liabilities are presented by class in the tables on page 111 at their carrying values, which generally
approximate to the fair values. In the case of the centrally managed fixed rate debt not swapped to floating rate totalling
$136.4 million (2014: $107.6 million), the fair value at 31 July 2015 is $136.439 million (2014: $116.977 million).
110 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Fair values (continued)
Consolidated 2015
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts:
Assets
Liabilities
Interest rate swaps:
Assets
Liabilities
Trade and other payables excluding derivatives
Bank overdraft
Secured bank loans
Unsecured bank loans
Senior unsecured notes (a)
Other loans
Finance leases
Consolidated 2014
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts:
Assets
Liabilities
Interest rate swaps:
Assets
Liabilities
Trade and other payables excluding derivatives
Bank overdraft
Secured bank loans
Unsecured bank loans
Senior unsecured notes (a)
Other loans
Finance leases
Available
-for-sale
$000
–
–
Note
15
16
Carried at
fair value
through
profit or loss
$000
–
–
Derivatives
used for
hedging
$000
–
–
Financial
assets/
liabilities at
amortised
cost
$000
391,418
780,493
Total
$000
391,418
780,493
16
24
16
24
24
15
25
25
25
25
25
–
–
–
–
–
–
–
–
–
–
–
–
6,384
(2,837)
–
(2,839)
–
–
6,384
(5,676)
877
–
–
–
–
–
–
–
–
4,424
17,760
(5,022)
–
–
–
–
–
–
–
9,899
–
–
(683,476)
(1,282)
(391,344)
(100,371)
(438,357)
(2,654)
(15,025)
(460,598)
18,637
(5,022)
(683,476)
(1,282)
(391,344)
(100,371)
(438,357)
(2,654)
(15,025)
(446,275)
Available
-for-sale
$000
–
–
Note
15
16
Carried at
fair value
through
profit or loss
$000
–
–
Derivatives
used for
hedging
$000
–
–
16
24
16
24
24
15
25
25
25
25
25
–
–
–
–
–
–
–
–
–
–
–
–
184
(1,903)
–
–
–
–
–
–
–
–
–
(1,719)
–
(725)
–
(21,092)
–
–
–
–
–
–
–
(21,817)
Financial
assets/
liabilities at
amortised
cost
$000
241,638
791,852
–
–
–
–
(534,539)
–
(373,422)
(43,875)
(339,271)
(2,078)
(12,896)
(272,591)
Total
$000
241,638
791,852
–
184
(2,628)
–
(21,092)
(534,539)
–
(373,422)
(43,875)
(339,271)
(2,078)
(12,896)
(296,127)
(a) Includes $301.9 million (2014: $231.7 million) of centrally managed fixed rate debt swapped to floating rate under fair value hedges, and is consequently fair
valued for interest rate risk.
NUFARM LIMITED ANNUAL REPORT 2015 | 111
NOTES TO THE FINANCIAL STATEMENTS continued
31. Financial risk management and financial instruments (continued)
Market risk (continued)
Fair values (continued)
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).
2015
Derivative financial assets
Derivative financial liabilities
2014
Derivative financial assets
Derivative financial liabilities
Consolidated
Level 1
$000
–
–
–
–
–
–
–
–
Level 2
$000
25,021
25,021
(10,698)
(10,698)
184
184
(23,720)
(23,720)
Level 3
$000
–
–
–
–
–
–
–
–
Total
$000
25,021
25,021
(10,698)
(10,698)
184
184
(23,720)
(23,720)
There have been no transfers between levels in either 2015 or 2014.
Valuation techniques used to derive fair values
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument
are observable, the instrument is included in Level 2.
Specific valuation techniques used to value financial instruments include:
• the use of quoted market prices or dealer quotes for similar instruments;
• the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable
yield curves;
• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date; and
• other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
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 based on the budget and growth strategy. The ROFE return for the year ended 31 July 2015 was 11.0 per cent
(2014: 9.1 per cent).
There were no changes in the group’s approach to capital management during the year.
