Nufarm Limited Annual Report 2022

Plain-text annual report

N u f a r m L i m i t e d A n n u a l R e p o r t 2 0 2 2 2022 Annual Report Nufarm is a global crop protection and seed technology company established over 100 years ago that helps farmers get more from their land. Contents Financial Year 2022 Overview Chair’s message CEO’s message About us Environmental, Social and Governance Operating and Financial Review Board of Directors Key Management Personnel Corporate Governance Statement Directors’ report Remuneration Report Auditors’ Independence Declaration 1 2 4 6 12 17 32 34 35 51 56 77 Consolidated financial statements for the year ended 30 September 2022 Consolidated statement of profit or loss and other comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the consolidated financial statements Directors’ declaration Independent Audit Report Shareholder and Statutory Information Corporate Information 79 80 82 83 84 86 144 145 151 IBC About this Report This Annual Report is a summary of the operations, activities and performance of Nufarm Limited (ABN 37 091 323 312) and its controlled entities for the year ended 30 September 2022 and its financial position as at 30 September 2022. In this Report, unless otherwise stated, references to Nufarm, the Nufarm Group, the group, we, us and our and similar expressions refer collectively to, Nufarm Limited and its controlled entities. Unless otherwise stated, financial information in this report is presented on the basis as described in the Notes to the Financial Statements basis of preparation on page 86. Nufarm Limited shares trade on the ASX under the listing code of NUF. Monetary amounts in this document are reported in Australian dollars, unless otherwise stated. Forward looking statements and scenario analysis This Report contains forward-looking statements, including our expected business strategies, business performance and market conditions including with respect to climate change and other environmental and energy transition scenarios. While these forward looking statements reflect Nufarm’s current knowledge, expectations and assumptions at the date of this Report, they are not guarantees or predications of future performance or statements of fact and Nufarm does not give any assurance that the assumptions will prove to be correct. They involve known and unknown risks and uncertainties, which may cause actual outcomes and developments to differ materially from those expressed in the statements contained in this Annual Report. Relevant factors may include (without limitation) changes in product demand, the timing and success of new product launches, decisions by regulatory authorities regarding approval and ongoing registration of Nufarm products, operational changes, difficulties or delays in manufacturing, third party supply interruptions, weather volatility, cyberattack/unauthorised access, the loss of key personnel, safety incidents, environmental damage, product contamination and quality, compliance breaches, litigation or government investigations, global economic and geo-political uncertainty and conflict including in Russia and the Ukraine, energy security and inflation including increases in costs of goods, and the effect of economic conditions generally. Further information about Nufarm’s risks are set out on pages 25 to 31 of this Annual Report. This Report also contains scenario analysis related to potential climate impacts. Scenario analysis has inherent limitations, including its reliance on assumptions that may or may not prove to be correct or eventuate, and may be impacted by factors apart from the assumptions disclosed. It is difficult to predict which (if any) of the scenarios might eventuate. Nufarm cautions readers against undue reliance on any forward- looking statements or guidance, particularly in light of the current economic climate with the significant volatility, uncertainty and disruption caused by global events such as geopolitical tensions and the ongoing COVID-19 pandemic and the inherent uncertainty in possible policy, market and technological developments in the future. Except as required by applicable laws or regulations, Nufarm does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. 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 Nufarm’s business, make decisions on the allocation of its resources and assess operational management. Non-IFRS measures have not been subject to audit or review. Notes explaining underlying EBIT and underlying EBITDA can be found on page 23 of this Annual Report. Nufarm Limited ABN 37 091 323 312 Nufarm is a global crop protection and seed technology company established over 100 years ago that helps farmers get more from their land. Contents Financial Year 2022 Overview Chair’s message CEO’s message About us Environmental, Social and Governance Operating and Financial Review Board of Directors Key Management Personnel Corporate Governance Statement Directors’ report Remuneration Report Auditors’ Independence Declaration 1 2 4 6 12 17 32 34 35 51 56 77 Consolidated financial statements for the year ended 30 September 2022 Consolidated statement of profit or loss and other comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the consolidated financial statements Directors’ declaration Independent Audit Report Shareholder and Statutory Information Corporate Information 79 80 82 83 84 86 144 145 151 IBC About this Report This Annual Report is a summary of the operations, activities and performance of Nufarm Limited (ABN 37 091 323 312) and its controlled entities for the year ended 30 September 2022 and its ﬁ nancial position as at 30 September 2022. In this Report, unless otherwise stated, references to Nufarm, the Nufarm Group, the group, we, us and our and similar expressions refer collectively to, Nufarm Limited and its controlled entities. Unless otherwise stated, ﬁ nancial information in this report is presented on the basis as described in the Notes to the Financial Statements basis of preparation on page 86. Nufarm Limited shares trade on the ASX under the listing code of NUF. Monetary amounts in this document are reported in Australian dollars, unless otherwise stated. Forward looking statements and scenario analysis This Report contains forward-looking statements, including our expected business strategies, business performance and market conditions including with respect to climate change and other environmental and energy transition scenarios. While these forward looking statements reﬂ ect Nufarm’s current knowledge, expectations and assumptions at the date of this Report, they are not guarantees or predications of future performance or statements of fact and Nufarm does not give any assurance that the assumptions will prove to be correct. They involve known and unknown risks and uncertainties, which may cause actual outcomes and developments to differ materially from those expressed in the statements contained in this Annual Report. Relevant factors may include (without limitation) changes in product demand, the timing and success of new product launches, decisions by regulatory authorities regarding approval and ongoing registration of Nufarm products, operational changes, difﬁ culties or delays in manufacturing, third party supply interruptions, weather volatility, cyberattack/unauthorised access, the loss of key personnel, safety incidents, environmental damage, product contamination and quality, compliance breaches, litigation or government investigations, global economic and geo-political uncertainty and conﬂ ict including in Russia and the Ukraine, energy security and inﬂ ation including increases in costs of goods, and the effect of economic conditions generally. Further information about Nufarm’s risks are set out on pages 25 to 31 of this Annual Report. This Report also contains scenario analysis related to potential climate impacts. Scenario analysis has inherent limitations, including its reliance on assumptions that may or may not prove to be correct or eventuate, and may be impacted by factors apart from the assumptions disclosed. It is difﬁ cult to predict which (if any) of the scenarios might eventuate. Nufarm cautions readers against undue reliance on any forward- looking statements or guidance, particularly in light of the current economic climate with the signiﬁ cant volatility, uncertainty and disruption caused by global events such as geopolitical tensions and the ongoing COVID-19 pandemic and the inherent uncertainty in possible policy, market and technological developments in the future. Except as required by applicable laws or regulations, Nufarm does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. IFRS and Non-IFRS fi nancial 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 proﬁ t after tax and gross proﬁ t margin. These measures are used internally by management to assess the performance of Nufarm’s business, make decisions on the allocation of its resources and assess operational management. Non-IFRS measures have not been subject to audit or review. Notes explaining underlying EBIT and underlying EBITDA can be found on page 23 of this Annual Report. Financial Year 2022 Overview Successfully navigating a challenging macro environment – revenue and earnings growth across all geographies. Continue to strive towards our zero- injury goal Revenue growth across all operating segments Record underlying EBITDA Safety (Lost time injury frequency rate per 1,000,000 hours worked) 9 0 . 8 . 0 Revenue (A$m) Underlying EBITDA (A$m) 3 7 7 , 3 6 1 2 3 , 7 4 4 1 6 3 FY21 FY22 FY21 FY22 FY21 FY22 Strong operating cash flow generation Strong growth in underlying profit Strong earnings performance and cash flow generation supports increased dividend for shareholders Total net operating cash flow (A$m) Underlying net profit after tax (A$m) Dividends per share (cps) 4 2 4 0 6 3 3 3 1 0 1 1 6 4 FY21 FY22 FY21 FY22 FY21 FY22 Nufarm Limited ABN 37 091 323 312 1 Nufarm Limited | Annual Report 2022Chair’s message Over the past year, Nufarm has taken strong strides in establishing itself as a global agricultural innovator with exciting technologies and a promising growth pipeline Record1 earnings result with growth across all segments Nufarm performed strongly in 2022, with record revenue and earnings and pleasing growth in all our business segments. While we benefited from good seasonal conditions in most regions, the result reflects our strategy to focus on growth and performance. Diversity across geographies and core crops helped our crop protection business perform very well. Our seeds business is building momentum with an increased revenue contribution and expansion into new, sustainable technologies providing a platform for accelerated growth. The significant uplift in performance enabled the board to declare an unfranked final dividend of 6 cents per share, taking the total dividend for the year to 10 cents per share. Our balance sheet has been further strengthened with major refinancing activities completed. Nufarm now has a flexible and durable capital structure that supports growth and provides greater financial resilience across operating cycles. Strategic focus on innovation and technology Agriculture faces major global forces that present significant opportunities for Nufarm. The world needs to feed a growing global population that is nearing 10 billion people, and that must be done in more sustainable ways. At the same time, plant-based solutions that aim to address to meet clean energy and other needs are arising. Nufarm is positioning itself at the centre of these changes, and the opportunity is significant. We see ourselves now as an agricultural innovator, where technology and innovation will play a greater role in driving the future of our business. Our activities in this area all progressed strongly during the year, including expansions of our biopesticides, omega 3, biofuel and bio energy platforms. Unique synergies from our combined crop protection and seeds market presence will enhance and help accelerate these growth initiatives. Thanks to our people The safety of our people is a core priority for the board and management. The Ukraine war, the lingering effects of COVID-19 and other external factors mean we continue to face supply chain and logistic challenges across the globe. The Nufarm team has very diligently managed all these challenges, ensuring we meet customers’ ongoing needs and deliver on our promises. On behalf of the board, I would like to thank all our people, led by Greg and his executive team, for their dedication and commitment to Nufarm. Our commitment to sustainability At Nufarm, we contribute to a sustainable society by helping farmers get the best from their land and developing innovative plant-based solutions to meet clean energy and other needs. We actively seek ways to minimise our footprint and deliver more sustainable solutions. To demonstrate our commitment to sustainable agricultural and production processes and continue to drive improvement through our business, we aligned to the United Nations Sustainable Development Goals (UN SDGs), which set the global sustainability ambition for 2030. We continue to progress our ambition to transparently report our sustainability approach and performance, aligning to the Global Reporting Initiative (GRI) Standards. We also formalised our commitment by becoming a Task Force for Climate-Related Disclosures (TCFD) supporter during FY21 and have expanded our disclosures in line with the TCFD framework. 1. On a reported basis for a 12 month period. Record earnings refers to uEBITDA. 2 Nufarm Limited | Annual Report 2022Our seed technology business, Nuseed, is developing crops that positively impact global issues while providing new economic opportunities for farming communities. The outlook for these activities is very exciting. I encourage you to read the sustainability section in this Annual Report and our detailed Sustainability Report which will be available on the Nufarm.com website in early 2023. We welcome feedback on our approach. Board renewal Our board renewal program continued during FY22 to ensure a diverse mix of skills, experience and tenure that is aligned with the future of our business. Frank Ford retired from the board in December 2021, having been a non-executive director for nine years and chair of the audit committee for eight years. The board benefited from Mr Ford’s sage advice and guidance, particularly in strategy and tax matters. Mr Toshikazu Takasaki resigned as a non-independent non- executive director in May 2022. Mr Takasaki joined the board in December 2012, representing the interests of Sumitomo Chemical Company Limited. He was a valued member for nearly 10 years and we express our gratitude for his contribution. In September 2022 we were delighted to announce the appointment of Ms Alexandra Gartmann as a non-executive director. Ms Gartmann has extensive executive experience across rural organisations and agribusiness, as well as strong ESG expertise and a passion for regional and rural affairs. The future is positive Substantial progress has been made in FY22 advancing Nufarm’s long-term growth agenda. As such, we look to FY23 and beyond with confidence. Nufarm’s crop protection and seeds businesses are positioned to perform well through a raft of growth initiatives and a continued focus on disciplined operational performance. On behalf of the board, I would again like to thank all our people for their unwavering dedication and commitment. We recognise the challenges they face and their efforts in ensuring our customers’ needs are met and greatly appreciated. And to all of our shareholders, thank you for your ongoing support of Nufarm. John Gillam Chair 3 Nufarm Limited | Annual Report 2022CEO’s message 2022 was an excellent year for Nufarm. We delivered record revenue and underlying earnings and made substantial progress on our growth initiatives. Record results In 2022, Nufarm generated record revenue of $3.8 billion, up 17 per cent on the prior comparative period (pcp), and record underlying EBITDA of $447 million, up 24 per cent on pcp. While we benefited from attractive soft commodity prices and increased demand and product pricing, the results reflect our ability to advance new products, navigate global supply chain challenges and meet key strategic milestones. The results validate our transformation program, our strategy to focus on core crops and key geographies, and our recent investments in supply chain efficiencies and portfolio development. The business continues to generate strong free cashflows and our balance sheet has been further strengthened. Growth in all regions and in seeds Our operating segments achieved excellent revenue growth during the year. North America delivered strong revenue and underlying earnings growth, up 16 per cent and 35 per cent respectively. The result reflects our investments in supply chain and domestic manufacturing capability. Our on-ground presence is helping to strengthen customer relationships, while new product introductions and an improved product mix are supporting margin expansion. Europe delivered strong revenue growth, up 15 per cent. A reduction in revenue from products deregistered during the year was offset by the introduction of new products and organic growth. Operations were impacted by interruptions to raw material supply, logistics and manufacturing challenges. We plan to address these issues through our capital expenditure program over the next three years. APAC enjoyed another excellent year. Higher revenues, improved margins and lower costs delivered a 21 per cent increase in underlying EBITDA. The result reflects the benefits flowing from our manufacturing footprint rationalisation, performance improvement initiatives and higher margin product launches. Seed technologies continued to accelerate, with revenue and earnings up by 23 per cent and 26 per cent respectively, reflecting the strong demand for sorghum, sunflower and canola seeds in multiple markets. Progressing our long-term growth agenda We continued to progress on our long-term growth agenda, expanding our Omega-3 Canola, biofuel and bio-energy platforms. We have now produced and sold 16,500 metric tonnes of Aquaterra® oil to salmon farmers in Chile. The first sale of Nutriterra® into the human supplement market is on track for late 2022, another important milestone for this technology. This year we entered a strategic 10-year offtake agreement with bp for our Nuseed Carinata. We increased the area planted to more than 35,000 hectares in Argentina and Uruguay, and we recently expanded the program into the northern hemisphere, planting 6,000 hectares in southern USA. In September, we announced a US$25 million acquisition of energy cane assets from GranBio group, a leading Brazilian industrial biotechnology group, to accelerate the development and global expansion of energy cane. These developments reflect a new direction for Nufarm. We have repositioned the company and now direct ourselves increasingly towards agricultural innovation, believing novel technology will play a greater role in driving the future growth of our business. 4 Nufarm Limited | Annual Report 2022Macro trends support our revenue aspirations Recognising our stakeholders At a macro level the drivers for our business remain very positive. Global food demand is set to rise significantly to match global population growth, while there is increasing pressure to produce food more sustainably. Advances in science and technology are rewriting the way we can use land and plants to supply not just food, but energy and other new products. Nufarm understands this potential, is engaged with it and is at the forefront with practical new product offers. Our key stakeholders deserve recognition in what has been another year of challenges as well as opportunities. Our customers sit at the core of our operations. In 2022 we have been grateful for their ongoing support and loyalty. They recognise Nufarm for its range of products, competitive pricing, efficient supply, and after sales support; in return we stand by them as we meet their needs and help them GROW A BETTER TOMORROW®. Our approach is to remain agile and nimble. Our strategy of collaborating with third party research companies, institutions and universities provides access to new technologies without having to invest significant capital in early-stage research and discovery. We are extremely grateful for the dedication shown by our people in delivering outstanding outcomes for our customers. Their continuing determination and flexibility in a challenging global environment are truly inspiring and reflect our Nufarm brand and our customer promise. On behalf of the management team, I would also like to thank the board for their ongoing support and guidance. And finally, to our shareholders, thank you for your support and shared belief in the future of Nufarm. Greg Hunt Along with seed technologies, which we expect will contribute significant revenues by 2026 and beyond, we are also partnering for growth through innovation in crop protection. An example of the technologies that will contribute to this growth is Actinobacteria, developed in partnership with the CSIRO. It is a biological fungicide to control sclerotinia in canola, which has a $300 million market. We have also invested in and are collaborating with a German ag-tech start up, crop.zone, developing a technology that works by pre-treating plants with a conductive liquid and then applying an electric charge to control the weeds. The crop protection market is expected to grow to around USD $68 billion by 2025, and our strong product development pipeline, with more than 200 projects, will enable us to take an increasing share of this growing market. Seed technologies provide multiple promising growth platforms, with the biofuels, bioenergy and omega-3 platforms expected to contribute significant revenues to the group from 2026. We remain on track to meet or exceed our annual revenue aspirations of $4.4–$4.6 billion by 2026, with crop protection delivering $3.7–$3.8 billion and seed technologies delivering $600–$700 million. 5 Nufarm Limited | Annual Report 2022About us Our purpose and ambition Nufarm is a global crop protection and seed technology company that has been helping growers fight disease, weeds and pests for more than 100 years. We do this by developing innovative crop protection solutions and BEYOND YIELDTM seed technologies. Our purpose is to help our customers GROW A BETTER TOMORROW®. Our ambition is to grow our relevance by delivering more sustainable solutions over more acres every year. We develop, manufacture and sell crop protection solutions including herbicides, insecticides and fungicides that help growers protect crops against weeds, pests and disease. We operate primarily in the off-patent market, providing customers with long-standing foundational products and unique formulations. Our business is focused on five core crops across key geographies (Europe, Middle East & Africa; North America; and Asia Pacific). The crops we focus on are cereals; corn; soybean; pasture, turf and ornamentals (T&O); and trees, nuts, vines and vegetables (TNVV). Crop protection Seed technologies combines our seed treatment portfolio and the Nuseed business. Our seed treatment products provide protection and treatment for damage caused by insects, fungus and disease. Nuseed's Value BEYOND YIELD® strategy focuses on providing sustainable plant-based solutions to address global issues and provide new social and economic opportunities for farm and end-use customers. Seed technologies FY22 Revenue* FY22 Underlying EBITDA* APAC Europe North America 29% 25% 38% Seed Technologies Global 8% APAC Europe North America 26% 34% 29% Seed Technologies Global 11% * Excluding non-operating corporate 6 Nufarm Limited | Annual Report 2022Our strategy, operating model and value proposition Our crop protection strategy focuses on five core crops (corn; soybean; cereals; pasture, turf and ornamentals; trees, nuts, vines and vegetables) in three key regions (North America, Europe and Asia Pacific). Alsip and Chicago Heights USA Saskatoon Canada Breckenridge USA Sacramento California USA Greenville Mississippi USA Manufacturing facilities Regional HQ Seed Innovation centre Seed R&D Procurement Hub Gaillon France Dusseldorf Germany Cairo Egypt Wyke UK Linz Austria Atar Serbia Shanghai China Vega USA Curitiba Brazil Venado Tuerto Argentina Kwinana Australia Kuala Lumpur Malaysia Merak Indonesia Horsham Australia Laverton Australia Melbourne Australia Soybean Corn Cereals Trees, nuts, vines and vegetables Pasture, turf and ornamentals Our scale and global distribution footprint make us an attractive partner for major manufacturers and research organisations. By collaborating with these industry partners, we are able to offer our customers high-quality products at competitive prices and a growing range of new, differentiated products to meet more of their needs across the crop lifecycle. We believe our products and geographic diversity, along with our long-term customer relationships, help protect our business from adverse seasonal or commercial pressures in any one market while also providing a range of expansion opportunities in major cropping markets around the world. 7 Nufarm Limited | Annual Report 2022About us continued Our operating model puts the customer at the centre of our business and decision making and provides a foundation for future growth. Our Operating Model puts the customer at the centre Delivering value to our growers, our channel and to Nufarm. We recognise the value that our channel brings to delivering our solutions to our customers. Our commercial teams are committed to ensuring that we excel at realising the value of our solutions and growing our business for us and our partners. o m C r c ial Excell e e m n Channel partnerships and commercial excellence c e A relevant portfolio of foundational, differentiated and innovative products backed by technical support and advice. Our Portfolio team is both globally coordinated, to benefit from our One Nufarm approach, and locally focused, to ensure that we can identify and develop relevant solutions to meet the needs of our customers. Customer Customer Experience Experience Relevant portfolio with technical support R e l e v ant Por t f o li o Quality products at competitive costs p ply Reliab l e u S Supply of quality products at competitive costs. We focus on improving the cost position, reliability and the quality across our product range with coordinated supply planning to meet customers’ demands. Our global footprint means our supply team have optimised procurement practices and efficient and effective manufacturing. We have a logistics network that helps the team deliver on time and in full. Our Value Proposition is to be a partner for growth Being a partner for growth means understanding what our partners need and working to grow our businesses together, backed by an essential and relevant portfolio of products. Easy To Do Business With Relevant Portfolio Technical Support & Advice Quality Products Competitively Supplied Priced Reliably 8 Nufarm Limited | Annual Report 2022Our seed technology business Seed technologies combines our seed treatment portfolio and the Nuseed business. Our seed treatment products provide protection and treatment for damage caused by insects, fungus and disease. Nuseed's Value BEYOND YIELD® strategy focuses on providing sustainable plant-based solutions to address global issues and provide new social and economic opportunities for farm and end-use customers. Nuseed Carinata is a non-food cover crop contract grown between main crop rotations to regenerate soil and produce certified sustainable low carbon renewable oil feedstock without the use of additional land. Nuseed Carinata Oil is independently certified by the Roundtable on Sustainable Biomaterials (RSB) as a sustainable feedstock. Aquaterra® is the world’s first land-based source of long-chain omega-3 fatty acids. A complement to fish nutrition, providing docosahexaenoic acid (DHA), eicosapentaenoic acid (EPA) and alpha-linolenic acid (ALA), Aquaterra delivers enhanced production performance by elevating the omega-3 levels needed for higher-quality nutritious fish. Nutriterra® is the world's first source of plant-based total omega-3 nutrition. More than 80 per cent of the population is deficient in this essential nutrient.1 Clinical studies show excellent bioavailability and efficacy.2 FDA recognises Nutriterra as a New Dietary Ingredient. Friend of the Sea certified, Nutriterra offers a sustainable alternative to marine-based nutrition. 1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7508802/#:~:text=It%20has%20been%20estimated%20that,and%20DHA%20is%20oily%20fish. 2. https://goedomega3.com/ 9 Nufarm Limited | Annual Report 2022About us continued Our History For 100 years our focus has been on the customer. This will continue to be our focus for the next 100. 1916 1957 1970s 1988 New Zealand Farmers Federation (NZFF) began with a few people delivering quality products to help farmers grow better crops. Nufarm Australia established by Max Fremder, providing solutions for farmers in Australia. Nufarm forges a reputation for service and product quality, and moves to headquarters in Melbourne. Nufarm and NZFF unite and starts a period of increased growth while always focusing on the customer. 1999 1994-98 1991-92 1988-89 Nufarm acquires one of its customers, Riverdale Chemical Company, to become Nufarm Americas. Nufarm expands into Europe, acquiring businesses that strengthen our core and diversify to meet customer demand. Nufarm expands into Asia, opening offices in Singapore and Malaysia. Exports to America start in earnest and Nufarm USA is incorporated in 1989. 2004 2006 2015 2022 Nufarm today Expansion into South America. Now over 3,000 people are part of Nufarm. The Nufarm seeds business, Nuseed, is established providing hybrid crops that create value for the farmer. Refreshed strategy to ensure that we focus on key crops in key geographical areas that meet customers’ needs. Nufarm delivers record revenue and earnings, despite global challenges. Nufarm is positioned for growth as an Agricultural Innovator, where technology and innovation will play a greater role in driving the future of our business. 10 Nufarm Limited | Annual Report 2022Our culture, values and behaviours At Nufarm, the safety of our people, our products, our customers and the community is foremost in all that we do. We believe all incidents can be prevented and that we are all responsible for making sure everyone who works at, or visits our sites, goes home safely. Our actions are anchored by our RARE values and guided by our One Nufarm behaviours. Our employees are encouraged to unearth the possibilities, every day. We aim to provide an inclusive work environment where individuals are valued for their diversity and empowered to reach their full potential. This is a reference to our high performing culture and also reflects the three principles of our employee value proposition – own your growth, stay curious and come as you are. RResponsibility We are accountable for our decisions and our actions. We recognise that trust is at the foundation of relationships and that acting ethically, safely and responsibly creates that trust. AAgility RRespect We are resourceful and adaptable in meeting the needs of our customers and our organisation. We respect others – colleagues, customers and stakeholders – and our environment. We care for all of our resources. EEmpowerment We are an innovative, entrepreneurial organisation where individuals and teams can do what is best for the customer, the organisation and our stakeholders. 11 Nufarm Limited | Annual Report 2022Environmental, Social and Governance The world is facing more and more challenges to solve, as our growing population increasingly impacts our climate, finite resources, and vulnerable ecosystem. With the global population expected to reach 9.7 billion by 2050, our land must work harder than ever before, providing resources, food and homes for an additional 1.7 billion people while maintaining habitats for the planet’s rich biodiversity. Nufarm is also evolving and is better placed than ever to respond to these and other sustainability challenges. Nufarm’s solutions improve crop efficiency, vitality, and yield, helping farmers to produce more, and feed more people from the same amount of land. How we grow our food is just as important as how much we grow. Nufarm is developing solutions that improve the health of soil, are efficient with precious water resources, and minimise harm to ecosystems. We are also working to find solutions that help our customers respond to climate change. We conduct our business with integrity We are committed to conducting our affairs honestly, responsibly, and ethically. Our code of conduct brings our values to life, setting out behavioural expectations to guide our people in their actions and decision making. Our board-approved policies set the scope of our environmental, social and governance (ESG) ambitions and expectations, such as human rights, anti-bribery and anti-corruption, climate change and health, safety and environment and are available on our website. Our executive risk and compliance committee is charged with overseeing, directing and supporting Nufarm’s risk and compliance frameworks, with responsibilities extending to health, safety and ESG. The committee reports and makes recommendations on key business risks to the board risk and compliance committee. In last year's Annual Report we communicated our adoption of the United Nations’ sustainable development goals (UN SDGs), demonstrating our commitment to sustainable agricultural and production processes. We publish an annual modern slavery statement in accordance with Australian and UK Modern Slavery Acts and seek to identify and minimise the risk of modern slavery in our supply chain and operations. Full details of our governance frameworks are in the corporate governance section of this report. 12 Nufarm Limited | Annual Report 2022We innovate for a more sustainable future We enable food security and nutrition Our customers are at the heart of everything we do, and we thrive on finding new and innovative ways to help them create a more sustainable and healthy future. As a ‘Partner for Growth’, we collaborate with leading edge research and development organisations to develop solutions and expedite their time to market. Our partnership with CROP.ZONE® has seen the development of NUCROP – Hybrid Electric Crop Protection™, that combines a conductive liquid called VOLT.FUEL®1 with electro-physical weeding. This technology is an alternative solution to chemical- based weed control and crop desiccation, reducing the chemical load on the environment. NUCROP has proven to be very successful at desiccating potato crops without impacting the vegetable quality or leaving chemical residues. Following field trials, commercial sales of the technology have now commenced in Europe, and we are currently developing more applications for the technology. We have been collaborating with the University of Liverpool to further optimise the efficiency of food production through the development of microparticle technology. Focusing on our important phenoxy products, this technology aims to allow lower doses of chemical to be applied to a crop while maintaining the same level of efficacy, delivering resource efficiencies and reducing the chemical load on the environment. We are currently undertaking field trials in Europe. You can find out more about these and some of our other innovations at https://www.nufarmpartnerforgrowth.com/ These new technologies light the path to crop protection of the future, but it is equally important to meet the food and nutrition demands of the 8 billion people living on the planet now. Nufarm helps growers operate effective and efficient farms in a sustainable way with its synthetic crop protection chemistry and ag technology. Crop protection is an essential part of modern agriculture, protecting crops from the time the seed is first planted through to harvesting. Pests, weeds and diseases threaten every food crop; crop protection products improve food quality and quantity. Using crop protection products helps growers increase their crop yields. While crop protection products are doing much to support food security, we strive to do more. We are continuously refining our existing technologies and investing in new developments to help farmers get more from their land. Through our successful collaboration with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Grains Research and Development (GRDC) in Australia, we developed Nuseed Omega-3 Canola the first land-based source of total omega-3, where just one to two acres of the crop can produce as much DHA as 10,000 kilograms of wild caught fish2. Our omega-3 products Nutriterra® and Aquaterra® are both certified as a Friend of the Sea®, delivering health benefits while helping to preserve our precious marine resources. Aquaterra® is already in use within the aquaculture industry, successfully replacing wild caught fish as a source of omega-3 oil. Independent studies completed this year show that Aquaterra®3 increases total omega-3 in salmon fillets and improves fillet quality. In our financial year ending September 2021 (FY21), the US Food and Drug Administration (FDA) recognised Nutriterra® Total Omega-3 as a new dietary ingredient. This year, based on independent assessment, it affirmed Nuseed Omega-3 Canola and Nutriterra ‘Generally Regarded as Safe’ (GRAS)4. Nutriterra is on track to be launched as a human health supplement input by the end of 2022. Through our new technologies and current portfolio we are contributing to UN SDG 2, Zero hunger, by supporting food security, improved nutrition and sustainable agricultural practices and to UN SDG 14, Life below water, helping to conserve and sustainably use the oceans, seas and marine resources for sustainable development. We improve environmental outcomes As an operator of manufacturing facilities, Nufarm is required to adhere to strict environmental regulations and licence conditions. We actively seek opportunities to prevent or minimise our impacts on the environment, taking a risk-based approach to environmental management and setting ourselves environmental improvement targets. The quality standards we have set for our products means we have wastewater that has to be incinerated at most of our locations. Last year we set a target to reduce hazardous waste by 20 per cent by 2025, using FY20’s waste as a baseline for our target. Our Chicago Heights site in the USA is our largest hazardous waste producer and we are focusing our initial efforts there to establish a waste treatment plant in 2023. 1. CROP.ZONE and VOLT.FUEL are third party registered trade marks. 2. https://blog.csiro.au/omega-omega-3-canola-gets-green-light/ 3. https://www.globalseafood.org/advocate/aquaterras-canola-oil-improves-salmon-fillet-quality-in-nofima-trials/ 4. https://www.fda.gov/media/157176/download 13 Nufarm Limited | Annual Report 2022Environmental, Social and Governance continued We set a target to reduce our volatile organic compound (VOC) emissions to air by 25 per cent by 2025 last year. We are well progressed with the design of air emissions controls for our facility in Linz, Austria. We also have a target to certify ten of our eleven crop protection manufacturing facilities to ISO14001 by 2025, with five sites already certified to this standard. These targets provide assurance of ongoing environmental compliance and risk management, and help us contribute to UN SDG 12, Responsible Consumption, and Production. Protecting biodiversity and minimising harm to non-target species is a key element of the crop protection development and registration process. Ecological risk assessments are carried out as a part of this process and products cannot be released to market without jurisdictional regulatory approval. The science of crop protection is continuing to evolve. Farmers are now applying 95 per cent less pesticide per hectare to achieve the same level of pest control compared with 40 years ago.1 We are bringing new products to market that are specially designed to have a lower environmental impact, from our range of biorational products, such as biological fungicides, Botector®2 and INTERVENE®, to our 2,4-D DROPZONE® technology with its improved drift profile. This year Nufarm increased our investment in Enko, an organisation that discovers and develops novel crop protection products. Enko's approach involves identifying new crop protection substances using DNA-encoded libraries, artificial intelligence, structure-based design, and machine learning that aims to find and select the right treatment for the right targets, faster and more effectively. It also aims to screen out any substances that may cause harm to non-target species, eliminating potentially harmful crop protection solutions, before they reach the development or field trial stage. Reducing the environmental load of our products the potential effects on the environment helps contribute to the ambitions of UN SDG 15, Life on the land. We respond to climate change The connection between nature and food systems means that climate change presents both risks and opportunities for Nufarm. Sustainable agriculture helps mitigate climate change in many ways: by increasing land productivity and yields, limiting further land clearing, growing renewable sources of fuel and materials, protecting soil against erosion and water loss, and growing crops to sequester more carbon. Nufarm is committed to playing its part in addressing climate change by providing solutions to help our growers reduce the effects on their farms. By doing so, we’re contributing to UN SDG 13, Climate action. This year we strengthened our bioenergy platform, entering a long-term strategic alliance with GranBio and acquiring GranBio’s energy cane breeding and commercial assets and research and development program. Energy cane is sugar cane that has the potential to be more productive in the manufacture of biofuel, biochemicals and renewable energy generation. Energy cane can be used in the production of cellulosic ethanol, also called second-generation (2G) ethanol. This is a developed and growing industry in Brazil and other regions of the world. Energy cane feedstock has the potential to help decarbonise hydrocarbons for applications such as biochemicals and sustainable aviation fuel (SAF). There are potential opportunities for this crop through regions of Latin America, southern USA, African, Asia and Australia. In February this year we entered a strategic, 10-year offtake and market development agreement with BP Products North America Inc. for the sale of Nuseed Carinata Oil. This product is grown as a non-food cover crop and enables growers to increase the productivity and health of their land. The harvested seed produces a low carbon renewable oil feedstock and has been listed by the International Civil Aviation Organisation (ICAO) as a feedstock for SAF. The offtake agreement enables us to accelerate the expansion of Nuseed Carinata production. 1. Phillips McDougall (2019) Evolution of the Crop Protection Industry since 1960 2. Botector® is a third-party registered trademark. 14 Nufarm Limited | Annual Report 2022Our crop protection products also seek to help our customers reduce their climate impacts and mitigate climate risk. They facilitate conservation farming practices, such as no-till farming, which reduces on-farm fuel consumption by up to 60 per cent, contributes to carbon sequestration, retains soil moisture, and reduces erosion1. They also improve farms’ resilience to low water and drought conditions in the future. We continue to progress our emissions reduction journey. Last year we set a target for an absolute reduction in scope 1 and 2 emissions from our manufacturing sites by 30 per cent by 2030, using FY20 as our emissions baseline. To achieve this target, we are focusing on Pipe Road in Australia first, which accounts for more than half our global manufacturing emissions. We anticipate establishing a power purchase agreement to supply the site’s electricity and using the large-scale generation certificates (LGCs) generated by this renewable energy project to off-set the scope 2 emissions at this site. Our next largest emitting site is Wyke in the UK. Pipe Road and Wyke combined account for more than 80 per cent of our global manufacturing emissions. Looking to 2030 and beyond, Wyke is our next opportunity for emissions reduction. This year we completed a decarbonisation strategy for the site to help map out an emissions reduction pathway. We identified that it is not economical to transition to currently available renewable fuel and technology but anticipate this situation will change in late 2020’s or early 2030’s. The project identified some energy efficiency and electrification opportunities that we will endeavor to pursue over the next few years to contribute to our emissions reduction target while we continue to investigate alternative means to accelerate our emissions reduction. We are pleased to have had another successful year enabling sustainable agriculture for our customers while reducing our emissions footprint. Since FY20, our greenhouse gas emissions have reduced due to the efficiencies gained from our manufacturing rationalisation, increased renewable energy supplied to our sites and production variability as shown in the chart below. In our FY21 annual sustainability report we made a commitment to disclose climate-related risks and opportunities in alignment with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD). This year, we worked towards implementing the recommendations through several key actions relating to governance, strategy, and risk management and metrics and targets. The first phase of this work was undertaken through partnering with an experienced service provider to conduct a qualitative climate-related risk and opportunity assessment completed over Nufarm’s value chain. In future, we will continue to analyse and quantify the priority risks that have emerged from our risk assessment. Our climate change risks and opportunities are summarised in the key risks section of the operational and financial review in this Report. Further climate change disclosures are in our FY22 sustainability report, which will be available in early 2023. Scope 1 and 2 greenhouse gas emissions (tonne CO2e) from our manufacturing sites 100,000 80,000 60,000 40,000 20,000 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1. https://www.croplife.org.au/wp-content/uploads/2021/03/The-Official-Australian-Reference-Guide-to-Pesticides.pdf 15 Nufarm Limited | Annual Report 2022Environmental, Social and Governance continued We value inclusion and diversity Nufarm values diversity. It fuels innovative thinking and decision making and to continue to grow and solve for the sustainability challenges of the future, we need diverse perspectives and experiences and an inclusive work environment where everyone can bring their whole self to work. This year we implemented the first phase of our 2022-2025 inclusion and diversity strategy. Increasing gender diversity is an important element of our strategy so we are working to improve gender representation and focusing on attracting, recruiting and promoting female talent. Last year we set a target of no less than 35 per cent of either gender in our workforce by 2025. This year we increased female representation from 26 per cent in FY21 to 27 per cent. Female representation is also improving at the board and leadership levels. We also set a new target of 40:40:20 in our senior leadership team by 2030: 40 per cent who identify as female, 40 per cent who identify as male and 20 per cent who identify as female, male, or other. To solidify our commitment to gender diversity and equality, we adopted UN SDG 5 Gender Equality, adding our voice to the global cry to empower all women and girls and achieve gender equality. More information on our approach to inclusion and diversity and our 2022–2025 inclusion and diversity strategy is in our FY22 corporate governance statement. We ensure the health, safety, and wellbeing of our people We believe that if we can operate our business safely, we have a greater chance of helping our customer GROW A BETTER TOMORROW®. We operate licenced major hazard facilities and manage the associated risks through rigorous process safety management systems. We also have a mobile sales and agronomy team that participates in regular driver safety programs to keep them safe out on the roads. This year we completed corporate health and safety audits of five of our 11 crop protection manufacturing sites, assessing them against Nufarm’s best practice corporate health and safety standard. While our sites demonstrated some improvement, further opportunities were identified, along with some good practice solutions that we are sharing across sites. FY22 brought with it ongoing COVID-19 disruptions and worker shortages but we are pleased to report no deterioration in our lost time injury frequency rate (LTIFR) (0.81 in FY22 compared with 0.90 in FY21). Unfortunately, our serious injury frequency rate (SIFR) increased this year (3.07 in FY22 compared with 2.69 in FY21) due to strains, sprains, cuts and injuries of that nature. We are striving towards our zero-injury goal and turning this trend around is a priority for us. We continue to emphasise workforce training. We are also recruiting additional health and safety professionals to further embed our safety-first culture and practices across the business. We are conscious of the additional pressure on the mental health and wellbeing of our people, including as a result of COVID-19. This year we held many mental health and wellbeing events across all our regions, empowering our people to care for themselves and those around them. The focus increased during our mental health week in October 2021. The feedback from our people was so positive that we have expanded the program, establishing a ‘wellness month’ in early FY23. We have also introduced a global wellness platform in partnership with Lifeworks, the world’s largest employee assistance provider, to support our people and their families worldwide. The journey towards zero injuries is not a straight line, but we have never lost sight of this goal and will continue to strive for it to make sure everyone goes home safely every day. For more information on our sustainability approach, targets and performance, see our 2022 Sustainability Report which will be available in early 2023 Nufarm's serious injury frequency rate (SIFR) and lost time frequency rate (LTIFR) – rolling 12 month averages (per million hours worked) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 60.0 1 - n a J 16 6 1 - r a M 6 1 - y a M 6 1 - l u J 6 1 - p e S 6 1 - v o N 7 1 - n a J 7 1 - r a M 7 1 - y a M 7 1 - l u J 7 1 - p e S 7 1 - v o N 8 1 - n a J 8 1 - r a M 8 1 - y a M 8 1 - l u J 8 1 - p e S 8 1 - v o N 9 1 - n a J 9 1 - r a M 9 1 - y a M 9 1 - l u J 9 1 - p e S 9 1 - v o N 0 2 - n a J 0 2 - r a M 0 2 - y a M 0 2 - l u J 0 2 - p e S 0 2 - v o N 1 2 - n a J 1 2 - r a M 1 2 - y a M 1 2 - l u J 1 2 - p e S 1 2 - v o N 2 2 - n a J 2 2 - r a M 2 2 - y a M 2 2 - l u J 2 2 - p e S Nufarm Group LTIFR Rolling 12 months Nufarm Group SIFR Rolling 12 months Nufarm Limited | Annual Report 2022 Operating and Financial Review Group results This Operating and Financial Review includes financial information based on financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and audited by KPMG. Information is presented on a continuing operations basis unless otherwise specified. Non-IFRS measures including underlying EBIT and underlying EBITDA are used internally by management to assess the performance of Nufarm’s business, make decisions on the allocation of its resources and assess operational management. Non-IFRS measures have not been subject to audit or review. All amounts are in Australian dollars unless otherwise specified. Summary financial results (continuing operations unless otherwise specified) Revenue Revenue excluding Corporate revenue Gross profit Underlying gross profit Underlying gross profit margin excluding corporate revenue Underlying SG&A Research and development expenditure Underlying EBITDA Underlying EBIT Operating profit Underlying net external interest Foreign exchange (gains)/losses Net financing costs Underlying net profit after tax Underlying effective tax rate Net profit after tax Statutory effective tax rate Basic earnings per share – excluding material items (cents) Basic earnings per share (cents) Final dividend per share declared (cents) Total dividends per share in respect of twelve month period (cents) Earnings Favourable seasonal conditions and soft commodity prices generated strong demand for Nufarm crop protection products and seed technologies. This resulted in revenue growth of 17 per cent to $3.8 billion relative to the comparative period while operating profit increased by 33 per cent to $208 million. Excluding non-operating corporate revenue (representing sales to Sumitomo Chemical Company Ltd under supply agreements following the Latin American operations divestment), revenue grew 19 per cent to $3.6 billion. Gross profit for the period was $973 million, which included material items of $16 million. Excluding the impacts of the material items and non-operating corporate revenue, underlying gross profit margin was stable at 28 per cent over the prior comparative period. Net profit after tax increased 65 per cent to $107 million. This movement helped to lift basic earnings per share to 26.3 cents. Excluding material items, basic earnings per share rose 135 per cent to 33.1 cents. 