112 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
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
2015
$000
12,954
9,327
23,259
163,534
209,074
2014
$000
11,807
10,286
22,725
144,995
189,813
Operating leases are generally entered to access the use of shorter term assets such as motor vehicles, mobile plant and
office equipment. Rentals are fixed for the duration of these leases. There is a small number of leases for office properties.
These rentals have regular reviews based on market rentals at the time of review.
33. Capital commitments
The group had contractual obligations to purchase plant and equipment for $3.787 million at 31 July 2015 (2014: $3.240 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.
Guarantee facility for Eastern European joint ventures with FMC Corporation.
Consolidated
2015
$000
9,626
2014
$000
7,254
Environmental guarantee given to the purchaser of land and buildings at Genneviliers
for EUR 8.5 million.
12,782
12,248
Insurance bond for EUR 2.717 million established to make certain capital expenditures
at Gaillon plant in France.
Brazilian taxation proceedings.(a)
Contingent liabilities
4,195
4,019
20,114
12,157
46,717
35,678
(a) As at 31 July 2015, the total contingent liability relating to future potential tax liabilities in Brazil is $20.1 million (2014: $12.2 million). These cases continue
to be defended.
Further to the above, the company’s 2013 annual financial report previously disclosed a contingent liability of $74.6 million in respect of potential pre-acquisition
tax liabilities of its Brazilian business, which was acquired in 2007. The company continued to defend the related tax claims during the period. The agreements
relating to the purchase of the business included indemnities that allow Nufarm to recover the majority of any such tax liabilities from the previous owners. These
indemnities have previously been confirmed via an independent arbitration process.
During December 2013, the company elected to participate in a federal tax program instigated by the Brazilian government that allows taxpayers to reduce
their tax liabilities by offering discounts on claims (including penalties and interest) applying to a period ending on 30 November 2008. The decision to
participate in the program reduced the company’s potential future liability and provided a final resolution of the claims to which the program applied.
In November 2014, the company elected to take advantage of changes to the federal tax program, which allowed for the balance of the aforementioned
liabilities to be fully settled via the utilisation of tax losses.
As previously disclosed, cash inflows from the previous owner, via enforcement of the indemnities currently under arbitration, will follow the settlement
of the tax obligations.
The recognition of the liability during the year ended 31 July 2014 was offset by the benefit of previously unrecognised tax assets. The tax assets will
be recovered via a combination of recoupment in the normal course of business and enforcement of the indemnities provided by the previous owner.
Further to the above, the group has a contingent asset in respect of potential pre-acquisition tax credits of its Brazilian business acquired in 2007.
Whilst the credits are deemed to be valid, the Brazilian courts are currently deliberating the value of the credits and therefore the full amount of
this contingent asset is yet to be established. Such credits can be used to offset future federal tax payable.
NUFARM LIMITED ANNUAL REPORT 2015 | 113
NOTES TO THE FINANCIAL STATEMENTS continued
35. Group entities
Parent entity
Nufarm Limited – ultimate controlling entity
Subsidiaries
Access Genetics Pty Ltd
Agcare Biotech Pty Ltd
Agchem Receivables Corporation
Agryl Holdings Limited
Ag-seed Research Pty Ltd
Agturf Inc
AH Marks (New Zealand) Limited
AH Marks Australia Pty Ltd
AH Marks Holdings Limited
AH Marks Pensions Scottish Limited Partnership
Artfern Pty Ltd
Atlantica Sementes SA
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
Fidene Limited
First Classic Pty Ltd
Framchem SA
Frost Technology Corporation
Greenfarm Hellas Trade of Chemical Products SA
Growell Limited
Grupo Corporativo Nufarm SA
Laboratoire European de Biotechnologie s.a.s
Le Moulin des Ecluses s.a
Lefroy Seeds Pty Ltd
Manaus Holdings Sdn Bhd
Marman (Nufarm) Inc
Marman de Guatemala Sociedad Anomima
Marman de Mexico Sociedad Anomima De Capital Variable
Marman Holdings LLC
Masmart Pty Ltd
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
114 | NUFARM LIMITED ANNUAL REPORT 2015
Note
Place of
incorporation
Percentage of shares held
2015
2014
(a)
(a)
(a)
(a)
(a)
(a)
(b)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Australia
Australia
USA
Australia
Australia
USA
New Zealand
Australia
United Kingdom
United Kingdom
Australia
Brazil
Australia
Australia
Australia
Netherlands
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Canada
New Zealand
Australia
Egypt
USA
Greece
United Kingdom
Guatemala
France
France
Australia
Malaysia
USA
Guatemala
Mexico
USA
Australia
Australia
Malaysia
Australia
Malaysia
Malaysia
N. Antillies
Australia
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
88
100
100
100
100
100
100
100
100
100
100
–
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
88
100
NOTES TO THE FINANCIAL STATEMENTS continued
35. Group entities (continued)
Midstates Agri Services Inc
NF Agriculture Inc
Nufarm Africa SARL AU
Nufarm Agriculture (Pty) Ltd
Nufarm Agriculture Inc
Nufarm Agriculture Zimbabwe (Pvt) Ltd
Nufarm Americas Holding Company
Nufarm Americas Inc
Nufarm Asia Sdn Bhd
Nufarm Australia Limited
Nufarm Bulgaria
Nufarm BV
Nufarm Canada Receivables Partnership
Nufarm Chemical (Shanghai) Co Ltd
Nufarm Chile Limitada
Nufarm Colombia S.A.
Nufarm Crop Products UK Limited
Nufarm Cropcare Private Limited
Nufarm Costa Rica Inc. SA
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 Europe GmbH
Nufarm Finance BV
Nufarm Finance (NZ) Limited
Nufarm GmbH
Nufarm GmbH & Co KG
Nufarm Grupo Mexico S DE RL DE CV
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 Korea Ltd
Nufarm Labuan Pte Ltd
Nufarm Limited
Nufarm Malaysia Sdn Bhd
Nufarm Materials Limited
Nufarm NZ Limited
Nufarm Pensions General Partner Ltd
Note
Place of
incorporation
Percentage of shares held
2015
2014
USA
USA
Morocco
South Africa
Canada
Zimbabwe
USA
USA
Malaysia
Australia
Bulgaria
Netherlands
Canada
China
Chile
Colombia
United Kingdom
India
Costa Rica
Guatemala
Mexico
Panama
Venezuela
Ecuador
Germany
Brazil
Spain
Germany
Netherlands
New Zealand
Austria
Austria
Mexico
New Zealand
Netherlands
France
Hong Kong
Hungary
USA
Brazil
Singapore
Netherlands
Italy
Japan
Korea
Malaysia
United Kingdom
Malaysia
Australia
New Zealand
United Kingdom
(a)
(a)
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
100
100
100
100
100
–
NUFARM LIMITED ANNUAL REPORT 2015 | 115
NOTES TO THE FINANCIAL STATEMENTS continued
35. Group entities (continued)
Nufarm Pensions Scottish Limited Partnership
Nufarm Peru SAC
Nufarm Platte Pty Ltd
Nufarm Portugal LDA
Nufarm Romania SRL
Nufarm s.a.s
Nufarm SA
Nufarm Services (Singapore) Pte Ltd
Nufarm Services Sdn Bhd
Nufarm Suisse Sarl
Nufarm Technologies (M) Sdn Bhd
Nufarm Technologies USA
Nufarm Technologies USA Pty Ltd
Nufarm Treasury Pty Ltd
Nufarm Turkey Import & Trade of Chemical Products LLP
Nufarm UK Limited
Nufarm Ukraine LLC
Nufarm Uruguay SA
Nufarm USA Inc
Nugrain Pty Ltd
Nuseed Americas Inc
Nuseed Europe Holding Company Ltd
Nuseed Europe Ltd
Nuseed Global Innovation
Nuseed Holding Company
Nuseed Mexico SA De CV
Nuseed Pty Ltd
Nuseed SA
Nuseed Serbia d.o.o.