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 3,772,970 3,579,856 972,585 988,863 27.6% (710,061) (51,100) 446,751 236,661 208,287 (51,574) (2,838) (80,184) 133,197 26.9% 107,438 16.1% 33.1 26.3 6 cents 10 cents 3,215,651 3,017,936 834,705 834,705 27.7% (654,390) (36,663) 361,107 153,100 156,977 (58,488) (2,802) (61,290) 61,058 33.5% 65,128 31.9% 14.1 15.2 4 cents 4 cents Change % 17% 19% 17% 18% (0.1)%pts 9% 39% 24% 55% 33% 12% (1)% (31)% 118% (6.6)%pts 65% (15.8)%pts 135% 73% 50% 150% This included underlying SG&A costs associated with supporting growth opportunities in respect of Nuseed and Nucrop. Research and development expenditure increased by $14 million as compared to the prior comparative period. Depreciation and amortisation was $214 million for the year. Removing the impact of material items, depreciation and amortisation was $2 million higher relative to the prior comparative period. Underlying net external interest decreased by $7 million to $54 million for the twelve months ended 30 September 2022 largely reflecting interest savings achieved from the completion of the high yield bond refinancing in January 2022. Net foreign exchange losses were $3 million which was consistent with the prior comparative period. This was despite global currency volatility associated with a range of events including the conflict in Ukraine. This outcome reflects the group’s targeted currency exposure risk mitigation program to assist in the management of foreign exchange risk. Underlying EBITDA of $447 million increased by $86 million, representing growth of 24 per cent for the year ended 30 September 2022, with increased revenue and higher gross profit impacted by an increase in costs. The statutory effective tax rate was 16.1 per cent which included the impacts of bringing to account previously unrecognised deferred tax assets. Excluding material items, the underlying effective tax rate is 26.9 per cent. Underlying selling, general and administration costs (underlying SG&A) increased by $56 million as compared to the prior comparative period across a number of expense categories. Underlying net profit after tax increased to $133 million from $61 million in the prior comparative period. Return on funds employed (ROFE) increased to 9.5 per cent, with the increase in underlying EBIT contributing to the improvement. 17 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Cash flow Cash flow results Underlying net operating cash flow Net operating cash flow – material items Total net operating cash flow Underlying net investing cash flow Net investing cash flow – material items Total net investing cash flow Total underlying net operating and investing cash flow Total net operating and investing cash flow 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 366,120 (6,551) 359,569 439,807 (15,616) 424,191 (240,409) (146,299) – – (240,409) (146,299) 125,711 119,160 293,508 277,892 Change % (17)% 58% (15)% (64)% n/a (64)% (57)% (57)% The group’s total net operating and investing cash flow for the year ended 30 September 2022 was a cash inflow of $119 million. Underlying net operating cash flow was a $366 million inflow reflecting the working capital position and improvement in underlying earnings. Operating cash flow generation is highly correlated with changes in net working capital and underlying EBITDA. Net cash outflow from investing activities increased 64 per cent with the majority of the increase due to investment in plant and equipment, increased investments in Enko and crop.zone, and the acquisition of the Biovertis energy cane assets from GranBio Investimentos SA (GranBio). The investments in Enko, crop.zone and Biovertis illustrates the group’s commitment to utilise free cash flow on growth opportunities. Balance Sheet Management Financial position Net debt Net working capital ANWC/sales excluding external corporate (%) ANWC/sales (%) Leverage – continuing operations (includes lease liabilities) Gearing % ROFE – total group As at 30 September 2022 $000 As at 30 September 2021 $000 346,168 862,696 28.3% 26.8% 0.8 13.9% 9.5% 316,817 854,431 34.3% 32.2% 0.9 13.0% 5.9% Change % 9% 1% (600)bps (540)bps (12)% 90 bps 360 bps Net debt has increased 9 per cent to $346 million. The average net working capital to sales (ANWC/sales (%)) ratio continued to improve to 26.8 per cent (28.3 per cent excluding non-operating corporate revenue). Management will continue to focus on working capital via a range of actions including customer terms, supplier negotiations and effective stock management. Statutory core leverage was 0.8x at 30 September 2022, and currently remains below the group target of 1.5x – 2.0x. Given the low leverage ratio, the group continues to apply free cashflow to growth opportunities such as the investments in Biovertis, crop.zone and Enko. 18 Nufarm Limited | Annual Report 2022 Capital Management Dividend As part of Nufarm’s review of its capital management framework, the board has adopted a change in the dividend policy to align dividend payments to free cash flow generation, subject to the balance sheet meeting its target leverage range of 1.5x – 2.0x and there being insufficient growth opportunities. Nufarm’s dividend policy ensures appropriate focus on cash generation, especially net working capital management, and greater focus on maintaining an appropriate capital structure for the group. The board has determined to pay an unfranked final dividend of 6 cents per share. The final dividend will be paid on 9 December 2022 to the holders of all fully paid shares in the company as at the close of business on 25 November 2022. 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 price of the company’s ordinary shares on the ASX over the 10-day period commencing on 21 November 2022 and ending on 2 December 2022. The last election date for shareholders who are not yet participants in the DRP, is 28 November 2022. At this point Nufarm has decided to not pursue any further capital management options beyond the payment of the final six cents per share dividend for FY22. The company will continue to evaluate appropriate capital management options, and in the near term, retain flexibility as it heads into FY23. In FY21, Nufarm completed a review of its capital structure and capital management principles with the aim of maintaining a robust and durable capital structure and clear guidelines for the application of free cashflow generated from business operations. Our financing arrangements aim to ensure Nufarm has the required financial resilience to withstand adverse trading cycles without experiencing undue balance sheet stress. Post year end, it was announced that Nufarm has entered into a five year A$800 million revolving Asset Based Lending credit facility (the ABL Facility) secured against trade receivables and inventory located in Australia, the United States and Canada. A smaller A$150 million Liquidity Facility (the Liquidity Facility) has also been established to sit alongside the ABL Facility to assist in the ongoing funding of Nufarm’s working capital requirements. Concurrently, the existing syndicated bank facility (SFA) that had a customary term of three years and group receivables securitisation facility that had a 12 month term were both wound up with amounts drawn under those existing facilities settled via proceeds obtained under the new facilities. Complementing the US$350 million Senior Unsecured Notes which were issued in January 2022 and due in January 2030, the ABL Facility will deliver considerable benefits to Nufarm’s capital structure, transitioning Nufarm to a covenant-lite financing structure and significantly extending the duration of the group’s debt maturity profile. An asset based lending facility provides a less restrictive and more flexible financial covenant regime. Nufarm’s new working capital debt facilities are important components underpinning a flexible and durable capital structure that will provide greater financial resilience across operating cycles and variable trading conditions. The extended term of the group’s working capital debt facilities demonstrates confidence by relationship lenders in Nufarm’s strong balance sheet position, strategic direction and future growth aspirations. 19 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Review of operations Nufarm’s business has two main reporting segments, crop protection and seed technologies. The crop protection business is focused on major agricultural markets in Asia Pacific (APAC), Europe and North America. The seed technologies business operates in more than 30 countries across the globe. 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 Change $'000 Change % 1,038,424 1,350,190 894,931 3,283,545 296,311 193,114 858,407 1,112,423 806,485 2,777,315 240,621 197,715 3,772,970 3,215,651 180,017 237,767 88,446 506,230 55,690 (4,601) 557,319 21% 21% 11% 18% 23% (2%) 17% 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 Change $'000 Change % 134,534 147,899 171,109 453,542 58,544 (65,335) 446,751 111,550 104,394 171,696 387,640 46,322 (72,855) 361,107 22,984 43,505 (587) 65,902 12,222 7,520 85,644 21% 42% 0% 17% 26% (10%) 24% 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 Change $'000 Change % 117,236 117,121 41,346 275,703 27,201 (66,243) 236,661 91,436 71,716 45,953 209,105 17,817 (73,822) 153,100 25,800 45,405 (4,607) 66,598 9,384 7,579 83,561 28% 63% (10%) 32% 53% (10%) 55% Revenue – Underlying ($000s) Crop protection APAC North America Europe Total Crop protection Seed Technologies – global Corporate Nufarm Group EBITDA – Underlying ($000s) Crop protection APAC North America Europe Total Crop protection Seed Technologies – global Corporate Nufarm Group EBIT – Underlying ($000s) Crop protection APAC North America Europe Total Crop protection Seed Technologies – global Corporate Nufarm Group 20 Nufarm Limited | Annual Report 2022Crop protection APAC Crop protection Europe Revenue of $895 million increased 11 per cent relative to the prior comparative period. Sales performance in Romania, Baltics, Poland, UK, Germany and France were particularly strong due to targeted campaigns, strong customer relationships and reliable supply under difficult procurement and logistic conditions. Revenue growth has been achieved despite €33 million lost from sales of products which were phased out in FY22. Operating costs increased relative to the prior comparative period due in part to increased freight and logistics rates and increased energy costs. COVID-19 restrictions have eased which resulted in increased travel and other discretionary expenditure which was limited by COVID-19 during the prior comparative period. The financial benefits from the closure of the 2,4-D synthesis manufacturing facility in Linz in March 2021 are being realised through the ability to source alternative supply at competitive pricing after consideration of price increases in technical inputs for synthesis activities. Overall, the segment has performed well despite the challenges faced during the year resulting in underlying EBITDA of $171 million, in line with the prior comparative period. Revenue of over $1 billion increased 21 per cent relative to the prior comparative period with favourable seasonal conditions and strong soft commodity prices generating solid demand. Higher raw material and freight costs correlated with external selling prices which contributed to the increase in revenue. Continued momentum from successful product launches in Australia and Indonesia and an increase in the proportion of Nufarm branded sales volumes in Australia contributed to a favourable product mix and higher margins. Benefits from manufacturing footprint rationalisation and performance improvement initiatives have contributed to improved EBTIDA. Overall, the segment delivered a very strong result for the year with Underlying EBITDA of $135 million, an increase of 21 per cent on the prior comparative period. Crop protection North America Revenue of $1.4 billion increased 21 per cent relative to the prior comparative period. Attractive soft commodity prices remaining high relative to historical levels driving demand for crop protection products. Increased active ingredient prices and supply chain and logistics rates correlated with external selling prices which contributed to the increase in revenue. The North America segment has focused on customer support and key relationship management during these challenging times to sustain and grow Nufarm’s market positions. Operating costs increased relative to the prior comparative period as logistics and warehousing rates increased. Also, with COVID-19 restrictions easing, travel for customer visits and industry conferences has continued to rebound toward pre-pandemic levels contributing to the increase. Overall, the segment has delivered a strong financial performance with underlying EBITDA of $148 million, an increase of 42 per cent relative to the prior comparative period. 21 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Seed Technologies The seed technologies segment includes sales of seed and downstream oil products, under the Nuseed brand, and seed treatment products. Revenue of $296 million increased 23 per cent relative to prior comparative period. Increased revenue from seed sales reflected stronger demand for Nuseed’s hybrid canola varieties in Australia, South America and Canada; Sorghum in Brazil, USA and other international markets; and Sunflower in key global markets. Underlying EBITDA of $59 million was up 26 per cent on the prior comparative period. The strong segment result represents broad based growth across the Nuseed platforms. In February, Nufarm entered into a strategic ten-year offtake and market development agreement with bp that will see bp, or its affiliates, purchase Nuseed Carinata Oil that it plans to process or sell into growing markets. The agreement enables the expansion of Nuseed Carinata production to increase low carbon renewable oil feedstock sustainably, while supporting higher economic returns on the investment in the Nuseed Carinata platform. Nufarm also launched the first hybrid Nuseed Carinata, Nujet 400, with an approximate >25 per cent yield improvement, in South America and the Southern United States which has generated strong interest and expanded grower contract production in 2022-23. In September, Nufarm announced a US$25 million acquisition of energy cane assets from GranBio group, a leading Brazilian industrial biotechnology group, to accelerate the development and global expansion of energy cane. Outlook The outlook for soft commodity prices remains positive and improved seasonal conditions in key grain producing regions continues to support strong demand for seed and crop protection products. Active ingredient pricing volatility and global supply chain and logistics challenges have eased in the second half of FY22. There continues to be uncertainty and volatility in relation to the broader global political and macroeconomic environment. These uncertainties have the potential to quickly change market dynamics and increase the competitive environment across all regions. Assuming normal seasonal conditions and on a constant currency basis1, Nufarm is planning for modest underlying EBITDA growth in FY23. Further: • Depreciation and amortisation to be materially in line with FY22 • Increased capital expenditure to approximately $220 million with carry over CAPEX from FY22 and targeted investments in growth opportunities • An underlying effective tax rate which is materially in line with FY22 assuming the mix of geographical earnings is consistent with FY22. Forward looking statements in this review are based on information and assumptions known to date and are subject to various risks and uncertainties including (without limitation) changes in product demand, the timing and success of new product launches, decisions by regulatory authorities regarding approval and ongoing registration of Nufarm products, operational changes, difficulties or delays in manufacturing, third party supply interruptions, weather volatility, cyberattack/ unauthorised access, the loss of key personnel, safety incidents, environmental damage, product contamination and quality, compliance breaches, litigation or government investigations, global economic & geo-political uncertainty and conflict including in Russia and the Ukraine, energy security and inflation including increases in costs of goods, and the effect of economic conditions generally. Actual results, performance or achievements may be significantly different. Such forward looking statements are not guarantees of future performance. Many of the known and unknown risks and uncertainties impacting these forward looking statements are beyond the control of Nufarm. Further information about Nufarm’s risks are set out on page numbers 25 to 31 of this review. Material items Individually material items are those items where their nature, including the expected frequency of the events giving rise to them, and/or amount is considered material to the consolidated financial report. Such items included within the group’s profit for the period are detailed below. Transactions related to Russia and Ukraine Regarding the ongoing conflict between Russia and Ukraine, together with continued uncertainty with respect to sanctions, regulatory and operating implications, the group has undertaken assessments of its operations and assets in these geographies. The pre-conflict revenue contribution from Ukraine and Russia was one per cent in the year ended 30 September 2021, and the total assets in Ukraine and Russia made up one per cent of total group assets at 30 September 2021. During the year ended 30 September 2022, the group has assessed the recoverability of assets, primarily trade receivables and inventories, in respect of the group’s operations in Russia and Ukraine and has recognised a pre tax expense of $29.5 million following this assessment. At 30 September 2022, the total assets in Ukraine and Russia make up less than half a per cent of total group assets. Debt refinancing costs During the period the group refinanced its high yield bond and incurred costs related to early redemption call premium and accelerated amortisation of deferred debt establishment transaction costs. 1. Constant currency financial information seeks to remove the impact of movements in monthly exchange rates that impact on the translation of foreign currency earnings and balances into Australian Dollars to facilitate the comparability of operational performance. The current financial reporting period EBITDA has been translated, from subsidiary functional currency into Australian Dollars, at the corresponding monthly exchange rates from the prior comparable financial reporting period. 22 Nufarm Limited | Annual Report 2022Transactions related to South American business disposal – onerous contract provision reversal During the period ended 31 July 2020 the group entered into a supply agreement contract signed as part of the disposal of the South American business that subsequently became onerous, as disclosed in material items for that period. During the year ended 30 September 2022 market conditions in relation to the terms of the contract have improved. The group has assessed that the full provision will no longer be required and it has therefore been fully reversed. The contract expired in March 2022. Deferred tax adjustments Australian Accounting Standards require that the group recognises a deferred tax asset arising from unutilised tax losses and tax credits, to the extent that it is probable that future taxable profit will be available, against which the tax losses and tax credits can be utilised. The net recognition of the deferred tax assets of $20.119 million in respect of the tax losses reflects improved financial performance and outlook for the group. 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 Nufarm’s business, make decisions on the allocation of its resources and assess operational management. Non-IFRS measures have not been subject to audit or review. The following notes explain the terms used throughout the operating and financial review: (1) Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is underlying EBIT before depreciation and amortisation and material items. Nufarm believes that underlying EBIT and underlying EBITDA provide useful information, but should not be considered as an indication of, or an alternative to, profit/(loss) for the period as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity. (2) Underlying EBITDA is used to reflect the underlying performance of Nufarm’s operations. Underlying EBITDA is reconciled to operating profit below on a continuing basis. 23 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Operating profit reconciliation (continuing operations unless specified) Underlying EBITDA add Depreciation and amortisation excluding material items Underlying EBIT Material items impacting operating profit Operating profit (3) Non-IFRS measures are defined as follows: Term Definition 12 months ended 30 September 2022 $000 12 months ended 30 September 2021 $000 446,751 361,107 (210,090) (208,007) 236,661 (28,374) 208,287 153,100 3,877 156,97 Change % 24% (1)% 55% large 33% Gross profit margin Underlying gross profit Gross profit as a percentage of revenue Gross profit less material items Underlying gross profit margin Underlying gross profit as a percentage of revenue Underlying SG&A Underlying EBIT Underlying EBITDA Sales, marketing and distribution expenses plus General and administrative expenses less material items Earnings before net financing costs, taxation and material items Underlying EBIT before depreciation and amortisation and material items Underlying net external interest Financial income, plus interest expense – external, plus interest expense – amortisation of debt establishment transaction costs, plus lease liability – interest expense, less material items Underlying net financing costs Net financing costs less material items Underlying net profit after tax Profit/(loss) for the period attributable to the equity holders of Nufarm Limited less material items Underlying income tax benefit/(expense) Income tax benefit/(expense) excluding material items Underlying effective tax rate Underlying income tax benefit/(expense) divided by underlying net profit after tax Net debt Current loans and borrowings, plus non-current loans and borrowings, plus cash and cash equivalents Net working capital Current trade and other receivables, plus inventories less current trade and other payables Average net working capital Net working capital measured at each month end as an average ANWC/sales (%) Average net working capital as a percentage of rolling 12 months revenue ANWC/sales excluding external corporate (%) Average net working capital as a percentage of rolling 12 months revenue excluding non-operating corporate revenue Leverage Net debt/rolling 12 months underlying EBITDA Interest coverage ratio Rolling 12 months underlying EBITDA/rolling 12 months net external interest Gearing % Net debt/(net debt plus equity) Return on funds employed (ROFE) 12 months rolling underlying EBIT divided by the average of opening and closing funds employed (total equity plus net debt) Underlying net operating cash flow Net cash from operating activities excluding material items cash flows Underlying net investing cash flow Net cash from investing activities excluding material items cash flows Constant currency Constant Currency financial information seeks to remove the impact of movements in monthly exchange rates that impact on the translation of foreign currency earnings and balances into Australian Dollars to facilitate the comparability of operational performance. The current financial reporting period profit or loss, and balance sheet, has been translated, from subsidiary functional currency into Australian Dollars, at the corresponding monthly exchange rates from the prior comparable financial reporting period 24 Nufarm Limited | Annual Report 2022Key risks A summary of the material risks that could impact the achievement of Nufarm’s business objectives is included below. The group’s processes for managing risk are set out in the group’s Corporate Governance statement which is available in the corporate governance section of our website, www.nufarm.com/CorporateGovernance. The risks below are set out in no particular order. There are interdependencies between them and so an increased exposure for one risk may elevate the exposure of other risks. Nufarm may be impacted by other more general risks that Australian businesses with global operations may face as well as emerging risks that are not listed below. Strategic context What this means for Nufarm Ltd (risk/uncertainty) How this is being managed Strategic growth (medium to long term) Regulation and market access The crop protection industry is highly regulated with government controls and standards imposed on all aspects of the industry’s operations. Crop protection products are subject to regulatory review and approval in all markets in which they are sold, with the requirements of regulatory authorities varying from country to country. Europe, in particular, is highly regulated and there is increasing political influence on the regulatory system. This is increasing the uncertainty in predicting regulatory outcomes. In relation to seed, Omega 3 trait presence in canola is also highly regulated in many markets across the globe (e.g. China) therefore industry resistance to Omega 3 co-existence that will continue until full de-regulation. Continued legal and community focus on the impact of crop protection products has been increasing, particularly in the US which may give rise to increased litigation risk in personal bodily injury class actions. Demand for new/different products and supporting manufacturing capability Continually evolving our product portfolio and customer strategy Regulatory policies can have an impact on the availability and usage of crop protection and seed technology products and, in some cases, can result in the restriction or removal of certain products from the market, which may have a material adverse effect on the financial performance of Nufarm. Social/ activist pressure to strengthen regulatory requirements as they relate to synthetic crop protection products may increase. Over time, our synthetic crop protection products may become less commercially viable in certain markets. This may bring the opportunity to increase our biological and other sustainable solutions presence in those markets. For example, seed technologies that improve crop resilience and yield will be in demand. This may require re-alignment and/or expansion of our manufacturing and processing footprint which will require capital investment to ensure we have the manufacturing and processing capability to produce new products that are pivotal to our growth. If the manufacturing footprint is not aligned to product portfolio, there is a risk that Nufarm’s assets will be under-utilised and/or not ready to manufacture new product lines, thereby impacting our financial performance. • Nufarm has increased its investment and expanded its partnership with crop health company, Enko. Enko is a like-minded company that recognises that innovation and technology are the future for sustainable agriculture practices. • All product development is aligned to Nufarm’s strategic focus on key geographies and crops. This is supported by centralised systems and processes to approve and monitor development activities and provide ongoing support and technical advice to the marketing and commercial functions. • The Nufarm portfolio team conducts regular assessments of advancements in application technology and product development. This is a key input to the product development pipeline and participation in potential partnerships with third parties with access to alternative technologies. • Nufarm monitors regulatory developments across its key regions of operations closely and completes detailed regulatory risk scenario analysis biannually. The Nufarm portfolio team considers this analysis in the maintenance and ongoing development of our portfolio. • Nufarm participates in several industry bodies and task forces which provide input and analysis to regulatory bodies on the use of our key products. We are undertaking a significant consultation process with the industry to build and maintain support for Omega 3 coexistence. Alignment of manufacturing capability • Assessment of the viability of our manufacturing footprint is completed on an ongoing basis. • Capital plans developed to support replacement of ageing plant and preventative maintenance programs have been established to minimise production downtime. During FY22, we have committed to and have commenced implementation of a significant investment in our Wyke plant that will mitigate risks associated with ageing plant and enhance capability to support our growth plans. 25 Nufarm Limited | Annual Report 2022Operating and Financial Review continued What this means for Nufarm Ltd (risk/uncertainty) Capability to execute strategy Inability to operationalise our strategy could result in loss of market share and variability in our earnings. • Capital – Nufarm’s manufacturing footprint may require further capital investment to ensure we have the manufacturing capability to produce new products that are pivotal to our growth. • Supply chain – Our growth depends on getting our products between Nufarm global locations and to customers efficiently and effectively. Freight and logistics availability and supply generally may become increasingly harder and costlier to do which may negatively impact our financial performance. Supply chain partners may cease to exist or financial pressure may drive others to take shortcuts that impact their quality of service or integrity. • Workforce capability – The post- pandemic world has shifted how, where and why people work and like many other organisations, Nufarm continues to assess how this may impact our strategic workforce planning for the future. Executing our strategy will mean strengthening existing functions and introducing new processes/ functions. If we can’t retain or attract existing and new skills, there is a risk that these processes and functions will not operate at the standard that will be required to execute our strategy. • Nufarm risks potential liability if it infringes third party intellectual property rights, and may need to withdraw products or negotiate a licensing deal. • If Nufarm doesn’t take adequate steps to protect or enforce its intellectual property rights it will lose the value of these rights. How this is being managed Continually monitoring our operational capability • The Finance team has reviewed Nufarm’s capital management principles against our longer-term objectives and also Nufarm’s capital structure. • The manufacturing capital expenditure plan is reviewed annually as part of the budgeting process. • The Procurement team continued its work to improve diversification of supply and reduce key dependencies. • Suppliers operating in high-risk jurisdictions are subject to Ecovadis risk assessments. • The People Plan and HR strategic priorities are set annually and monitored throughout the year. • An annual talent showcase and succession planning processes ensure that key roles/ competencies are identified and managed. • Disciplined product selection process taking into account possible intellectual property infringement. • Expert IP advice is obtained regarding freedom to operate, protection and enforcement. • Aim to share responsibility with product development partners where feasible. Strategic context Global economic & geo-political uncertainty The social, economic and political impacts of the pandemic remain to be seen. The global economic environment is inflationary. The Ukraine crisis has not materially impacted our financial position to date. However, uncertainties remain given the crisis is ongoing, such as volatility of energy prices and further supply chain impacts. Innovation • Nufarm introduces innovative crop protection and seed technology products where there may be a risk of infringement of third-party intellectual property rights. • Nufarm holds or has the right to use intellectual property covering its products, which intellectual property may be lost or infringed. Climate Related Risks The climate change risks and opportunities were assessed against two scenarios: • Low emissions scenario (High Transition Impact) – Global average temperature below 2°C warming relative to pre-industrial levels • High emissions scenario (High Physical Impact) – Global average temperature above 3°C warming relative to pre-industrial levels Two time horizons were chosen for the assessment, a short (2030) and a long term horizon (2050). To assess physical risks, we have performed a demand analysis by assessing the impact of the various TCFD climate drivers on agricultural conditions and Nufarm’s associated products using the IPCC Sixth Assessment Report and online area and topographic maps for regions. Chronic physical risks refer to longer-term shifts in climate patterns such as sustained higher temperatures or changes to precipitation patterns. Acute physical risks refer to those that are event-driven, including increased severity of extreme weather events, such as cyclones, droughts, heatwaves, or floods. The descriptions of risks, opportunities and resilience are not forecasts, but describe what could happen if the world’s development progressed as described in each of these scenarios. The impact of the risks is described qualitatively and does not take into account mitigating actions that may already be in progress. This assessment was the first scenario analysis performed by Nufarm, and therefore focuses on qualitative assessment. 26 Nufarm Limited | Annual Report 2022Transition risks Description – Risk Description – Opportunity Strategy and mitigating actions 1. Changes in product demand – driven by changes in the market, and in policy and regulation Transition: Policy, legal and regulation; Market Risk Scenario: 2° Time horizon: 2030 Opportunity Scenario: 2° >3° Time horizon: 2050 Under the low emissions scenario, growers across the globe will adapt and evolve their farming methods and crop choice in direct response to regulation and/or consequent economic/market conditions. Under both high emissions and low emissions scenarios, changes in climate also create opportunities for Nufarm to evolve our product offerings and target markets. Impact: Reduced volume of sales Impact: Increased revenue Improving yields and new plant-based solutions are important elements in improving nutrition, supporting the environment and the getting the most from every acre. 2a. Operational changes – fossil fuel & carbon footprint reduction/compliance with GHG policy & regulation 2b. Operational cost/CoGS increase – suppliers passing on transition costs Transition: Policy, legal and regulation Risk Scenario: 2° Opportunity Scenario: 2° >3° Time horizon: 2030 Time horizon: 2030 – 2050 Under the low emissions scenario, our manufacturing and processing facilities in some locations may be impacted by regulatory changes to address climate change. Impact: Increased capital and operational expenditure Under both emissions scenarios, there are opportunities to achieve greater productivity, resource efficiency and resilience to climate variability. Impact: Reduced operating costs, access to new markets and sources of finance, reduced climate-related impact on revenue It’s important to us that we reduce our consumption of precious resources and minimise our impact on the world around us. Our GRI Content and Index contains more information on how we are progressively planning for and implementing measures to reduce our environmental footprint. Just as Nufarm ‘partners for growth’ with our distribution channel partners, we also apply this philosophy when establishing and maintaining our key supply partnerships and alliances. As we and our partners plan our transition pathways, we will continue to work closely to understand and manage any increase to supply costs. Physical risks Risk/Opportunity 3a. Changes in product demand – driven by climate unsuitability (chronic physical) 3b. Changes in product demand – driven by acute physical events Opportunity Refer to the opportunities outlined under 1. Changes in product demand – driven by adaptation policy and regulation and the market response to policy and regulation The climate change risk assessment gives us insights into how climate change may impact our core crop selection and geographies. We will integrate these insights into our longer term strategic planning process. Physical Risk Scenario: >3° Time horizon: 2030 – 2050 The physical risk to Nufarm’s grower demand is the impact of climate events on the grower’s crops, disrupting demand for Nufarm’s crop protection products and seed technologies. The increasing volatility of weather patterns will increase the frequency and intensity of adverse weather events. These may result in significant crop damage and reduction in yields. Under a high emissions scenario, there may be a shift in agricultural regions, increasing weather variability and changes in prevalence of pests and diseases. Impact: Reduced sales 27 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Risk/Opportunity 4. Impacts on our operations (including supply chain) – driven by changes in climate and weather events Physical Risk Scenario: >3° Time horizon: 2030 – 2050 Under a high emissions scenario, our operations may be subject to more disruption from climate and weather physical events. Repeated disruptions may render parts of our supply chain and manufacturing arrangements unviable in the long term. Impact: Increased operational expenditure Opportunity Refer to the opportunities outlined under 2a. Operational changes – fossil fuel and carbon footprint reduction/compliance with GHG policy & regulation and 2b. Operational cost/CoGS increase – suppliers passing on transition costs Our business continuity and insurance programs consider physical risk exposures relating to our manufacturing and non- manufacturing operations including identifying actions to physically strengthen our facilities. The longer term suitability of our manufacturing footprint and supply chain arrangements is assessed through our strategic risk management process. Risk/uncertainty inherent in Nufarm’s operations How we are managing this Operational continuity (what we do) Weather volatility – seasonality The timing of weather seasons in the geographies in which Nufarm operates is uncertain and varies from year to year. Consequently, there is a risk that unusually early or late seasons may have a negative impact on demand for Nufarm products in a particular year and therefore its financial performance. • Nufarm’s operations are global, providing geographic diversification to climatic and seasonality risks and our product portfolio is diverse, supporting a wide range of agricultural applications. • At an operating level, Nufarm’s business planning processes incorporate forecasting and supply planning based on typical weather conditions. These processes have been strengthened to enhance the agility of the supply chain to respond to pandemic, geo-political/economic and weather-related impacts. Weather volatility – physical damage • Nufarm maintains a comprehensive insurance program which An increase in extreme weather events as a result of changing climatic conditions could also result in operational disruptions, such as physical damage to our manufacturing facilities or disruption to our supply chain for key raw material inputs or delivery of finished goods to our customers. Significant disruption to our manufacturing facilities could materially impact production and our financial performance. Third party supply interruptions Nufarm relies on supply of various active ingredients, intermediates and other inputs from a number of third-party suppliers, including suppliers based in China. The reliability of supply and the cost of these inputs can be impacted by a range of factors including, but not limited to, manufacturing closures or temporary disruptions, compliance with more stringent environmental and/or safety standards, and other changes in government policy or regulation. Significant interruptions can impact our ability to fulfil orders which may ultimately increase our costs. is supported by continuity strategies across our global manufacturing footprint and key suppliers. • Arrangements have been established with key toll manufacturers to support our internal manufacturing capability. • Nufarm’s procurement and integrated business planning processes include the ongoing assessment of supply availability as input to manufacturing and safety stock levels. • Where possible, we have entered into specific supply arrangements to assist with availability and pricing of key active ingredients. • Alternate supply arrangements have been established, where permitted under regulatory requirements. • Our manufacturing facilities are geographically aligned with distribution to minimise disruption to supply. 28 Nufarm Limited | Annual Report 2022Risk/uncertainty inherent in Nufarm’s operations How we are managing this Cyber-attack/unauthorised access • Nufarm has made significant investment in IT systems, Nufarm’s operations are supported by several key IT systems and applications. Complete or partial failure of the IT systems, applications or data centre infrastructure due to unauthorised access, cyberattacks or natural disasters could have a significant impact on Nufarm’s ability to maintain operations and service customers. This could adversely impact Nufarm’s financial position and/or reputation. Loss of key personnel The loss of key personnel or the inability to recruit and retain or motivate high calibre staff could have a material adverse effect on Nufarm. Nufarm operates globally and has facilities in multiple jurisdictions. Management of a complex business that operates globally has a higher employee risk/complexity than a business which operates in one jurisdiction. The addition of new employees and the departure of existing employees, particularly in key positions, can be disruptive and could have an adverse effect on Nufarm and may impact Nufarm’s financial performance and future prospects. infrastructure and capability to support the efficient operation of the business. This investment has included a global integrated business planning system, new financial system across Europe, significant uplift in our customer platforms and realignment to the Cloud for certain services to gain access to improved technology and capability. • Nufarm has implemented disaster recovery strategies over its key IT systems, applications and data centres, which are reviewed and tested on a regular basis. • Cyber threats are assessed on an ongoing basis to the best of our knowledge based on the continually evolving nature of these threats. Security controls are updated to mitigate these risks supported by a combination of external and internal vulnerability testing. • Critical roles across the organisation have been identified and appropriate succession and retention strategies developed. • Guidelines for remuneration and reward have been developed to ensure Nufarm can attract and retain talent. 29 Nufarm Limited | Annual Report 2022Operating and Financial Review continued Risk/uncertainty inherent in Nufarm’s operations How we are managing this Operational sustainability & compliance (how we do it) Safety incident Operation of Nufarm’s manufacturing sites across the globe require major hazard facility licences. Operating within these environments can lead to personal injury, loss of life or damage to property. Regulatory bodies undertake regular audits of Nufarm’s sites to ensure that it is appropriate to renew the licences. These audits can result in suspension of operations, fines or penalties or remediation expenses. Environmental damage Nufarm operates in a regulatory environment that establishes high standards in terms of environmental compliance. Any material failure by Nufarm to adequately control hazardous substances and manufacturing operations, including the discharge of waste material, or to meet its various statutory and regulatory environmental responsibilities, could result in significant liabilities as well as ongoing costs relating to operational inefficiencies which may arise. This extends to historical environmental issues that may be present in sites that we have acquired. • A robust and comprehensive Health, Safety and Environment (HSE) program is in place which provides clear guidance on culture, behaviours, process, metrics and reporting. • This program includes the ongoing audit and assessment of HSE risks and practices. • A program of regular reporting at a local, regional and global level is in place, including quarterly reporting to the executive management and board. • Wellbeing seminars, encouragement of leave-taking and a range of other COVID-related fatigue support measures are in place and continue to be advocated throughout the organisation. • Environmental risk assessments have been completed across all our key operational sites and guidelines on the management of environmental risks aligned to ISO 14001 on environmental management systems have been implemented. • Local management engage with local environmental authorities on key risks and compliance. Product contamination/quality Nufarm manufactures and supplies a range of crop protection products and seed solutions which must be manufactured, formulated and packaged to exact standards, with strict quality controls. The performance of those products would be negatively impacted if those quality standards are not met and this could, in turn, have an adverse impact on the reputation and success of Nufarm. We produce GM and non-GM seed. Unapproved GM products are highly regulated in many markets across the globe. Some markets accept a small level of unapproved trait presence whilst others have no tolerance. A significant unintended low-level presence/trait event could lead to significant liabilities owed to third parties and impact our growth. • Quality guidelines and procedures are defined across the manufacturing process, including external tolling activities. This includes a detailed contamination prevention program with associated procedures and are aligned to the ‘Contamination Prevention in the Manufacture of Crop Protection Products Guidelines and Best Practices’ issued by CropLife International. • Manufacturing processes are subject to rigorous testing to ensure quality standards are met and an ongoing review program is in place with the aim of ensuring operations adhere to the quality standards. • In relation to controlling GM traits, trait testing is undertaken at breeding to production handover and prior to commercial release. We are actively working to promote industry coordination and transparency of hybrid seed production zones. Compliance breach Nufarm’s global footprint requires compliance with government legislation and regulations across all the countries within which we are established to maintain our licenses to operate. New legislation or changes to requirements could have an adverse impact on our operations, financial position or relationship with key customers and suppliers. This includes requirements relating to occupational health and safety, environment, product registration, sanctions and anti-bribery, data privacy, taxation and review of contractual obligations with key suppliers and customers. Geopolitical risks such as changes to tariffs and sovereign risk impacting the political stability of certain countries we operate in could impact the price and volume of agricultural products traded in these regions. • Policies and procedures have been developed supporting legislative and regulatory compliance. Nufarm’s Code of Conduct provides overarching guidance on behaviours and is supported by procedures for sanction implications, ethical sourcing and management of sensitive personal data. • Nufarm also maintains a dedicated internal legal team across its key regional operations, which is supported externally as required, to provide input on key legislative and regulatory compliance. • Nufarm’s internal tax department has developed specific guidance on the group’s tax strategy and policies to ensure compliance and alignment with tax authorities on the treatment of transactions. • Nufarm has an online global whistleblower program to allow employees to report any unethical, illegal or fraudulent behaviour. 