Nuseed South America Sementes Ltda
Nuseed Ukraine LLC
Nuseed Uruguay
Nutrihealth Grains Pty Ltd
Nutrihealth Pty Ltd
Opti-Crop Systems Pty Ltd
Pharma Pacific Pty Ltd
PT Agrow
PT Crop Care
PT Nufarm Indonesia
Richardson Seeds Ltd
Seeds 2000 Argentina SRL
Selchem Pty Ltd
Societe Des Ecluses la Garenne s.a.s
Note
Place of
incorporation
Percentage of shares held
2015
2014
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(a)
(a)
(a)
United Kingdom
Peru
Australia
Portugal
Romania
France
Argentina
Singapore
Malaysia
Switzerland
Malaysia
New Zealand
Australia
Australia
United Kingdom
United Kingdom
Ukraine
Uruguay
USA
Australia
USA
United Kingdom
United Kingdom
United Kingdom
USA
Mexico
Australia
Argentina
Serbia
Brazil
Ukraine
Uruguay
Australia
Australia
Australia
Australia
Indonesia
Indonesia
Indonesia
USA
Argentina
Australia
France
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
75
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
75
100
100
100
100
100
100
100
100
(a) These entities have entered into a deed of cross guarantee dated 21 June 2006 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.
(b) Formerly known as Atlantica Sementes Ltd.
(c) Formerly known as Minteledan S.A.
116 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
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 director’s reports.
It is a condition of the class order that the company and each of the subsidiaries enter into a deed of cross guarantee. The
parent entity and all the Australian-controlled entities have entered into a deed of cross guarantee dated 21 June 2006,
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 2015
is set out as follows:
Summarised income statement and retained profits
Profit/(loss) before income tax expense
Income tax expense
Net profit attributable to members of the closed group
Retained profits at the beginning of the period
Adjustments for entities entering the deed of cross guarantee
Dividends paid
Retained profits at the end of the period
Balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
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
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Current tax payable
Provision
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
TOTAL EQUITY
Consolidated
2015
$000
2014
$000
(17,961)
(1,689)
(19,650)
37,165
–
(23,788)
(6,273)
(58,855)
4,305
(54,550)
120,659
–
(28,944)
37,165
73,607
582,276
202,553
8,989
867,425
42,724
472,637
169,736
9,766
694,863
19,401
9,111
1,200,606
65,072
114,616
110,911
1,519,717
2,387,142
–
5,793
1,171,314
65,178
122,170
102,288
1,466,743
2,161,606
729,289
5,748
9,626
4,030
3,735
752,428
548,689
–
23,095
1,053
–
572,837
5,150
432,547
13,828
9,003
460,528
1,212,956
1,174,186
22,092
337,506
18,014
10,661
388,273
961,110
1,200,496
1,074,119
106,340
(6,273)
1,174,186
1,068,871
94,460
37,165
1,200,496
NUFARM LIMITED ANNUAL REPORT 2015 | 117
NOTES TO THE FINANCIAL STATEMENTS continued
37. Parent entity disclosures
Result of the parent entity
(Loss)/profit 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 (a)
Total equity
Company
2015
$000
8,866
1,841
10,707
2014
$000
(1,192)
(403)
(1,595)
1,087,435
1,459,583
1,060,681
1,419,961
225,978
224,804
179,549
179,549
1,074,119
41,829
(31,536)
150,367
1,234,779
1,068,871
37,788
(31,536)
165,289
1,240,412
(a) Retained earnings comprises the transfer of net profit for the year and is characterised as profits available for distribution as dividends in future years.
Dividends amounting to $23.788 million (FY14: $21.078 million) were distributed from the retained earnings during the year.
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 guarantees to support several of the regional working capital facilities located in Brazil and Europe, and the senior
unsecured notes.
Parent entity capital commitments for acquisition of property, plant and equipment
There are no capital commitments for the parent entity in 2015 or 2014.