30 Nufarm Limited | Annual Report 2022Risk/uncertainty inherent in Nufarm’s operations How we are managing this Financial exposures (how we fund what we do) Debt financing Nufarm has significant short term bilateral funding and supplier financing facilities to fund its working capital requirements. Continued access to these facilities is dependent upon compliance with relevant banking covenants and the successful renewal of these facilities as and when they fall due. Nufarm’s ability to refinance its debt obligations, and the terms on which any such refinancing can be obtained, is uncertain. If Nufarm is unable to refinance its debt obligations, or to do so on reasonable terms, it may have an adverse effect on the financial position and performance of Nufarm. Foreign exchange exposure Global crop protection companies such as Nufarm purchase inputs and determine selling prices in a range of international currencies and are therefore exposed to fluctuations in exchange rates. Further, a substantial portion of Nufarm’s revenues, costs, assets and liabilities are denominated in currencies other than Australian dollars. As a result, exchange rate movements affecting these currencies may impact the financial performance and future prospects of the business of Nufarm. Working Capital Management Effective management of working capital is a key operational priority across the group and is impacted by factors such as changing customer demand as a result of seasonality and climatic conditions, changes in customer credit profiles and supply constraints. • A clearly defined funding strategy is in place which includes a diversified funding structure with a range of debt maturity profiles. • Board and executive oversight is in place to monitor ongoing compliance with key banking covenants and facilitate the early identification of any covenants under stress. • Further details on strategies to manage liquidity, credit and market risk is included in Note 29 of the consolidated financial statements. • Nufarm has implemented a range of financial risk management policies and procedures to assist with the management of foreign exchange exposure. The group treasury function manages financial risks in accordance with these policies. Where possible, currency and interest rate risk is managed through hedging strategies (refer note 29 of the consolidated financial statements). • Policies and procedures have been developed to support the management of customer credit, inventory and procurement. • Nufarm’s procurement and integrated business planning processes provide a focus on working capital management regionally and globally. This is supported by an investment in systems and data analytics to provide timely data on key working capital drivers. • Performance metrics supporting working capital management have been defined at a global and regional level and included in individual objectives and performance related remuneration for senior management. 31 Nufarm Limited | Annual Report 2022Board of Directors John Gillam BCom, MAICD, FAIM (Chair) Independent non-executive chair Other directorships and offices (current and recent): John Gillam joined the board on 31 July 2020 and was appointed chair on 24 September 2020. • Chair of CSR Limited (director since December 2017 and chair since 1 June 2018) John has extensive commercial and leadership experience from a 20-year career with Wesfarmers where he held various senior leadership roles including chief executive officer of the Bunnings Group, Managing Director of CSBP and chairman of Officeworks. • Chair of BlueFit Pty Limited (since February 2018) • Director of the Heartwell Foundation (since 2009) • Director of Clontarf Foundation (since 2017) Board committee memberships: • Chair of the nomination committee Greg Hunt Managing Director and Chief Executive Officer Non-independent executive director 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 has considerable executive and agribusiness experience. Greg had a successful career at Elders before being appointed managing director of Elders Australia Limited, a position he held between 2001- 2007. After leaving Elders, Greg worked with various private equity firms focussed on the agriculture sector and has acted as a corporate advisor to Australian and international organisations in agribusiness related matters. Gordon Davis BForSc, MAgSc, MBA Independent non-executive director Other directorships (current and recent): Gordon Davis joined the board on 31 May 2011. • Director of Healius Limited (formerly Primary Health Gordon was managing director of AWB Limited (from 2006 to 2010) and has held various senior executive positions with Orica Limited, including general manager of Orica Mining Services (Australia, Asia) and general manager of Incitec Fertilisers. He has also served in a senior capacity on various industry associations. Care Limited) (since August 2015) • Director of Midway Limited (since April 2016) Board committee memberships: • Chair of the risk and compliance committee • Member of the audit committee • Member of the human resources committee • Member of the nomination committee Alexandra Gartmann BSc (Resource & Environmental Management) Independent non-executive director Other directorships and roles (current and recent): Alexandra Gartmann joined the board on 23 September 2022. Alexandra brings over 25 years of deep industry experience in rural, agriculture and community focused organisations and is the former chief executive officer of the Rural Bank, a division of the Bendigo & Adelaide Bank. Her executive career includes roles such as Bendigo & Adelaide Bank Executive Marketing, Partnerships & Corporate Affairs and chief executive officer of Rural Bank and as chief executive officer of the Foundation for Rural & Regional Renewal and The Birchip Cropping Group. Alexandra serves on boards across agriculture, banking and the environment. • Chair of the Victorian Agriculture & Climate Change Council • Trustee of the Helen MacPherson Smith Trust • Director of the Australian Farm Institute • Former chair of the CSIRO Agriculture and Food Advisory Council • Former member of the National Rural Advisory Council Board committee memberships: • Member of the risk and compliance committee • Member of the audit committee • Member of the nomination committee Dr David Jones BA (Hons) Science, PhD Independent non-executive director Other directorships (current and recent): David Jones joined the board on 23 June 2021. • Chairman of Enko Chem Inc (since July 2021) David has held chair and director roles in large global agricultural business. His experience includes as Head of Business Development at Syngenta and former Chairman of Zeneca China, Arysta Life Science, and Plant Impact. David has broad leadership experience in operations, strategy, mergers and acquisitions and intellectual property in multiple jurisdictions including Asia, Latin America, Europe and the United States. • Chairman of BigSis (since 2020) • Former Chairman of Commercial Advisory Board of Enko Chem Inc (2019 to July 2021) Board committee memberships: • Member of the innovation committee • Member of the nomination committee 32 Nufarm Limited | Annual Report 2022Peter Margin BSc(Hons), MBA Independent non-executive director Other directorships (current and recent): Peter Margin joined the board on 3 October 2011. • Deputy chairman of Bega Cheese Limited Peter has many years of leadership experience in major Australian and international food companies including executive chairman of Asahi Holdings (Australia) Pty Ltd, chief executive/managing director of Goodman Fielder Ltd and before that chief executive/managing Director of National Foods Ltd. (since September 2020) • Director of Costa Group Holdings Limited (since June 2015) • Former chairman of Asahi Holdings (Australia) Pty Ltd (to December 2020 Board committee memberships: • Chair of the human resources committee • Member of the risk and compliance committee • Member of the nomination committee • Member of the innovation committee Marie McDonald LLB(Hons), BSc(Hons) Independent non-executive director Other directorships (current and recent): Marie McDonald joined the board on 22 March 2017. • Director of CSL Limited (since 14 August 2013) Marie is widely recognised as one of Australia’s leading corporate and commercial lawyers having been a Senior Partner at Ashurst until 2014 where she specialised in mergers and acquisitions, corporate governance and commercial law. Marie was chair of the Corporations Committee of the Business Law Section of the Law Council of Australia from 2012 to 2013, having previously been the deputy chair, and was a member of the Australian Takeovers Panel from 2001 to 2010. Marie is currently a member of the Melbourne University Law School Foundation Board Lynne Saint BCom, GradDip Ed Studies, FCPA, FAICD • Director of Nanosonics Limited (since 24 October 2016) • Director of Walter and Eliza Hall Institute of Medical Research (since October 2016) Board committee memberships: • Member of the nomination committee • Member of the audit committee • Member of the risk and compliance committee • Member of the innovation committee Independent non-executive director Other directorships (current and recent): Lynne Saint joined the board on 18 December 2020. • Director of Iluka Resources (since 24 October 2019) Lynne has broad financial and commercial experience from a global career including more than 19 years with Bechtel Group where she served as chief audit executive and chief financial officer of the Mining and Metals Global Business Unit. Her expertise encompasses strong financial skills, corporate governance, enterprise risk, supply chain risk and project management • Ventia Services Group Limited (since 1 July 2021) Board committee memberships: • Chair of the audit committee • Member of the human resources committee • Member of the nomination committee Kate Hall Company Secretary LLB(Hons), Bsc and LLM(IP) Kate Hall was appointed company secretary on 20 April 2022. Kate has more than 20 years’ Australian and international experience as a general counsel and senior executive leading legal, intellectual property, governance, risk and compliance functions. Most recently, she was general counsel of Mayne Pharma, an international, ASX listed pharmaceutical company where she had oversight of the company secretariat function. Kate was also special counsel at Minter Ellison and IP counsel at Royal Dutch Shell in The Hague. 33 Nufarm Limited | Annual Report 2022Key Management Personnel Greg Hunt Managing Director and Chief Executive Officer Non-independent executive director 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 has considerable executive and agribusiness experience. Greg had a successful career at Elders before being appointed managing director of Elders Australia Limited, a position he held between 2001-2007. After leaving Elders, Greg worked with various private equity firms focussed on the agriculture sector and has acted as a corporate advisor to Australian and international organisations in agribusiness related matters. Paul Townsend Chief Financial Officer Paul Townsend joined Nufarm in December 2020. His 30-year career record spans across a variety of industries and includes CFO roles with Asaleo Care, Pacific Hydro, Futuris Automotive Group and most recently Monash University. David Allen Group Executive, Manufacturing and Supply Chain Dave joined Nufarm in 2022 with a highly successful track record within global organisations of delivering strategic change, business transformation and capability development. Dave's areas of expertise include manufacturing, operations, procurement, sales and operations planning, logistics and IT. 34 Nufarm Limited | Annual Report 2022Corporate Governance Statement 1 Introduction 2 Board of directors Nufarm is committed to ensuring that its policies and practices reflect a high standard of corporate governance. The board considers that Nufarm’s governance framework and adherence to that framework are fundamental in demonstrating that the directors are accountable to shareholders, are appropriately overseeing the management of risk and promoting a culture of ethical, lawful and responsible behaviour within Nufarm. This Corporate Governance Statement (Statement) outlines the governance framework of Nufarm Limited and its controlled entities (Nufarm or company) for the year ended 30 September 2022. During FY22, the board continued its structured succession process taking into consideration the current skills on the board and the expected requirements into the future. During the year, Frank Ford retired from the board and Alexandra Gartmann was appointed as an independent non-executive director. Toshikazu Takasaki resigned from the board in May 2022 following the sale by Sumitomo Chemical Company of its shareholding. Key governance policies are reviewed regularly to ensure they continue to reflect a high standard of corporate governance and comply with the ASX Corporate Governance Principles and Recommendations 4th Edition (ASX Principles). Nufarm, as a listed entity is required to comply with the Corporations Act (Cth), the ASX Listing Rules and other Australian and international laws and is required to report on the extent to which it has complied with the ASX Principles. Nufarm’s key governance documents, including constitution, board and board committee charters and key policies are available on the company’s website at https://nufarm.com/ investor-centre/corporate-governance/. The Corporate Governance Statement is current as at 8 December 2022 and has been approved by the board. 2.1 Board role and responsibilities The constitution provides that the business and affairs of Nufarm are to be managed by or under the direction of the board. Ultimate responsibility for governance and strategy rests with the board. The role of the board is to represent shareholders, and to demonstrate leadership and approve the strategic direction of Nufarm. The board is accountable to the shareholders for the company’s performance and governance. The board charter sets out the board’s key responsibilities, the matters the board has reserved for its own consideration and decision making and the authority it has delegated to the Managing Director and Chief Executive Officer (CEO). The board's responsibilities, as set out in the board charter, include: • appointment and termination of the CEO and the company secretary and ratification of the appointment of the Chief Financial Officer (CFO) and Key Management Personnel (KMP) and the terms of their employment contracts including termination payments; • approving the remuneration policies and practices of the board, the CEO and the CEO’s direct reports; • approving commitments, capital and non-capital items, acquisitions and divestments above authority levels delegated to the CEO; • approving the overall capital structure of Nufarm including any equity related transactions and major financing arrangements; • approving the annual and half year financial and director reports including the full year operating and financial review, remuneration report and corporate governance statement; • approving the dividend policy and determining the dividends to be paid; • approving management’s development of corporate strategy; • reviewing and approving the annual budget, strategic business plans, balance sheet and funding strategy; • approving the succession plans and processes for the chair, directors, CEO and the CEO’s direct reports; • approving the Diversity and Inclusion Policy and measurable objectives for achieving diversity across Nufarm and monitoring progress in achieving those objectives; • approving governance practices and policies including Continuous Disclosure Policy, Code of Conduct, Anti-Bribery Policy and Speak Up (Whistleblower) Policy; • approving ASX releases as set out in the Continuous Disclosure Policy; • appointing the chair of the board; and • appointing directors to casual vacancies and recommending their election to shareholders at the next Annual General Meeting. A copy of the board charter which sets out the role and responsibilities of the board in more detail can be found in the corporate governance section of Nufarm’s website. 35 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued Delegation to management 2.3 Board composition The board currently has seven non-executive directors and the CEO. Details of the directors, including their qualifications, experience, date of appointment and independent status are set out in the Directors Report on pages 52-53 in the 2022 Annual Report. The constitution provides that the company is not to have more than 11 or less than three directors. Until its divestment in May 2022, Sumitomo Chemical Company, as a major shareholder in the company, was entitled to have one nominee director on the board. Toshikazu Takasaki was Sumitomo’s nominee until his resignation effective 31 May 2022, and was not considered independent. In assessing the composition of the board regard is given to the following principles: • the role of the chair and the CEO should not be filled by the same person; • the chair must be an independent non-executive director; • the CEO must be a full-time employee of the company; • the majority of the board must be independent non-executive directors; and • the board should represent a broad range of qualifications, experience, expertise and diversity. Changes during the year During the year, Frank Ford retired at the conclusion of the 2021 Annual General meeting, and Toshikazu Takasaki resigned on 31 May 2022. The board, with the assistance of the nomination committee, continued to progress board renewal during the year with the appointment of Alexandra Gartmann as a non-executive director on 23 September 2022. 2.4 Director skills, experience and attributes The key attributes that directors must possess are set out in the board charter and include: • honesty, integrity and a proven track record of creating value for shareholders; • an ability to apply strategic thought; • a preparedness to debate issues openly and constructively and to question, challenge and critique; • a willingness to understand and commit to the governance framework of the company; and • an ability to devote sufficient time to properly carry out the role and responsibilities of the board. The board has delegated to the CEO responsibility for the day-to-day management of the company's affairs and implementation of the strategic objectives, the annual budgets and policy initiatives. The CEO is accountable to the board for all authority delegated to management and for the company’s performance. The CEO is required to operate in accordance with board approved policies and delegations of authority and management must supply the board with information in a form, timeframe and quality that will enable the board to discharge its duties effectively. The CEO is required to report to the board in a spirit of openness and trust and is required to ensure that all decisions are made lawfully, ethically and responsibly. 2.2 Board meetings and attendance The board meets as often as required. During the reporting period, the board met 10 times including a strategy board session. While regularly scheduled meetings are generally held face to face, some meetings were held virtually or as hybrid meetings. In addition to the company secretary, the CFO regularly attends all board meetings by invitation. Other members of management attend meetings by invitation. During regularly scheduled meetings, the board holds a closed session (attended by non-executive directors only), which provides non-executive directors with an opportunity to raise issues in the absence of management. Details of attendance at board and standing board committee meetings during FY22 can be found in the Annual Report on page 54. Key Activities undertaken by the board during the year The board considered a range of matters during FY22, including: • reviewing and agreeing to adopt updates to governance policies including the Human Rights Policy, Anti-bribery and Anti-corruption Policy, Continuous Disclosure Policy and Speak Up (Whistleblower) Policy and the Modern Slavery Statement; • continuing the board succession process resulting in the appointment of Alexandra Gartmann as a non-executive director from 23 September 2022; • participating with management in the annual review of strategy and monitoring management’s execution of strategy; • reviewing Nufarm’s capital structure; • reviewing the delegation of authority to management to ensure it remains appropriate; • overseeing the financial performance and key metrics of the company including receiving regular updates of the impact of COVID-19 on the company; • reviewing the risk management system including the Risk Management Policy and Framework; and • approving the appointment of KMP Dave Allen and his remuneration package. 36 Nufarm Limited | Annual Report 2022Skills matrix During FY22, as part of the ongoing succession planning for the board, the nomination committee continued to review the board skills matrix which took into consideration the skills and experience the board currently requires but also the skills and experience that will be required for the company during its next phase of development. The board skills matrix at 30 September 2022 and the assessment of the current directors is included in the following table. Skills/Experience No of Directors with skill Manufacturing & Integrated Supply Chain Management in High Risk Environment Relevant experience in international manufacturing and/or integrated supply chain management including demonstrated ability to improve production systems Customer Relations Relevant international experience in customer service delivery and/or marketing of products, including brand marketing, e-commerce and use of digital technology Technology Experience in R&D, seed technologies or emerging technologies including commercialisation Agricultural Experience Experience in crop protection or agricultural industry obtained through a large international company Finance board audit experience or a senior executive or equivalent experience in financial accounting and reporting, corporate finance and internal financial controls/audit Risk Relevant experience and understanding of risk management frameworks and controls, including HSEC and sustainability, and the ability to oversee mitigation strategies and identify emerging risks Mergers, Acquisitions, JVs, Partnerships, Alliances, Divestments & Integrations Relevant experience in merger and acquisition transactions (including JV’s etc) raising complex financial, regulatory and operational issues Strategy and Transformation Experience in developing and executing successful strategies and/or transformation in a complex environment to deliver a sustained and resilient business Corporate Governance and Compliance Experience serving on boards in different industries, including publicly listed. Awareness of leading practice in corporate governance and compliance with a demonstrated commitment to achieving those standards Regulatory, Government, Public Policy Relevant experience identifying and managing legal, regulatory, public policy and corporate affairs issues People, Culture and Remuneration Relevant experience overseeing or implementing a company’s culture and people management framework, including succession planning and setting and applying remuneration policy and frameworks linked to strategy Board diversity (as at 30 September 2022) Tenure of non-executive directors (as at 30 September 2022) Female Male 3 5 0–3 years 3–6 years 6–9 years 9+ years 4 1 0 2 Average tenure = 4.7 years 5 7 5 6 8 8 7 6 8 7 7 37 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 2.5 Chair 2.8 Conflict of interest The chair of the board is John Gillam, an independent non- executive director. The chair is responsible for the leadership of the board and for encouraging a culture of openness and debate amongst the directors to foster a high performing and collegiate board. The chair also serves as the primary link between the board and management. 2.6 Board succession planning The board manages succession planning for non-executive directors with the assistance of the nomination committee and for the CEO with the assistance of the human resources committee. The board has a non-executive tenure policy that provides for non-executive directors to retire after nine years (or twelve years in the case of a chair who has served in the role of chair for less than six years) from the first date of election of shareholders. The board may in exceptional circumstances, exercise discretion to extend the maximum term where it considers such an extension is in the best interests of the company. Gordon Davis and Peter Margin have both held office for 11 years. The board has taken this into consideration as part of ongoing board succession planning. All non-executive directors are required to stand for re-election every three years. The nomination committee will undertake a review of the directors retiring by rotation and make a recommendation to the board on whether their re-election is to be supported. The company provides all material information in its possession concerning the director standing for re-election in the notice of meeting and accompanying explanatory notes. During FY22 Frank Ford retired as a director at the 2021 AGM and Toshikazu Takasaki resigned as a director in May 2022 following the sale by Sumitomo Chemical Company of its shareholding. Alexandra Gartmann was appointed non- executive director on 23 September 2022. 2.7 Director independence The board is committed to ensuring the majority of non- executive directors are independent. The board considers directors to be independent where they are independent of management and free from any interest, position, association or relationship that might influence or might reasonably be perceived to interfere with the exercise of their unfettered and independent judgement. During FY22 all non-executive directors were considered to be independent, except for Toshikazu Takasaki, who was a nominee of Sumitomo, a substantial shareholder in the company, until his resignation as a director effective 31 May 2022. In considering the matter of independence, the board considered each director’s tenure and concluded that Gordon Davis and Peter Margin had not held office for such a period as to interfere with the exercise of independent judgement. In reaching this conclusion, the board noted that neither had formed associations with management that might compromise their ability to exercise independent judgement. The company has a Conflict of Interest Policy to ensure that directors disclose any conflicts of interest and that any conflicts are appropriately addressed. In the event a director does have an actual or potential conflict, the director does not receive the relevant board or committee papers and must absent themselves from the room when the board or committee discusses and votes on matters subject to the conflict. This continues unless the other directors resolve otherwise. The director cannot access the minutes of the board or committee meeting in relation to the conflict. During the period that Sumitomo Chemical Company remained a substantial shareholder, the board had in place an information exchange protocol with Sumitomo Chemical Company to ensure that the Sumitomo nominee director could discharge their duties as a director while also ensuring that they did not receive any competitive information or participate in discussions regarding competitive information. 2.9 Director appointment, induction training and continuing education When considering new appointments to the board, the nomination committee oversees the preparation of a role description which includes the key attributes identified in the board charter and the relevant skills taking into account the principles set out in section 2.3 and any gaps identified in the board skills matrix. This role description is provided to an external search firm who assists in undertaking the search. When suitable candidates are identified, the nomination committee will interview a short list of candidates before making a recommendation to the board. All directors will interview the candidate prior to the board considering formal appointment. All non-executive directors on appointment are required to sign a letter of appointment which sets out the terms and conditions of their appointment including; • duties and responsibilities of a director; • participation in induction training and continuing education; • remuneration; • expectation around time commitments for the board and relevant committee meetings; • the requirement to disclose directors’ interests on an ongoing basis; • access to professional advice; and • indemnity, access and insurance arrangements. Prior to appointment all directors, are subject to extensive background and screening checks. All new senior executive appointments are also subject to extensive background and screening checks. With the exception of the CEO, all directors appointed by the board to a casual vacancy are required to stand for shareholder election at the next AGM. The company provides all material information in its possession concerning the director standing for re-election in the notice of meeting and accompanying explanatory notes. 38 Nufarm Limited | Annual Report 2022Induction training is provided to all new directors. This includes discussions with the CEO, CFO, company secretary and other senior executives and the option to visit the company’s sites in Australia on appointment or with the board during an overseas board meeting. Induction materials include information on the company’s strategy and financial performance, full information on the board including all board and committee charters, recent board and committee minutes, information on the risk management framework and the risk appetite statement approved by the board, all board policies including the Code of Conduct and the obligations of directors. All directors are expected to undertake ongoing professional development to develop and maintain the skills and knowledge required to discharge their responsibilities. Directors are provided with information papers and presentations on developments in the law including continuous disclosure, industry related matters and any new emerging developments that may affect the company. 2.10 Shareholding requirements for non-executive directors The company has a Non-executive Director Minimum Shareholding Policy which applies to all non-executive directors except for any nominee directors appointed to the board. The policy requires that non-executive directors are required to accumulate and then hold a minimum holding of Nufarm securities equivalent to 100 per cent of their total pre-tax annual base fee including superannuation. This minimum holding is to be achieved within five years of appointment or for those non-executive directors who were a member of the board at the date the policy was adopted, within five years of the adoption. Further details are set out in the Remuneration Report on pages 56 to 76 of the Annual Report. 2.11 Board performance evaluation The board is committed to regularly reviewing its own performance and effectiveness as well of those of the committee and individual directors. The board conducted an externally facilitated review during FY20 which focussed on chair succession, board succession planning and board capabilities, board calendar and papers, executive succession planning and the structure of the board committees. All actions from this review have been implemented. During FY22 the board continued to monitor the effectiveness of these actions to ensure they remained appropriate. The next external review will be completed in FY23. An assessment of director performance is undertaken by the nomination committee with feedback sought from all directors prior to the board considering recommending a director for re-election to shareholders at an AGM. 2.12 Independent professional advice The board and its committees may access independent experts and professional counsel for advice where appropriate and may invite any person from time to time to attend meetings. 2.13 Company secretary The details of the company secretary, including their qualifications, are set out in the Annual Report 2022 on page 53. The appointment and removal of the company secretary is a matter for the board. The company secretary is accountable to the board for the effectiveness of the implementation of the corporate governance processes, adherence to the board’s principles and procedures and co-ordinates all board and board committee business, including agendas, papers, minutes, communication and filings. All directors have direct access to the company secretary. 3 Committees 3.1 Audit committee To assist the board to carry out its responsibilities, the board has established an audit committee, a risk and compliance committee, a human resources committee, an innovation committee and a nomination committee. Each of the permanent committees has a charter which sets out the membership structure, roles and responsibilities and meeting procedures. Generally, these committees review matters on behalf of the board and, as determined by the relevant charter: • refer matters to the board for decision, with a recommendation from the committee; or • determine matters (where the committee acts with delegated authority), which the committee then reports to the board. The company secretary provides secretarial support for each committee. Membership of each committee is highlighted in the relevant section below. The role of audit committee is to assist the board in fulfilling its responsibilities in respect of the company’s financial statements, the effectiveness of internal and external audit processes, internal control systems, treasury and taxation practices and compliance with relevant legal and regulatory and best practice requirements within the responsibility of the committee. The audit committee has a charter which sets out the roles and responsibilities of the committee in more detail and can be found in the corporate governance section of Nufarm’s website. The audit committee charter was last reviewed in July 2021. Membership and meetings The audit committee consists of: • a minimum of 3 members of the board, all of whom are non-executive directors; • a majority of independent directors (as defined in the board charter); and • an independent chair, who is not chair of the board. 39 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued The members of the audit committee during the reporting period were: Name Membership status Lynne Saint (Chair) Member and chair for the entire period Gordon Davis Member for the entire period Marie McDonald Member for the entire period Alexandra Gartmann Member from 29 September 2022 Frank Ford Member until 17 December 2021 At least one member of the committee must have formal accounting qualifications with recent and relevant experience. The committee as a whole is to have sufficient understanding of the industry in which Nufarm operates. The board is satisfied that the current composition of the committee satisfies this requirement. The external auditors, the chair of the board, the CEO, the CFO, the group financial controller, the head of internal audit (if applicable), the group tax manager, group treasurer and the internal audit service provider partner attend meetings of the audit committee at the invitation of the committee chair. All board members are invited to attend all audit committee meetings. The details of the audit committee meetings are set out in the Directors’ Report in the 2022 Annual Report on page 54. Activities during the year The key activities undertaken by the audit committee during the year include: • reviewing the scope, plan and fees for the external audit for the period and overseeing the work performed by the external auditors; • reviewing the independence and performance of the external auditor; • reviewing significant accounting, financial reporting and related issues raised by management and the external auditor; • monitoring developments in significant accounting, financial reporting and taxation matters and considering the implications for the company; The committee has a policy on the provision of non-audit related services by the external auditor which sets out the company’s approach to engaging the external auditor for the performance of non-audit related services with a view to ensuring their independence is maintained. This policy was reviewed and updated in February 2021. A copy of the policy on the provision of non-audit related services by the external auditor can be found in the corporate governance section of Nufarm’s website. The external auditor attends the company’s AGM and is available to answer questions from investors relevant to the audit. 3.2 Risk and compliance committee The role of the risk and compliance committee is to assist the board in relation to the oversight of financial and non-financial risk management and compliance management within Nufarm. The risk and compliance committee has a charter which sets out the roles and responsibilities of the committee in more detail and can be found on the corporate governance section of Nufarm’s website. The key responsibilities and functions of the risk and compliance committee are: • overseeing the risk profile and recommending the risk appetite for the company to the board for approval; • considering and recommending to the board the risk management framework in respect of both financial and non-financial risk, (including the health, safety and environment framework); • recommending for approval by the board the company’s Risk Management Policy and Health, Safety and Environment Policy; • overseeing the company’s response to ESG responsibilities and reporting requirements, including modern slavery and climate change; • overseeing the company’s insurance program; • overseeing compliance management; and • receiving reports of any material breaches of the Anti-Bribery and Anti-Corruption and Speak Up (Whistleblower) Policies. Membership and meetings The risk and compliance committee consists of: • a minimum of 3 members of the board, all of whom are • approving the internal audit plan for FY22 and reviewing the non-executive directors; outcome of internal audit reviews and the plans to implement any remedial action; • reviewing and monitoring improvements to the company’s internal control and accounting practices; and • reviewing and recommending to the board the approval of the half year and annual financial statements. External audit The audit committee reviews the external auditor’s scope of work, including the external audit plan, to ensure it is appropriate, having regard to the company’s key risks. The external auditor reports to the committee at each meeting and is given an opportunity to raise issues with the committee in the absence of management. The committee also reviews the performance and independence of the external auditor on an annual basis. KPMG is the external auditor. • a majority of independent directors; and • an independent director as chair. The members of the risk and compliance committee during the reporting period were: Name Membership status Gordon Davis (Chair) Member for the entire period Peter Margin Member for the entire period Marie McDonald Member for the entire period Alexandra Gartmann Member from 29 September 2022 Toshikazu Takasaki Member until 31 May 2022 Non committee members, including members of management, attend meetings of the committee at the invitation of the committee chair. 40 Nufarm Limited | Annual Report 2022Activities during the reporting period The key activities undertaken by the committee during this period were: • reviewing the company’s key risks and risk management framework including recommending to the board the adoption of a revised Risk Management Policy and framework and confirming that the framework was sound and that the company is operating with due regard to the risk appetite set by the board; Further details on the company’s remuneration framework, the policies and practices regarding the remuneration of directors, as well as the contractual arrangements, remuneration and performance evaluation of other members of KMP, are reflected in the Remuneration Report on pages 56 to 76. The progress against the company’s inclusion and diversity objectives are detailed in the inclusion and diversity section of this Statement on pages 43–47. Membership and meetings • reviewing management reports on the company’s key financial The human resources committee consists of: and non-financial risks and risk management program including contemporary and emerging risks such as impacts of COVID-19, geopolitical, cyber-security, privacy and data breaches and climate change; • a minimum of 3 members of the board, all of whom are non-executive directors; • a majority of independent directors; and • receiving regular reports on health, safety, environment and • an independent director as chair. quality matters; • recommending to the board the approval of the Modern Slavery Statement for FY21; The members of the committee during this period were: Name Membership status • approving the 2021 Annual Sustainability Review; and Peter Margin (Chair) Member for the entire period • receiving regular reports on the company’s compliance program. 3.3 Human resources committee Gordon Davis Lynne Saint Member for the entire period Member for the entire period The role of the human resources committee is to assist the board to perform its functions in relation to remuneration policies and practices, development, retention and termination of the CEO and KMP. A standing invitation is issued to the managing director and CEO, CFO and group executive, people and performance for all meetings. Activities during the year The key activities undertaken by the committee during the year included: • utilising data provided by remuneration consultants to review managing director and CEO and other KMPs executive remuneration; • endorsing the adoption by the board of Equity Incentive Plan Rules; • monitoring the progress on measurable objectives for achieving gender diversity including recommending the approval of the FY21 Inclusion and Diversity report; • sponsoring academic research investigating why women leave front line manufacturing and developing retention strategies; • receiving regular updates on progress with people plans and succession planning; • reviewing and recommending to the board the outcome of the FY21 incentive plans and the metrics for the FY22 incentive plans; and • approving the remuneration report for FY21. The human resources committee has a charter which sets out the roles and responsibilities of the committee in more detail and can be found on the corporate governance section of Nufarm’s website. The committee’s key responsibilities and functions are to: • oversee the company’s remuneration, recruitment, retention and termination policy and procedures and its application to the CEO and the KMPs; • assess the performance of the CEO and assist the chair with reviews of the CEO’s performance; • review and make recommendations to the board on the CEO succession plans; • review and make recommendations to the board regarding the remuneration and benefits of non-executive directors; • review the annual remuneration report; • review and make recommendations to the board on the Inclusion and Diversity Policy and the measurable objectives for achieving the inclusion and diversity outcomes; and • make recommendations to the board on the adoption of the company’s Code of Conduct. The process to engage remuneration consultants is included in the human resources charter who will provide independent remuneration advice, as appropriate, on director fees and KMP remuneration, structure, practice and disclosure. Remuneration consultants are engaged directly by the chair of the human resources committee and report directly to the committee. During the period data provided by remuneration consultants engaged through this process was utilised to review KMP and Nufarm Leadership Team (NLT) remuneration for FY22. 41 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 3.4 Nomination committee 3.5 Innovation committee The role of the nomination committee is to assist the board to oversee the composition, performance, succession planning of the board as well as the induction and ongoing training for directors. The nomination committee has a charter which sets out the roles and responsibilities of the committee in more detail and can be found on the corporate governance section of Nufarm’s website. Membership and meetings The role of the innovation committee is to assist the board in the oversight of the company’s strategy, policies and procedures with regard to the development and adoption of innovation solutions and technologies in crop protection and seed technologies. The innovation committee has a charter which sets out the roles and responsibilities of the committee in more detail and can be found on the corporate governance section of Nufarm’s website. The innovation committee’s key responsibilities and functions are: The membership of the nomination committee includes: • recommending the Product Research and Development Policy • All non-executive directors (with the majority to be independent non-executive directors) with the chair to be an independent non-executive director; • where the board chair is the committee chair, he or she will not chair the committee when it is dealing with the appointment of a successor to the chair. The members of the nomination committee during this period were: Name Membership status John Gillam (Chair) Gordon Davis David Jones Chair and member for the entire period Member for the entire period Member for the entire period Marie McDonald Member for the entire period Peter Margin Lynne Saint Member for the entire period Member for the entire period Alexandra Gartmann Member from 23 September 2022 Toshikazu Takasaki Member until 31 May 2022 Activities during the year The key activities undertaken by the nomination committee related to succession planning for the board including making a recommendation to appoint Alexandra Gartmann as an independent non-executive director. to the board for approvals; • reviewing the strategic direction of the company’s approach to innovation in crop protection and seed technologies including the processes for reviewing existing and emerging trends in innovation that may affect the company’s strategic plan; • oversight and review of any innovation technologies in potential acquisitions; • monitoring and reviewing the company’s research and development capital allocation policies and procedures for crop protection and seed technologies; • monitoring post implementation results including measurable benefits for all new key product development; • reviewing management of the intellectual property portfolio; • reviewing and making recommendations on commercialisation opportunities for the company’s technology and intellectual property; and • reviewing relationships with key third parties necessary to further develop the company’s adoption of innovative solutions and technologies. Membership and meetings The committee consists of: • a minimum of 3 members of the board with the majority to be independent non-executive directors; and • an independent director as chair. The members of the committee during the relevant period were: Name Membership status Dr David Jones (Chair) Member for the entire period Marie McDonald Member for the entire period Peter Margin Member for the entire period Non-committee members, including members of management attend meetings of the committee at the invitation of the committee chair. 42 Nufarm Limited | Annual Report 20224 Inclusion and diversity Nufarm is a global organisation that nurtures an inclusive work environment where individuals are valued for their diversity, can bring their whole self to work and be empowered to reach their full potential. We know diversity fuels innovative thinking and decision-making and contributes to the richness of Nufarm and our ability to solve for the customer. We are stronger when our plans and operations reflect the thinking of all our people, representing a broad range of backgrounds, cultures and experience. Maintaining a diverse and inclusive culture with varied perspectives and backgrounds is critical for Nufarm to remain innovative and to grow while creating a sense of belonging for all. We know from our engagement surveys that: • Creating a safe place to work is a priority. • People feel comfortable to be themselves at work and have a sense of belonging at Nufarm. • Our leaders value different perspectives. This year we implemented the initial phase of our 2022–2025 Inclusion and Diversity (I&D) Strategy with oversight and leadership from our executive I&D steering committee. Our strategy will allow us to embed inclusion and diversity in the way we conduct our business, wherever we operate around the world. Some activities were: • continuing to improve our employee satisfaction and inclusion and diversity items measured through Nufarm Voice, our employee continuous listening strategy • maintaining employee wellbeing and engagement during Ukraine and Russian war through crisis management and assistance such as donations and offering short-term housing support. Nufarm Voice recognized these efforts, with 88 per cent of our Ukraine and Russian employees sharing high employee satisfaction of 91 – 12 points higher than our company average and 19 points higher than 2021 • launching LifeWorks as our global wellness platform which gives ALL employees access to the employee assistance program, in 48 languages, and seeing 24 per cent uptake since the July launch • holding five executive inclusion and diversity steering committee meetings • celebrating diversity across the globe with International Women’s Day, Black History Month in North America, and European Diversity Week • launching a suite of safety shares focused on creating a psychologically safe work environment through inclusive behaviours and raising quiet voices • intentionally focusing on attracting diverse and female talent through: – inclusive interview training for all managers – targeted shortlists – gender diverse interview panels – talent mapping – refreshed referral programs that encouraged referral of underrepresented candidates • being recognised as a relevant employer under the Workplace Gender Equality Act and as a gender diverse employer, endorsed by work180 in Australia and North America • being recognised as AFR BOSS 2022 Best Places to Work for Mining, Agriculture and Utilities sector. 4.1 Nufarm’s workforce At the end of this reporting period, we employed the full-time equivalent of 2,811 people (2021: 2,678), an increase of 133 full-time equivalents. Most of our workforce remain full-time: 89 per cent are permanent employees (2021: 89 per cent) and 11 per cent are contract or non-permanent employees (2021: 11 per cent). Where the role allows it, we support flexible work arrangements, with 3 per cent of our workforce operating under part-time arrangements (2021: 2 per cent). Flexible work has increased since 2021 when we introduced our global flexible working guidelines for all employees. The number of men participating in part-time work has doubled since 2021. Males now represent 23 per cent of our part-time workforce compared with females, who represent 77 per cent. We continue to recruit across the career lifespan: 32 per cent (2021: 41 per cent) of new hires are aged under 30 years, 51 per cent (2021: 46 per cent) are aged 30–50 years, and 17 per cent are over 50 (2020: 13 per cent). 