118 | NUFARM LIMITED ANNUAL REPORT 2015
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
Depreciation
Non-cash material items
Inventory write down excluding material items
Gain on disposal of non-current assets and investments
Share of (profits)/losses 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
2015
$000
2014
$000
43,049
37,747
401
34,948
45,260
43,955
6,633
(1,623)
(1,120)
82,329
(73,182)
31,961
(43,149)
169,462
(6,404)
(131,954)
163,258
34,148
59,048
228,510
120
35,076
45,740
33,355
5,693
(53)
(2,208)
80,436
(68,937)
24,104
(45,028)
146,045
(1,375)
169,886
5,727
(52,186)
122,052
268,097
NUFARM LIMITED ANNUAL REPORT 2015 | 119
NOTES TO THE FINANCIAL STATEMENTS continued
39. Related parties
(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
Lotus Agrar GmbH
Purchases from
Trade payable
Sales to
Trade payable
Trade receivable
Sales to
Purchases from
Trade receivable
Trade payable
Sales to
Trade receivable
Trade payable
Consolidated
2015
$000
6,677
4,573
50,756
167
34,767
32,535
110,894
20,843
40,260
20,390
3,590
–
2014
$000
13,837
7,152
48,729
338
36,385
41,665
53,877
17,525
22,507
29,098
6,840
76
These transactions were undertaken on commercial terms and conditions.
(c) 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
2015
$
6,982,311
362,186
689,581
3,265,747
281,275
11,581,100
2014
$
8,722,847
394,716
1,060,374
–
361,460
10,539,397
Individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation is provided in the remuneration report section of the
directors’ report.
120 | NUFARM LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS continued
39. Related parties (continued)
(d) Other key management personnel transactions with the company or its controlled entities
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.
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 arm’s 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.
(e) Loans to key management personnel and their related parties
There were no loans to key management personnel at 31 July 2015 (2014: nil).
40. Auditors’ remuneration
Audit services
KPMG Australia
Audit and review of group financial report
Overseas KPMG firms
Audit and review of group and local financial 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 advisory services
Other services remuneration
41. Subsequent events
Consolidated
2015
2014
498,000
518,000
1,250,000
1,748,000
1,239,000
1,757,000
159,680
1,907,680
198,626
1,955,626
–
–
27,700
–
62,296
159,486
221,782
85,809
525,778
639,287
A final dividend of six cents per share, totalling $15,904,045, was declared on 23 September 2015, and will be paid
on 13 November 2015 (2014: five cents per share, totalling $13,217,663).
NUFARM LIMITED ANNUAL REPORT 2015 | 121
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 2015 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 2015.
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 23rd day of September 2015.
DG McGauchie AO
Director
GA Hunt
Director
122 | NUFARM LIMITED ANNUAL REPORT 2015
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 2015, consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date,
notes 1 to 41 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.
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 2015 | 123
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 2015 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 2015. 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 2015, complies with Section 300A
of the Corporations Act 2001.
KPMG
Gordon Sangster
Partner
Melbourne
23 September 2015
124 | NUFARM LIMITED ANNUAL REPORT 2015
SHAREHOLDER AND STATUTORY INFORMATION
Details of shareholders, shareholdings and top 20 shareholders
Listed securities – 23 September 2015
Fully paid ordinary shares
Number of
holders
8,823
Number
of securities
234,590,534
Percentage held
by top 20
88.50
Twenty largest shareholders
Sumitomo Chemical Company Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Amalgamated Dairies Limited
BNP Paribas Noms Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Challenge Investment Company Limited
Avalon Investments Trust Ltd
Pacific Custodians Pty Limited
Forsyth Barr Custodians Ltd
CS Fourth Nominees Pty Ltd
Douglas Industries Limited
Moturua Properties Ltd
CPU Share Plans Pty Ltd
Mirrabooka Investments Limited
HSBC Custody Nominees (Australia) Limited
Investment Custodial Services Limited
RBC Investor Services Australia Nominees Pty Limited
Distribution of shareholders
Size of holding
1– 1,000
1,001– 5,000
5,001–10,000
10,001–100,000
100,001 and over
Ordinary
shares as
at 23.09.15
60,210,136
47,331,099
36,704,412
27,137,381
20,840,467
14,805,328
6,491,942
4,192,733
3,130,282
2,664,282
1,940,055
1,916,251
1,512,253
1,170,866
964,455
916,800
909,308
722,178
533,684
496,622
Percentage of
issued capital as
at 23.09.15
22.72
17.86
13.85
10.24
7.86
5.59
2.45
1.58
1.18
1.01
0.73
0.72
0.57
0.44
0.36
0.35
0.34
0.27
0.20
0.19
Number of
holders as
at 23.09.15
Ordinary
shares held as
at 23.09.15
4,278
3,461
664
369
51
1,780,000
8,183,188
4,711,456
8,089,523
242,303,257
Of these, 772 shareholders held less than a marketable parcel of shares of $500 worth of shares (65 shares). In accordance with
the ASX Listing Rules, the last sale price of the company’s shares on the ASX on 23 September 2015 was used to determine the
number of shares in a marketable parcel.