2022 FTE by Geography 2022 FTE by Function Asia-Pacific Europe Latin America North America 42% 36% 4% 18% Supply Chain Sales Portfolio Solutions Finance Corporate 47% 32% 9% 7% 2% Information Technology 1% Human Resources 2% 43 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 4.2 Women at Nufarm Nufarm focuses on removing barriers to equality and being an inclusive place to work. We are committed to working towards our target of having not less than 35 per cent of either gender represented in our workforce by 2025. We are also pursuing a new target to have 40:40:20 representation at our senior leadership category (CEO-1 and CEO-2). This represents 40 per cent who identify as female, 40 per cent who identify as male and 20 per cent who identify as male, female, or other in our senior leadership by 2030. We saw improved female representation across all areas of the business this year: Board up 18% Leadership up 6% 43 per cent of our board’s non-executive board members are female (2021: 25 per cent), as a result of either board appointments and resignations during 2022. Female representation in our executive and senior management employee category (including KMP) increased 6 per cent to 31 per cent (2021: 25 per cent): • 80 per cent of executive and senior management appointments were female, (2021: 56 per cent); 13 per cent of those came from within our internal talent pool. Female representation across the business increased to 27 per cent (2021: 26 per cent): Nufarm up 1% • 37 per cent of all new appointments were female (2021: 30 per cent). • 28 per cent of leavers were female (2021: 28 per cent). • Promotions of females was higher, at 35 per cent (2021: 28 per cent). Female representation increased in all regions except North America and increased across all functions except Finance, which remained consistent with higher female representation. We continued to focus on improving gender diversity in our commercial and manufacturing functions and pursued targeted objectives to address the gender diversity gap. Gender Diversity by Geography Female Male Grand Total Female % Female% Grand Total 30 Sept 2022 30 Sept 2021 Asia-Pacific Europe Latin America North America Gender Diversity by Function Supply Chain Sales Portfolio Solutions Finance Corporate Information Technology Human Resources Gender by Employee Category Non-executive board Key management personnel Exec and senior management (CEO-1 and CEO-2) People manager Professionals Manufacturing shop floor Administration Other 293 298 26 150 272 188 109 109 34 9 46 3 0 28 82 348 137 168 4 896 719 87 342 1,039 704 135 89 36 32 8 4 3 60 341 795 763 67 15 1,189 1,017 113 492 2,811 1,312 892 244 198 70 41 54 2,811 7 3 88 423 1,143 900 235 19 25% 29% 23% 30% 27% 21% 21% 45% 55% 49% 22% 85% 27% 43% 0% 32% 19% 30% 15% 72% 21% 23% 27% 20% 31% 26% 20% 18% 43% 55% 46% 20% 79% 26% 25% 0% 25% 21% 28% 10% 70% 23% 1,168 983 99 428 2,678 1,280 816 236 166 85 51 44 2,678 8 3 91 471 1,189 676 218 30 * Key management personnel as listed in the annual report and include CEO and some direct reports. ** CEO-1 refers to the layer of senior executives reporting directly to the CEO; CEO-2 the next layer of senior management reporting to those senior executives. 44 Nufarm Limited | Annual Report 20224.3 Cultural diversity Our global footprint gives us a culturally diverse workforce of leaders and teams representing local cultures and customers in more than 100 countries. • Nufarm’s employee self-disclosed data indicate that our workforce comes from 81 different countries and can speak over 40 different languages. • 14 per cent of non-executive board members (2021: 25 per cent) and 46 per cent of CEO-1 executive team members reside outside Australia. • Our executive and senior management team remains culturally diverse, representing at least 20 different cultural backgrounds. • Of this self-disclosed data 18 per cent are currently working in a country other than that of their birth. This represents 9 per cent of our organisation (2021: 8 per cent). • Of the employees that are working in a country other than birth 42 per cent are female and 58 per cent are male. 2022 Gender diversity of employees working in a country other than birth 2022 Location of our employees working in a country other than that of their birth Female Male 42% 58% Asia-Pacific Europe Latin America North America 51% 35% 0% 14% 4.4 Nufarm Voice Employee feedback uncovers opportunities to improve and strengths to leverage towards building a better Nufarm and a more inclusive culture. This year we conducted three Nufarm Voice employee engagement surveys and introduced onboarding surveys to speed up time to perform and sense of belonging as part of our continuous employee listening strategy. The survey runs every four months and while participation is not compulsory it is encouraged. We saw gradual improvement towards the top quartile benchmark: high participation continued at 78–80 per cent and overall employee satisfaction improved slightly, from 77 to 79 over the year – both of these results are close to the top quartile benchmark in the GLINT database (2022). Nufarm Voice empowers managers to better use anonymous, confidential employee feedback on a regular basis to fuel meaningful conversations and prioritize timely action that responds to this feedback and contributes to positive change: • Nufarm Voice puts our managers in the driver’s seat to act on what their teams are saying about ways to create positive change. • We conduct shorter and more frequent surveys so we can continuously listen to the voice of our people. • The results are delivered with suggested resources and checklists so managers can start to make positive change immediately. Nufarm Voice Inclusion Items 2022 Overall engagement (eSat) Authenticity: I feel comfortable being myself at work. Inclusion: Leaders at Nufarm value different perspectives. Speak my mind: I feel free to speak my mind without fear of negative consequences. Equal opportunity: Regardless of background, everyone at Nufarm has equal opportunity to succeed. Belonging: I feel a sense of belonging at Nufarm. While Nufarm Voice is a comprehensive employee engagement platform, we use the results to understand, cultivate and measure our progress towards building a more inclusive culture. Since we introduced the survey, we can see our inclusion and diversity efforts progressing positively, with most of the identified inclusion items at or above the top quartile benchmark. Although females report slightly lower engagement across all the identified inclusion items, their response has improved more than that of males across most items since 2021. Recent result versus benchmark Change since FY21 Female versus male response Change in female response 79 83 73 73 77 79 +1 +1 (1) – – +2 +2 +1 +2 +1 – na (3) – (1) (2) (5) (2) * Benchmarked to the top quartile of organisations represented in the GLINT database, 2022. +1 +2 +2 +3 (1) na 45 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 4.5 Focus for FY25 and progress towards achievement We are cultivating a high performing culture – one our employees create as they solve for the customer using a growth mindset and working together as ‘One Nufarm’. We recognise inclusive and diverse workplaces perform better and can deliver stronger returns, innovate with ease, have access to a diverse talent pool and retain their employees for longer. New aspiration 40:40:20 representation by 2030 for Senior Leadership Team (CEO-1 and CEO-2) 2025 I&D Goals Increase I&D awareness: 2022 I&D objectives Internal: Implement an I&D communication plan for all internal and external communications. Communicate about I&D internally and externally to show our employees and stakeholders Nufarm is an inclusive work environment where individuals are valued for their diversity and can bring their whole self to work and be empowered to reach their full potential, measured through Nufarm Voice survey and LinkedIn presence. Implement frequent communication and engagement activities that improve awareness and engagement results: • Authenticity: I feel comfortable being myself at work. • Inclusion: Leaders at Nufarm value different perspectives. • Speak my mind: I feel free to speak my mind without fear of negative consequences. • Equal opportunity: Regardless of background everyone at Nufarm has equal opportunity to succeed. External: Raise awareness of Nufarm’s commitment to diversity by sharing more stories of diversity on our social media channels and attracting greater diversity in our social media followers. Strengthen I&D leadership: Increase leadership accountability for creating an inclusive workplace and progressing diversity. Pursue leadership and talent development targets by 2025: • the board to have not less than 40 per cent of either gender represented by 2025 • senior leadership team and workforce to have not less than 35 per cent of either gender represented by 2025 • senior leadership team to have succession plans with diverse candidates who are skilled, ambitious and engaged • establishing gender diversity in succession plans for all executive roles by 2025. Work towards the senior leadership team (CEO-2) having not less than 30 per cent of either gender represented, with clear accountabilities established. Conduct the Women in Manufacturing Review to identify obstacles and opportunities for Nufarm and: • increase female representation in supply chain(manufacturing) leadership roles by at least 3 per cent in FY23 (2020 13 per cent). Improve female representation in commercial and P&L roles by: • establishing and deploying a women’s mentoring program • mapping external talent for P&L roles within each region, alongside internal succession coverage. Populate succession plans with diverse candidates who are skilled, ambitious, and engaged. Have established gender diversity in succession plans of in all executive roles. Attract and retain diverse talent: For attracting and advertising: Update recruitment and selection processes to reduce bias, attract/select more diverse talent and enable internal promotions. For attracting and advertising: • increase role attractiveness to minority groups by 2025 measured through engagement presence with LinkedIn and appointments • target universities, colleges, technical institutions, and areas with high minority populations to advertise and build an employer of choice image for IT, commercial agriculture, and manufacturing by 2025. For selection: • have one female on the selection panel for all senior leadership appointments and for 80 per cent of all other appointments across the organisation by 2025 • commit to having a gender-neutral shortlist for all senior leadership roles with at least one female on the shortlist of 80 per cent of all other roles by 2025. 46 • Conduct a review on how we advertise to attract diverse candidates and develop an action plan to ensure our jobs ads are more inclusive. • Develop an interview guide to minimise unconscious bias and a training plan so all panelists are trained. For interview panels: Have one female on the interview panel for 100 per cent of CEO-1 and CEO-2 roles and 80 per cent of all CEO-3 roles. For shortlisting: • Have at least one female on the shortlist for all senior leadership roles (CEO-1 and CEO-2), and at least two females on the shortlist for 60 per cent of those roles • Develop a program to attract early-in-career pipeline talent relevant to regional focus areas. Nufarm Limited | Annual Report 20222022 Progress against objectives 2023 I&D objectives For internal communications: For internal communications: We implemented campaigns to increase engagement and awareness, including celebrating Women’s Day, Mental Health Awareness week, Black History Month, and Pride Month; established a Women in Stem network; and hosted other local awareness events including disability awareness in our LATAM region. Frequent communication/engagement activities that improve our peoples experience above benchmark for all of: • Authenticity: I feel comfortable being myself at work. • Inclusion: Leaders at Nufarm value different perspectives. Three of four inclusion items increased since 2021, and three of four track above the top quartile (Nufarm Voice items 2022, page 44). • Speak my mind: I feel free to speak my mind without fear of negative consequences. For external communications: Total female engagement with LinkedIn went up 3 per cent to 38 per cent (2021: 35 per cent). Overall followers remained consistent at 31 per cent (2021: 31 per cent) female representation. • 43 per cent of non-executive board members are female. • 31 per cent of the executive and senior management team is female, and we’re working towards our 2025 target of having not less than 35 per cent of either gender represented by 2025. For female representation in manufacturing: • We conducted the Women in Manufacturing Review. Regional actions plan will be developed and implementation will commence by Q3 FY23. • There was no change in female representation in manufacturing (supply chain) leadership during 2022. Targeted talent mapping will commence Q1 FY23. • Equal opportunity: Regardless of background everyone at Nufarm has equal opportunity to succeed. • Belonging: I feel a sense of belonging at Nufarm. For external communications: Improve gender diversity of social media followers greater than industry, 31 per cent that identify as female (LinkedIn, 2022). Increasing female engagement and awareness of Nufarm diversity benefits measured through LinkedIn reporting. Progress the senior leadership team towards having not less than 35 per cent of each gender represented, with clear accountabilities established. • Pursue a targeted inclusion program for manufacturing: Increase female representation in supply chain (manufacturing) leadership roles by at least 3 per cent in FY23 (2020: 13 per cent) – Map external talent for manufacturing roles – Ensure sites are represented on local inclusion and diversity councils – Establish women in manufacturing mentoring For female representation in commercial and P&L roles: • Improve female representation in commercial and P&L roles: • We established and deployed a women’s mentoring program in North America with 50 per cent of the female commercial staff now being mentored. Europe and ANZ will be launched FY23. • We conducted external market mapping of female talent for P&L roles. Females now represent 35 per cent of the talent pool for NLT succession. Deploy the Women’s Mentoring Program across all regions Increase female representation greater than 17 per cent in commercial and P&L roles • Conduct a global gender pay parity review. Have not less than 35 per cent of each gender represented in succession plans of the executive team (CEO-1) and establish gender diversity in more than 70 per cent of individual succession plans. For attracting and advertising: • We started this by endorsing Work180 in ANZ and North America, and developing an employee referral program to encourage referrals of those groups who are underrepresented. • We completed hiring manger training, including training on interview guides, in North America and ANZ. Roll out in EMEA is scheduled for FY23. For interview panels: • A female sat on the panel for 78 per cent of senior leadership (CEO-1 and CEO-2) roles. • Deploy an employee referral program across all regions to increase diversity of candidates in each business unit • Develop a global parental leave guideline • Launch early-in-career programs to attract early-in-career pipeline relevant to regional focus areas. For interview panels: • Have one female on selection panel for all senior leadership appointments and for 80 per cent of all other appointments across the organisations • 77 per cent of all roles had a female on the interview panel. For shortlisting: For shortlisting: • All senior leadership roles had at least one female on the shortlist, and 78 per cent had at least two females. • 60 per cent of all roles appointed had at least 1 female on the shortlist. ANZ and Europe have developed early-in-career programs. Australia developed a Commercial Graduate Program targeting females in commercial. Two females are now part of this program. Other regions have established their target pipeline and will be implementing programs during 2023. • Have a gender-neutral shortlist for all senior leadership roles with at least one female on the shortlist for 70 per cent of all other roles by 2025. These objectives are in addition to the ongoing activities under Nufarm’s inclusion and diversity policy and current practices that are already yielding meaningful results. 47 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 5 Promoting responsible and ethical behaviour Code of Conduct Nufarm has in place a Code of Conduct, which applies to all directors, employees, contractors, agents and representatives of the company. The key values underpinning the Code of Conduct are: • actions must be governed by the highest standards of integrity and fairness; • all decisions must be made in accordance with the spirit and letter of applicable law; and • business must be conducted honestly and ethically, with skill and the best judgement, and for the benefit of customers, employees, investors and the company alike. The Code of Conduct provides clear direction and advice on general workplace behaviour and how to conduct business both domestically and internationally, interacting with investors, business partners and the communities in which the company operates. Material breaches of the Code of Conduct are reported to the human resources committee. The Code of Conduct was reviewed with updates approved by the board in November 2020. The Code of Conduct is available in the corporate governance section of Nufarm’s website. Anti-bribery and Anti-corruption Policy Nufarm has in place an Anti-bribery and Anti-corruption Policy that applies to all directors, officers and employees of Nufarm. The policy strictly prohibits the making or receiving of unlawful improper payments, or the giving or receiving of anything of value or improper advantage, to or by any individual or entity with the intent of securing a business advantage for Nufarm to which it is not legally entitled. The policy prohibits improper payments to persons or entities including public officials, any Nufarm customer or any other individual or entity with whom Nufarm does business. Breaches of the Anti-bribery and Anti-corruption Policy are reported to the risk and compliance committee. The Anti-bribery and Anti-corruption Policy was reviewed with updates approved by the board in July 2022. The policy is available in the corporate governance section of Nufarm’s website. Speak Up (Whistleblower) Policy Nufarm has in place a Speak Up (Whistleblower) Policy to provide a clear and transparent way for employees and contractors to report unethical, unlawful or irresponsible behaviour without fear of intimidation or recrimination. The purpose of the Speak Up Policy is to help detect and address any conduct that is: • corrupt, illegal, unlawful or fraudulent including bribery or any other act in breach of the company’s Anti-bribery and Anti-corruption Policy; • contrary to or in breach of any company’s policy or the company’s Code of Conduct, including harassment, bullying, discrimination victimisation; • seriously harmful or potentially seriously harmful activity that pose a threat to the company’s employees, shareholders, clients or third parties such as deliberate unsafe work practices, with wilful disregard for the safety of others; 48 • activity that could cause significant financial loss to the company or damage its reputation or be otherwise detrimental to the company’s interests; • a substantial mismanagement of company resources; and • any act which endangers the public or the financial system. The Speak Up Policy sets out protection that will be afforded to whistleblowers as well as the option to make an anonymous report. Material breaches of the Speak Up Policy are reported to the risk and compliance committee. The Speak Up Policy was reviewed with updates approved by the board in June 2022. The policy is available in the corporate governance section of Nufarm’s website. Modern Slavery Statement and Human Rights Policy Nufarm takes its human rights obligations and responsibilities seriously and strives to protect human rights in its business, supply chain and the communities in which it operates consistent with the United Nations Universal Declaration of Human Rights. Nufarm believes that respecting human rights is integral to the sustainability and success of its business. Nufarm has in place a Human Rights Policy that was reviewed and updated by the board in September 2022. Nufarm believes that slavery, trafficking in persons and child labour are very serious issues. The board approved the current Modern Slavery Statement in March 2022. The statement provides information on the steps taking to identify and reduce the risk of modern slavery in our business, including our initial focus on the most significant areas of our supply chain and operations being our direct spend and employees in higher risk countries and the actions that will be taken in the coming year. The risk and compliance committee receives updates on progress against these actions. The Human Rights Policy and Modern Slavery Statement are available in the corporate governance section of Nufarm’s website. Securities Trading Policy and insider trading The board has a Securities Trading Policy that covers dealings by directors, KMP and relevant employees and complies with the ASX Listing Rule requirements for a trading policy. The Securities Trading Policy aims to ensure that public confidence is maintained in the reputation of Nufarm, the reputation of its directors and employees and in the trading of Nufarm securities. The Securities Trading Policy prohibits all Nufarm employees from trading in Nufarm securities at any time if they are in possession of price sensitive information and during blackout periods. Additional restrictions apply to directors, KMPs and relevant employees in including that they may only trade if they have obtained pre-approval to do so. The policy also prohibits directors, KMP’s and relevant employees from entering into margin lending, short-term or speculative dealing or hedging of Nufarm securities. The Securities Trading Policy is available in the corporate governance section of Nufarm’s website. Nufarm Limited | Annual Report 20226 Risk management and internal control 6.1 Approach to risk management and internal control The board recognises that the effective identification and management of risk reduces the uncertainty in executing the company’s business strategies. The board has a focus on strategy development and execution and actively supports integrated risk management to strengthen this focus area. The risk framework, policies and procedures align to the concepts and principles identified in the Australia/New Zealand standard on Risk Management (AS/NZ ISO 31000:201809). They set out the roles, responsibilities, and guidelines for managing financial and non-financial risks associated with the company’s business and have been designed to provide effective management of material risks at a level appropriate to the company’s global business and have continued to be enhanced as the group’s operations develop and its range of activities expand. These risks include contemporary and emerging risks such as cyber-security, post-COVID-19 impacts, privacy and data breaches, increased geo-political risk and climate change. The policy and framework emphasise the board and executive’s commitment to maintaining a positive risk culture across Nufarm to maximise the effectiveness of risk management practices with a particular focus on integrating risk into strategy and decision-making. The Group Risk Management Policy is available in the corporate governance section of Nufarm’s website. Nufarm is committed to continuing to improve its enterprise risk management practices to protect and enhance shareholder value. The executive risk and compliance committee continued to meet during FY22 to assist with overseeing, directing and supporting the implementation and operation of the risk management framework and internal compliance and control system across the company. The members of the committee are the CEO (Chair), CFO, group executive supply chain operations, group executive people and performance, the group general counsel and company secretary and a regional general manager (on a rotational basis). During FY22, the group executive technology and information was added to the membership of this committee. A standing invitation to attend the meeting is issued to the group head risk and compliance, group environmental social governance (ESG) manager and the global lead – health, safety and quality. More information on Nufarm’s financial and non-financial risks, including environmental, the approach to climate change and social related risks, is set out in the Annual Report 2022 on pages 25 to 31 and the Sustainability Report. 6.2 Risk management responsibilities The board is responsible for overseeing Nufarm’s risk management framework, including both financial and non- financial risks and setting the risk appetite within which the board expects management to operate. The board is also responsible to satisfy itself that management has developed and implemented a sound system of internal controls. The board has delegated oversight of the ongoing risk management program, procedures, auditing and adequacy and effectiveness of the enterprise risk management to the risk and compliance committee and oversight of evaluating the adequacy and effectiveness of the internal control systems to the audit committee. The company’s risk management framework, policies and procedures set out the roles, responsibilities and guidelines for managing financial and non-financial risks associated with the business. The framework, policies and procedures have been designed to provide effective management and governance of material risks at a level appropriate to Nufarm’s global business. 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 group head risk and compliance, manages the implementation of this framework across the company. The framework aims to deal adequately with contemporary and emerging risks, such as conduct risk, digital disruption, cyber-security, privacy and data breaches, sustainability and climate change. Risk profiles for key operational business units have been developed and were reviewed in FY22. 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 risk and compliance committee charter requires the committee and the group head risk and compliance to review, at least annually, the Risk Management Framework. The Risk Management Framework underwent extensive review in FY21. The risk and compliance committee is satisfied that the risk management framework continues to be sound and that the company is operating with due regard for the risk appetite set by the board. 6.3 Internal audit Nufarm adopts an outsourced internal audit model, engaging PWC who is accountable to both the committee and the CEO for the delivery of the internal audit plan and work program. The CFO manages the relationship with PWC. The internal audit service provider supports management efforts to: • manage and control risks; • improve the efficiency and effectiveness of key business processes and internal control systems; • monitor compliance with company-wide requirements, policies and procedures; and • provide the committee with assurance on the operating effectiveness of controls. The scope of internal audit work (including the annual internal audit plan) is prepared with a view to providing coverage of all major business and functional units and identified key risks. The audit committee approves the internal audit plan which is reviewed throughout the year to ensure it remains appropriate. The CFO and PWC representatives report directly to the committee at each meeting on the progress against the internal audit plan, as well as detailed findings and corresponding management actions in relation to reviews undertaken in accordance with the internal audit plan. There is an opportunity to raise issues with the committee in the absence of management, in a closed session held during each committee meeting. The internal audit function had unfettered access to the chair of the audit committee. 49 Nufarm Limited | Annual Report 2022Corporate Governance Statement continued 6.4 CEO and CFO assurance Before the board adopted the 2022 half year and annual financial statements, the CEO and the CFO provided written declarations to the board in respect of the company’s half year and annual financial statements that, in their opinion, 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 financial position and performance of the company, and that the opinion has been formed on the basis of an adequate system of risk management and internal control which is operating effectively. The declaration of the CEO and CFO is supported by written statements by all executives and key finance personnel relating to the financial position of the company, market disclosure, the application of company policies and compliance with internal controls and external obligations. 6.5 Verification of periodic reports Nufarm is committed to ensuring that all the information contained in its corporate reports are accurate, effective and clear. Nufarm has put in place a process to verify the integrity of its periodic reports that are not subject to audit or reviewed by the external auditor. This includes the annual Directors Reports, the Annual Report and the Sustainability Report. A statement on the processes undertaken to verify the information not audited or verified by the external auditor is available in the corporate governance section of Nufarm’s website 7 Continuous disclosure and communications with shareholders 7.1 Continuous disclosure and market communications Nufarm is committed to timely, open and effective communication with its shareholders and the general investment community. The board has adopted a Continuous Disclosure Policy, which establishes procedures aimed at ensuring that Nufarm complies with the legal and regulatory requirements under the Corporations Act and the ASX Listing Rules. These procedures include the establishment of a market disclosure committee, which monitors the continuous disclosure framework and is responsible for ensuring that Nufarm complies with its obligations. The market disclosure committee is constituted by the chair of the board, CEO, CFO, group general counsel and company secretary and the general manager, investor relations and external communications and is responsible for implementing and monitoring reporting processes and controls to ensure there is an adequate system in place for the disclosure of all material information to the ASX. The group general counsel and company secretary reports to the board on the matters considered by the market disclosure committee at each meeting. The board approves any announcements which are within the matters reserved for decision by the board including annual and half year financial reports, any profit update or earnings guidance, matters which could have significant financial or reputational risks, company transforming transactions or events, significant corporate transactions including any equity related transactions and any other matters that the market disclosure committee considers is of fundamental significance to the company. In addition to approving the announcements reserved for decision by the board, directors are provided with copies of all announcements that are made to the ASX immediately after they have been released on the market announcements platform. The Continuous Disclosure Policy was reviewed and updated by the board in July 2021. The policy is available in the corporate governance section of Nufarm’s website. 7.2 Shareholder communication The company places a high priority on communication with shareholders and other stakeholders and aims to ensure they are kept informed of all major developments affecting Nufarm. The company has an investor relations program to facilitate 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, but also to listen and 50 understand shareholders’ perspectives and respond to their feedback. Nufarm holds briefings on the annual and half year financial results and on other new and significant information. Presentation material or speeches that provides any new and substantive information are first disclosed to the ASX through the market announcements platform and then posted to the Nufarm website prior to any discussion. One of the key communication tools is the company’s website. The website contains the key governance documents, market announcements, the Annual Report and half-yearly financial statements, a calendar of events relating to shareholders and other communications to key stakeholders. The website also contains a facility for shareholders to direct inquiries to the company. Shareholders are provided with an update on the company’s performance at the AGM, as well as an opportunity to vote on important matters affecting Nufarm and ask questions of the board and key members of management. All resolutions at the AGM are decided by a poll rather than a show of hands. Copies of the chair’s speech and the meeting presentation are released to the ASX and posted to the company’s website as the meeting commences. A summary of proceedings and outcome of voting on the items of business are also released to the ASX and posted to the website as soon as they are available after the meeting. All directors are expected to attend the AGM. Nufarm’s external auditor attends the AGM to answer any shareholder questions concerning the conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by Nufarm and the independence of the external auditor in relation to the audit. The company encourages shareholders to receive communications electronically. Shareholders may elect to receive all or some of their communications electronically. This election can be made directly with the share registry, Computershare Investor Services Pty Limited. The board obtains the views of shareholders by either formal or informal means. The board receives a regular report from the general manager investor relations and external communications which contains feedback from investors. The CEO and CFO are accessible to shareholders, analysts, fund managers and others with a potential interest in the company. The chair of the board and the chair of the human resources committee are also accessible to shareholders and institutional investors. Nufarm Limited | Annual Report 2022Directors’ 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 30 September 2022 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: J Gillam (Chair) G Hunt (Managing Director) G Davis A Gartmann (appointed 23 September 2022) D Jones P Margin M McDonald L Saint T Takasaki (resigned 31 May 2022) F Ford (retired 17 December 2021) 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 below. Name, qualifications and responsibilities Tenure and experience John Gillam BCom, MAICD, FAIM John Gillam joined the board on 31 July 2020 and was appointed chair on 24 September 2020. Independent non-executive chair Chair of the nomination committee Greg Hunt Managing director and CEO Gordon Davis BForSc, MAgSc, MBA Independent non-executive director Chair of the risk and compliance committee Member of the audit committee Member of the human resources committee Member of the nomination committee John has extensive commercial and leadership experience from a 20-year career with Wesfarmers where he held various senior leadership roles including chief executive officer of the Bunnings Group, Managing Director of CSBP and chairman of Officeworks. Other directorships and offices (current and recent): • Chair of CSR Limited (director since December 2017 and chair since 1 June 2018) • Chair of BlueFit Pty Limited (since February 2018) • Director of the Heartwell Foundation (since 2009) • Director of Clontarf Foundation (since 2017) 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 CEO in February 2015. Greg has considerable executive and agribusiness experience. Greg had a successful career at Elders before being appointed managing director of Elders Australia Limited, a position he held between 2001-2007. After leaving Elders, Greg worked with various private equity firms focussed on the agriculture sector and has acted as a corporate advisor to Australian and international organisations in agribusiness related matters. Gordon Davis joined the board on 31 May 2011. Gordon was managing director of AWB Limited (from 2006 to 2010) and has held various senior executive positions with Orica Limited, including general manager of Orica Mining Services (Australia, Asia) and general manager of Incitec Fertilisers. He has also served in a senior capacity on various industry associations. Other directorships (current and recent): Director of Healius Limited (formerly Primary Health Care Limited) (since August 2015) Director of Midway Limited (since April 2016) 51 Nufarm Limited | Annual Report 2022Directors’ report continued Name, qualifications and responsibilities Tenure and experience Alexandra Gartmann BSc (Resource & Environmental Management) Independent non-executive director Member of the nomination committee Member of the audit committee Member of the risk and compliance committee Alexandra Gartmann joined the board on 23 September 2022. Alexandra brings over 25 years of deep industry experience in rural, agriculture and community focused organisations and is the former CEO of the Rural Bank, a division of the Bendigo & Adelaide Bank. Her executive career includes roles such as Bendigo & Adelaide Bank Executive Marketing, Partnerships & Corporate Affairs and CEO of Rural Bank and as CEO of the Foundation for Rural & Regional Renewal and The Birchip Cropping Group. Alexandra serves on boards across agriculture, banking and the environment. Other directorships and roles (current and recent): • Chair of the Victorian Agriculture & Climate Change Council • Trustee of the Helen MacPherson Smith Trust • Director of the Australian Farm Institute • Former chair of the CSIRO Agriculture and Food Advisory Council • Former member of the National Rural Advisory Council David Jones joined the board on 23 June 2021. David has held chair and director roles in large global agricultural business. His experience includes as Head of Business Development at Syngenta and former Chairman of Zeneca China, Arysta Life Science, and Plant Impact. David has broad leadership experience in operations, strategy, mergers and acquisitions and intellectual property in multiple jurisdictions including Asia, Latin America, Europe and the United States. Other directorships (current and recent): • Chairman of Enko Chem Inc (since July 2021) • Chairman of BigSis (since 2020) • Former Chairman of Commercial Advisory Board of Enko Chem Inc (2019 to July 2021) Peter Margin joined the board on 3 October 2011. Peter has many years of leadership experience in major Australian and international food companies including executive chairman of Asahi Holdings (Australia) Pty Ltd, chief executive/managing director of Goodman Fielder Ltd and before that chief executive/managing director of National Foods Ltd. Other directorships (current and recent): • Deputy chairman of Bega Cheese Limited (since September 2020) • Director of Costa Group Holdings Limited (since June 2015) • Former chairman of Asahi Holdings (Australia) Pty Ltd (to December 2020) Dr David Jones BA (Hons) Science, PhD Independent non-executive director Chair of the innovation committee Member of the nomination committee Peter Margin BSc(Hons), MBA Independent non-executive director Chair of the human resources committee Member of the risk and compliance committee Member of the nomination committee Member of the innovation committee Marie McDonald LLB(Hons), BSc(Hons) Independent non-executive director Member of the nomination committee Member of the audit committee Member of the risk and compliance committee Member of the innovation committee Marie McDonald joined the board on 22 March 2017. Marie is widely recognised as one of Australia’s leading corporate and commercial lawyers having been a Senior Partner at Ashurst until 2014 where she specialised in mergers and acquisitions, corporate governance and commercial law. Marie was chair of the Corporations Committee of the Business Law Section of the Law Council of Australia from 2012 to 2013, having previously been the deputy chair, and was a member of the Australian Takeovers Panel from 2001 to 2010. Marie is currently a member of the Melbourne University Law School Foundation Board. Other directorships (current and recent): • Director of CSL Limited (since 14 August 2013) • Director of Nanosonics Limited (since 24 October 2016) • Director of Walter and Eliza Hall Institute of Medical Research (since October 2016) 52 Nufarm Limited | Annual Report 2022Name, qualifications and responsibilities Tenure and experience Lynne Saint BCom, GradDip Ed Studies, FCPA, FAICD Independent non-executive director Chair of the audit committee Member of the human resources committee Member of the nomination committee Lynne Saint joined the board on 18 December 2020. Lynne has broad financial and commercial experience from a global career including more than 19 years with Bechtel Group where she served as chief audit executive and chief financial officer of the Mining and Metals Global Business Unit. Her expertise encompasses strong financial skills, corporate governance, enterprise risk, supply chain risk and project management. Other directorships (current and recent): • Director of Iluka Resources (since 24 October 2019) • Director of Ventia Services Group Limited (since 1 July 2021) Former Directors Toshikazu Takasaki BBA Non-independent non-executive director Member of the risk and compliance committee Member of the nomination committee Toshikazu Takasaki joined the board on 6 December 2012 and resigned on 31 May 2022. Mr Takasaki represented the interests of shareholder Sumitomo Chemical Company (SCC). He is a former executive of SCC holding senior management positions in businesses relating to crop protection, both within Japan and in the US. 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. Frank Ford MTax, BBus (Acc), FCA Independent non-executive director Member of the nomination committee Member of the audit committee Frank Ford joined the board on 10 October 2012 and retired on 17 December 2021. Frank is a former Managing Partner of Deloitte Victoria after a long and successful career as a professional advisor spanning some 35 years. During that period, Mr Ford was also a member of the Deloitte Global Board, Global Governance Committee and National Management Committee. Company secretary Kate Hall (LLB (Hons), BSc and LLM (IP)) was appointed company secretary on 20 April 2022. Kate has more than 20 years’ Australian and international experience as a general counsel and senior executive leading legal, intellectual property, governance, risk and compliance functions. Most recently, she was general counsel of Mayne Pharma, an international, ASX listed pharmaceutical company where she had oversight of the company secretariat function. Kate was also special counsel at Minter Ellison and IP counsel at Royal Dutch Shell in The Hague. Fiona Smith (BSc, LLB, GDipGov, FGIA) was company secretary between 27 June 2019 and her retirement on 31 January 2022. Fiona is a senior legal and governance professional with 20 years’ experience in company secretarial roles arising from her time spent in such roles in listed companies. Fiona reported directly to the board. Terrie Morgan and Paul Townsend (CFO) were appointed company secretaries on a transitional basis between 31 January 2022 and 20 April 2022. Directors’ interests in shares and step-up securities Relevant interests of the directors in the shares and step-up securities issued by the company and related bodies corporate are, at the date of this report, as notified by the directors to the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, as follows: Nufarm Ltd Ordinary shares Nufarm Finance (NZ) Ltd Step-up securities J Gillam G Hunt G Davis A Gartmann1 D Jones M McDonald P Margin L Saint 185,000 589,847 71,609 – 82,000 34,827 31,867 14,290 1. Alexandra Gartmann was appointed as director on 23 September 2022. – – – – – – – – 53 Nufarm Limited | Annual Report 2022Directors’ 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: Board Audit Risk and Compliance Innovation Human Resources Nomination A 10 10 10 1 10 10 10 10 3 7 B 10 10 10 1 10 10 10 10 3 6 A B A B A B A B A B – – 5 – – – 5 5 1 3 4 4 5 – 2 4 5 5 1 3 – – 4 – – 4 4 – – 3 4 3 4 – – 4 4 4 – 3 – – – – 5 5 5 – – – 3 2 2 – 5 5 5 4 – 1 – – 4 – – 4 – 4 – – 2 3 4 – – 4 4 4 – 2 4 4 4 1 4 4 4 4 – 1 4 4 4 1 4 4 4 4 – 1 John Gillam Greg Hunt Gordon Davis Alexandra Gartmann1 David Jones Peter Margin Marie McDonald Lynne Saint Frank Ford2 Toshikazu Takasaki3 Column A: indicates the number of meetings held during the period of each director’s tenure. Where a director is not a member of a committee but attended committee meetings during the period, then only the number of meetings attended is shown. Column B: indicates the number of meetings attended by each director. 1 Alexandra Gartmann joined the board on 23 September 2022. 2 Frank Ford retired on 17 December 2021. 3 Toshikazu Takasaki resigned on 31 May 2022. Principal Activities and Changes Dividends Nufarm’s principal activities during the financial year were the manufacture and sale of crop protection products and its proprietary seed technologies business which are further described in the Operating and Financial Review accompanying this Directors’ Report. Nufarm employs approximately 2,800 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/(loss) attributable to members of the group for the 12 months to 30 September 2022 is $107.4 million. The comparable figure for the 12 months to 30 September 2021 was $65.1 million. Operating and Financial Review and Future Prospects The operating and financial review and future prospects are set out in the Operating and Financial Review on pages 17 to 31 and forms part of this Directors’ Report. The following unfranked dividends have been paid, declared or recommended since the end of the preceding financial year. Cents per share Total amount $000 Date of payment 4.0 4.0 6.0 15,200 17 December 2021 15,199 17 June 2022 22,810 9 December 2022 Type 2021 final dividend paid 2022 interim dividend paid 2022 final dividend declared Nufarm Step-up Securities distributions Distribution for the period 15 October 2021 – 14 April 2022 at the rate of 3.9651 per cent paid 19 April 2022 $5,072 Distribution for the period 15 April 2021 – 14 October 2021 at the rate of 3.9962 per cent paid 15 October 2021 $5,029 State of Affairs The state of the group’s affairs are set out in the Operating and Financial Review accompanying this Directors’ Report. 54 Nufarm Limited | Annual Report 2022Indemnities and insurance for directors and officers The company has entered into insurance contracts which indemnify directors and officers of the company, and its controlled entities, against liabilities. In accordance with normal commercial practices, under the terms of the insurance contracts, the nature of the liabilities insured against and the amount of premiums paid are confidential. An indemnity agreement has been entered into between the company and each of the directors named earlier in this report. Under the agreement, the company has agreed to indemnify the directors against any claim or for any expenses or costs, which may arise as a result of the performance of their duties as directors to the extent allowed by law. 