NUFARM LIMITED ANNUAL REPORT 2015 | 125
SHAREHOLDER AND STATUTORY INFORMATION continued
Stock exchanges on which securities are listed
Ordinary shares: Australian Stock Exchange Limited.
Substantial shareholders
In accordance with section 671B of the Corporations Act, as at 23 September 2015, the substantial shareholders set out
below have notified the company of their respective relevant interest in voting shares in the company shown adjacent to
their respective names as follows:
Number and percentage of shares in which interest held at date of notice
Ellerston Capital Limited
Dimensional Fund Advisors LP
Sumitomo Chemical Company Limited
Nufarm Limited1
Amalgamated Dairies Limited
The Khyber Pass Investment Co Ltd 2,6
Glade Buildings Ltd3,6
Hauraki Trading Co. Ltd 4
PG Keeling & EW Preston (Oxford Trustees) 5
Date of notice
18 August 2015
23 December 2013
10 June 2011
10 June 2011
31 May 2010
31 May 2010
31 May 2010
31 May 2010
31 May 2010
Number
22,327,025
13,187,894
60,210,136
60,210,136
14,330,798
14,349,658
14,692,730
14,679,639
14,711,590
Interest %
8.42
5
23
23
5.47
5.48
5.61
5.61
5.62
1. Nufarm Limited has a relevant interest in the shares held by Sumitomo Chemical Company. The relevant interest arises under a shareholder deed dated
22 January 2010 between Nufarm and Sumitomo, which contains certain obligations relating to the voting and disposal of shares in Nufarm by Sumitomo.
2. The Khyber Pass Investment Co. Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the
shares held by Amalgamated Dairies Ltd.
3. Glade Building Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares held by
Amalgamated Dairies Ltd.
4. Hauraki Trading Ltd has a relevant interest in Amalgamated Dairies Ltd and, as a result, the number of shares disclosed by it includes the shares held by
Amalgamated Dairies Ltd.
5. Oxford Trustees has a relevant interest in Glade Building Ltd, Khyber Pass Ltd and Amalgamated Dairies Ltd and, as a result, the number of shares disclosed
by it includes the shares held by Glade Building Ltd, Khyber Pass Ltd and Amalgamated Dairies Ltd.
6. On 30 March 2012, Glade Buildings Ltd and the Kyber Pass Investment Co. Ltd amalgamated to become The Kyber Pass Investment Co Ltd. Glade Buildings
Ltd was struck off as a NZ Limited Company.
Voting rights
On a show of hands, every shareholder present in person or represented by a proxy or representative shall have one vote and
on a poll every shareholder who is present in person or represented by a proxy or representative shall have one vote for every
fully paid share held by the shareholder.
126 | NUFARM LIMITED ANNUAL REPORT 2015
SHAREHOLDER AND STATUTORY INFORMATION continued
Shareholder information
Annual general meeting
The annual general meeting of Nufarm Limited will be held on Thursday 3 December 2015 at 10.00am in Bayside Rooms
5 and 6, Level 2, RACV Club, 501 Bourke Street, Melbourne, Victoria. Full details are contained in the notice of meeting
sent to all shareholders.
Voting rights
Shareholders are encouraged to attend the annual general meeting. However, when this is not possible, they are encouraged
to use the form of proxy by which they can express their views. Proxy voting can be completed online via www.nufarm.com/
annualgeneralmeeting or via post by completing the proxy form and sending it back in the return envelope.
Every shareholder, proxy or shareholder’s representative has one vote on a show of hands. In the case of a poll, each share
held by every shareholder, proxy or representative is entitled to:
(a) one vote for each fully paid share; and
(b) voting rights in proportion to the paid up amount of the issue price for partly paid shares.