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 77 and forms part of the Directors’ Report for the financial year ended 30 September 2022. Rounding of amounts The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and, in accordance with that Instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated. This Report has been made in accordance with a resolution of directors. John Gillam Director Melbourne 16 November 2022 GA Hunt Director Events subsequent to reporting date On 17 October 2022 a distribution was paid by Nufarm Finance (NZ) Ltd on the Nufarm Step-up Securities. The distribution rate was 4.8647 per cent resulting in a gross distribution of $6,055 million. Post year end it was announced that Nufarm has entered into a five year A$800 million revolving Asset Based Lending credit facility (the ABL Facility) secured against trade receivables and inventory located in Australia, the United States and Canada. A smaller A$150 million Liquidity Facility (the Liquidity Facility) with a two year term has also been established to sit alongside the ABL Facility to assist in the ongoing funding of Nufarm’s working capital requirements. Concurrently, the existing syndicated bank facility (SFA) and group receivables securitisation facility were both wound up with amounts drawn under those existing facilities settled via proceeds obtained under the new facilities. On 10 November 2022 the directors declared a final and unfranked dividend of six cents per share which is payable on 9 December 2022. On 10 November 2022, the group further increased its investment in Enko Chem via an additional investment of USD $5 million. The group intends to hold this investment for the long term for strategic purposes and has designated the investment at FVOCI. Other than noted above, the Directors are not aware of any matter or circumstance that has arisen since the end of the financial year that, in their opinion, has significantly affected, or may significantly affect in future years, Nufarm’s operations of the state of Nufarm’s affairs. Remuneration Report The Remuneration Report set out on pages 56 to 76 forms part of this Directors’ Report. Environmental performance Details of Nufarm’s performance in relation to environmental regulations are set out in the Operating and Financial Review accompanying this Directors’ Report. The group did not incur any prosecutions or fines in the financial period relating to environmental performance. The group publishes annually a sustainability report. This report can be viewed on the group’s website or a copy will be made available upon request to the company secretary. Non-audit services During the year KPMG, the company’s auditor, has performed certain other services in addition to their statutory duties. Details of the audit fee and non-audit services are set out in note 37 on page 143 to the financial report. The board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the reason that all non-audit services were subject to the corporate governance procedures adopted by the company and have been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor. 55 Nufarm Limited | Annual Report 2022Remuneration Report A letter from the chair of the Human Resources Committee (HRC) Dear fellow shareholder, On behalf of the board, I am very pleased to present the remuneration report for the financial year ended 30 September 2022 (FY22). At Nufarm, our people are our most important asset. They play a key role in achieving the company’s strategic objectives and delivering sustainable, long-term value for our shareholders. I was particularly proud to see how our people maintained their unwavering commitment to our customers over the past year. As a result, our financial results have been extremely positive with underlying EBITDA1 of $447m achieved – a significant 24 per cent uplift on what was a very strong financial result in the previous financial year. This strong financial performance has enabled the board to declare total dividends of 10.0 cents per share in respect of the twelve-month period. On behalf of the board, I would like to acknowledge all the efforts of our people, led by the Nufarm leadership team, in continuing to deliver great outcomes for our customers through what was a challenging external environment. Safety is our number one priority at Nufarm. Employee health and wellbeing were always the most important concern for the board and the human resources committee as we navigated through challenges presented by COVID-19 in multiple jurisdictions across the globe. Employee health and wellbeing will remain at the forefront as we continue to navigate these challenges. As a global organization, we experienced direct and indirect impacts from the war in Ukraine. Nufarm has operations in both Ukraine and Russia and our first priority was to ensure our people and families in both countries were safe and supported. Nufarm is a very different company today from what it was five years ago and we have seen the fruits of the significant work we have undertaken over the past few years. We are focused on core crops and geographies, and we have a refreshed capital structure and streamlined operations. We are positioned for growth. Technology and innovation are core to this growth. In February, we announced our aspiration to achieve revenues in excess of $4 billion by 2026 with significant contributions from both our crop protection and seed technologies businesses. The future for Nufarm is bright and I am excited by the opportunities that lie ahead over the next 12 months and beyond. Executive remuneration outcomes for the 2022 year In our prior year remuneration report, we introduced the 2022 executive incentive plan (EIP) which came into effect 1 October 2021 and replaced the previous short term incentive (STI) and long term incentive (LTI) plans from that date. I believe the EIP reflects a more contemporary remuneration framework, is a better fit for the needs of our growing global business and has already proved effective in attracting and retaining our talent. Financial performance in FY22 has been extremely strong with revenue and underlying EBITDA growth in all regions and the seed technologies business. Key financial metrics have also improved with an increase in cash generation from operations, an improved working capital performance and higher return on assets. The company’s improved financial performance has been reflected in the EIP outcomes for key management personnel (KMP). Each of the FY22 EIP financial measures exceeded their target, and no discretion was exercised to adjust the timing or amount of the outcome. The FY20 LTI plan was tested on 30 September 2022: despite significant improvement in the FY22 return of funds employed (ROFE), the 3-year ROFE targets were not achieved; however, a portion of the relative total shareholder return (RTSR) target was achieved and consequently a percentage of the incentive rights vested. Further details of remuneration outcomes are set out in section 3.2 of the Remuneration Report. Director fees There have been no changes to chair or non-executive director fees during FY22. Changes to key management personnel On 1 September 2022, Dave Allen was appointed group executive global supply chain replacing Elbert Prado in this role. Dave Allen is an international operations and supply chain executive, and management consultant. He has a highly successful track record within global organisations of delivering strategic change, business transformation and capability development. His areas of expertise include manufacturing, operations, procurement, sales and operations planning, logistics and IT. He will be a valuable addition to the leadership team at Nufarm with his considerable operational and supply chain management skills. Elbert Prado joined Nufarm in 2013 and has over 40 years’ experience in manufacturing and supply chain with extensive global experience managing global supply chains. I would like to thank Elbert Prado for his commitment and dedication in the role group executive global supply chain role. His extensive knowledge and experience in the global agricultural industry was of great value to Nufarm. In summary To close, FY22 was a very strong year for Nufarm and I believe the remuneration outcomes reflect the strong financial results. I am excited by the future prospects for our business and believe we have the right team to achieve our growth aspirations. While the board and the human resources committee are confident that remuneration outcomes for FY22 are appropriate, we will continue to engage with shareholders and listen to feedback on the effectiveness of our remuneration policy, framework, and governance to ensure it continues to meet the needs of the business and its stakeholders. It is my pleasure as the chair of the human resources committee to present Nufarm’s remuneration report to shareholders for your consideration and support. Peter Margin Chair – Human Resources Committee 1. Underlying EBITDA is earnings before net finance costs, taxation, depreciation, amortisation and material items. 56 Nufarm Limited | Annual Report 2022Audited remuneration report The audited remuneration report is designed to provide shareholders with an understanding of Nufarm’s remuneration policies and the link between our remuneration strategy and performance. This Report details Nufarm’s remuneration framework and outcomes for KMP for the financial year ended 30 September 2022 (FY22). The Report has been prepared in accordance with section 300A of the Corporations Act 2001 (Corporations Act). Section What it covers 1. Remuneration snapshot 1.1 Key management personnel • Lists the names and roles of the non-executive directors and executive KMP whose remuneration details are disclosed in this report. 1.2 Changes for FY22 • Outlines the changes to non-executive directors and executive KMP arrangements in FY22. 1.3 Summary of FY22 non-executive director (NED) fees • Details the NED fee changes in FY22. 1.4 Executive KMP remuneration outcomes • Details the key remuneration outcomes in FY22. 1.5 Actual total remuneration earned by executives in FY22 • Provides voluntary disclosure of how much executive KMP were paid in FY22. 2. Setting senior executive remuneration 2.1 Remuneration governance 2.2 Remuneration strategy 2.3 Remuneration components • Explains Nufarm’s remuneration policy, and how the board and human resources committee (HRC) make decisions, including the use of external consultants. • Explains Nufarm’s remuneration strategy implemented for FY22. • Shows how executive remuneration is structured to support business objectives and explains the executive remuneration mix. 2.4 Remuneration outlook • Indicates how Nufarm intends to apply its remuneration policy for FY23. 3 Executive remuneration outcomes 3.1 Financial performance 3.2 Plan outcomes 3.3 Senior executive contract details • Provides a breakdown of Nufarm’s performance over the past five reporting periods. • Details the performance outcomes for the respective plans relevant to executive remuneration for FY22 including executive incentive plan outcomes and long term incentive plan outcomes. • Lists the key contract terms governing the employment of executive KMP (including termination entitlements where relevant). 4. Non-executive director remuneration • Provides details of the fee structure for board and committee roles. 5. Remuneration tables 5.1 Remuneration of directors and disclosed executives • Provides the remuneration disclosures required by the Corporations Act and in accordance with relevant Australian Accounting Standards. 5.2 Equity instruments held by directors and disclosed executives • Provides details on equity instruments held, vested, forfeited during the period. 5.3 Shares held in Nufarm • Provides details on the number of Nufarm shares held during the period. 57 Nufarm Limited | Annual Report 2022Remuneration Report continued 1. Remuneration snapshot 1.1 Key management personnel This remuneration report is focused on the KMP of Nufarm, being those persons with authority and responsibility for planning, directing and controlling the activities of Nufarm. KMP includes the non-executive directors (NED) and senior executives (referred to as executive KMPs throughout this report). Unless otherwise indicated, the KMP were classified as KMP for the entire financial year. Non-executive Directors John Gillam Gordon Davis Chair and independent, non-executive director Independent, non-executive director Alexandra Gartmann Independent, non-executive director (effective 23 September 2022) David Jones Peter Margin Marie McDonald Lynne Saint Former Non-executive Directors Independent, non-executive director Independent, non-executive director Independent, non-executive director Independent, non-executive director Independent, non-executive director (ceased 17 December 2021) Non-executive director (ceased 31 May 2022) Managing director and chief executive officer Chief financial officer Group executive supply chain operations (effective 1 September 2022) Group executive supply chain operations (ceased 31 August 2022) Frank Ford Toshikazu Takasaki Executive KMP Greg Hunt Paul Townsend Dave Allen Former KMP Elbert Prado 1.2 Changes for FY22 Additions: • Dave Allen commenced as group executive supply chain operations on 1 September 2022 replacing Elbert Prado in this role. • Alexandra Gartmann commenced as an independent, non-executive director on 23 September 2022. Cessations: • Frank Ford retired as an independent, non-executive director from the Nufarm board at the conclusion of the AGM on 17 December 2021. • Toshikazu Takasaki's final day on the Nufarm board as a non-executive director was 31 May 2022. • Elbert Prado ceased in his role as group executive supply chain operations, and consequently ceased being executive KMP of Nufarm on 31 August 2022. Elbert continues his employment with Nufarm. 58 Nufarm Limited | Annual Report 20221.3 Summary of FY22 NED fees NED fees are fixed and do not have any variable components. The chair receives a fee for chairing the Nufarm board and is not paid any other fees. Other NEDs receive a base fee and additional fees for each additional committee chair positions and membership. The chair’s fee and non-executive director fees remained unchanged for a third year, although directors’ committee fees were adjusted from 1 October 2021 to reflect changes to the structure of the board committees. No additional retirement benefits were paid. Fees paid to NEDs are subject to a maximum annual non-executive director fee pool of $2 million approved by shareholders at the 2017 AGM. 1.4 Executive KMP remuneration outcomes The overall structure and philosophy of Nufarm’s approach to remuneration remained consistent throughout FY22. The organisation’s remuneration philosophy continues to be based on linking financial rewards directly to employee contributions and company performance. Fixed annual remuneration (FAR) Executive incentive plan (EIP) Historical short term incentive (STI) Historical long term incentive (LTI) During FY22 Greg Hunt received 3 per cent increase, Paul Townsend received 2.5 per cent and Elbert Prado received 2.5 per cent increase to his base salary. The FY22 EIP was tested on 30 September 2022 against relevant performance measures. Financial performance for FY22 exceeded the maximum level for the financial performance measures. In addition, executive KMP were assessed as achieving relevant FY22 non-financial measures. The EIP program consists of a cash portion and an equity portion. The cash portion is equal to 33 per cent, and the equity portion is equal to 66 per cent of the total reward based on the testing undertaken at 30 September 2022. The equity granted is subject to service and performance conditions, with a vesting date of 30 September 2025. The number of rights to be granted will be determined using the value of the equity portion of the EIP remuneration divided by the 5-day VWAP following the release of the preliminary final report in November 2022. The FY21 STI plan included the achievement of certain performance measures and resulted in the granting of rights, subject to service conditions, in Nufarm ordinary shares with a vesting date of 30 September 2023. The FY20 LTI plan was tested on 30 September 2022. The average cumulative Return on Funds Employed (ROFE) achievement was below threshold and the Relative Total Shareholder Return (RTSR) achievement was above threshold. Therefore, the plan met the entry hurdle associated with the RTSR. The outcome was that relevant executive KMP received equity related to the FY20 LTI plan based on the RTSR outcome. The final historical LTI (FY21) plan is due to be tested on 30 September 2023. 59 Nufarm Limited | Annual Report 2022Remuneration Report continued 1.5 Actual total remuneration earned by executives in FY22 (unaudited) The table below details actual pay and benefits for executive KMPs who were employed during the reporting period. This table aims to assist shareholders in understanding the cash and other benefits received by executive KMPs from the various components of their remuneration during FY22. As a general principle, Australian Accounting Standards require the value of share-based payments to be calculated at the time of grant and accrued over the performance period and restriction period. The Corporations Act and Australian Accounting Standards also require that pay and benefits be disclosed for the period that a person is an executive KMP. This may not reflect what executive KMPs received or became entitled to during FY22 (especially if they became KMP part way through the year). The figures in this table have not been prepared in accordance with Australian Accounting Standards. They provide additional voluntary disclosures to Table 5.1 (which provides a breakdown of executive KMPs remuneration in accordance with statutory requirements and Australian Accounting Standards). The treatment of the remuneration elements in this disclosure are as follows: • Fixed annual remuneration earned between 1 October 2021 and 30 September 2022. This includes superannuation. • STI and EIP cash illustrates the cash payable under the FY21 STI plan and FY22 EIP respectively, which is payable at 30 September of the relevant year, and is paid following the release of the audited results. • STI rights vested and LTI rights vested illustrates the number of rights vested during the period 1 October 2021 and 30 September 2022. The values represent the number of rights vested multiplied by the share price at the relevant date. Fixed annual remuneration At risk remuneration (Realised) Total2 In AUD Period1 Salary and Fees $ Other benefits1 $ Super– annuation $ Directors' Non–executive Sub total directors’ non–executive (realised) Executive KMP G Hunt Managing director and CEO P Townsend Chief financial officer D Allen3 Group executive supply chain Former Executive KMP P Binfield4 Chief financial officer E Prado5 Group executive supply chain Sub total executive KMP (realised) Total directors’ and executive KMP (realised) FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 1,468 1,511 1,332 1,294 744 603 61 – – 206 691 707 2,828 2,810 4,296 4,321 – – – – – – 1 – – 213 57 60 58 273 58 273 99 125 28 26 28 21 – – – 6 49 45 105 98 204 223 STI and EIP cash $ STI rights vested $ LTI rights vested $ Other long term $ Total Remun– eration $ LTI rights forfeited $ – – 810 698 354 265 – – – 50 298 259 1,462 1,272 1,462 1,272 – – – – – – – – – – – 54 – 54 – 54 – – 327 – – – – – – – – – 327 – 327 – – – – – – – – – – – – – – – – – 1,567 1,636 2,497 2,018 1,126 889 62 – – 475 1,095 1,125 4,780 4,507 – – (470) (782) – – – – – – – (238) (470) (1,020) 6,347 6,143 (470) (1,020) Total $ 1,567 1,636 1,360 1,320 772 624 62 – – 425 797 812 2,991 3,181 4,558 4,817 1. Other benefits includes allowances, health insurance and other costs for overseas based executives. 2. ‘Total’ represents total remuneration paid in the financial period. 3. Mr D Allen was appointed as a KMP effective from 1 September 2022. 4. Mr P Binfield ceased to be a KMP on 31 December 2020. 5. Mr E Prado ceased being a KMP effective 31 August 2022. The table excludes the value of LTI rights that Mr Prado is eligible to receive, that have vested in September 2022 ($103,790); and the value of LTI rights that Mr Prado forfeited at 30 September 2022 ($149,360). Note: LTI rights vested or forfeited are valued at the Nufarm share price prevailing upon the vesting or forfeiture date ($5.0 at 30 September 2022, $4.80 at 30 September 2021). 60 Nufarm Limited | Annual Report 2022 2 Setting senior executive remuneration 2.1 Remuneration governance The HRC is responsible for reviewing and making recommendations to the Nufarm board on remuneration policies and practices of the board, the CEO and other executive KMP. The HRC is comprised of a minimum of three independent non-executive directors and is tasked with ensuring that remuneration policies and packages retain and motivate high calibre executives and have a clear relationship between company performance and executive remuneration. The HRC charter can be found at www.nufarm.com. The board has progressively increased the remit of the HRC to include a wider talent and succession agenda including a review of Nufarm’s diversity and inclusion strategy. The HRC reviews executive KMPs’ remuneration annually to ensure there is a balance between fixed and at risk pay, and it reflects both short term and long term objectives aligned to Nufarm’s strategy. In conjunction with information provided by Egan Associates the board reviews the CEO’s remuneration based on market benchmarks, performance against agreed measures and other relevant factors, while the CEO undertakes a similar exercise in relation to the other executive KMPs. The results of the CEO’s annual review of executive KMPs’ performance and remuneration are subject to board review and approval. The board measures financial performance under the applicable EIP and LTI plans using audited numbers. The relative total shareholder return (RTSR) used within the LTI plan is measured by an independent external advisor. Within the remuneration framework, under specific circumstances, the board has discretion to lapse or enforce forfeiture (or potentially cash repayment where an award has been issued as cash or converted into cash) of any rights, options or shares issued under the terms of the relevant plans. In accordance with Nufarm’s Security Trading Policy, executive KMPs are not permitted to enter into margin lending, short-term or speculative dealing or hedging of Nufarm securities, including any rights. 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 remuneration decisions. 2.2 Remuneration Strategy In FY22 Nufarm’s remuneration strategy and reward framework was reviewed and enhanced to: • Create a pay for performance culture where financial rewards are directly linked to both short and long term company performance • Attract global talent, and reward and retain participants • Address the cyclical nature of the sector • Include annual financial and non-financial targets that are both key to company performance, and in the control of the participants • Distribute awards in a mix of cash and equity. For FY22 the remuneration strategy translates into the executive KMP remuneration package detailed below: Fixed annual remuneration Executive Incentive Plan Attract, motivate, and retain highly skilled employees Reward achievement if financial and personal/team strategic objectives are met and align to long-term shareholder value creation Cash Cash Equity Base salary plus superannuation 33.33 per cent of EIP remuneration paid in cash annually following release of audited financial statements. 66.67 per cent of EIP remuneration is converted into rights, with service and performance conditions, with an additional three year vesting period (four year total). Cash remuneration levels are set based on market and internal relativity, performance, and experience EIP remuneration levels are set based on market benchmarking and balance between fixed and at risk pay to ensure it is reflective of both short and long term Nufarm objectives. Outcomes are based on short term financial and non-financial performance measures. EIP remuneration converted into rights are subject to service and non-financial performance measures to be tested prior to vesting. 61 Nufarm Limited | Annual Report 2022Remuneration Report continued 2.3 Remuneration components a) Remuneration structure In FY22, the executive remuneration structure is based on Fixed Annual Remuneration (FAR) with additional incentives (‘at risk’) available to be earned subject to specified performance measures. The variable ‘at risk’ components of the remuneration structure represent the Executive Incentive Plan (EIP) In previous years, the executive remuneration included specified short term and long term incentives available to be earned subject to performance. Under these historical remuneration structures, the variable ‘at risk’ components of the remuneration structure were represented by short term incentive (STI) plans and long term incentive (LTI) plans. The graphic below outlines the remuneration mix for executive KMP’s directly linked to FY22. For the group executive supply chain operations the remuneration mix presented is for Elbert Prado who was KMP during FY22 until 31 August 2022. For the period 1 September 2022 to 30 September 2022, Dave Allen was not a participant to the FY22 EIP and therefore his remuneration mix was 100 per cent FAR during this period. The variable ‘at risk’ components of EIP (including potential deferred rights) are expressed at target. CEO CFO Group executive supply chain operations 43.5% 18.8% 37.7% 50.0% 16.7% 33.3% 64.4% 11.9% 23.7% ● FAR ● Cash EIP ● Deferred Rights EIP b) Executive incentive plan What is the plan’s aim? The plan rewards a combination of financial and non-financial performance measures that are aligned to the creation of shareholder value. Primary emphasis is placed on profitability, return on investment, and cash flow. The non-financial measures focus our executive KMP on executing the most critical objectives aligned to the company’s strategy. How is the EIP target payout established? The Executive Incentive Plan (EIP) target payout is set annually as a percentage of fixed annual remuneration (FAR) (CEO, CFO) or base salary (group executive supply chain operations) applicable during the year. This is pro-rated if that percentage is changed during the year. Who participates in the EIP and what is the ‘at risk’ amount as a % of FAR Managing director and Chief Executive Officer 130% of FAR Chief financial officer Group executive supply chain operations 100% of FAR 85% of base salary 62 Nufarm Limited | Annual Report 2022What measures are used in the plan? The EIP consists of short term performance elements with an equal weighting allocated to each. These elements determine the initial cash remuneration and remuneration that is converted into rights, with a long term non-financial element to be assessed at the completion of the performance period (four years) prior to the vesting of EIP rights. Elements – Short Term Profit Return on Investments Cash flow Non-financial Weighting Measured by 25% 25% 25% 25% Group underlying EBIT (uEBIT) Average group underlying return on funds employed (ROFE) Average net working capital divided by sales (ANWC/Sales) Defined non-financial strategic or operational goals as determined by the board for each executive KMP. These include: • Safety and Environment • Sustainability • Strengthening key supplier relationships • Enhancing financial standing • Strategic growth for the Crop protection and Nuseed business Elements – Long Term The long term non-financial measures focus on non-financial strategic and operational goals including: Portfolio Profitably build the crop protection and seeds portfolios to underpin the 2026 revenue aspiration. Supply Chain Optimise global supply chain footprint to achieve company benchmarks for customer excellence, manufacturing efficiency, total delivered cost in line with our 2026 revenue aspiration. Environmental, Social and Governance (ESG) 1. Sustainability initiatives as published in Nufarm’s sustainability report ie. • 30% reduction in scope 1 and 2 greenhouse gas emissions from our manufacturing sites by 2030. • 20% reduction in hazardous waste by 2025. • 25% reduction in our volatile organic air emissions (VOCs) by 2025. • ISO14001 certification at all manufacturing sites by 2025 (excluding Cairo). 2. Build a leading portfolio of seed products that positively impact global environmental issues. Is there a minimum threshold for EIP payment? In order to earn an award in the EIP, the profit element must meet its minimum threshold. If this is not met, all elements are forfeited. 63 Nufarm Limited | Annual Report 2022Remuneration Report continued How are the EIP payments determined? The EIP is comprised of three performance levels for each element: minimum, target and maximum outcomes. The minimum, target and maximum values for financial performance measures will be set, reviewed, and approved by the board annually for each KMP. Performance Levels Minimum Target The minimum performance outcome that must be achieved before any EIP payment will be made in relation to the measure An outcome delivering significant benefit to the company achieved by great performance Maximum A stretch goal that could only be achieved by sustained outstanding performance Profit Return on investments Cash flow Non-financial Minimum Target Maximum 85% of budgeted* uEBIT 85% of budgeted* ROFE 105% of budgeted* ANWC/Sales 100% 120% 100% 120% 100% 95% Determined by the board based on individual performance * Annual budgets are reviewed and approved by the board to ensure they demonstrate growth potential and achievement of strategic milestones. Once performance levels are set, EIP payments are calculated based on payout slopes with a minimum of 25% to a maximum of 150% for each financial measure. All measures are equally weighted at 25% of the total award. Profit Return on Investments Cash flow Non-financial Minimum Target Maximum 25% of EIP target payment 100% 150% 0% to 100% of EIP target payment Are payments in cash or equity? Two thirds (66.67%) of the total EIP payment are deferred into performance rights over Nufarm ordinary shares, and the remaining one third (33.33%) is paid as cash at the end of year one, following the release of the audited financial statements. When do the shares vest? At the end of the four year performance period the rights are retested against key strategic objectives, including ESG and other key deliverables as determined by the board. Withholding a large portion of the award as rights with service and performance measures, ensures the participants maintain a focus on both short and long term company performance as well as ensuring alignment with shareholder experience. Is there a ‘claw back’ provision in the plan? The Nufarm board have absolute discretion regarding the amount and timing of any EIP payments. The EIP is governed by the overarching Nufarm Equity Incentive Plan rules. Within the remuneration framework, under specific circumstances, the board has discretion to lapse or enforce forfeiture (or potentially cash repayment where an award has been issued as cash or converted into cash) of any rights, options or shares issued under the terms of the relevant plans. 64 Nufarm Limited | Annual Report 2022What happens if the executive KMP leaves Nufarm? Unless the board determines otherwise: a) if employment is terminated for cause (as defined below) or the KMP resigns (or give notice of resignation) prior to the date on which the EIP award is delivered, the employee will not be entitled to an EIP award. An employee will be ‘terminated for cause’, where employment with the group is terminated because the employee: • acted fraudulently or dishonestly; • engaged in serious or willful misconduct; • is seriously negligent in the performance of your duties; • committed a serious breach of your employment contract; • committed an act, whether at work or otherwise, which could reasonably be regarded to have brought the company or a group company into disrepute; or • is convicted of an offence punishable by imprisonment. b) if an employee ceases employment for any other reason prior to the date on which the EIP award is delivered, it will be pro-rated (based on the portion of the performance period that has elapsed up until the date of termination). Unvested equity will remain intact and continue to vest under the plan rules. c) Long term incentive plans What LTI plans were applicable for FY22 For which current executive KMP are the LTI plans applicable The legacy LTI plans applicable during the FY22 financial year were: • FY20 Long term incentive plan • FY21 Long term incentive plan LTI plan rights are subject to vesting conditions at the conclusion of the applicable performance period. FY20 Long term incentive plan Managing director and chief executive officer FY21 Long term incentive plan Managing director and chief executive officer Other selected senior managers, including Elbert Prado (previous group executive supply chain operations) Chief financial officer Other selected senior managers, including Elbert Prado (previous group executive supply chain operations) Are the awards cash or equity? The plan rules provide the flexibility to use a number of different instruments provided they comply with local regulations and sound practice. At the time of vesting the board will determine if the rights convert to ordinary shares or cash or other instruments which may be in use at the time. When are the awards made? How do the awards vest? What is the comparator group for the assessment of relative TSR How is RTSR calculated? Under the plans, LTI plan participants receive the award as soon as practical after the announcement of the audited financial statements pertaining to the final year of the performance period. The performance/vesting period for awards is three years. Awards will vest in two equal tranches as follows: • 50 per cent of the LTI plan grant will vest subject to the achievement of RTSR performance hurdle measured against a selected comparator group of companies; and • 50 per cent of the LTI plan grant will vest subject to a 3-year average of an absolute annual ROFE target. At the inception of the LTI plans the board approved the adoption of the ‘S&P ASX 200 excluding those companies in the financial, materials and energy groups’ as the RTSR comparator group. RTSR 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. 65 Nufarm Limited | Annual Report 2022Remuneration Report continued What is the RTSR performance required for vesting? RTSR of Nufarm relative to the RTSR of comparator group companies Proportion of RTSR grant vesting Less than 50th percentile 50th percentile Between 51st percentile and 75th percentile 0% 50% Straight line vesting between 50% and 100% 75th percentile or above 100% How is the ROFE target set? How is ROFE measured? ROFE objectives are set by the board at the beginning of each year. There is both a ‘target’ and a ‘stretch’ hurdle. These numbers are based on the budget. Target represents a sustainable return to acceptable ROFE levels. Stretch recognises achievement well above budget. This ensures that full vesting of the LTI plan 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 shareholder’s funds plus total interest-bearing debt (including lease liability). For measuring ROFE performance in the LTI plan, ROFE will be averaged over the life of the plan. What is the ROFE performance required for vesting? Percentage of ROFE target achieved Proportion of ROFE grant vesting Less than target Target 0% 50% Between target and stretch Straight line vesting between 50% and 100% Stretch 100% What happens if the awards do not vest? Any proportion of the RTSR or ROFE grants that have not met the performance required to vest at the end of the 3-year performance period will lapse and consequently be forfeited as a result. Is there a clawback provision in the plan? The Nufarm board have absolute discretion regarding the amount and timing of any LTI rights vesting. The LTI plan is governed by the overarching Nufarm Equity Incentive Plan rules. Within the remuneration framework, under specific circumstances, the board has discretion to lapse or enforce forfeiture (or potentially cash repayment where an award has been issued as cash or converted into cash) of any rights, options or shares issued under the terms of the relevant plans. What happens if an executive KMP leaves? To be eligible under the LTI plan, the executive must be employed by Nufarm on the 1st anniversary of the allocation. If the executive leaves before this date, the allocation is forfeited. If the executive leaves under ‘qualifying leaver’ provisions after the 1st anniversary and before the 3rd 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. 2.4 Remuneration outlook As flagged in the FY2021 Remuneration report, the board through the HRC appointed Egan Associates as a remuneration consultant to provide remuneration benchmarking for executive KMP. In addition, with the assistance of an external provider, the board initiated a review of Nufarm’s executive remuneration framework to: • Better understand local and global market practices and trends • Review the efficacy of the current incentive schemes • Provide insights into the design of a Nufarm incentive scheme that ensures it: – Attracts and retains talent from a global pool – Focuses executives on creating value for shareholders consistent with the company’s strategy and values – Rewards performance through the cycles of volatility inherent in the sector – Rewards results that strengthen the business and deliver long term value As an outcome of the above review and utilising the information provided by Egan Associates the board established appropriate remuneration packages for KMP including the executive incentive plan in FY22, and this plan will remain in place in FY23. 66 Nufarm Limited | Annual Report 20223 Executive remuneration outcomes 3.1 Financial performance Details of Nufarm’s performance, share price and dividends over the past five years are summarised in the table below: Performance measures3 Nufarm performance Underlying EBITDA* Underlying EBIT* Underlying NPAT* ANWC/Sales** ROFE achieved Shareholder value TSR Total dividends declared Closing share price Continuing group1 FY22 FY21 Sept 202,4 FY203,4 FY193,4 $m $m $m % % % Cents $m 446.8 236.7 133.2 28.3 9.5 24.8 10.0 5.00 361.1 153.1 61.1 34.3 5.9 (45.3) 4.0 4.80 (43.4) (78.8) (85.9) 44.7 n/a (4.2) – 3.85 235.8 34.4 (80.6) 46.4 1.2 (49.2) – 4.02 300.1 135.3 39.6 47.7 4.6 (31.0) – 4.88 1. Performance measures for the periods FY19 and FY20 are presented on a continuing operations basis. 2. ‘Sept 20’ in this table represents the 2 months ended 30 September 2020. 3. FY20 and FY19 are presented for the respective 12 months ended 31 July. 4. Performance metrics for Sept 20, FY20 and FY19 have not been restated for the change in accounting policy with respect to the IFRIC agenda decision on cloud computing arrangement costs as discussed in the previous year Annual Report. * Underlying EBIT is earnings before net finance costs and taxation excluding material items. Underlying EBITDA is earnings before net finance costs, taxation, depreciation and amortisation excluding material items. Underlying NPAT is Net Profit/(Loss) after Tax excluding material items. Underlying NPAT, Underlying EBIT and Underlying EBITDA are used internally by management to assess performance of the business and make decisions on the allocation of our resources. ** Average Net Working Capital/Sales is used throughout the business and highlights the management of working capital over the full year. 3.2 Plan outcomes Based on an Underlying EBIT of $236.7 million, ROFE of 9.5 per cent and ANWC/Sales % of 28.3 per cent, and performance against individual and strategic business objectives, executive KMP’s employed for the performance period were awarded an incentive in accordance with the rules of the FY22 EIP and the historical FY20 LTI Plan. a) FY22 Executive incentive plan outcomes In line with the introduction of the EIP and Nufarm’s commitment to continue to improve transparency, the outcomes against targets for executive KMPs are shown below which include actual targets: Executive KMPs Greg Hunt Paul Townsend Elbert Prado2 Dave Allen3 Threshold Group uEBIT Group ROFE Group ANWC/sales % Non-financial Group uEBIT1 Weight Target1 Actual1 Outcome Weight Target Actual Outcome Weight Target Actual Outcome Weight Outcome 145.6m 25% 171.3m 236.7m 150% 25% 6.8% 9.5% 150% 25% 37.0% 28.3% 150% 25% 100% 145.6m 25% 171.3m 236.7m 150% 25% 6.8% 9.5% 150% 25% 37.0% 28.3% 150% 25% 100% 145.6m 25% 171.3m 236.7m 150% 25% 6.8% 9.5% 150% 25% 37.0% 28.3% 150% 25% 100% n/a 1. Figures presented are $ millions. 2. Elbert Prado ceased being KMP prior to the performance measure testing date but was incentivized via the EIP during FY22. Elbert continued to be eligible under the plan post 31 August 2022 in his continuing role with Nufarm. 3. Dave Allen was appointed as a KMP on 1 September 2022 and was not a participant in the FY22 EIP. 67 Nufarm Limited | Annual Report 2022Remuneration Report continued FY22 Executive incentive plan potential Executive KMPs At target $ At maximum $ Total Award $ Greg Hunt Paul Townsend Elbert Prado1 Dave Allen2 1,767,061 771,825 709,447 n/a 2,429,709 1,061,259 975,490 n/a 2,429,709 1,061,259 975,490 n/a Executive KMP average 1,082,778 1,488,819 1,488,819 FY22 EIP Award as a % of target potential FY22 EIP as % of FA To be paid in cash in December 2022 To be converted into rights with vesting date 30 September 20253 138% 138% 138% n/a 138% 138% 138% 138% n/a 138% 809,903 353,753 325,163 n/a 1,619,806 707,506 650,326 n/a 496,273 992,546 1. Elbert Prado ceased being KMP on 31 August 2022 but was incentivized via the EIP during FY22. Elbert continued to be eligible under the plan post 31 August 2022 in his continuing role with Nufarm. The information is presented on a full year basis. 2. Dave Allen was appointed as a KMP on 1 September 2022 and was not a participant in the FY22 EIP. 3. The amounts to be converted into rights are converted by dividing this amount by the 5-Day VWAP of the Nufarm share price following the announcement of the audited financial statements. The vesting of the rights is subject to the achievement of long term non-financial measures to be tested on or prior to 30 September 2025 by the Nufarm board. Plan performance relative to Nufarm’s uEBIT results The following chart compares Nufarm’s current EIP and historical STI plan performance results against underlying EBIT over the last four performance measurement periods. Nufarm’s incentive plans measure performance against a range of financial and non-financial metrics with varied weightings. Accordingly, the pay for performance relationship is based on the performance against these metrics as a whole and may not always align with underlying EBIT performance solely. Underlying EBIT vs plan outcomes (EIP and Historical STI performance) ) 0 0 0 $ ( I T B E g n y l r e d n U i 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% FY19 ● Underlying EBIT ● EIP and historical STI plan award as a % of target potential FY20 FY21 FY22 160% 140% 120% 100% 80% 60% 40% 20% 0% d r a w a n a p l I T S l i a c i r o t s h d n a P E I l a i t n e t o p t e g r a t f o % a s a b) Long Term Incentive Plan outcomes The performance period for the FY20 LTI plan concluded on 30 September 2022. The results of Nufarm’s RTSR are calculated by an external provider. ROFE is calculated on an underlying basis which excludes the impact of material items. Accordingly, the board determined the ROFE outcome to ensure no windfall gains or losses and accordingly adjusted for the net impact of material items. The board approved the vesting outcomes in accordance with the LTI plan rules. 68 Nufarm Limited | Annual Report 2022 FY20 LTI plan testing as at 30 September 2022 The vesting table for the FY20 LTI plan is detailed below reflecting performance up to 30 September 2022 against the two performance measures of RTSR and ROFE. Performance measure* Threshold RTSR ROFE Total 50th percentile 5.9% Actual 66th percentile 5.5% (below threshold) % of total plan vested 41% 0% 41% * Refer to section 2.3(c) for further information regarding the LTI plan measures. FY20 LTI award outcome The table below details the individual outcome for the FY20 LTI plan award granted 1 August 2019. Executive KMP Greg Hunt Paul Townsend1 Elbert Prado2 Dave Allen1 FY20 LTI award vested 30 September 2022 Total number of rights available Total number of rights awarded Total award as a % of potential Average granted date fair value of awarded rights Total grant date fair value of award $ Total grant date fair value of lapsed award $ 159,456 n/a 50,630 n/a 65,377 n/a 20,758 n/a 41.0% n/a 41.0% n/a 227,512 666,526 439,104 n/a 72,238 n/a n/a n/a 211,633 139,396 n/a n/a 1. Paul Townsend and Dave Allen did not participate in the FY20 LTI plan as they were not employed by Nufarm at the time of plan issue. 2. Elbert Prado ceased being KMP on 31 August 2022 but was incentivized via the FY20 LTI plan during FY22. Elbert continued to be eligible under the plan post 31 August 2022 in his continuing role with Nufarm. The information is presented on a full year basis. Historical LTI plan performance relative to Nufarm’s share price The following chart compares Nufarm’s LTI plan vesting results for the past six LTI plans (as a percentage of plan maximum) to the share price history during the same period. The FY16, FY17, FY18 and FY19 LTI plans did not meet the hurdle and therefore are depicted below as hollow bars. Nufarm historical share price vs LTI outcome $ e c i r p e r a h S 12.00 10.00 8.00 6.00 4.00 2.00 0.00 89% 100% 0% 0% 0% 0% 120% 41% 100% e m o c t u o n a p l I T L 80% 60% 40% 20% 0% 6 1 - l u J 6 1 - p e S 6 1 - v o N 7 1 - n a J 7 1 - r a M 7 1 - y a M 7 1 - l u J 7 1 - p e S 7 1 - v o N 8 1 - n a J 8 1 - r a M 8 1 - y a M 8 1 - l u J 8 1 - p e S 8 1 - v o N 9 1 - n a J 9 1 - r a M 9 1 - y a M 9 1 - l u J 9 1 - p e S 9 1 - v o N 0 2 - n a J 0 2 - r a M 0 2 - y a M 0 2 - l u J 0 2 - p e S 0 2 - v o N 1 2 - n a J 1 2 - r a M 1 2 - y a M 1 2 - l u J 1 2 - p e S 1 2 - v o N 2 2 - n a J 2 2 - r a M 2 2 - y a M 2 2 - n u J 2 2 - p e S ● LTI Plan Share Price The hollow bars indicate periods in which the LTI plans did not achieve threshold and lapsed. 69 Nufarm Limited | Annual Report 2022 Remuneration Report continued 3.3 Senior executive contract details The company has employment contracts with the executive KMPs. These contracts formalise the terms and conditions of employment. The contracts are for an indefinite term. The contracts of the CEO and other executive KMPs have been structured to be compliant with the termination benefits cap under the Corporations Act. The company may terminate the contract of the CEO and other executive KMPs by giving six months’ notice, in which case the CEO and other executive KMPs would be entitled to a termination payment of 12 months fixed annual remuneration inclusive of any notice paid in lieu. The contract also provides for payment of applicable statutory entitlements. The CEO and other executive KMPs may terminate the contract by giving the company six months’ notice. The company may terminate the employment contracts immediately for serious misconduct. 4. Non-executive directors (NED) remuneration Nufarm’s operations are managed under the direction of the board. The board oversees the performance of Nufarm management in seeking to deliver superior business and operational performance and long-term growth in shareholder value. The board recognises that providing strong leadership and strategic guidance to management is important to achieve our goals and objectives. Fees for non-executive directors are set at a level to attract and retain directors with the necessary skills and experience to allow the board to have a proper understanding of, and competence to deal with, current and emerging issues for Nufarm’s business. The board seeks to attract directors with different skills, experience, expertise, and diversity. Additionally, when setting non-executive director fees, the board takes into account factors such as external market data on fees and the size and complexity of Nufarm’s operations. The non-executive directors’ fees are fixed, and non-executive directors do not participate in any Nufarm incentive plan. Chair1 Director Audit committee chair Audit committee member Risk and compliance committee chair Risk and compliance committee member HR committee chair HR committee member Innovation committee chair Innovation committee member 1. The chair receives no fees as a member of any committee. The board’s policy with regard to NED remuneration is to position board remuneration at the market median with comparably 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 2017 AGM, shareholders approved an aggregate of $2,000,000 per year (including superannuation costs). The total fees for FY22 remained within the approved cap. Fees applicable from 1 October 2021 ($) per annum 392,567 160,597 27,000 13,500 27,000 13,500 27,000 13,500 27,000 13,500 70 Nufarm Limited | Annual Report 20225. Remuneration tables 5.1 Remuneration of directors and disclosed executives Short Term Post- employment Share based payments (SBP) Total In AUD Period Salary and Fees $ Cash Bonus (Vested) $ Other benefits1 $ Total short term $ Other long term2 $ Super- annuation $ Term- ination benefits $ Equity settled expenses $ Total Remun- eration $ Percen- tage of remun- eration perform- ance based % SBP expense as a prop- ortion of total remun- eration % Non-executive directors’ J Gilliam Chair G Davis Director A Gartmann3 Director D Jones Director P Margin Director M McDonald Director L Saint Director FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 359 361 200 195 4 – 188 49 215 212 183 188 183 136 Former non-executive directors A Brennan4 Director F Ford5 Director T Takasaki6 Director Sub total Non-executive Directors remuneration FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 37 32 175 106 158 1,470 1,511 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 359 361 200 195 4 – 188 49 215 212 183 188 183 136 37 32 175 106 158 1,470 1,511 – – – – – – – – – – – – – – – – – – – – – 34 36 15 20 – – – – – – 18 19 18 14 4 3 18 11 16 99 127 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 393 397 215 215 4 – 188 49 215 212 201 207 201 150 41 35 193 117 174 1,569 1,638 – – – – – – – – – – – – – – – – – – – – – – 1. Other benefits includes movements in annual leave accrual. For overseas based executives other benefits include allowances, health insurance and other costs. A negative balance may appear where the leave accrual has decreased from the prior year. 2. Other long term includes movement in long service leave provisions. A negative balance may appear where the leave accrual has decreased from the prior year. 3. Ms A Gartmann was appointed a director on the 23 September 2022. 4. Ms A Brennan ceased being a director on 18 December 2020 following her retirement. 5. Mr F Ford ceased being a director on the 17 December 2021. 6. Mr T Takasaki ceased being a director on 31 May 2022. – – – – – – – – – – – – – – – – – – – – – – 71 Nufarm Limited | Annual Report 2022 Remuneration Report continued Short Term Post- employment Share based payments (SBP) Total Salary and Fees $ Cash Bonus (Vested) $ Other benefits1 $ Total short term $ Other long term2 $ Super- annuation $ Term- ination benefits $ Equity settled expenses $ Total Remun- eration $ Percen- tage of remun- eration perform- ance based % SBP expense as a prop- ortion of total remun- eration % 1,332 1,294 744 603 61 – – 206 691 707 810 698 354 265 – – – 50 298 259 2,828 2,810 4,298 4,321 1,462 1,272 1,462 1,272 66 50 – 19 1 – – (31) 57 60 124 98 124 98 2,208 2,042 1,098 887 62 – – 225 1,046 1,026 4,414 4,180 5,884 5,691 42 32 19 15 – – – (177) – – 61 (130) 61 (130) 28 26 28 21 – – – 6 49 45 105 98 204 225 – – – – – – – 213 – – – 213 – 213 833 472 339 162 – – – – 276 179 1,448 813 1,448 813 3,111 2,572 1,484 1,085 62 – – 267 1,371 1,250 6,028 5,174 7,597 6,812 53% 45% 47% 39% 0% 0% 0% 19% 42% 35% – – – – 27% 18% 23% 15% 0% 0% 0% 0% 20% 14% – – – – In AUD Period Executive KMP G Hunt Managing director and CEO P Townsend Chief financial officer D Allen3 Group executive supply chain FY22 FY21 FY22 FY21 FY22 FY21 Former executive KMP P Binfield4 Chief financial officer E Prado5 Group executive supply chain Sub total – total executive KMP remuneration Total directors and executive remuneration FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 1. Other benefits includes movements in annual leave accrual. For overseas based executives other benefits include allowances, health insurance and other costs. A negative balance may appear where the leave accrual has decreased from the prior year. 2. Other long term includes movement in long service leave provisions. A negative balance may appear where the leave accrual has decreased from the prior year. 3. Mr D Allen was appointed as an Executive KMP effective from the 1 September 2022. 4. Mr P Binfield announced his resignation on 14 September 2020 and therefore forfeited his equity based compensation in accordance with the plan rules, resulting in negative renumeration from the reversal of prior awards. An STI cash bonus was paid to Mr Binfield upon achievement of the delivery of a report recasting how operating expense savings could be accelerated into FY21. Upon departure from Nufarm, Mr Binfield received a termination payment consisting of annual and long service leave accrued. 5. Mr E Prado ceased being an Executive KMP effective 31 August 2022. The remuneration amounts, including the cash bonus (vested) and the equity settled expenses, represent expenses accrued during the period 1 October 2021 to 31 August 2022. 72 Nufarm Limited | Annual Report 2022 5.2 Equity instruments held by directors and disclosed executives The following tables show the number of: • options/performance rights over ordinary shares in the company; • right to deferred shares granted under previous years STI schemes; and • shares in the company that were held during the financial year by disclosed executives and non-executive directors of the group, including their close family members and entities related to them. Equity instruments in relation to the FY22 EIP will be granted following the release of the FY22 audited financial statements. 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. Disclosed executives’ rights over ordinary shares in Nufarm Limited Scheme Balance at 1 Oct 2021 Granted as remun- eration(f) Exercised Forfeited or lapsed Net change other(e) Balance at 30 Sept 2022(d) Vested during 2022 Vested at 30 Sept Value at date of for- 2022(a) feiture(c) Executive KMP G Hunt LTI rights STI rights deferred(b) 393,404 – – 145,890 P Townsend LTI rights 74,161 D Allen STI rights deferred(b) LTI rights STI rights deferred(b) – – – Former Executives E Prado LTI rights 118,497 – 55,465 – – – 54,238 255,593 – – – – 586,062 – – – – Total STI rights deferred(b) LTI rights STI rights deferred(b) Non-KMP Officers K Hall LTI rights STI rights deferred(b) Former Non-KMP Officers F Smith Total LTI rights STI rights deferred(b) 89,431 – 675,493 255,593 – – – – – – – – – – – – – – – (94,079) – – – – – – – – – – – – – (118,497) (54,238) 299,325 145,890 74,161 55,465 – – – – 65,377 65,377 470,395 – – – – – – – – – – – – – – – – – – – – – (94,097) (118,497) 373,486 65,377 65,377 470,395 – – – – – (54,238) 201,355 – – (89,431) – – – – – – – – – – – – – – – – – – – – (94,097) (262,166) 574,841 65,377 65,377 470,395 (a) All rights that are vested are exercisable. (b) Deferred rights were granted as remuneration during the year ended 30 September 2022 in relation to the year ended 30 September 2021. Deferred rights in respect of the FY22 Executive Incentive Plan to be granted as remuneration on the back of the current year EIP outcomes will be determined and allocated in December 2022. (c 59 per cent of LTI performance rights due to vest in the year ended 30 September 2022 were forfeited due to a failure to satisfy service or performance conditions. The value of the LTI performance rights forfeited is expressed in the table above using the share price of the company as at the date of forfeiture (30 Sep 2022: $5.00). (d) 308,159 of the total LTI performance rights held by KMPs or non-KMP officers are due to vest in the period ending 30 September 2023. (e) ‘Net change other’ reflects changes to KMPs and non-KMP officers during the period. (f) The number of FY21 STI performance rights granted as remuneration during FY22 were determined by dividing the KMP's total STI grant opportunity by $4.78, being the five-day VWAP post the announcement of the group's annual results for the year ended 30 September 2021. 73 Nufarm Limited | Annual Report 2022 Remuneration Report continued Non-executive director rights over ordinary shares in Nufarm Limited Nufarm’s non-executive director rights (NED rights) plan commenced in 2021. Under the terms of this plan, non-executive directors may allocate a fixed portion of their remuneration to be used to purchase NED rights. In accordance with Nufarm’s Security Trading Policy, the rights will vest every six months on the second business day following the date in which Nufarm publicly releases its half-yearly and annual financial statements. All vested rights are converted into ordinary shares via on market purchase and are subject to restrictions in accordance with the plan rules. There are no performance obligations attached to the NED rights or restricted shares, and changes in value of the NED rights and restricted shares are not considered to be remuneration. The first six-monthly tranche of NED rights issued under the plan vested into shares in May 2022. Rights issued under the second tranche are scheduled to vest in November 2022. These rights, as well as those that subsequently convert to restricted shares, combine to form part of the non-executive Director’s Minimum Shareholding Requirement (MSR). The movement during the reporting period in the number of rights for each non-executive director, including their related parties, is set out in the table below: Balance at 1 Oct 2021(a) Rights acquired Vested and converted to shares(b) Forfeited Balance at 30 Sept 2022(d) Non-executive directors J Gilliam G Davis A Gartmann D Jones P Margin M McDonald L Saint Former non-executive directors T Takasaki Total – – – – – – – – – – – – – – 8,394 – 15,262 – – – – – – (4,197) – (7,631) – – 23,656 (11,828) – – – – – – – – – – – – – – 4,197 – 7,631 – – 11,828 (a) The Non-executive director NED plan only commenced in November 2021, therefore there is a nil opening balance as at the 1 October 2021. (b) This represents the rights that have vested and subsequently been converted to ordinary shares. 74 Nufarm Limited | Annual Report 20225.3 Shares held in Nufarm Limited During FY21 the board introduced a non-executive director minimum shareholding policy which applies to all non-executive directors except for any nominee directors appointed to the board. The policy requires that non-executive directors are required to accumulate and then hold a minimum holding of Nufarm securities equivalent to 100 per cent of their total pre-tax annual base fee including superannuation. This minimum holding is to be achieved within five years of appointment or for those non-executive directors who were a member of the board at the date the policy was adopted, within five years of the adoption. The minimum share-holding requirement at 30 September 2022 was 30,385 shares. In line with the minimum shareholding policy and the transitional arrangements all applicable non-executive directors comply with the policy. Balance as at 1 October 2021 Granted as remuneration On exercise of rights Net change other Balance as at 30 September 2022 Directors J Gillam G Davis A Gartmann1 D Jones P Margin M McDonald L Saint Former Directors F Ford2 T Takasaki3 Executive KMP D Allen4 G Hunt P Townsend Former Executive KMP E Prado5 Total 185,000 71,609 – 82,000 13,906 34,827 6,659 51,400 – – 564,847 11,000 17,829 1,039,077 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 17,961 – 7,631 (51,400) – 9,843 25,000 9,500 185,000 71,609 – 82,000 31,867 34,827 14,290 – – 9,843 589,847 20,500 (17,829) – 52,106 1,162,757 1. A Gartmann was appointed a director as of 23 September 2022. 2. Net change other for FA Ford reflects that he has ceased to be a director from 17 December 2021. 3. T Takasaki ceased being a director as of 31 May 2022. 4. D Allen’s net change other movement reflects opening balance of shares following becoming a KMP on 1 September 2022. 5. Net change other for E Prado reflects that he has ceased to be a KMP on 31 August 2022. 75 Nufarm Limited | Annual Report 2022Remuneration Report continued Shares issued as a result of the exercise of options There were nil (2021: nil) shares issued as a result of the exercise of options during the year. Unissued shares under option There are nil (2021: nil) unissued shares under option. Loans to key management personnel There were no loans to key management personnel at 30 September 2022 (2021: 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 director’s 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 arms-length basis. From time to time, key management personnel of the company or its controlled entities, or their related entities, may purchase goods from the group. These purchases are on the same terms and conditions as those entered into by other group employees or customers and are trivial or domestic in nature. This report has been made in accordance with a resolution of directors. JC Gillam Director Melbourne 16 November 2022 GA Hunt Director 76 Nufarm Limited | Annual Report 2022 Auditors’ Independence Declaration 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 of Nufarm Limited for the financial year ended 30 September 2022 there have been: i. ii. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Chris Sargent Partner Melbourne 16 November 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 77 Nufarm Limited | Annual Report 202278 Nufarm Limited | Annual Report 2022Consolidated financial statements for the year ended 30 September 2022 Contents Consolidated statement of profit or loss and other comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity 1 Reporting entity 2 Basis of preparation 3 Significant accounting policies 4 Determination of fair values 5 Operating segments 6 Individually material income and expense items 7 Other income 8 Other expenses 9 Personnel expenses 10 Finance income and expense 11 Income tax expense 12 Assets held for sale 13 Business combinations and acquisition of non-controlling interests 14 Cash and cash equivalents 15 Trade and other receivables 16 Inventories 17 Tax assets and liabilities 80 82 83 84 86 86 88 98 99 102 104 104 104 104 105 106 106 106 107 107 108 18 Investments accounted for using the equity method 110 19 Other investments 20 Property, plant and equipment 21 Intangible assets 22 Trade and other payables 23 Interest-bearing loans and borrowings 24 Employee benefits 25 Share-based payments 26 Provisions 27 Capital and reserves 28 Earnings per share 110 111 112 114 114 116 119 121 121 123 29 Financial risk management and financial instruments 124 30 Leases 31 Capital commitments 32 Contingencies 33 Group entities 34 Company disclosures 35 Deed of cross guarantee 36 Related parties 37 Auditors’ remuneration 38 Subsequent events Directors’ declaration Independent Audit Report Shareholder and Statutory Information Corporate Information 133 134 134 134 138 139 141 143 143 144 145 151 IBC 79 Nufarm Limited | Annual Report 2022Consolidated statement of profit or loss and other comprehensive income For the year ended 30 September 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 profits/(losses) Financial income Financial expenses excluding foreign exchange gains/(losses) Net foreign exchange gains/(losses) Net financial expenses Net financing costs Profit/(loss) before income tax Income tax benefit/(expense) Profit/(loss) for the period Attributable to: Equity holders of the group Consolidated Note 2022 $000 2021 $000 3,772,970 3,215,651 (2,800,385) (2,380,946) 972,585 834,705 7 9,051 9,021 18 10 10 10 (523,344) (477,623) (198,813) (172,890) (51,100) (36,663) (92) 427 208,287 156,977 2,381 (79,727) (2,838) (82,565) (80,184) 1,616 (60,104) (2,802) (62,906) (61,290) 128,103 95,687 11 (20,665) (30,559) 107,438 65,128 107,438 65,128 The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. 80 Nufarm Limited | Annual Report 2022Profit/(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: Gains/(losses) due to changes in fair value of other investments Actuarial gains/(losses) on defined benefit plans Income tax on share based payment transactions Consolidated Note 2022 $000 2021 $000 107,438 65,128 (67,496) 234 6,293 4,293 12,635 359 14,365 227 1,659 270 12,033 680 Other comprehensive profit/(loss) for the period, net of income tax (43,682) 29,234 Total comprehensive profit/(loss) for the period 63,756 94,362 Attributable to: Equity holders of the group Earnings per share Basic earnings/(loss) per share Diluted earnings/(loss) per share 63,756 94,362 28 28 26.3 26.1 15.2 15.1 The amounts recognised directly in equity are disclosed net of tax. The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. 81 Nufarm Limited | Annual Report 2022Consolidated balance sheet As at 30 September Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax assets Assets held for sale Total current assets Non-current assets Trade and other receivables Investments in equity accounted investees Other investments Deferred tax assets Property, plant and equipment Intangible assets Total non-current assets TOTAL ASSETS Current liabilities 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 group Other securities TOTAL EQUITY The consolidated balance sheet is to be read in conjunction with the attached notes. 82 Consolidated Note 2022 $000 2021 $000 14 15 16 17 12 15 18 19 17 20 21 22 23 24 17 26 22 23 17 24 585,702 550,251 1,602,457 19,251 3,438 724,215 811,714 976,163 22,709 – 2,761,099 2,534,801 3,778 6,462 54,850 164,801 475,331 1,427 3,750 4,267 142,612 441,367 1,192,777 1,243,831 1,897,999 1,837,254 4,659,098 4,372,055 1,290,012 269,169 30,595 10,773 6,878 933,446 252,536 19,234 4,434 13,778 1,607,427 1,223,428 28,827 662,701 146,141 61,281 5,777 788,496 133,893 98,998 898,950 1,027,164 2,506,377 2,250,592 2,152,721 2,121,463 1,837,228 1,835,888 42,751 25,810 94,992 (56,349) 1,905,789 1,874,531 27 246,932 246,932 2,152,721 2,121,463 Nufarm Limited | Annual Report 2022Consolidated statement of cash flows For the year ended 30 September Cash flows from operating activities Profit/(loss) for the period – after tax Adjustments for: Tax expense/(benefit) Net finance expense Depreciation & amortisation Inventory write down Share of (profits)/losses of associates net of tax Other 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 Cash generated from operations Interest received Dividends received Interest paid Taxes paid Net operating cash flows Cash flows from investing activities Proceeds from sale of property, plant and equipment Payments for property, plant and equipment Payments for other investments, associates or joint ventures Purchase of a business, net of cash acquired Payments for acquired intangibles and major product development expenditure Consolidated Note 2022 $000 2021 $000 107,438 65,128 8 18 20,665 77,346 213,680 58,278 92 (363) 259,518 (684,572) 390,551 8,853 30,559 58,488 208,007 16,853 (427) (221) 49,013 53,912 18,824 10,515 451,486 510,651 2,381 9 (62,278) (32,029) 1,616 14 (56,837) (31,253) 6 359,569 424,191 643 (75,802) (46,170) (33,965) (85,115) 780 (48,809) (4,592) – (93,678) Net investing cash flows 6 (240,409) (146,299) Cash flows from financing activities High yield bond – early redemption costs Debt establishment transaction costs Proceeds from borrowings Repayment of borrowings Lease liability payments Distribution to other securities holders Dividends paid Net financing cash flows Net increase/(decrease) in cash and cash equivalents Cash at the beginning of the period Exchange rate fluctuations on foreign cash balances Cash and cash equivalents at period end date The consolidated statement of cash flows is to be read in conjunction with the attached notes. 23 23 23 23 27 27 6 (18,988) (14,354) – (1,437) 497,895 467,488 (668,645) (416,788) (20,116) (10,201) (29,957) (19,851) (10,229) – (264,366) 19,183 (145,206) 724,215 6,693 297,075 423,914 3,226 14 585,702 724,215 83 Nufarm Limited | Annual Report 2022Consolidated statement of changes in equity For the year ended 30 September Consolidated Attributable to equity holders of the group Share capital $000 Translation reserve $000 Capital profit reserve $000 Other reserve $000 Retained earnings $000 Total $000 Other securities $000 Total equity $000 Balance at 1 October 2020 1,834,934 46,796 33,627 (5,744) (126,117) 1,783,496 246,932 2,030,428 Profit/(loss) for the period from continuing operations Other comprehensive income Foreign exchange translation differences Gains/(losses) on cash flow hedges taken to equity Gains/(losses) on net investment hedges taken to equity Gains/(losses) due to changes in fair value of other investments Actuarial gains/(losses) on defined benefit plans Income tax on share based payment transactions Total comprehensive income/(loss) for the period Transactions with owners, recorded directly in equity Employee share award entitlements and share issuances Dividends paid to shareholders Dividend reinvestment plan Distributions to other security holders – – – – – – – – – 14,365 – – – – – 14,365 954 – – – – – – – – – – – – – – – – – – – – – 227 1,659 270 65,128 65,128 – – – – 14,365 227 1,659 270 – 12,033 12,033 680 – 680 2,836 77,161 94,362 3,112 – – – – – – 4,066 – – (7,393) (7,393) – – – – – – – – – – – 65,128 14,365 227 1,659 270 12,033 680 94,362 4,066 – – (7,393) Balance at 30 September 2021 1,835,888 61,161 33,627 204 (56,349) 1,874,531 246,932 2,121,463 84 Nufarm Limited | Annual Report 2022Consolidated Attributable to equity holders of the group Share capital $000 Translation reserve $000 Capital profit reserve $000 Other reserve $000 Retained earnings $000 Total $000 Other securities $000 Total equity $000 Balance at 1 October 2021 1,835,888 61,161 33,627 204 (56,349) 1,874,531 246,932 2,121,463 Profit/(loss) for the period from continuing operations Other comprehensive income Foreign exchange translation differences Gains/(losses) on cash flow hedges taken to equity Gains/(losses) on net investment hedges taken to equity Gains/(losses) due to changes in fair value of other investments Actuarial gains/(losses) on defined benefit plans Income tax on share based payment transactions Total comprehensive income/(loss) for the period Transactions with owners, recorded directly in equity Employee share award entitlements and share issuances Dividends paid to shareholders Dividend reinvestment plan Distributions to other security holders – – – – – – – – – (67,496) – – – – – (67,496) 901 – 439 – – – – – – – – – – – – – – – – – – 107,438 107,438 – 107,438 – 234 6,293 4,293 – – – – (67,496) 234 6,293 4,293 – 12,635 12,635 359 – 359 11,179 120,073 63,756 4,076 – 4,977 – – – (30,396) (30,396) – 439 (7,518) (7,518) – – – – – – – – – – – (67,496) 234 6,293 4,293 12,635 359 63,756 4,977 (30,396) 439 (7,518) Balance at 30 September 2022 1,837,228 (6,335) 33,627 15,459 25,810 1,905,789 246,932 2,152,721 The amounts recognised directly in equity are disclosed net of tax. The consolidated statement of changes in equity is to be read in conjunction with the attached notes. 85 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements For the year ended 30 September 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 30 September 2022 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. Operating profits/ (losses) may fluctuate throughout the year due to seasonality inherent within the crop protection and seed technology markets, and the geography of operations. 2 Basis of preparation (a) Statement of compliance The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). Changes to significant accounting policies are described in note 3. The consolidated financial statements were authorised for issue by the board on 16 November 2022. (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, and defined benefit fund obligations that are 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 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 and presentation currency. The company is of a kind referred to in ASIC Corporations (Rounding in Financial/ Director’s Reports) Instrument 2016/191 and, in accordance with that Instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand dollars unless otherwise stated. (d) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the 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 the group making assumptions about the timing of cash inflows and outflows, growth assumptions, discount rates and cost of debt. (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, using the higher of a value in use (VIU) or a fair value less cost to dispose (FVLCD) methodology to estimate the recoverable amount of cash generating units. VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal. VIU is determined by applying assumptions specific to the group’s continued use and cannot consider future development. The determination of recoverable value often requires the estimation and discounting of future cash flows which is based on information available at balance date such as expected revenues from products, the return on assets, future costs, growth rates, applicable discount rates and useful lives. FVLCD is an estimate of the amount that a market participant would pay for an asset or Cash Generating Unit (CGU), less the cost to dispose. Fair value is generally determined using independent market assumptions to calculate the present value of the estimated future cash flows expected to arise from the continued use of the asset, and its eventual sale where a market participant may take a consistent view. Cash flows are discounted using an appropriate discount rate to arrive at a net present value of the asset which is compared against the asset’s carrying value. These estimates are subject to risk and uncertainty that may be beyond the control of the group, hence there is a possibility that changes in circumstances will materially alter projections, which may impact the recoverable amount of assets at each reporting date. Other non-current assets are also assessed for impairment indicators. Refer to note 21 for key assumptions made in determining the recoverable amounts of the CGU’s. 86 Nufarm Limited | Annual Report 2022(iii) Income taxes (vi) Capitalised development costs Uncertain tax matters: 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. The group has exercised judgement in the application of tax legislation and its interaction with income tax accounting principles. 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 recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised in the period in which the tax determination is made. Deferred tax: 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. Judgement is required by the group to determine the likely timing and the level of future taxable income. The group assesses the recoverability of recognised and unrecognised deferred taxes including losses in Australia and overseas incorporating assumptions including expected revenues from products, the return on assets, future costs, growth rates and useful lives. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future. (iv) Defined benefit plans A liability in respect of defined benefit pension plans is recognised in the balance sheet, and is measured as the present value of the defined benefit obligation at the reporting date less the fair value of the pension plan’s assets. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund at the reporting date, calculated annually by independent actuaries and requires the exercise of judgement in relation to assumptions for expected future salary levels, long term price inflation and bond rates, experience of employee departures and periods of service. Refer to note 24 for details of the key assumptions used in determining the accounting for these plans. (v) Working capital In the course of normal trading activities, the group uses judgement in establishing the carrying value of various elements of working capital, which is principally inventories and trade receivables. Judgement is required to estimate the provision for obsolete or slow moving inventories and bad and doubtful receivables. In estimating the provision for obsolete or slow moving inventories the group considers the net realisable value of inventory using estimated market price less cost to sell. In estimating the provision for bad and doubtful receivables the group measures the expected credit losses (ECLs) using key assumptions to determine a probability weighted basis including the geographical location’s specific circumstances. Actual expenses in future periods may be different from the provisions established and any such differences would impact future earnings of the group. Development expenditure is recognised as an intangible asset when the group judges and can 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. The criteria above are derived from independent valuations and predicated on estimates and judgements including future cash flows, revenue streams and value in use calculations. Estimates and assumptions may change as new information becomes available. If, after having commenced the development activity, a judgement is made that the intangible asset is impaired, the appropriate amount will be written off to the income statement. (vii) Intellectual property Intellectual property consists of product registrations, product access rights, copyright, patents, trademarks, task force seats, product distribution rights and product licences acquired from third parties. The group assesses intellectual property to have a finite life. Changes to estimates related to the useful life of intellectual property are accounted for prospectively and may affect amortisation rates and intangible asset carrying values. (viii) Coronavirus (COVID-19) The group has carefully considered the effect of the Coronavirus in preparing its financial statements for the year ended 30 September 2022. Where applicable, the group has incorporated judgements, estimates and assumptions specific to the impact of the Coronavirus in determining the amounts recognised in the financial statements. This was done based on conditions existing at balance sheet date, recognising that an element of uncertainty still exists. (vii) Russia and Ukraine conflict The group has carefully considered the effect of the Russian and Ukrainian conflict in preparing its financial statements for the year ended 30 September 2022. Where applicable, the group has incorporated judgements, estimates and assumptions specific to the impact of the conflict, primarily in respect of the net realisable value of inventory and the expected credit losses for outstanding receivables, in determining the amounts recognised in the financial statements. Estimates and assumptions may change as the situation in these geographies change, with actual expenses in future periods differing from the provisions established, and any such differences would impact future earnings of the group. (e) Reclassification Where applicable comparatives are adjusted to present them on the same basis as current period figures. 87 Nufarm Limited | Annual Report 20223 Significant accounting policies Except as described 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. (a) Impact of new accounting standards and interpretation and changes in accounting policies (i) New and amended accounting standards and interpretations adopted by the group In the current year the group has adopted the following new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current financial reporting period. Their adoption has not had a material impact on the disclosures or amounts reported in these financial statements: • AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions • AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 (ii) New and revised Australian Accounting Standards and Interpretations on issue but not yet effective There are no standards that are not yet effective that would be expected to have a material impact on the group in the current or future reporting periods. (b) 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. 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. In assessing control, the group takes into consideration potential voting rights that currently are exercisable. 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. 88 (ii) Non-controlling interests (NCI) NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. (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. When the group loses control over a subsidiary it derecognises the assets and liabilities of the subsidiary and any related NCI and other components of equity. Any resulting gain or loss is recognised in profit and loss. Any interest retained is measured at fair value when control is lost. Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as an equity transaction with the owners of the group. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the group. Losses applicable to the NCI in a subsidiary are allocated to the NCI even if doing so causes the NCI to have a deficit balance. (iv) Investments in equity accounted investees The group’s interests in equity-accounted investees comprise interests in associates and joint ventures. 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. Investments in associates and joint ventures are accounted for using the equity method and are initially recognised at cost, which includes transaction costs. The group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. Subsequent to initial recognition, the consolidated financial statements include the group’s share of the income and expenses and equity movements of the investees after adjustments to align the accounting policies of the investees with those of the group, until the date on which significant influence or joint control ceases. On loss of significant influence the investment is no longer equity accounted and is revalued to fair value. Where the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 3(i). (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. Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September(c) 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 (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 and accumulated in translation reserve except to the extent that the translation difference is allocated to NCI. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve 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 translation reserve. (d) Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. (i) Non-derivative financial assets Financial assets are classified, at initial recognition, as either measured at amortised cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL). The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the group’s business model for managing them. With the exception of trade receivables, the group initially measures a financial asset at its fair value plus transaction costs on trade date at which the group becomes a party to the contractual provisions of the instrument. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under AASB 15 Revenue from Contracts with Customers. Refer to note 3(m). 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. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Amortised cost • Fair value through OCI with recycling of cumulative gains and losses (debt instruments) • Fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) • Fair value through profit or loss Financial assets at amortised cost This category is the most relevant to the group. Financial assets are measured at amortised cost if both of the following conditions are met and is not designated as FVTPL: • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The group’s financial assets at amortised cost includes trade receivables. Financial assets at fair value through OCI (FVOCI) – debt instruments The group measures debt instruments at fair value through OCI if both of the following conditions are met and is not designated as FVTPL: • The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss. 89 Nufarm Limited | Annual Report 20223 Significant accounting policies (continued) (d) Financial instruments (continued) (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. (iv) Other securities Nufarm step-up securities The Nufarm step-up securities (NSS) are classified as non- controlling equity instruments as they are issued by a subsidiary. After-tax distributions thereon are recognised as distributions within equity. Further details can be found in note 27. (v) 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 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. 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 documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: • There is an ‘economic relationship’ between the hedged item and the hedging instrument. • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship. • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the group actually hedges and the quantity of the hedging instrument that the group actually uses to hedge that quantity of hedged item. Financial assets at fair value through OCI (FVOCI) – equity instruments Upon initial recognition, the group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, gains are recorded in OCI. Financial assets at fair value through profit or loss (FVTPL) 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. Financial assets with cash flows that are not ‘solely payments of principal and interest’ (SPPI) are classified and measured at fair value through profit or loss, irrespective of the business model. In assessing whether the contractual cash flows are SPPI, the group considers the contractual terms of the instrument by considering events, terms and prepayment/extension features that could change the timing or amount of contractual cash flows such that it would not meet this condition. 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. (ii) Non-derivative financial liabilities At initial recognition, financial liabilities are classified at FVTPL, loans and borrowings, or payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. 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. 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 period which are unpaid. The group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts and trade and other payables. 90 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberHedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below: 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. 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 hedge 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. Derivatives that do not qualify or are not designated for hedge accounting Certain derivative instruments do not qualify, or are not designated for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify, or is not designated for hedge accounting are recognised immediately in profit or loss. (e) 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. (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. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows: • buildings • leasehold improvements • plant and equipment • motor vehicles • computer equipment 15-50 years 5 years 10-15 years 5 years 3 years Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold. Depreciation methods, useful lives and residual values are reassessed at each reporting date. 91 Nufarm Limited | Annual Report 2022(vi) Amortisation of intangible assets 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, for the current and comparative periods, are as follows: • capitalised development costs 5 to 30 years • intellectual property over the useful life and not more than 30 years • computer software 3 to 7 years Amortisation methods, useful lives and residual values are reassessed at each reporting date. (g) Leases Lease liability Lease liabilities are initially measured at the present value of lease payments that are not paid at that date. The lease payments are discounted using either the interest rate implicit in the lease, where that rate can be readily determined, or the incremental borrowing rate. The lease payments included in the measurement of the lease liability comprise the following (where applicable): (a) fixed payments, less any lease incentives receivable; (b) variable lease payments, measured using the index or rate as at the commencement; (c) amounts expected to be paid by the lessee under residual value guarantees; (d) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and (e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. Lease liabilities are remeasured when there is a change in future lease payments arising from a change in the above. Lease liabilities are measured at amortised cost using the effective interest method. Interest is recognised as part of the financial expenses in the Income Statement. Incremental borrowing rate The group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Adjustments made relate to the standalone borrowing capacity of entities within the group, in addition to financing rates applicable in the geographical regions in which it operates. 3 Significant accounting policies (continued) (f) 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) Intellectual property Intellectual property consists of product registrations, product access rights, copyright, patents, trademarks, task force seats, product distribution rights and product licences acquired from third parties. Intellectual property is assessed to have a finite life. Finite life intellectual property is amortised over its useful life but not longer than 30 years. 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. (iii) Computer software Computer software the group controls, is measured initially at acquisition cost or costs incurred to develop the asset. Cost includes expenditure that is directly attributable to the acquisition or development of the software. Software assets acquired in a business combination are recognised at fair value at the date of acquisition. Following initial recognition, computer software with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. They are amortised on a straight-line basis over their estimated useful lives. (iv) 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, or for extended use of existing 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. (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. 92 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberRight of use asset The right-of-use asset is initially measured at cost, and comprises the following (where applicable): (a) the amount of the initial measure of the lease liability, as described above; (b) any lease payments made at or before the commencement date, less any lease incentives received; (c) any initial direct costs incurred by the lessee; and (d) an estimate of the costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lease terms and conditions of the lease, unless those costs are incurred to produce inventories. The right-of-use asset is depreciated on a straight-line basis over the shorter of the lease term and the useful life. Determining the lease term The lease term is the non-cancellable period of a lease, together with both: (a) periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that option. The lease term is revised if there is a change in the non- cancellable period of a lease. Short term/low value leases Leases with a short term (duration of a year or less at the time of commencement) and leases which are low value are expensed on a straight line basis over the lease term. (h) 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. (i) Impairment (i) Non-derivative financial assets The group recognises an allowance for expected credit losses (ECLs) for all financial assets at amortised cost and debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. For trade receivables, the group applies a simplified approach in calculating ECLs. Therefore, the group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The group considers a financial asset to be in default when contractual payments are 90 days past due. However, in certain cases, the group may also consider a financial asset to be in default when internal or external information indicates that the group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows 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. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to the statement of profit or loss and other comprehensive income. (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 of disposal. 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 or joint venture is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate or joint venture is tested for impairment as a single asset when there is objective evidence that the investment in an associate or joint venture may be impaired. Refer to use of estimates and judgements note 2 and intangibles note 21 for further information. 93 Nufarm Limited | Annual Report 20223 Significant accounting policies (continued) (j) Assets held for sale Assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than continuing use are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance with the group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity accounted investees ceases once classified as held for sale or distribution. Refer to use of estimates and judgements note 12 for assets held for the sale during the period. (k) 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 comprises 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 other comprehensive income (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 94 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 corporate bonds that have maturity dates approximating the terms of the group’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised in profit or loss in the period in which they arise. (iv) Termination benefits Termination benefits are recognised as an expense when the group is demonstrably committed, without a realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the group has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than twelve months after the reporting period, then they are discounted to their present value. (v) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (vi) Share-based payment transactions The group has a global share plan for employees whereby matching and loyalty shares are granted to employees. The group’s previous global share plan, which was suspended in December 2020, included loyalty shares granted to employees. Although the plan is suspended the loyalty component of the plan will continue until November 2025. The fair value of matching and loyalty shares granted is recognised as an expense in profit or loss over the respective service period, with a corresponding increase in equity. Refer to note 25 for further details. The group has short term incentive plans (STI) available to key executives, senior managers and other managers globally. For the year ended 30 September 2021 a pre-determined percentage of the STI is paid in cash with the remainder deferred into either shares or rights to ordinary shares which have a two year vesting period following the year in which the short term incentives are measured. For the year ended Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September30 September 2022, the STI plans will be fully cash settled. The cash portion is recognised immediately as an expense at the time of performance testing. The fair value of the STI shares or rights is expensed over the vesting period including the year in which the short term incentives are measured. Refer to note 25 for further details on this plan. The group has a Key Leadership Incentive Plan (KLIP) which is available to key executives and certain selected senior managers. Performance rights have been granted to acquire ordinary shares in the group subject to the satisfaction of service vesting conditions. The fair value of the KLIP rights is expensed over the relevant vesting period. For further information refer to note 25 for further details on the plan. The group has two long term incentive plans (LTIP) in place, granted on 1 October 2019 and 1 October 2020, which were available to key executives and certain selected senior managers. The vesting dates for the existing plans are 30 September 2022 and 30 September 2023 respectively. Performance rights were granted to acquire ordinary shares in the group subject to the achievement of market and non-market performance conditions. The fair value of the LTIP rights is expensed over the relevant vesting period. For further information refer to note 25 for further details on the plan. The group has a executive incentive plan (EIP) which is available to key executives. A pre-determined percentage of the EIP is paid in cash with the remainder deferred into rights to ordinary shares which have vesting periods of one to three years following the year in which the performance conditions are measured. The deferred rights are subject to service vesting conditions and applicable performance conditions. The cash portion is recognised immediately as an expense at the time of performance testing. The fair value of the EIP rights is expensed over the vesting period including the year in which the performance measures are measured. Refer to note 23 for further details on this plan. (l) 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. (m) Revenue from contracts with customers Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the group expects to be entitled in exchange for those goods or services. The group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer. (i) Goods sold Revenue from sale of goods is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods. The group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods, the group considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any). (ii) Variable consideration If the consideration in a contract includes a variable amount, the group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of certain products provide customers with a right of return and volume rebates. The rights of return and volume rebates give rise to variable consideration. Rights of return Certain contracts provide a customer with a right to return the goods within a specified period. The group uses the expected value method, including applying any constraints, to determine variable consideration to which the group will be entitled. For goods that are expected to be returned, instead of revenue, the group recognises a refund liability. A right of return asset (and corresponding adjustment to cost of sales) is also recognised for the right to recover products from a customer. Rebates and sales incentives The group provides rebates and sales incentives to certain customers once thresholds specified in the contract are met or exceeded. Rebates are offset against amounts payable by the customer. To estimate the variable consideration for the expected future rebates, the group applies the requirements on constraining estimates of variable consideration and recognises a refund liability for the expected future rebates. (iii) End point royalties The group receives royalty revenue from growers for certain varieties of seed. Sales or usage based royalties are recognised as revenue at the later of when the sales or usage occurs and the performance obligation is satisfied, which would be when the harvest occurs and the royalty is paid. (iv) Significant financing components The group may receive short-term advances from its customers. Using the practical expedient in AASB 15, the group does not adjust the promised amount of consideration for the effects of a significant financing component as it is expected, at contract inception, that the period between the transfer of the good and when the customer pays for that good will be one year or less. (n) 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. 95 Nufarm Limited | Annual Report 20223 Significant accounting policies (continued) (o) Finance income and finance costs (i) Tax consolidation The group’s finance income and finance costs include the following: interest income, interest expense, dividends on preference shares issued classified as financial liabilities, financial assets, the net gain or loss on financial assets at fair value through profit or loss, the foreign currency gain or loss on financial assets and financial liabilities, the gain on the remeasurement to fair value of any pre-existing interest in an acquiree in a business combination, the fair value loss on contingent consideration classified as a financial liability, impairment losses recognised on financial assets (other than trade receivables), the net gain or loss on hedging instruments that are recognised in profit or loss, and the reclassification of net gains or losses previously recognised in other comprehensive income. Interest income or expense is recognised using the effective interest method. Finance costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets. (p) Income tax 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 (the ‘head entity’). Current tax expense/benefit, 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 following). Any difference between these amounts is recognised by the company as an equity contribution amounts or distribution. 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. The company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be utilised. Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only. (ii) Nature of tax funding arrangements and tax sharing agreements The head entity of the Australian tax-consolidated group, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability/(asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in the head entity recognising an inter-entity receivable/(payable) equal in amount to the tax liability/(asset) assumed. The inter-entity receivables/(payables) are at call. Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities. The head entity of the Australian tax-consolidated group, 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 consolidated financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote. Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. 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. 96 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September(q) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST or equivalent), except where the GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the 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 which are recoverable from, or payable to, the relevant tax authorities are classified as operating cash flows. (r) Earnings per share The group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all potential dilutive ordinary shares, which comprise convertible notes and share options granted to employees. (s) Segment reporting Determination and presentation of operating segments 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 (CEO) to make decisions about resources to be allocated to the segment and to assess its performance. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly loans and borrowings and related expenses, corporate assets and head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill. 97 Nufarm Limited | Annual Report 2022(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 rights to ordinary shares issued under the respective Nufarm incentive plans have been measured using Monte Carlo Simulation or the Binomial Tree. 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). 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) Intangible 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. 98 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September5 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, New Zealand and Asia (together ‘APAC’), Europe and North America. The seed technologies business deals in the sale of seeds, bioenergy 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 EBITDA and underlying EBIT, as defined below, as included in the internal management reports that are reviewed by the group’s CEO. These metrics are 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 non-operating corporate segment comprises mainly corporate expenses, and unallocated interest-bearing loans, borrowings and corporate assets. From April 2020, the non- operating corporate segment revenue represents revenue earned on delivering products under a two year supply agreement with Sumitomo Chemical Company Ltd as the purchaser of the group’s South American business, that was divested in April 2020. 2022 Operating Segments Revenue Crop Protection APAC $000 Europe $000 North America $000 Seed Technologies Global $000 Non Operating Corporate $000 Total $000 Group Total $000 Total segment revenue 1,038,424 894,931 1,350,190 3,283,545 296,311 193,114 3,772,970 Results Underlying EBITDA(a) 134,534 171,109 147,899 453,542 58,544 (65,335) 446,751 Depreciation & amortisation excluding material items (17,298) (129,763) (30,778) (177,839) (31,343) (908) (210,090) Underlying EBIT(a) 117,236 41,346 117,121 275,703 27,201 (66,243) 236,661 Material items included in operating profit (refer note 6) Net financing costs Profit/(loss) before tax (28,374) (80,184) 128,103 2021 Operating Segments Revenue Crop Protection APAC $000 Europe $000 North America $000 Seed Technologies Global $000 Non Operating Corporate $000 Total $000 Group Total $000 Total segment revenue 858,407 806,485 1,112,423 2,777,315 240,621 197,715 3,215,651 Results Underlying EBITDA(a) 111,550 171,696 104,394 387,640 46,322 (72,855) 361,107 Depreciation & amortisation excluding material items (20,114) (125,743) (32,678) (178,535) (28,505) (967) (208,007) Underlying EBIT(a) 91,436 45,953 71,716 209,105 17,817 (73,822) 153,100 Material items included in operating profit (refer note 6) Net financing costs Profit/(loss) before tax 3,877 (61,290) 95,687 (a) Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is Underlying EBIT before depreciation, amortisation and material items. 