Stock exchange listing
Nufarm shares are listed under the symbol NUF on the ASX. The securities of the company are traded on the ASX under
CHESS (Clearing House Electronic Sub-register System), which allows settlement of on-market transactions without having
to reply on paper documentation.
Shareholders seeking more information about CHESS should contact their stockbroker or the ASX.
Shareholder details
The Nufarm Limited Share Register is managed by Computershare Investor Services. You can gain access to your shareholding
information in the following ways.
Online via Investor Centre
Details of individual shareholdings can be checked by visiting our share registry’s website at www.investorcentre.com
Existing users can simply log in. New users will need to create a log in. You will need to enter your security reference number
(SRN) or holder identification number (HIN), your postcode or country of residence, enter Nufarm as the company name and
then follow the prompts to complete registration.
By telephone via InvestorPhone:
InvestorPhone provides telephone access 24 hours a day, seven days a week.
Step 1 Call the Nufarm shareholder information line on 1300 652 479 (within Australia) or +61 3 9415 4360 (outside Australia).
Step 2 Follow the prompts to gain secure, immediate access to your:
– holding details
– registration details
– payment information
Shareholder communications
You can choose to receive shareholder communications electronically. Register for this initiative at www.eTree.com.au/nufarm
and a donation of $1 will go to Landcare to support urgent reforestation projects in Australia and New Zealand.
The default for receiving the annual report is now via the company’s website – www.nufarm.com
NUFARM LIMITED ANNUAL REPORT 2015 | 127
SHAREHOLDER AND STATUTORY INFORMATION continued
Shareholder enquires
Contact:
Computershare Investor Services
Yarra Falls, 452 Johnston Street
Abbotsford Victoria 3067
GPO Box 2975
Melbourne Victoria 3001
Telephone:
1300 652 479 (within Australia)
+61 3 9415 4360 (outside Australia)
Email: web.queries@computershare.com.au
Key dates
29 October 2015* Annual report sent to shareholders
3 December 2015 Annual general meeting
22 March 2016*
31 July 2016
Announcement of profit result for half year ending 31 January 2016
End of financial year
* Subject to confirmation.
For enquiries relating to the operations of the company, please contact the Nufarm Corporate Affairs Office on:
Telephone:
Facsimile:
Email:
+61 3 9282 1177
+61 3 9282 1111
corporate.information@au.nufarm.com
Written correspondence should be directed to:
Corporate Affairs Office
Nufarm Limited
PO Box 103
Laverton Victoria 3028 Australia
128 | NUFARM LIMITED ANNUAL REPORT 2015
DIRECTORY
Directors
DG McGauchie AO – Chairman
GA Hunt – Managing director
AB Brennan
GR Davis
FA Ford
Dr WB Goodfellow
PM Margin
T Takasaki
Company secretary
R Heath
Solicitors
Arnold Bloch Leibler & Co
333 Collins Street
Melbourne Victoria 3000 Australia
Auditors
KPMG
147 Collins Street
Melbourne Victoria 3000 Australia
Trustee for Nufarm step-up securities
The Trust Company (Australia) Limited
Level 15, 20 Bond Street
Sydney NSW 2000 Australia
Share registrar
Australia
Computershare Investor Services Pty Ltd
GPO Box 2975EE
Melbourne Victoria 3001 Australia
Telephone: 1300 850 505
Outside Australia: +61 3 9415 4000
Step-up securities registrar
New Zealand
Computershare Registry Services Limited
Private Bag 92119
Auckland 1020 New Zealand
Telephone: +64 9 488 8700
Registered office
103–105 Pipe Road
Laverton North Victoria 3026 Australia
Telephone: +61 3 9282 1000
Facsimile: +61 3 9282 1001
NZ branch office
6 Manu Street
Otahuhu Auckland New Zealand
Telephone: +64 9 270 4157
Facsimile: +64 9 267 8444
Website
nufarm.com
Nufarm Limited
ACN 091 323 312
Design: MDM Investor Connect.
NUFARM LIMITED ANNUAL REPORT 2015 | 129
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103 –105 Pipe Road
Laverton North Victoria 3026 Australia
Telephone +61 3 9282 1000
Facsimile +61 3 9282 1001
nufarm.com