99 Nufarm Limited | Annual Report 20225 Operating segments (continued) Crop Protection 2022 Operating Segments Assets APAC $000 Europe $000 North America $000 Seed Technologies Global $000 Non Operating Corporate $000 Total $000 Group Total $000 Segment assets 748,926 1,267,220 1,320,015 3,336,161 618,741 636,498 4,591,400 Equity accounted & other investments 2,165 3,514 – 5,679 1,188 54,445 61,312 Total assets 751,091 1,270,734 1,320,015 3,341,840 619,929 690,943 4,652,712 Liabilities Segment liabilities Total liabilities Other segment information 683,743 245,970 376,031 1,305,744 90,662 1,103,585 2,499,991 683,743 245,970 376,031 1,305,744 90,662 1,103,585 2,499,991 Capital expenditure (cash basis)(b) 20,579 70,894 26,923 118,396 77,963 44,693 241,052 2021 Operating Segments Assets Crop Protection APAC $000 Europe $000 North America $000 Seed Technologies Global $000 Non Operating Corporate $000 Total $000 Group Total $000 Segment assets 667,866 1,306,106 947,116 2,921,088 562,871 880,079 4,364,038 Equity accounted & other investments 2,146 941 – 3,087 663 4,267 8,017 Total assets 670,012 1,307,047 947,116 2,924,175 563,534 884,346 4,372,055 Liabilities Segment liabilities Total liabilities Other segment information 561,395 238,480 223,379 1,023,254 41,570 1,185,768 2,250,592 561,395 238,480 223,379 1,023,254 41,570 1,185,768 2,250,592 Capital expenditure (cash basis)(b) 12,161 71,041 27,255 110,457 33,003 3,619 147,079 (b) Capital expenditure includes cash investments in property, plant and equipment, intangibles and other investments but excludes right of use lease assets. 100 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberGeographical information – revenue by location of customer United States of America Australia Rest of world(b) Total Revenue 2022 $000 1,104,667 801,219 2021 $000 955,090 577,556 1,867,084 1,683,005 3,772,970 3,215,651 (b) Other than Australia and the United States of America sales to other countries are individually less than 10% of the group’s total revenues. Geographical information – non-current assets by location of asset United States of America Germany United Kingdom Australia Rest of world(c) Unallocated(d) Total Non-current assets 2022 $000 453,371 381,766 346,587 339,798 211,676 164,801 2021 $000 413,962 467,501 349,113 277,875 186,191 142,612 1,897,999 1,837,254 (c) Other than Germany, Australia, United States of America, and the United Kingdom, non-current assets held in other countries are individually less than 10% of the group’s total non-current assets. (d) Unallocated non-current assets predominately include deferred tax assets. 101 Nufarm Limited | Annual Report 20226 Individually material income and expense items Individually material items are those items where their nature, including the expected frequency of the events giving rise to them, and/or amount is considered material to the financial statements. Such items included within the group’s profit for the period are detailed below. Material items by category: Transactions related to Russia and Ukraine Debt refinancing costs Transactions related to South American business disposal Deferred tax asset recognition Asset rationalisation and restructuring Legal costs Total Consolidated Consolidated 2022 $000 pre-tax 2022 $000 after-tax (29,454) (25,772) 1,080 – – – (28,191) (18,767) 1,080 20,119 – – (54,146) (25,759) 2021 $000 pre-tax – – 6,300 – (2,031) (392) 3,877 2021 $000 after-tax – – 6,300 – (1,838) (392) 4,070 30 September 2022 Material items 30 September 2021 Material items Transactions related to Russia and Ukraine Legal costs In the financial years ended 31 July 2019 and 31 July 2020, the group incurred legal costs associated with the enforcement of Omega-3 canola trademark and patent matters. The group has continued to incur legal costs in relation to the same matter during the year ended 30 September 2021. Asset rationalisation and restructuring During the year ended 31 July 2020 the group announced a group wide performance improvement program, relating to asset rationalisation and organisational restructuring. The group has continued to incur expenses in relation to this program during the year ended 30 September 2021. Transactions related to South American business disposal – onerous contract provision reversal During the year ended 31 July 2020 the group entered into a supply agreement contract as part of the disposal of the South American business that subsequently became onerous, as disclosed in material items for that period. During the year ended 30 September 2021 market conditions in relation to the terms of the contract have improved. The group has assessed that the full provision will no longer be required and it has therefore been partially reversed. The contract is due to expire in March 2022. Regarding the ongoing conflict between Russia and Ukraine, together with continued uncertainty with respect to sanctions, regulatory and operating implications, the group has undertaken assessments of its operations and assets in these geographies. The pre-conflict revenue contribution from Ukraine and Russia was 1 percent in the year ended 30 September 2021, and the total assets in Ukraine and Russia made up 1 percent of total group assets at 30 September 2021. During the year ended 30 September 2022, the group has assessed the recoverability of assets, primarily trade receivables and inventories, in respect of the group’s operations in Russia and Ukraine and has recognised a pre tax expense of $29.5 million following this assessment. At 30 September 2022, the total assets in Ukraine and Russia make up less than half a percent of total group assets. Debt refinancing costs During the period the group refinanced its high yield bond and incurred costs related to early redemption call premium and accelerated amortisation of deferred debt establishment transaction costs. Transactions related to South American business disposal – onerous contract provision reversal During the period ended 31 July 2020 the group entered into a supply agreement contract as part of the disposal of the South American business that subsequently became onerous, as disclosed in material items for that period. During the year ended 30 September 2022 market conditions in relation to the terms of the contract have improved. The group has assessed that the full provision will no longer be required and it has therefore been fully reversed. The contract expired in March 2022. Deferred tax adjustments Australian Accounting Standards require that the group recognises a deferred tax asset arising from unutilised tax losses and tax credits, to the extent that it is probable that future taxable profit will be available, against which the tax losses and tax credits can be utilised. The net recognition of the deferred tax assets of $20.119 million in respect of the tax losses reflects improved financial performance and outlook for the group. 102 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberMaterial items are classified by function as follows: 2022 $000 Transactions related to Russia and Ukraine Debt refinancing costs Transactions related to South American business disposal – onerous contract provision reversal Total material items Total material items included in operating profit 2021 $000 Legal costs Asset rationalisation and restructuring Transactions related to South American business disposal – onerous contract provision reversal Total material items Total material items included in operating profit Material items impacting cash flows are as follows: 2022 Cash flows from operating activities Net operating cash flows Cash flows from investing activities Net investing cash flows Cash flows from financing activities Net financing cash flows Selling, marketing and distribution expense General & administrative expense Net financing costs – – – – – (13,176) – – (25,772) 1,080 (12,096) (12,096) – (25,772) – Cost of sales (16,278) – – (16,278) (16,278) Selling, marketing and distribution expense General & administrative expense Net financing costs Cost of sales – – – – – – – – – – (392) (2,031) 6,300 3,877 3,877 – – – – – Total Pre-tax (29,454) (25,772) 1,080 (54,146) (28,374) Total Pre-tax (392) (2,031) 6,300 3,877 3,877 Underlying $000 Material items $000 Total group $000 366,120 (6,551) 359,569 (240,409) – (240,409) (245,378) (18,988) (264,366) Net operating, investing and financing cash flows (119,667) (25,539) (145,206) 2021 Cash flows from operating activities Net operating cash flows Cash flows from investing activities Net investing cash flows Cash flows from financing activities Net financing cash flows Underlying $000 Material items $000 Total group $000 439,807 (15,616) 424,191 (146,299) 19,183 – – (146,299) 19,183 Net operating, investing and financing cash flows 312,691 (15,616) 297,075 103 Nufarm Limited | Annual Report 20227 Other income Rental income Sundry income Total other income 8 Other expenses The following expenses were included in the period result: Consolidated 2022 Depreciation and amortisation Inventory write down 2021 Depreciation and amortisation Inventory write down 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 2022 $000 48 9,003 9,051 2021 $000 42 8,979 9,021 Underlying $000 210,090 42,000 Material items $000 3,590 16,278 Total group $000 213,680 58,278 208,007 16,853 – – 208,007 16,853 Consolidated 2022 $000 2021 $000 312,104 290,615 49,117 12,217 2,110 6,582 4,112 – 47,383 12,184 1,782 7,824 2,687 1,117 386,242 363,592 The restructuring expense relates to the group’s asset rationalisation and organisational restructure program. These expenses are included in material items in note 6. 10 Finance income and expense Other financial income Financial income Interest expense – external Interest expense – debt establishment transaction costs Debt redemption costs Lease liability – interest expense Net foreign exchange gains/(losses) Financial expenses Net financing costs 104 Consolidated 2022 $000 2,381 2,381 (43,474) (9,755) (18,988) (7,510) (2,838) (82,565) 2021 $000 1,616 1,616 (49,537) (3,147) – (7,420) (2,802) (62,906) (80,184) (61,290) Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September11 Income tax expense Recognised in the income statement Current tax expense/(benefit) Current period Tax free income and non-recognition of tax assets on material items Changes in estimates related to prior years Current tax expense/(benefit) Deferred tax expense/(benefit) Origination and reversal of temporary differences and tax losses Effect of changes in tax rates (Recognition)/non-recognition of tax assets on underlying and material items Deferred tax expense/(benefit) 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 Australian corporate tax rate of 30% Increase/(decrease) in income tax expense due to: Non-deductible Amortisation/Depreciation Non-deductible expenses Other taxable income Effect of changes in tax rates (Recognition)/non-recognition of tax assets on underlying items (Recognition)/non-recognition of tax losses on material items Tax free income and non-recognition of tax assets on material items Effect of tax rate in foreign jurisdictions Tax exempt income Tax incentives not recognised in the income statement Changes in estimates related to 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 Consolidated 2022 $000 2021 $000 31,355 4,361 2,434 38,150 12,008 (105) (29,388) (17,485) 31,304 (1,892) 5,656 35,068 (1,233) (50) (3,226) (4,509) 20,665 30,559 Consolidated 2022 $000 2021 $000 128,103 95,687 38,431 28,706 3,310 3,640 1,612 (105) (9,269) (20,119) 4,361 (2,217) – (1,413) 18,231 2,434 20,665 Consolidated 2022 $000 (2,489) (2,489) 3,998 (359) 3,639 2,915 3,043 1,511 (50) (3,226) – (1,892) (4,969) (170) (965) 24,903 5,656 30,559 2021 $000 (2,836) (2,836) (2,706) (680) (3,386) 105 Nufarm Limited | Annual Report 202212 Assets held for sale During the period ended 31 July 2020 the group announced a group wide performance improvement program, relating to asset rationalisation and organisational restructuring. As part of this program, the manufacturing operations of the Raymond Road site in Laverton Australia, forming part of the APAC segment, were closed. During the year ended 30 September 2022 the group has approved the sale of the Raymond Road site and has entered into a sales agreement with settlement expected to occur within the next 12 months. As such, the relevant land and buildings are deemed to be held for sale as at 30 September 2022. Land and buildings Total assets held for sale 2022 $000 3,438 3,438 13 Business combinations and acquisition of non-controlling interests Acquisitions in 2022 On 9 September 2022, the group announced that it had entered into an agreement with GranBio Investimentos SA (GranBio) group, a leading Brazilian industrial biotechnology group, to acquire its energy cane business. The acquisition included energy cane production assets including germplasm, breeding materials and related processes, together with products in various stages of development and customer contracts. The acquisition included cash consideration of USD 23 million paid on the acquisition date, contingent consideration of USD 2 million payable upon satisfaction of certain conditions subsequent, and contingent consideration based upon agreed revenues earned until 30 June 2034. The acquisition is highly complementary to the group’s existing bioenergy platform within the Seed Technology segment. The business expects to extract revenue synergies from the acquisition via the existing bioenergy platform and established model enabling the Seed Technology segment to provide advanced feedstocks to a broader suite of energy forms. In the period from 9 September 2022 to 30 September 2022, the acquisition did not contribute any additional revenues, whilst the contribution to operating profit was a loss of $0.134 million. Revenue and profit from the acquisition that would have been earned if the acquisition had occurred at the commencement of the financial year has not been provided on the basis that the calculation of that information is impracticable. This is because the business was fully integrated into the vendor’s operations and separate comparable financial information relating to the acquired business as a stand-alone operation was not available. Acquiree’s net assets at acquisition date Intangible assets Property, plant and equipment Net identifiable assets and liabilities Goodwill on acquisition Cash consideration paid Contingent consideration Total consideration Preliminary acquisition fair value $000 39,250 1,255 40,505 2,895 33,965 9,435 43,400 Total goodwill of $2.895 million from the business combination is attributable mainly to the synergies expected to be achieved from integrating the respective businesses into the group’s existing business. Acquisition of non-controlling interest There were no acquisition of non-controlling interest in the current or prior period. 14 Cash and cash equivalents Bank balances Call deposits Bank overdraft Total cash and cash equivalents 106 Consolidated 2022 $000 578,159 7,543 585,702 – 2021 $000 710,021 14,194 724,215 – 585,702 724,215 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September 15 Trade and other receivables Current Trade receivables Provision for impairment losses Prepayments Derivative financial instruments Other receivables Current receivables Non-current Other receivables Non-current receivables Total trade and other receivables 16 Inventories Raw materials Work in progress Finished goods Provision for obsolescence and valuation adjustments of inventories Total inventories Consolidated 2022 $000 2021 $000 477,464 (30,945) 446,519 27,277 24,734 51,721 710,201 (22,662) 687,539 55,103 6,110 62,962 550,251 811,714 3,778 3,778 1,427 1,427 554,029 813,141 Consolidated 2022 $000 582,421 26,481 1,051,399 1,660,301 (57,844) 1,602,457 2021 $000 304,176 22,193 669,228 995,597 (19,434) 976,163 107 Nufarm Limited | Annual Report 202217 Tax assets and liabilities Current tax assets and liabilities The current tax asset for the group of $19.251 million (2021: $22.709 million) represents the amount of income taxes recoverable in respect of the current and prior periods and that arose from the payment of tax in excess of the amounts due to the relevant tax authority. The current tax liability for the group of $10.773 million (2021: $4.433 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: 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) Assets 2022 $000 Liabilities 2021 $000 2022 $000 2021 $000 Net 2022 $000 10,750 10,052 19,282 25,898 31,200 77,070 174,252 (9,451) 164,801 11,984 11,225 23,332 24,463 37,487 44,282 152,773 (10,161) 142,612 (6,580) (101,061) – (20,466) (27,485) – (7,020) (94,319) – (20,037) (22,678) – (155,592) (144,054) 9,451 10,161 4,170 (91,009) 19,282 5,432 3,715 77,070 18,660 – (146,141) (133,893) 18,660 2021 $000 4,964 (83,094) 23,332 4,426 14,809 44,282 8,719 – 8,719 108 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberMovement in temporary differences during the period Consolidated Property, plant and equipment Intangible assets Employee benefits Provisions Other items Tax value of losses carried forward Consolidated Property, plant and equipment Intangible assets Employee benefits Provisions Other items Tax value of losses carried forward Balance 2021 $000 4,964 (83,094) 23,332 4,426 14,809 44,282 8,719 Balance 2020 $000 6,234 (82,558) 25,087 (16) 6,361 44,727 (165) Recognised in income $000 Recognised in equity $000 Currency adjustment $000 (968) (2,204) 1,144 917 (11,345) 29,941 17,485 – – (3,998) – 359 – (3,639) 174 (5,711) (1,196) 89 (108) 2,847 (3,905) Recognised in income $000 Recognised in equity $000 Currency adjustment $000 (1,225) (1,336) (4,929) 4,554 7,495 (50) 4,509 – – 2,706 – 680 – 3,386 (45) 800 468 (112) 273 (395) 989 Balance 2022 $000 4,170 (91,009) 19,282 5,432 3,715 77,070 18,660 Balance 2021 $000 4,964 (83,094) 23,332 4,426 14,809 44,282 8,719 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. Deferred tax assets and liabilities Unrecognised deferred tax liability At 30 September 2022, a deferred tax liability of $36.867 million (2021: $30.532 million) relating to investments in subsidiaries has not been recognised because the group 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 30 September 2022, there are unrecognised deferred tax assets in respect of tax losses and timing differences of $216.374 million (2021: $245.718 million). 109 Nufarm Limited | Annual Report 202218 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 period: Nature of relationship Country Balance date of associate Seedtech Pty Ltd Associate(1) Australia 31 December Leshan Nong Fu Trading Co., Ltd Joint Venture(2) China 31 December Crop.zone GmbH Associate(3) Germany 31 December Ownership and voting interest 2022 25.00% 35.00% 14.77% 2021 25.00% 35.00% 10.71% Seedtech Pty Ltd Leshan Nong Fu Trading Co., Ltd Crop.zone GmbH Carrying amount Share of profit/(loss) 2022 $000 808 2,164 3,490 6,462 2021 $000 663 2,146 941 3,750 2022 $000 144 3 (239) (92) 2021 $000 115 343 (31) 427 (1) Seedtech is a company that offers services to the seed industry such as cleaning, packaging, distribution and storage of seeds. (2) Leshan Nong Fu Trading is a joint venture in which the group has joint control and a 35 percent ownership interest. The joint venture is focused on sales and marketing of formulated crop protection products in the Chinese domestic market. It is structured as a separate vehicle. In accordance with the agreement under which Leshan Nong Fu Trading was established, the investors in the joint venture have agreed to make capital contributions in proportion to their ownership interests to make up any losses up to a maximum amount of RMB 100 million ($21.645 million). This commitment has not been recognised in this consolidated financial report. (3) Crop.zone is an Agtech start-up which provides electrophysical solutions to replace chemical herbicides in select market segments. During the period additional capital contributions were provided which raised the groups ownership interest to 14.77 per cent. The investment in crop.zone is equity accounted as Nufarm has additional powers under its shareholders agreement such that it is able to exert significant influence over the operations of crop.zone. 19 Other investments Non-current investments Other investments Total non-current investments 2022 $000 54,850 54,850 2021 $000 4,267 4,267 In July 2022, the group increased its investment in Enko Chem, a crop protection innovation company specialising in the discovery and development of novel products for growers that meet demands of growers, consumers and regulators globally. The group intends to hold this investment for the long term for strategic purposes and has designated the investment at FVOCI. 110 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September20 Property, plant and equipment Cost Balance at 1 Oct 2021 Additions Additions through business combinations Disposals and write-offs Transfer to assets held for sale Other transfers Foreign exchange adjustment Balance at 30 September 2022 Accumulated depreciation and impairment losses Balance at 1 Oct 2021 Depreciation charge for the period Disposals and write-offs Transfer to assets held for sale Other transfers Foreign exchange adjustment Balance at 30 September 2022 Consolidated Land and buildings $000 Plant and machinery $000 Capital work in progress $000 Total $000 1,109,630 100,399 1,255 (28,877) (8,648) – 334,422 18,439 669 (6,662) (8,648) (305) 4,586 728,144 17,712 586 (22,215) – 16,541 (8,767) 47,064 64,248 – – – (16,236) 728 (3,453) 342,501 732,001 95,804 1,170,306 (154,097) (514,166) (20,330) 5,536 5,210 1,039 (1,778) (40,799) 17,936 – (1,039) 7,513 (164,420) (530,555) – – – – – – – (668,263) (61,129) 23,472 5,210 – 5,735 (694,975) Net property, plant and equipment at 30 September 2022 178,081 201,446 95,804 475,331 Cost Balance at 1 October 2020 Additions Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2021 Accumulated depreciation and impairment losses Balance at 1 October 2020 Depreciation charge for the period Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2021 Consolidated Land and buildings $000 327,192 15,372 (8,587) 2,186 (1,741) Plant and machinery $000 685,747 31,063 (8,118) 19,939 (487) Capital work in progress $000 42,989 25,603 – (22,125) Total $000 1,055,928 72,038 (16,705) – 597 (1,631) 334,422 728,144 47,064 1,109,630 (138,371) (480,872) (20,544) (40,611) 4,066 (234) 986 6,159 234 924 (154,097) (514,166) – – – – – – (619,243) (61,155) 10,225 – 1,910 (668,263) Net property, plant and equipment at 30 September 2021 180,325 213,978 47,064 441,367 111 Nufarm Limited | Annual Report 202221 Intangible assets Cost Balance at 1 October 2021 Additions Additions through business combinations Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2022 Accumulated amortisation and impairment losses Balance at 1 October 2021 Amortisation charge for the period Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2022 Consolidated Goodwill $000 Intellectual Property $000 Computer software $000 Capitalised development costs $000 Total $000 379,843 1,094,293 90,546 628,404 2,193,086 – 2,895 – – (1,947) 4,920 39,250 (111) (28,918) (17,068) 380,791 1,092,366 702 79,468 – – 196 (3,511) 87,933 – (4,747) 28,722 (25,870) 85,090 42,145 (4,858) – (48,396) 705,977 2,267,067 (172,470) (475,920) – – – 7,394 (78,422) 29 526 4,658 (49,790) (11,809) (251,075) (949,255) (62,320) (152,551) – – 552 (526) 581 – 1,591 13,292 26,935 (165,076) (549,129) (60,008) (300,077) (1,074,290) Intangibles carrying amount at 30 September 2022 215,715 543,237 27,925 405,900 1,192,777 Cost Balance at 1 October 2020 Additions Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2021 Consolidated Goodwill $000 Intellectual Property $000 Computer software $000 Capitalised development costs $000 Total $000 382,481 1,124,954 – – – 15,453 (27,961) (621) (2,638) (17,532) 88,525 2,680 (75) 135 (719) 544,563 2,140,523 75,545 (3,090) 486 10,900 93,678 (31,126) – (9,989) 379,843 1,094,293 90,546 628,404 2,193,086 Accumulated amortisation and impairment losses Balance at 1 October 2020 Amortisation charge for the period Disposals and write-offs Other transfers Foreign exchange adjustment Balance at 30 September 2021 (173,536) (420,244) (98) – – 1,164 (89,076) 27,841 (232) 5,791 (37,362) (12,647) 95 773 (649) (203,032) (834,174) (45,032) (146,853) 2,827 (541) (5,297) 30,763 – 1,009 (172,470) (475,920) (49,790) (251,075) (949,255) Intangibles carrying amount at 30 September 2021 207,373 618,373 40,756 377,329 1,243,831 112 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberCash-generating units containing goodwill 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 life intangibles are country or region specific in nature. The exception to this is Seeds Technologies which is managed on a worldwide basis. There is no allocation of goodwill between CGUs. At 30 September 2022, resulting from changes in the management structure and internal reporting of operating segments incorporated as part of previously implemented rationalisation and restructuring activities, the previously identified cash generating units for Australia and New Zealand (ANZ), and for the Asian operations, should be combined to form a single cash generating unit for the Asia Pacific region (APAC). The goodwill within the APAC CGU consists of previously recognised goodwill within Asia. There is no goodwill reallocated to the APAC CGU from other cash generating units. The major CGUs and their intangible assets are as follows: North America $197 million (2021: $175 million), Seed Technologies $432 million (2021: $391 million), Europe $534 million (2021: $646 million) and APAC $30 million (2021: $31 million). The remaining balance of intangibles is spread across multiple CGUs, with no remaining individual CGU intangible balance being more than 5 per cent of 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 higher of the following two valuation methods are used by the group when assessing recoverable value. Valuation method – Value in use Value in use (VIU) is an estimate of the recoverable amount based on the present value of the future cash flows expected to be derived from a CGU. In assessing VIU, the estimated future cash flows are derived from the three year plan for each cash-generating unit 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 VIU 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. Valuation assumptions The valuation method, range of terminal growth rates and nominal post-tax discount rates applied for impairment testing purposes is as follows: 2022 North America CGU Europe CGU APAC CGU Seed Technology CGU 2021 North America CGU Europe CGU ANZ CGU* Seed Technology CGU Valuation method Terminal growth rate Discount rate Total goodwill $000 VIU VIU VIU VIU 1.9% 2.0% 2.5% 2.6% 9.8% 10.4% 10.3% 13.5% 58,586 62,767 15,265 79,096 Valuation method Terminal growth rate Discount rate Total goodwill $000 VIU VIU VIU VIU 2.3% 1.9% 2.4% 3.0% 8.4% 10.0% 9.6% 13.1% 53,255 67,117 – 71,900 *As previously noted, the group moved from separate impairment testing for ANZ and Asian operations cash generating units, to a combined APAC cash generating unit at 30 September 2022. The comparative period illustrates the previous ANZ CGU disclosure. An impairment test has been performed at the ANZ CGU level prior to the consolidation of the APAC CGU with no further action undertaken. The terminal growth rate assumed is generally a long term inflation estimate. The discount rate assumed is the group’s weighted average cost of capital, adjusted for country risk and asset-specific risk. The margin and volume assumptions generally reflect past experience for existing and enhanced portfolio products, while new products utilise external sources of information reflecting current market pricing in expected end use markets. The directors have determined that, given the excess of recoverable value over asset carrying value (headroom), there are no reasonably possible changes in assumptions which could occur to cause the carrying amount of the CGU’s to exceed their recoverable amount. 113 Nufarm Limited | Annual Report 202222 Trade and other payables Current payables – unsecured Trade creditors and accruals – unsecured Business combination – consideration payable Derivative financial instruments Cash advances from customers (contract liabilities) Current payables Non-current payables – unsecured Creditors, accruals and cash advances from customers (contract liabilities) Business combination – consideration payable Non-current payables 23 Interest-bearing loans and borrowings Current liabilities Bank loans – secured Bank loans – unsecured Deferred debt establishment costs Lease liabilities Loans and borrowings – current Non-current liabilities Bank loans – unsecured Senior unsecured notes Deferred debt establishment costs Lease liabilities Other loans – unsecured Loans and borrowings – non-current Net cash and cash equivalents Net debt Financing facilities Refer to the section entitled ‘Liquidity Risk’ in note 29 for detail regarding the group’s financing facilities. 2022 Bank loan facilities and senior unsecured notes Other facilities Total financing facilities 2021 Bank loan facilities and senior unsecured notes Other facilities Total financing facilities 114 Consolidated 2022 $000 2021 $000 1,147,451 835,136 3,072 11,254 128,235 – 4,779 93,531 1,290,012 933,446 22,194 6,633 28,827 5,777 – 5,777 Consolidated 2022 $000 2021 $000 239,526 227,872 15,033 (3,964) 18,574 9,009 (2,444) 18,099 269,169 252,536 398 63 537,634 659,447 (8,371) (5,292) 123,288 125,464 9,752 8,814 662,701 788,496 (585,702) (724,215) 346,168 316,817 Accessible $000 Utilised $000 1,302,559 792,590 9,752 9,752 1,312,311 802,342 1,493,689 896,391 8,814 8,814 1,502,503 905,205 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberReconciliation of liabilities arising from financing activities Balance at 1 Oct 2021 Cash changes Proceeds from borrowings (net of costs) Repayment of borrowings Debt establishment transaction costs Lease liability payments Total cash flows Non-cash changes Leases entered into during the period net of leases ceased Foreign exchange movements Transfer Amortisation of debt establishment transaction costs Accelerated amortisation of debt establishment transaction costs Total non-cash changes Balance at 30 September 2022 Balance at 1 Oct 2020 Cash changes Proceeds from borrowings (net of costs) Repayment of borrowings Debt establishment transaction costs Lease liability payments Total cash flows Non-cash changes Leases entered into during the period net of leases ceased Foreign exchange movements Transfer Amortisation of debt establishment transaction costs Total non-cash changes Balance at 30 September 2021 Loans and borrowings – current $000 Loans and borrowings – non-current $000 Debt related derivatives (included in assets/ liabilities)(1) $000 Total debt related financial instruments $000 252,536 788,496 387 1,041,419 449,177 52,561 (3,843) 497,895 (443,523) (225,122) (10,231) – – – – (668,645) (14,354) (20,116) (4,123) (20,116) (18,585) – 11,581 20,666 2,971 – 35,218 269,169 (182,792) (3,843) (205,220) 21,484 49,396 (20,666) – 6,783 56,997 662,701 – (3,800) – – – (3,800) (7,256) 21,484 57,177 – 2,971 6,783 88,415 924,614 Loans and borrowings – current $000 Loans and borrowings – non-current $000 Debt related derivatives (included in assets/ liabilities)(1) $000 Total debt related financial instruments $000 234,313 795,808 336 1,030,457 347,230 (329,149) (1,173) (19,851) (2,943) 4,971 483 12,565 3,147 21,166 87,800 (87,639) (264) – (103) 12,074 (6,718) (12,565) – 32,458 467,488 – – – 32,458 – (32,407) – – (416,788) (1,437) (19,851) 29,412 17,045 (38,642) – 3,147 (7,209) (32,407) (18,450) 252,536 788,496 387 1,041,419 (1) Total derivatives balance at 30 September 2022 is a net asset of $13.480 million (2021: $1.331 million net asset). The difference in carrying value to the table above relates to forward exchange contracts which are excluded from the balances above as they are not connected to the group’s financing activities. Financing arrangements Without refinancing, expiry of available debt facilities (excluding lease liabilities) Period ending 30 September 2023/30 September 2022 Period ending 30 September 2024/30 September 2023 Period ending 30 September 2025 or later/30 September 2024 or later Consolidated 2022 $000 764,527 398 547,386 2021 $000 414,179 420,063 668,261 115 Nufarm Limited | Annual Report 202223 Interest-bearing loans and borrowings (continued) Average interest rates Nufarm step-up securities Syndicated bank facility Group securitisation program facility Other bank loans Lease liabilities Senior unsecured notes Consolidated 2022 % 4.86 n/a 3.31 3.91 5.26 5.00 2021 % 4.00 n/a 1.32 4.06 5.15 5.75 Average interest rates are calculated using the weighted average of the interest rates for the drawn balances under each facility as at 30 September 2022. The Syndicated bank facility was undrawn as at 30 September 2022 and 30 September 2021. Undrawn facility fees are paid on undrawn portions of the Syndicated bank facility, the Group securitisation program facility, and other bank loans. 24 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 non-current portion of other long-term employee benefits Non-current employee benefits Total employee benefits Consolidated 2022 $000 2021 $000 16,162 14,433 30,595 16,234 3,000 19,234 7,687 9,935 122,393 203,487 (77,650) (130,946) 52,430 82,476 8,851 61,281 91,876 16,522 98,998 118,232 During the period ended 30 September 2022 the group made contributions to defined benefit pension funds in the United Kingdom, France, Indonesia and Germany that provide defined benefit amounts for employees upon retirement. 116 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberChanges 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 Plan amendments Contributions Benefits paid Exchange adjustment 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 Assets distributed on settlement Contributions by employer Distributions Exchange adjustment Closing fair value of fund assets The actual return on plan assets is the sum of the expected return and the actuarial gain/(loss). Consolidated 2022 $000 2021 $000 213,422 212,821 870 4,136 (69,070) – – – – (6,222) (12,579) 130,557 942 3,543 (3,655) – – (810) – (6,119) 6,700 213,422 130,946 115,517 2,548 (49,795) – – 8,040 (6,037) (7,922) 1,893 6,664 – – 8,066 (5,856) 4,662 77,780 130,946 117 Nufarm Limited | Annual Report 202224 Employee benefits (continued) Expense/(gain) recognised in profit or loss Current service costs Interest on obligation Interest income Losses/(gains) on curtailment Plan amendments 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 period opening date Recognised during the period Cumulative amount at period closing date The major categories of fund assets as a percentage of total fund assets are as follows: Equities Bonds Property Cash Other Principal actuarial assumptions at the reporting date (expressed as weighted averages): Discount rate at period end Future salary increases Future pension increases Consolidated 2022 $000 870 4,136 (2,548) – (348) – 2,110 2021 $000 942 3,543 (1,893) – (810) – 1,782 1,011 1,006 811 251 37 415 274 87 2,110 1,782 Consolidated 2022 $000 (72,739) 12,635 (60,104) 2021 $000 (84,772) 12,033 (72,739) Consolidated 2022 % 77.0% 14.5% 1.3% 6.7% 0.5% 5.0% 2.9% 2.7% 2021 % 63.0% 16.0% 0.8% 16.0% 4.2% 1.6% 2.6% 2.1% The group expects to pay $7.621 million in contributions to defined benefit plans during the year ending 30 September 2023 (2022: $8.872 million). 118 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September25 Share-based payments Nufarm Executive Share Plan (2000) The Nufarm Executive Share Plan (2000) offered shares to executives. In August 2011 the group decided to cease the use of this plan and no awards have been granted since this time. All awards have vested and converted into unrestricted shares as at 30 September 2022 and an independent trustee continues to hold the shares on behalf of participants. At 30 September 2022 there were 3 participants (2021: 3 participants) in the scheme and 3,034 shares (2021: 3,034) were allocated and held by the trustee on behalf of the participants. The cost of issuing the shares were expensed in the period of issue. 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 incorporates certain financial and non-financial measures relevant to an individual, including: • a profit measure (typically underlying EBIT(a) or underlying EBITDA(a)) • a cash flow measure (typically average net working capital as a percentage of revenue) • a return measure (typically return of funds employed, or return on assets) • non-financial measures incorporating strategic and business improvement objectives. For the year ended 30 September 2021, a pre-determined percentage of the STI was paid in cash at the time of performance testing and the balance was deferred into rights to shares in the group for nil consideration. The number of rights to shares granted was based on the volume weighted average price (VWAP) of Nufarm Limited shares in the 5 days subsequent to the results announcement. For the year ended 30 September 2022, the STI plans will be fully cash settled. 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 group 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 period. The performance and vesting period for the awards will be three years. For the year ended 30 September 2022, the group had two LTIP plans in place. Awards vest in two equal tranches as follows: • 50 per cent of the LTIP grant will vest subject to the achievement of a relative total shareholder return (TSR) performance hurdle measured against a selected comparator group of companies; and • the remaining 50 per cent will vest subject to meeting an absolute return on funds employed (ROFE) target. Executive Incentive Plan (EIP) The Executive Incentive Plan (EIP) commenced in 2022 and replaces the STI and LTIP plans for key management personnel and certain selected senior managers. There are two components to the EIP plan, with a third of the value of the award being paid out in cash at the completion of the first year, whilst the remaining two thirds are deferred into performance rights in Nufarm ordinary shares for nil consideration. The performance and vesting period for the deferred performance rights vary between two, three and four years, and for key management personnel the vesting of the rights is conditional upon satisfaction of certain non-financial measures at the end of the vesting period (year four). The value of the awards, calculated at the end of the initial performance year, incorporates certain financial and non-financial performance measures relevant to an individual, including: • a profit measure (typically underlying EBIT(a) or underlying EBITDA(a)) • a cash flow measure (typically average net working capital as a percentage of revenue) • a return measure (typically return of funds employed, or return on assets) • non-financial measures incorporating strategic and business improvement objectives As noted, two thirds of the value of the award is deferred into performance rights in Nufarm ordinary shares for nil consideration. The number of rights granted is based on the volume weighted average price of Nufarm Limited shares in the five days subsequent to the results announcement. Nufarm Key Leadership Incentive Plan (KLIP) On 1 August 2018, the KLIP commenced and is available to certain selected group employees. Awards are granted to individuals in the form of rights, which provide eligibility to the employees to acquire ordinary shares in the group for nil consideration, subject to the employees remaining employed within the group for a defined length of time under the respective plans. The rights generally will have a vesting period of two or four years. At 30 September 2022 there were 63 participants (30 September 2021: 46 participants) in the scheme and 1,025,500 rights (30 September 2021: 709,798) were allocated. Global Share Plan (2001) The Global Share Plan commenced in 2001 and was available to all permanent employees. The plan was suspended effective 31 December 2020. Previously, participants contributed a proportion of their salary to purchase shares. The group contributed 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 could be contributed but were not able to be matched. For each year the shares are held, up to a maximum of five years, the group 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 30 September 2022 there were 343 participants (30 September 2021: 379 participants) in the scheme and 1,412,199 shares (30 September 2021: 1,558,899) were allocated and held by the trustee on behalf of the participants. (a) Underlying EBIT is earnings before net finance costs, taxation and material items. Underlying EBITDA is Underlying EBIT before depreciation, amortisation and material items. 119 Nufarm Limited | Annual Report 202225 Share-based payments (continued) Nushare Share Plan The Nushare Share Plan commenced in 2022 and offers shares to all permanent employees who have not given, or been given, notice of termination. Over an initial six-month period, employees contribute a percentage or set-amount of after-tax salary each month, up to 10 per cent of their annual salary, and an independent trustee acquires shares monthly at market value. At the end of the initial six-month period, for every three shares acquired through the plan, employees are granted one share right. The rights have a subsequent vesting period of 12 months, with conditions requiring employees to hold the acquired shares and continue employment with Nufarm over the subsequent 12 month period. Upon satisfaction of the conditions, the rights will automatically convert into unrestricted Nufarm ordinary shares. An independent trustee holds both the acquired shares and the rights on behalf of all employees. At 30 September 2022 there were 311 participants (30 September 2021: nil) in the scheme and 15,718 rights (30 September 2021: nil) 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 group. Employee expenses Total expense arising from share-based payment transactions Measurement of fair values Consolidated 2022 $000 4,606 2021 $000 3,640 The fair value of performance rights to be granted as awards under the EIP corresponds to pre-determined performance levels (i.e.: Minimum, Target or Maximum) at the beginning of the financial year in respect of the relevant financial and non-financial performance measures. Eligible employees will receive a variable number of rights ‘to the value of’ these pre-determined amounts. The number of rights is determined based on the value of the award to be deferred into performance rights, divided by the volume weighted average price (VWAP) for the five day period subsequent to the period end results announcement. The fair value of performance rights granted through the LTIP, KLIP and STIP were measured as follows: Weighted average fair value at grant date Nufarm LTIP performance rights Share price at grant date Grant date Earliest vesting date Expected life Volatility Risk free interest rate Dividend yield 2021 Plan – 3 year $2.98 $3.87 1 Oct 2020 30 Sep 2023 3 years 32% 0.2% 1.7% Nufarm KLIP performance rights 2022 Plan – 4 year 2021 Plan – 4 year 2020 Plan – 4 year $4.41 $3.60 $4.83 $4.72 1 Oct 2021 30 Sep 2025 $3.87 1 Oct 2020 30 Sep 2024 $5.03 1 Aug 2019 31 Jul 2023 4 years 4 years 4 years n/a 32% 30% n/a 0.3% 0.9% 1.7% 1.8% 1.0% 2022 Reconciliation of outstanding share awards Outstanding at period opening date Forfeited during the period Exercised rights during the period Expired during the period Granted during the period Outstanding at 30 September Exercisable at 30 September LTI KLIP STI 1,212,422 (269,101) – 709,798 (105,500) 26,695 – (83,798) (26,695) – – – – 943,321 187,002 505,000 1,025,500 484,564 484,564 – – 2021 Reconciliation of outstanding share awards Outstanding at period opening date Forfeited during the period Exercised rights during the period Expired during the period Granted during the period Outstanding at 30 September Exercisable at 30 September LTI KLIP STI 1,023,788 (594,563) – 599,429 (96,131) (158,500) 35,545 – (35,545) – – – 783,197 1,212,422 365,000 709,798 26,695 26,695 – – – The performance rights outstanding at 30 September 2022 have a $nil exercise price (2021: $nil) and a weighted average contractual life of 3 years (2021: 3 years). All performance rights granted to date have a $nil exercise price. 120 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September26 Provisions Current Restructuring Other Current provisions Movement in provisions Balance at 1 October 2021 Provisions made during the period Provisions reversed during the period Provisions used during the period Exchange adjustment Balance at 30 September 2022 Consolidated 2022 $000 6,878 – 6,878 Consolidated Other provisions $000 Restructuring $000 2021 $000 12,686 1,092 13,778 Total $000 12,686 1,092 13,778 511 405 (6,551) (173) 6,878 – (1,092) – – – 511 (687) (6,551) (173) 6,878 The provision for restructuring is mainly relating to the asset rationalisation and restructuring being undertaken by the group. 27 Capital and reserves Share capital Balance at 1 October Issue of shares Balance at 30 September Group Number of ordinary shares 2022 Number of ordinary shares 2021 379,907,116 379,694,706 261,629 212,410 380,168,745 379,907,116 The group does not have authorised capital or par value in respect of its issued shares. 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. During the period the following shares were issued: • On 17 December 2021, 50,399 shares at $4.61 were issued under the Dividend Reinvestment Plan • On 28 February 2022, 61,641 shares at $5.54 were issued under the Global Share Plan • On 30 June 2022, 39,096 shares at $5.24 were issued under the Dividend Reinvestment Plan such time that Nufarm Finance (NZ) Limited makes up the arrears. The floating rate is the average mid-rate for bills with a term of six months plus a margin of 3.9% (2021: 3.9%). 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. • On 1 August 2022, 110,493 shares at $5.09 were issued under Capital profit reserve employee incentive plans Other securities Nufarm step-up securities On 24 November 2006 Nufarm Finance (NZ) Limited, a wholly owned subsidiary of Nufarm Limited, issued 2,510,000 hybrid securities at $100 each called Nufarm step-up securities (NSS), which are perpetual step up securities. The NSS are listed on the ASX under the code ‘NFNG’ and on the NZDX under the code ‘NFFHA’. 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 This reserve is used to accumulate realised capital profits. Other reserves This reserve includes the following: • accrued employee entitlements to share awards that have been charged to the income statement and have not yet been exercised. • accumulative effective portion of changes in the fair value of financial instruments that have been designated as either cash flow hedges or net investment hedges. • changes in the fair value of other investments that have been designated at FVOCI. 121 Nufarm Limited | Annual Report 202227 Capital and reserves (continued) Dividends Proposed and unrecognised at reporting date Final dividend (unfranked)(a) 2022 Paid interim dividend (unfranked) Paid final dividend (unfranked) 2021 No dividends paid during the year ended 30 September 2021 Consolidated Cents per share Total amount $000 Payment date 6.0 22,810 9 Dec 2022 4.0 4.0 15,199 17 Jun 2022 15,200 17 Dec 2021 The company operates a Dividend Reinvestment Plan (DRP) under which eligible holders of ordinary shares are able to reinvest all or part of their dividend payments into additional fully paid Nufarm Limited shares. Distributions Nufarm step-up securities The following distributions were paid by Nufarm Finance (NZ) Ltd: Proposed and unrecognised at reporting date Distribution 2022 Distribution Distribution 2021 Distribution Distribution Consolidated Distribution rate Total amount $000 Payment date 4.86% 6,055 17 Oct 2022 3.97% 4.00% 4.01% 4.15% 5,072 5,029 19 Apr 2022 15 Oct 2021 5.013 5.216 15 Apr 2021 15 Oct 2020 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 $7.518 million (2021: $7.393m). Franking credit balance The amount of franking credits available for the subsequent financial period are: Franking account balance as at the end of the period at 30% (2021: 30%) Franking credits that will arise from the payment of income tax payable as at the end of the period Credit balance at 30 September 2022 $000 2021 $000 – – – – – – The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. In accordance with the tax consolidation legislation, the company as the head entity in the tax-consolidated group has also assumed the benefit of $nil (2021: $nil) franking credits. (a) Estimated final dividend payable, subject to variations in the number of shares up to the record date. 122 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September28 Earnings per share Net profit/(loss) for the period Net profit/(loss) attributable to equity holders of the group Other securities distributions (net of tax) Earnings/(loss) used in the calculations of basic and diluted earnings per share Subtract/(add back) items of material income/(expense) (refer note 6) Earnings/(loss) excluding items of material income/(expense) used in the calculation of earnings per share – excluding material items Consolidated 2022 $000 107,438 107,438 (7,518) 99,920 2021 $000 65,128 65,128 (7,393) 57,735 (25,759) 4,070 125,679 53,665 For the purposes of determining basic and diluted earnings per share, the after-tax distributions on other securities 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 2022 2021 379,799,885 379,757,921 382,640,901 382,323,691 There have been no conversions to, calls of, or subscriptions for ordinary shares or issues of ordinary shares since the reporting date and before the completion of this financial report. Earnings per share Basic earnings per share Diluted earnings per share Basic earnings per share – excluding material items Diluted earnings per share – excluding material items Cents per share 2022 26.3 26.1 33.1 32.8 2021 15.2 15.1 14.1 14.0 123 Nufarm Limited | Annual Report 202229 Financial risk management and financial instruments The group has exposure to the following financial risks: • credit risk; • liquidity risk; and • market risk. This note presents information about the group’s exposure to each of the above risks, the objectives, policies and processes for measuring and managing risk, and the management of capital. The board 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 and the risk and compliance committee has established detailed policies on risk oversight and management by approving a global risk management charter that specifies the responsibilities of the global head of risk and compliance and the chief financial officer (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 group entities worldwide. The global head of risk and compliance and the chief financial officer report to the chair of the risk and compliance committee and the audit committee respectively. Written reports regarding risk and compliance activities and internal audit findings are provided at each meeting of the risk and compliance committee and audit committee respectively. In doing so, the global head of risk and compliance and the chief financial officer has direct and ongoing access to the chair and members of the risk and compliance committee and the audit committee respectively. Credit risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and other financial assets. Exposure to credit risk The group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the group’s customer base, including the default risk of the industry and country in which the customers operate, has less of an influence on credit risk. The group has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers before the group’s standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represents the maximum open amount without requiring further management approval. The group’s maximum exposure to credit risk at the reporting date was: Carrying amount Trade and other receivables Cash and cash equivalent assets Derivative contracts: Assets Consolidated 2022 $000 529,295 585,702 2021 $000 807,031 724,215 24,734 6,110 1,139,731 1,537,356 124 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberThe 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 2022 $000 164,340 61,627 191,810 89,436 22,080 529,293 2021 $000 123,606 162,249 261,662 241,281 18,233 807,031 The group’s top five customers account for $96.338 million of the trade receivables carrying amount at 30 September 2022 (2021: $272.224 million). These top five customers represent 21 per cent (2021: 38 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 expected credit losses Trade receivables Consolidated 2022 $000 402,601 46,982 11,567 2,806 13,508 477,464 (30,945) 446,519 2021 $000 626,710 52,914 8,603 6,202 15,772 710,201 (22,662) 687,539 Some receivables are secured by collateral from customers such as guarantees and charges on assets. In some countries credit insurance is undertaken to reduce credit risk. The past due receivables not impaired are considered recoverable. 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 period was as follows. Balance at 1 October Provisions made/(reversed) during the period Provisions used during the period Exchange adjustment Balance at 30 September Consolidated 2022 $000 22,662 18,194 (8,903) (1,008) 30,945 2021 $000 28,423 7,093 (12,447) (407) 22,662 125 Nufarm Limited | Annual Report 202229 Financial risk management and financial instruments (continued) Credit risk (continued) Expected credit loss assessment for individual customers The group uses an allowance matrix to measure the expected credit loss (ECL) of trade receivables from individual customers, which comprise of a large number of customers with small balances. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write off. Roll rates are calculated separately for exposures in different segments and countries. 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. Sales and operating profit are seasonal and are weighted towards the first half of the calendar year in Australia/New Zealand, North America and Europe, reflecting the planting and growing cycle in these regions while in Latin America the sales and operating profit is weighted towards the second half of the calendar year. This seasonal operating activity results in seasonal working capital requirements. Principally, the group sources liquidity from cash generated from operations, and where required, external bank facilities. Working capital fluctuations due to seasonality of the business are supported by the short-term funding available from the group’s trade receivables securitisation facility. Debt facilities As at 30 September 2022, the key group facilities include a group trade receivables securitisation facility with a maximum seasonal limit of $500 million (30 September 2021: $500 million), a US$350 million senior unsecured notes offering maturing in January 2030 (30 September 2021: US$475 million) and a senior secured bank facility (SFA) of $440 million (30 September 2021: $490 million) The senior unsecured notes were refinanced during the year ended 30 September 2022, with the face value decreasing to US$350 million and are due in January 2030 (30 September 2021: April 2026) with a fixed coupon component of 5.0 per cent (30 September 2021: 5.75%) and hereby referred to as the ‘2030 notes’. The 2030 notes were issued under a dual tranche structure by Nufarm Australia Ltd (US$105 million) and Nufarm Americas Inc (US$245 million). As at 30 September 2022, $440 million of the SFA expires on 28 April 2023 (30 September 2021: $20 million expires on 31 January 2022, $50 million expires on 30 June 2022 and $420 million expires on 31 October 2022). The SFA includes covenants of a type normally associated with facilities of this kind, and the group was in compliance with these covenants. The facility was undrawn at 30 September 2022 (30 September 2021: undrawn). On 23 August 2011, Nufarm executed a group trade receivables securitisation facility. The facility provides funding that aligns with the working capital cycle of the group. The facility limit varies on a monthly basis to reflect the cyclical nature of the trade receivables being used to secure funding under the program. The monthly facility limit is set at $500 million for three months of the financial year, $400 million for one month of the financial year, $350 million for four months of the financial year, $300 million for two months of the financial year and $250 million for two months of the financial year (30 September 2021: as per the disclosure above). 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 Europe, which at 30 September 2022 totalled $112.372 million (30 September 2021: $130.604 million). At 30 September 2022, the group had access to debt of $1,303 million (30 September 2021: $1,494 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 and the notes. In November 2022 the group refinanced its trade receivables securitisation facility and syndicated bank facility. Further information is provided in note 38, subsequent events. Trade finance The liquidity of the group is influenced by the terms suppliers extend in respect of purchases of goods and services. The determination of terms provided by suppliers is influenced by a variety of factors including supplier’s liquidity. Suppliers may engage financial institutions to facilitate the receipt of payments for goods and services from the group, which are often referred to as supplier financing arrangements. The group is aware that trade payables of $367.639 million at 30 September 2022 (30 September 2021: $297.066 million) are to be settled via such arrangements in future periods. In the event suppliers or financial institutions cease such arrangements the liquidity of the group’s suppliers may be affected. If suppliers subsequently seek to reduce terms on group’s purchases of goods and services in the future, the group’s liquidity will be affected. Details of the group’s trade and other payables are disclosed in note 20. To support the liquidity of the group and reduce the credit risk relating to specific customers, trade receivables held by the group are sold to third parties. The sales (or factoring) of receivables to third parties is primarily done on a non-recourse basis, and the group incurs a financing expense at the time of the sale. The group derecognises trade receivables where the terms of the sale allows for derecognition. At 30 September 2022 the group did not have any derecognised trade receivables which were being held by third parties (30 September 2021: $18.426 million). For clarity, the group trade receivables securitisation facility, noted above, has terms which does not allow the group to derecognise these trade receivables. 126 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberThe following are the contractual maturities of the group’s financial liabilities: Consolidated 2022 Non-derivative financial liabilities Trade and other payables Bank loans – secured Bank loans – unsecured Senior unsecured notes Other loans – unsecured 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 Consolidated 2021 Non-derivative financial liabilities Trade and other payables Bank loans – secured Bank loans – unsecured Senior unsecured notes Other loans – unsecured 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 1,297,880 1,297,880 1,275,686 16,736 5,458 239,526 15,431 537,634 9,752 247,088 16,939 739,247 9,752 247,088 16,490 26,882 – – 449 – – 26,882 685,483 – 9,752 141,862 288,246 24,004 20,463 243,779 – – – – – – 11,254 733,317 733,317 – – – – (721,141) (721,141) – – – – 841,870 841,870 (24,734) (870,076) (870,076) – – – – – – – – – – – – – – – – 2,228,605 2,583,122 1,574,120 64,530 944,472 934,444 227,872 9,072 934,447 230,847 9,974 659,447 849,038 8,814 8,814 928,667 230,847 9,908 37,918 – 205 – 66 5,575 – – 37,918 773,202 – 8,814 143,563 307,084 18,087 21,387 267,610 – – – – – – 4,779 791,695 791,695 – – – – (783,901) (783,901) – – – – 889,173 889,173 (6,110) (899,110) (899,110) – – – – – – – – – – – – – – – – 1,981,881 2,338,061 1,223,284 59,576 1,055,201 127 Nufarm Limited | Annual Report 202229 Financial risk management and financial instruments (continued) Liquidity risk (continued) Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying operations of the group. This provides an economic hedge and no derivatives are 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 financial instruments to manage specifically identified foreign currency risks. This includes risks relating to the translation of earnings that are denominated in a currency other than the group reporting currency (Australian Dollars), and transactional foreign currency risks where receivables, payables and borrowings are denominated in a currency other than the functional currency of the individual group entity. The functional currency is determined via reference to the currency of the operating, investing and financing cashflows for each individual group entity. The currencies giving rise to the identified risks include the US Dollar, the Euro, the British Pound, the Australian Dollar, New Zealand Dollar, Polish Zloty, Ukrainian Hryvnia, Romanian Leu, Hungarian Forint, Mexican Peso, Turkish Lira, Russian Ruble and the Czech Koruna. Financial instruments used by the group to manage currency risks include derivative instruments such as foreign exchange contracts, cross currency interest rate swaps and options, and non-derivative instruments such as foreign currency debt instruments. The group designates select financial instruments for hedge accounting where it is deemed appropriate to do so. The group uses financial instruments to manage foreign currency translation risk arising from the group’s net investments in foreign currency subsidiary entities. These financial instruments are designated as net investment hedges for hedge accounting purposes. No ineffectiveness was recognised from net investment hedges during the reporting periods. For accounting purposes, the group has not designated any other derivative financial instruments in hedge relationships and all movements in fair value are recognised in profit or loss during the period. The net fair value of derivative financial instruments in the group, not designated as being in a hedge relationship, used as economic hedges of forecast transactions at 30 September 2022 was a $13.480 million asset (2021: $1.331 million asset) comprising assets of $24.734 million (2021: $6.110 million) and liabilities of $11.254 million (2021: $4.779 million). Exposure to transactional currency risk The group’s exposure to major transactional foreign currency risks at balance date are as follows. The exposures are calculated based on locally reported net foreign currency exposures, and are presented net of open derivative financial instruments. The analysis is performed on the same basis as the previous financial period. Net financial assets/(liabilities) – by currency of denomination AUD $000 – (1) 1,445 (245) 1,199 USD $000 EUR $000 (4,554) – 3,478 (9,656) (10,732) 256 (388) – (6,082) (6,214) GBP $000 (608) – 1,727 – 1,119 Net financial assets/(liabilities) – by currency of denomination AUD $000 – (236) 3,607 (245) 3,126 USD $000 EUR $000 6,495 – (5,404) (359) 732 2,680 (6,177) – 7,760 4,263 GBP $000 5,556 (13) 4,018 – 9,561 Consolidated 2022 Functional currency of group operation Australian dollars US dollars Euro British pound Consolidated 2021 Functional currency of group operation Australian dollars US dollars Euro British pound 128 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberSensitivity analysis Based on the aforementioned group’s net financial assets/(liabilities) at 30 September 2022, a one per cent strengthening or weakening of the following currencies at 30 September 2022 would have increased/(decreased) profit or loss by the amounts shown below. This analysis assumes all other variables, including interest rates, remain constant. The analysis is performed on the same basis for 30 September 2021. 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 Weakening Strengthening Weakening Profit or (loss) after tax 2022 $000 Profit or (loss) after tax 2022 $000 Profit or (loss) after tax 2021 $000 Profit or (loss) after tax 2021 $000 42 (72) (90) 120 (43) 72 89 (119) (80) 50 14 17 81 (50) (14) (17) 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 period: AUD US Dollar Euro GBP Interest rate risk Average rate Reporting date 12 months to 2022 12 months to 2021 0.710 0.658 0.558 0.751 0.628 0.548 As at 2022 0.651 0.662 0.580 As at 2021 0.720 0.621 0.536 The group’s exposure to the risk of changes in market interest rates primarily relates to the group’s debt obligations that have floating interest rates. This risk is mitigated by maintaining a level of fixed and floating rate borrowings, as well as the ability to use derivative financial instruments when deemed appropriate to do so. The majority of the group’s debt is raised under central borrowing programs. The syndicated bank facility and the group trade receivables securitisation facility are considered floating rate facilities. The notes were refinanced in January 2022 through the issuance of US$350 million senior unsecured notes due in January 2030 with a fixed coupon component of 5.00%. 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% (2021: 3.9%). 129 Nufarm Limited | Annual Report 202229 Financial risk management and financial instruments (continued) Interest rate risk (continued) Profile At the reporting date the interest rate profile of the group’s interest-bearing financial instruments were: Variable rate instruments Financial assets Financial liabilities Fixed rate instruments Financial assets Financial liabilities Consolidated Carrying amount 2022 $000 2021 $000 7,543 14,194 (406,571) (389,321) (399,028) (375,127) – – (537,634) (659,447) (537,634) (659,447) Sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The sensitivity is calculated on the debt at 30 September 2022. Due to the seasonality of the crop protection business, debt levels can vary during the period. The analysis is performed on the same basis for 30 September 2021. 2022 Variable rate instruments Total sensitivity 2021 Variable rate instruments Total sensitivity Fair values Profit or loss 100bp increase $000 (3,990) (3,990) 100bp decrease $000 3,990 3,990 (3,751) (3,751) 3,751 3,751 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 below 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 $537.634 million (2021: $659.447 million), the fair value at 30 September 2022 is $451.156 million (2021: $677.582 million). 130 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberConsolidated 2022 Cash and cash equivalents Trade and other receivables excluding derivatives Other investments Forward exchange contracts: Assets Liabilities Trade and other payables excluding derivatives Secured bank loans Unsecured bank loans Senior unsecured notes Other loans Lease liabilities Consolidated 2021 Cash and cash equivalents Trade and other receivables excluding derivatives Other investments Forward exchange contracts: Assets Liabilities Trade and other payables excluding derivatives Secured bank loans Unsecured bank loans Senior unsecured notes Other loans Lease liabilities Carried at fair value through profit or loss $000 Derivatives used for hedging $000 Note 14 15 19 15 22 22 23 23 23 23 23 – – – 24,734 (11,254) – – – – – – 13,480 – – – – – – – – – – – – Carried at fair value through profit or loss $000 Derivatives used for hedging $000 Note 14 15 19 15 22 22 23 23 23 23 23 – – – 6,110 (4,779) – – – – – – 1,331 – – – – – – – – – – – – - Financial assets/ liabilities at amortised cost $000 585,702 529,295 – – – (1,297,880) (239,526) (15,431) (537,634) (9,752) (141,862) Financial assets/ liabilities at FVOCI $000 – – 54,445 – – – – – – – – Total $000 585,702 – 529,295 54,445 24,734 (11,254) (1,297,880) (239,526) (15,431) (537,634) (9,752) (141,862) (1,127,088) 54,445 (1,059,163) Financial assets/ liabilities at amortised cost $000 724,215 807,031 – – – (934,444) (227,872) (9,072) (659,447) (8,814) (143,563) (451,966) Financial assets/ liabilities at FVOCI $000 – – 3,887 – – – – – – – – Total $000 724,215 – 807,031 3,887 6,110 (4,779) (934,444) (227,872) (9,072) (659,447) (8,814) (143,563) 3,887 (446,748) 131 Nufarm Limited | Annual Report 202229 Financial risk management and financial instruments (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: Based on quoted prices (unadjusted) in active markets for identical financial assets and 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: Based on inputs not observable in the market using appropriate valuation models, including discounted cash flow modelling and comparable company transactions. 2022 Derivative financial assets(1) Other investments(2) Derivative financial liabilities(1) 2021 Derivative financial assets(1) Other investments(2) Derivative financial liabilities(1) Level 1 $000 – – – – – Level 1 $000 – – – – – Consolidated Level 2 $000 24,734 – 24,734 (11,254) (11,254) Level 3 $000 – 54,445 54,445 Total $000 24,734 54,445 79,179 – – (11,254) (11,254) Consolidated Level 2 $000 6,110 – 6,110 (4,779) (4,779) Level 3 $000 – 3,887 3,887 – – Total $000 6,110 3,887 9,997 (4,779) (4,779) There have been no transfers between levels in either the 12 months ended 30 September. Valuation techniques used to derive fair values 1. Derivative financial assets and liabilities include forward exchange contracts which are valued using market data including spot foreign exchange rates and forward rates at balance sheet date to determine fair value. 2. Other investments include the groups strategic investments which primarily consist of unlisted private investments. The fair value of these investments are determined using valuation techniques such as discounted cashflow models, comparable company analysis and recent capital seeding rounds to determine fair value. The group has used a recent capital seeding round, from July 2022, to determine the fair value of its investment in Enko Chem. Capital management The board’s capital management policy aims to maintain a robust and durable capital structure and provide clear guidelines for the application of cash flow generated from business operations. The policy includes a cascading approach to capital allocation decisions that is consistent with maintaining targeted credit metrics and a sound financial structure. This cascading approach to capital allocation and the application of free cashflow encompasses both capital investment decisions and distributions paid to shareholders. While the board maintain discretion, it is intended that the group applies free cashflow from business operations in the following manner: 1. 2. Application of free cashflow to investment growth projects and/or small bolt-on acquisitions where the projected returns satisfy internal underlying return on funds employed (ROFE) measures that exceed the group’s weighted average cost of capital. Consideration of the payment of a dividend from part of free cashflow, subject to compliance with the core target leverage (statutory) range of 1.5x – 2.0x, under the adoption of a new dividend policy. 3. Consideration of any excess capital to be returned to shareholders in circumstances where the group is below its targeted leverage metrics and insufficient growth opportunities exist to utilise excess free cashflow. These capital return measures may include special dividends and share buy-backs. 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 period. There is a target and a stretch hurdle. These numbers will based on the budget and growth strategy. The ROFE for the year ended 30 September 2022 was 9.5 per cent. (2021: 5.9 per cent) 132 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September 30 Leases 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. The group also leases IT equipment which have short term contracts and/or are low value items. The group has elected not to recognise right-of-use assets and lease liabilities for these leases. Right-of-use assets Right-of-use assets included in property, plant and equipment (see note 20) are as follows: Balance at 1 October 2021 Additions to right-of-use assets Depreciation charge for the period Disposals and write-offs Foreign exchange adjustment Balance at 30 September 2022 Balance at 1 October 2020 Additions to right-of-use assets Depreciation charge for the period Disposals and write-offs Foreign exchange adjustment Balance at 30 September 2021 Amounts recognised in profit/(loss) Depreciation on right of use assets Lease liability interest expenses Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets Amounts recognised in statement of cash flows Operating cash flows Lease liability interest payments Short-term and low-value lease payments Financing cash flows Lease liability principal payments Consolidated Land and buildings $000 Plant and machinery $000 Total $000 85,549 16,242 (14,521) (238) (246) 21,081 106,630 7,331 (7,294) (2,129) (841) 23,573 (21,815) (2,367) (1,087) 86,786 18,148 104,934 Consolidated Land and buildings $000 Plant and machinery $000 90,893 10,933 (15,211) (800) (266) 19,784 8,393 (6,965) (466) 335 Total $000 110,677 19,326 (22,176) (1,266) 69 85,549 21,081 106,630 Consolidated 2022 $000 (21,815) (7,510) (197) (8) 2021 $000 (22,176) (7,420) (67) (7) (7,510) (205) (7,420) (74) (20,116) (19,851) 133 Nufarm Limited | Annual Report 202231 Capital commitments The group had contractual obligations to purchase plant and equipment for $15.346 million at 30 September 2022 (2021: $12.747 million). The group has agreed to make capital contributions in proportion to its interest in the Leshan Nong Fu Trading Co., Ltd joint venture to make up any losses if required, up to a maximum of RMB 35 million. The outstanding commitment is RMB 28 million ($6.060 million). For further information refer to Note 18. 32 Contingencies Obligations may arise in the future due to currently unknown lawsuits and claims including those pertaining to product liability, safety and health, environmental and tax matters which may be instituted or asserted against the group. While the amounts claimed may be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that existed at balance date. Nonetheless, it is possible that results of the group’s operations or liquidity in a particular period could be materially affected by such claims. 33 Group entities Company Nufarm Limited – ultimate controlling entity Subsidiaries Access Genetics Pty Ltd Agcare Biotech Pty Ltd Agchem Receivables Corporation Agryl Holdings Limited Agtrol International SE DE CV Ag-seed Research Pty Ltd Ag-turf SA DE CV 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 COCRF Investor 177 LLC 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 First Classic Pty Ltd Frost Technology Corporation Growell Limited Grupo Corporativo Nufarm SA Le Moulin des Ecluses s.a Lefroy Seeds Pty Ltd Manaus Holdings Sdn Bhd 134 Notes Place of incorporation 2022 2021 Percentage of shares held (a) (a) (a) (a) (a) (a) (a) (a) (a) (b) (a) (a) (a) (a) (a) (a) (a) Australia Australia USA Australia Mexico Australia Mexico Australia United Kingdom United Kingdom Australia Brazil Australia Australia Australia Netherlands USA Australia New Zealand New Zealand Australia Australia Australia Australia Canada Australia USA United Kingdom Guatemala France Australia Malaysia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberMarman (Nufarm) Inc 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 Securities Limited Munistrategies Sub-CDE 29, LLC NF Agriculture Inc Nufarm Africa SARLAU Nufarm Agriculture (Pty) Ltd Nufarm Agriculture Inc Nufarm Agriculture Zimbabwe (Pvt) Ltd Nufarm Americas Holding Company Nufarm Americas Inc Nufarm Asia Sdn Bhd Nufarm Australia Limited Nufarm BV Nufarm Canada Receivables Partnership Nufarm Chemical (Shanghai) Co Ltd 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 Inc Nufarm Finance Pty Ltd 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 Insurance Pte Ltd Nufarm Investments Cooperatie WA Notes Place of incorporation 2022 2021 Percentage of shares held (a) (a) (a) (a) (b) (a) USA Mexico USA Australia Australia Malaysia Australia Malaysia Malaysia Australia USA USA Morocco South Africa Canada Zimbabwe USA USA Malaysia Australia Netherlands Canada China United Kingdom (c) India Costa Rica Guatemala Mexico Panama Venezuela Ecuador Germany Brazil Spain Germany (b) Netherlands USA Australia New Zealand Austria Austria Mexico New Zealand Netherlands France Hong Kong Hungary USA Singapore Netherlands 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 135 Nufarm Limited | Annual Report 202233 Group entities (continued) Nufarm Investment Pty Ltd Nufarm Italia srl Nufarm KK Nufarm Korea Ltd Nufarm Labuan Pte Ltd Nufarm Limited Nufarm Malaysia Sdn Bhd Nufarm Materials Limited Nufarm Middle East Operations Nufarm Nordics AB Nufarm NZ Limited Nufarm Paraguay SA Nufarm Pensions General Partner Ltd Nufarm Pensions Scottish Limited Partnership Nufarm Peru SAC Nufarm Platte Pty Ltd Nufarm Polska SP.Z O.O Nufarm Portugal LDA Nufarm Romania SRL Nufarm s.a.s 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 Canada Inc Nuseed Europe Holding Company Ltd Nuseed Europe Ltd Nuseed Global Holdings Pty Ltd Nuseed Global Innovation Nuseed Global Management USA Inc Nuseed Holding Company Nuseed International Holdings Pty Ltd Nuseed Mexico SA De CV Nuseed Nutritional Australia Pty Ltd Nuseed Nutritional US Inc Nuseed Omega Holdings Pty Ltd Nuseed Pty Ltd Nuseed Russia LLC 136 Notes Place of incorporation 2022 2021 Percentage of shares held Australia Italy Japan Korea Malaysia United Kingdom Malaysia Australia Egypt Sweden New Zealand Paraguay United Kingdom United Kingdom Peru Australia Poland Portugal Romania France Singapore Malaysia Switzerland Malaysia New Zealand Australia Australia Turkey United Kingdom Ukraine Uruguay USA Australia USA Canada (a) (a) (a) (a) (a) United Kingdom United Kingdom (a) Australia United Kingdom (a) (a) (a) USA USA Australia Mexico Australia USA Australia Australia Russia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 SeptemberNuseed SA Nuseed Serbia d.o.o. Nuseed South America Sementes Ltda Nuseed Ukraine LLC Nuseed Uruguay SA Nutrihealth Grain Pty Ltd Nutrihealth Pty Ltd Opti-Crop Systems Pty Ltd Pharma Pacific Pty Ltd PT Agrow PT Crop Care PT Nufamindo Agro Mukmur PT Nufarm Indonesia Richardson Seeds Ltd Selchem Pty Ltd Societe Des Ecluses De la Garenne 3 Rivers Sub-CDE 5 LLC Notes Place of incorporation Argentina Serbia Brazil Ukraine Uruguay Australia Australia Australia Australia Indonesia Indonesia Indonesia Indonesia USA Australia France USA (a) (a) (a) (a) (b) Percentage of shares held 2022 2021 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 – 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, varied by an Assumption Deed dated 13 February 2013, 29 May 2013 and 26 July 2019 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) The group does not hold any ownership interests in these entities, however, based on the terms of agreement under which these entities were established, the group controls the operations of these entities. (c) These entities ceased operations during the year ended 30 September 2022 resulting in liquidation of the entity or amalgamation with other group entities. 137 Nufarm Limited | Annual Report 202234 Company disclosures Result of the company Profit for the period Other comprehensive income Total comprehensive profit/(loss) for the period Financial position of the company at the period end Current assets Total assets Current liabilities Total liabilities Total equity of the company comprising of: Share capital Reserves Accumulated losses Retained Earnings(a) Total equity Company 2022 $000 2021 $000 45,522 (1,542) 43,980 2022 $000 8,995 1,217 10,212 2021 $000 747,789 603,049 2,175,225 2,109,791 166,482 176,404 125,423 129,970 1,837,228 1,835,888 47,790 (57,512) 45,257 (57,512) 171,315 156,188 1,998,821 1,979,821 (a) Retained earnings comprises the transfer of net profit for the period and are characterised as profits available for distribution as dividends in future periods. Dividends amounting to $30.396 million (2021: $nil) were distributed from the retained earnings during the year. Company contingencies The company is one of the guarantors of the senior secured bank facility (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 company also provides guarantees to support several of the regional working capital facilities located in Europe, and the senior unsecured notes. Company capital commitments for acquisition of property, plant and equipment There are no capital commitments for the company at 30 September 2022 or 30 September 2021. 138 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September35 Deed of cross guarantee Under ASIC Corporations (Wholly owned Companies) Instrument 2016/785, the Australian wholly-owned subsidiaries referred to in note 33 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 company 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 30 September 2022 follows. Summarised income statement and retained profits Profit/(loss) before income tax expense Income tax (expense)/benefit Net profit/(loss) attributable to members of the closed group Retained profits/(losses) at the beginning of the period Dividends paid Retained profits/(losses) at the end of the period Consolidated 2022 $000 2021 $000 (9,800) 18,580 8,780 83,658 6,660 90,318 (94,555) (30,396) (184,873) – (116,171) (94,555) 139 Nufarm Limited | Annual Report 20222022 $000 2021 $000 136,807 192,869 1,027,461 1,266,190 271,896 12,346 3,438 209,118 12,361 – 1,451,948 1,680,538 2,972 2,809 1,302,019 1,252,619 85,721 114,092 168,273 64,236 106,904 167,793 1,673,077 1,594,361 3,125,025 3,274,899 1,020,710 925,980 1,302 22,533 2,158 3,922 1,050,625 2,162 11,199 799 10,564 950,704 173,349 372,492 46,594 2,443 42,737 12,184 222,386 427,413 1,273,011 1,378,117 1,852,014 1,896,782 1,837,228 1,835,888 73,691 57,266 73,691 81,758 (116,171) (94,555) 1,852,014 1,896,782 35 Deed of cross guarantee (continued) Balance sheet Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax assets Assets held for sale Total current assets Non-current assets 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 Loans and borrowings Deferred tax liabilities Employee benefits Total non-current liabilities TOTAL LIABILITIES NET ASSETS Equity Share capital Other contributed equity Reserves Retained earnings TOTAL EQUITY 140 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September36 Related parties a) Transactions with related parties in the wholly-owned group The group entered into the following transactions during the period 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 Sumitomo Chemical Company Ltd: Sale of goods and services Purchase of goods and services Consolidated 2022 $000 2021 $000 242,985 81,450 262,307 104,754 On the 23 May 2022, Sumitomo Chemical Company Ltd divested its shares in Nufarm Limited and ceased being a related party of the group. The above transactions are for the period of which they were defined as a related party, from the 1 October 2021 to the 22 May 2022. The prior period is for the year ended 30 September 2021. The sale of goods and services above includes transactions disclosed within the non operating corporate segment (note 5) in accordance with a two year supply agreement that the group and Sumitomo Chemical Company Ltd agreed upon the sale of the group’s South American business (‘Supply Agreement’). Under the Supply Agreement, active ingredient manufactured by the group was transacted at an agreed market price. This resulted in the recognition of an onerous contract in April 2020 (note 6). The balance of the product supplied under the Supply Agreement was transacted at the cost incurred by the group. Crop.zone GMBH: Lease payments Interest expense Sale of goods and services Purchase of goods and services Crop.zone GMBH: Trade payable Lease liability Consolidated 2022 $000 611 123 40 1,620 Consolidated As at 30 Sep 2022 $000 74 792 2021 $000 354 23 – 259 2021 $000 63 1,726 In August 2021, Nufarm provided a bank guarantee to support crop.zone GmbH for a value of € 250,000. The guarantee is still in place as at 30 September 2022. These transactions were undertaken on commercial terms and conditions. 141 Nufarm Limited | Annual Report 202236 Related parties (continued) 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 2022 $ 2021 $ 5,883,196 5,690,145 203,152 1,447,526 – 223,766 813,467 213,492 61,217 (129,172) 7,595,091 6,811,698 Individual directors and executives compensation disclosures Information regarding individual directors and executives compensation is provided in the remuneration report section of the director’s report. 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 30 September 2022 (2021: nil). 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 reporting period and there were no material contracts involving director’s interest existing at the end of this period. A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the company or its subsidiaries in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arms-length basis. 142 Nufarm Limited | Annual Report 2022Notes to the consolidated financial statements continuedFor the year ended 30 September37 Auditors’ remuneration Audit services KPMG Australia Consolidated 2022 $ 2021 $ Audit and review of group financial report 885,087 852,332 Overseas KPMG firms Audit and review of group and local financial reports Other auditors Audit and review of local 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 auditors Other assurance services Other advisory services Other services remuneration 38 Subsequent events 2,698,206 2,597,914 3,583,293 3,450,246 472,557 237,524 4,055,850 3,613,861 361,508 – 91,861 1,471 – 67,097 521,937 – – – 92,865 – 21,877 114,742 On 17 October 2022 a distribution was paid by Nufarm Finance (NZ) on the Nufarm step-up securities. The distribution was 4.86% resulting in a gross distribution of $6.055 million. A final dividend of 6 cents per share, totalling $22.810 million, was declared on 16 November 2022 and will be paid on 9 December 2022 (2021: $15.196 million). On 15 November 2022, it was announced that Nufarm has entered into a five year A$800 million revolving Asset Based Lending credit facility (the ABL Facility) secured against trade receivables and inventory located in Australia, the United States and Canada. A smaller A$150 million Liquidity Facility (the Liquidity Facility) has also been established to sit alongside the ABL Facility to assist in the ongoing funding of Nufarm’s working capital requirements. Concurrently, the existing syndicated bank facility (SFA) and group receivables securitisation facility were both terminated and any outstanding loans amounts repaid via proceeds obtained under the new facilities. On the 10th November 2022, the group further increased its investment in Enko Chem via an additional investment of USD $5 million. The group intends to hold this investment for the long term for strategic purposes and has designated the investment at FVOCI. Other than noted above, no matters or circumstances have arisen in the interval between 30 September 2022 and the date of this report that, in the opinion of the directors, have or may significantly affect the operations, results or state of affairs of the group in subsequent accounting periods. 143 Nufarm Limited | Annual Report 2022Directors’ declaration 1 In the opinion of the directors of Nufarm Limited (the company): (a) the consolidated financial statements and notes are in accordance with the Corporations Act 2001 including: (i) giving a true and fair view of the group’s financial position as at 30 September 2022 and of its performance for the twelve months 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 33 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 Corporations (Wholly owned Companies) Instrument 2016/785. 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 twelve months ended 30 September 2022. 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 16th day of November 2022 JC Gillam Director GA Hunt Director 144 Nufarm Limited | Annual Report 2022Independent Audit Report Independent Auditor’s Report To the shareholders of Nufarm Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Nufarm Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: giving a true and fair view of the Group’s financial position as at 30 September 2022 and of its financial performance for the year ended on that date; and • • The Financial Report comprises: • Consolidated balance sheet as at 30 September 2022 • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant complying with Australian Accounting Standards and the Corporations Regulations 2001. accounting policies • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 145 Nufarm Limited | Annual Report 2022 Independent Audit Report continued Key Audit Matters The Key Audit Matters we identified are: • Recoverability of non-current assets, including property, plant and equipment and intangible assets • Recoverability of deferred tax assets in relation to tax losses Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recoverability of non-current assets, including property, plant and equipment ($475.3m) and intangible assets ($1,192.8m) Refer to the following notes to the financial report: Note 2(d)(ii) Basis of preparation – Use of estimates and judgments – impairment testing, Note 3(i)(ii) Significant accounting policies – Impairment – Non-financial assets, Note 20 Property, plant and equipment, and Note 21 Intangible assets. The key audit matter How the matter was addressed in our audit Recoverability of non-current assets, including property, plant and equipment and intangible assets, is a key audit matter due to the following: • Inherent complexity in determination of the Group’s cash generating units (“CGU’s”), noting that the Group prepares a separate discounted cash flow model for each CGU. • The diverse nature of regional agricultural markets in which the Group operates, noting that each geographic and product market segment experiences the following factors which are subject to inherent uncertainty leading to a range of possible forecast outcomes: - fluctuating demand depending on economic and climatic conditions; - significant regulatory activity and oversight, which can lead to approval and cessation of new and existing products; and - technological advancements by the Group and competitors, which can lead to shifts in market demand for products. • Given the unique, non-homogenous, nature of these factors, specific auditor attention is applied to each element, increasing the overall audit effort in this area. We focus Our procedures included: • Using our understanding of the nature of the Group’s business, we analysed: - - the internal reporting of the Group to assess how results are monitored and reported; and the implications for CGU identification in accordance with accounting standards. • Considering the appropriateness of the value in use method applied by the Group to perform the annual impairment test against the requirements of the accounting standards. • Assessing the integrity of the value in use model used, including the accuracy of the underlying calculation formulas. • Testing the design and implementation of key controls over the cash flow models, including Board consideration and approval of key assumptions and business unit budgets which form the basis of the cash flow forecasts. • Assessing the Group’s discounted cash flow models and key assumptions by: - comparing forecast cash flows to historical trends and performance, by CGU, to inform our evaluation of the forecasts incorporated into the models and company-specific risk premiums incorporated into the discount 146 Nufarm Limited | Annual Report 2022 on the authority and knowledge of the sources of judgements incorporated into the cash flow models, evidence of bias and consistency of application of judgements.The above factors increase the complexity in auditing both the assessed useful lives for individual intangible assets, and also the forward-looking assumptions contained in the Group’s discounted cash flow models for each CGU. Additional key assumptions we focused on included growth rates during the forecast period, terminal value growth rates and discount rates. • These same conditions impact our audit effort associated with assessing the capitalised development costs intangible asset, in particular the recoverable amount of new products in development phases. Products in early stages of development, compared to those closer to product launch, are prone to a wider range of forecast outcomes and projections can contain highly judgemental assumptions. We focused on the authority and knowledge of the sources of judgements incorporated into the valuation, common market practices and consistency of judgements. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. rates; - comparing the relevant cash flow forecasts to the Board approved budgets and FY23- FY25 business plans, including the Group’s consideration of the potential impacts of the Russia-Ukraine conflict on forecasts; - working with our valuation specialists, we independently developed a discount rate range and terminal growth rate for each CGU, using publicly available market data for comparable entities, adjusted for risk factors specific to the CGU and the industry it operates in. We compared the discount rates and terminal growth rates applied by the Group for each CGU to our acceptable ranges; and - using our industry knowledge, information published by regulatory and other bodies and information obtained through inquiries with the Group to challenge key assumptions. This included the forecast cash flows and growth assumptions in light of recent operating performance, the useful lives associated with specific intangible assets and the impact of technology, market and regulatory changes on those assumptions. We looked for evidence of sensitivity and bias within and across models, and consistency of application, investigating significant differences. • Evaluating the Group’s sensitivity analysis in respect of the key assumptions in the models to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures. • Working with our valuation specialists, we assessed the reasonableness of forecast cash flows by comparing implicit earnings and asset multiples from the models to corresponding multiples of comparable entities. • Assessing the related disclosures included in the financial report using our understanding of the matter obtained from our testing and against the requirements of accounting standards. 147 Nufarm Limited | Annual Report 2022 Independent Audit Report continued Recoverability of deferred tax assets in relation to tax losses ($77.1m) Refer to the following notes to the financial report: Note 2(d)(iii) Basis of preparation – Use of estimates and judgements – income tax, Note 3(p) Significant accounting policies – Income tax, Note 11 Income tax expense and Note 17 Tax assets and liabilities. The key audit matter How the matter was addressed in our audit Recoverability of deferred tax assets in relation to tax losses is a key audit matter due to the: • Complexity in auditing the forward-looking assumptions applied to the Group’s tax loss utilisation models, especially given the multiple tax jurisdictions and their bespoke tax regimes. Further details on the significant forward-looking assumptions and implications for the audit are contained in the Key Audit Matter relating to the recoverability of non-current assets, including property, plant and equipment and intangible assets. Additional auditor attention is focused on the reconciliation of forecast cash flows to forecasts of taxable income for each tax jurisdiction. • Age of the tax losses, and the relevance of recent taxable profits to forecasts. • The large number of jurisdictions and our need to consider their varying and complex rules on tax loss utilisation. This necessitated involvement of our tax specialists to supplement our senior audit team members in relevant jurisdictions. Our procedures included: • Testing design and implementation of key controls over the taxable income forecasts underpinning the tax loss utilisation models, including Board consideration and approval of key assumptions and business unit budgets which form the basis of these forecasts. • Comparing the key assumptions and business unit budgets for consistency with those tested by us, as set out in the Key Audit Matter relating to the recoverability of non-current assets, including property plant and equipment and intangible assets, and also comparing the reconciliation of these budgets to taxable income concepts. • Assessing the Group’s tax loss utilisation models and key assumptions, by significant jurisdiction, by: - comparing taxable income to historical trends and performance to inform our evaluation of the current taxable profit forecasts; - evaluating the key assumptions in the Group’s forecast tax loss utilisation models, including the identification of areas of estimation uncertainty to focus further procedures; - understanding the timing of future taxable income and considering the consistency of the timeframes of expected recovery to our knowledge of the business and its plans; and - involving our tax specialists and teams from relevant jurisdictions to assess the tax loss utilisation expiry dates and annual utilisation allowances for consistency with local practice, regulatory parameters and legislation. 148 Nufarm Limited | Annual Report 2022 Other Information Other Information is financial and non-financial information in Nufarm Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Operating and Financial Review, the Corporate Governance Statement and the Directors’ Report. The Financial Year 2022 Overview, Chairman’s Message, Managing Director’s Message, Environmental, Social and Governance, information on the Board of Directors and Key Management Personnel, and the Shareholder and Statutory Information are expected to be made available to us after the date of the Auditor’s Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on 149 Nufarm Limited | Annual Report 2022 Independent Audit Report continued the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Remuneration Report of Nufarm Limited for the year ended 30 September 2022 complies with Section 300A of the Corporations Act 2001. 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 responsibilities We have audited the Remuneration Report included in the Directors’ report for the year ended 30 September 2022. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Chris Sargent Partner Melbourne 16 November 2022 150 Nufarm Limited | Annual Report 2022Shareholder and Statutory Information Substantial shareholders As at 16 November 2022, the names of the substantial holders of the company and the number of equity securities in which those substantial holders and their associates have a relevant interest, as disclosed in substantial holding notices given to the company, are as follows: Holder of Equity Securities Allan Gray Australia Pty Ltd Aware Super Pty Ltd as trustee of Aware Super Vanguard Group Number of holders As at 16 November 2022, the number of holders is as follows: Class of Equity Securities Fully paid ordinary shares Number of Equity Securities held 44,902,420 23,642,760 19,011,407 % of total issued securities capital in relevant class 11.81% 6.22% 5.00% Number of holders 14,071 Less than marketable parcels of ordinary shares (UMP Shares) The number of holders of less than a marketable parcel of ordinary shares based on the closing market price at 16 November 2022 is as follows: Total Shares 380,168,745 UMP Shares UMP Holders % of issued shares held by UMP holders 17,431 966 0.005% Voting rights of equity securities As at 16 November 2022, there were 14,071 holders of a total of 380,168,745 ordinary shares of the company. At a general meeting of the company, every holder of ordinary shares present in person or by proxy, attorney or representative has one vote on a show of hands and, on a poll, one vote for each ordinary share held. On a poll, every member (or his or her proxy, attorney or representative) is entitled to vote for each fully paid share held and, in respect of each partly paid share, is entitled to a fraction of a vote equivalent to the proportion which the amount paid up (not credited) on that partly paid share bears to the total amounts paid and payable (excluding amounts credited) on that share. Amounts paid in advance of a call are ignored when calculating the proportion. Distribution of holders of equity securities The distribution of holders of equity securities on issue in the company as at 16 November 2022 is as follows: Distribution of Ordinary Shareholders Holdings Ranges Holders Total Units 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 Over 5,955 5,840 1,413 814 49 2,489,221 14,467,676 10,399,063 18,112,469 % 0.65 3.81 2.74 4.76 334,700,316 88.04 151 Nufarm Limited | Annual Report 2022Shareholder and Statutory Information continued Twenty largest shareholders as at 16 November 2022 Rank Name Units % Units 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NATIONAL NOMINEES LIMITED BNP PARIBAS NOMS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSI EDA CITICORP NOMINEES PTY LIMITED MOTURUA PROPERTIES LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD BNP PARIBAS NOMS PTY LTD WARBONT NOMINEES PTY LTD IOOF INVESTMENT SERVICES LIMITED NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> NETWEALTH INVESTMENTS LIMITED BRISPOT NOMINEES PTY LTD SAINT KENTIGERN TRUST BOARD MR MARK GODDARD 125,576,183 86,441,851 58,211,248 22,414,687 13,028,596 7,067,960 3,195,186 3,023,847 2,281,620 1,352,595 977,357 769,980 683,926 651,440 632,493 590,275 520,282 488,292 430,434 420,000 33.03 22.74 15.31 5.90 3.43 1.86 0.84 0.80 0.60 0.36 0.26 0.20 0.18 0.17 0.17 0.16 0.14 0.13 0.11 0.11 Total number of shares of Top 20 Holders Total Remaining Holders Balance 328,758,252 51,410,493 86.48 13.52 152 Nufarm Limited | Annual Report 2022Corporate Information Board of Directors J Gillam – Chair G Hunt – Managing Director G Davis A Gartmann D Jones M McDonald P Margin L Saint Registered office 103-105 Pipe Road Laverton North Victoria 3026 Australia Telephone: +61 3 9282 1000 Facsimile: +61 3 9282 1001 Nufarm Limited (NZ Branch) Baker Tilly Staples Rodway Auckland Ltd 9th Floor, 45 Queen Street, Auckland, 1010 New Zealand Telephone: +64 9 270 4150 Company Secretary Kate Hall Auditors KPMG Tower Two Collins Square 727 Collins Street Melbourne Victoria 3008 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 2975 Melbourne Victoria 3001 Australia Telephone: 1300 652 479 Outside Australia: +61 3 9415 4360 Step-up securities registrar New Zealand Computershare Registry Services Limited Private Bag 92119 Auckland NZ 1142 Telephone: +64 9 488 8700 Stock Exchange Listing The Company’s ordinary shares are quoted on the Australian Securities Exchange (ASX). The Company was admitted to the official list of the ASX on 10 November 1988 (ASX issuer code: NUF). Website www.nufarm.com Nufarm Limited ACN 091 323 312 nufarm.com N u f a r m L i m i t e d A n n u a l R e p o r t 2 0 2 2

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