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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 2022 Chair’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 2022 Our 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 2022 CEO’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 2022 Macro 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 2022 About 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 2022 Our 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 2022 About 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 2022 Our 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 2022 About 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 2022 Our 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 2022 Environmental, 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 2022 We 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 2022 Environmental, 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 2022 Our 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 2022 Environmental, 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
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J
16
6
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6
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7
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8
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2
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-
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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 2022 Operating 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 2022 Operating 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 2022 Crop 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 2022 Operating 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 2022 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 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 2022 Operating 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 2022 Key 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 2022 Operating 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 2022 Transition 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 2022 Operating 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 2022 Risk/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 2022 Operating 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 2022 Risk/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 2022 Board 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 2022 Peter 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 2022 Key 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 2022 Corporate 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 2022 Corporate 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 2022 Skills 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 2022 Corporate 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 2022 Induction 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 2022 Corporate 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 2022 Activities 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 2022 Corporate 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 2022 4 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 2022 Corporate 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 2022 4.3 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 2022 Corporate 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 2022 2022 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 2022 Corporate 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 2022 6 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 2022 Corporate 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 2022 Directors’ report
The directors present their report together with the financial report of Nufarm Limited (‘the company’)
and of the group, being the company and its subsidiaries and the group’s interests in associates and jointly
controlled entities, for the financial year ended 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 2022 Directors’ 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 2022 Name, 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 2022 Directors’ report continued
Directors’ meetings
The number of directors’ meetings (including meetings of board committees) and number of meetings attended by each of the
directors of the company during the financial year are:
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 2022 Indemnities and insurance for directors
and officers
The company has entered into insurance contracts which
indemnify directors and officers of the company, and its
controlled entities, against liabilities. In accordance with normal
commercial practices, under the terms of the insurance
contracts, the nature of the liabilities insured against and the
amount of premiums paid are confidential.
An indemnity agreement has been entered into between the
company and each of the directors named earlier in this report.
Under the agreement, the company has agreed to indemnify
the directors against any claim or for any expenses or costs,
which may arise as a result of the performance of their duties
as directors 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 2022 Remuneration 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 2022 Audited 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 2022 Remuneration 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 2022 1.3 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 2022 Remuneration 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 2022 Remuneration 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 2022 What 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 2022 Remuneration 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 2022 What 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 2022 Remuneration 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 2022 3 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 2022 Remuneration 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
-
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a
J
7
1
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r
a
M
7
1
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a
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7
1
-
l
u
J
7
1
-
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e
S
7
1
-
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o
N
8
1
-
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8
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a
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8
1
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a
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8
1
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J
8
1
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8
1
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9
1
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9
1
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a
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9
1
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9
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9
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9
1
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0
2
-
n
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0
2
-
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a
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0
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-
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a
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0
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-
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0
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-
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0
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-
v
o
N
1
2
-
n
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1
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1
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-
v
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2
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2
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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 2022 5. 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 2022 5.3 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 2022 Remuneration 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 2022 78
Nufarm Limited | Annual Report 2022 Consolidated 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 2022 Consolidated 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 2022 Profit/(loss) for the period
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences for foreign operations
Effective portion of changes in fair value of cash flow hedges
Effective portion of changes in fair value of net investment hedges
Items that will not be reclassified to profit or loss:
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 2022 Consolidated 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 2022 Consolidated 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 2022 Consolidated 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 2022 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 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 2022 Notes 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 2022 3 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 2022 3 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 September Hedges 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 September Right 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 2022 3 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 September 30 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 2022 3 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 September 5 Operating segments
Segment information is presented in respect of the group’s
key operating segments. The operating segments are based
on the group’s management and internal reporting structure.
Operating segments
The group operates predominantly along two business lines,
being crop protection and seed technologies.
The crop protection business deals in the manufacture and sale
of crop protection products used by farmers to protect crops
from damage caused by weeds, pests and disease. It is managed
by major geographic segments, being Australia, 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 2022 5 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 September Geographical 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 2022 6 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 September Material 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 2022 7 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 September 11 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 2022 12 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 2022 17 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 September Movement 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 2022 18 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 September 20 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 2022 21 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 September Cash-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 2022 22 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 September Reconciliation 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 2022 23 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 September Changes in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation
Service cost
Interest cost
Actuarial losses/(gains)
Past service cost
Losses/(gains) on curtailment
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 2022 24 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 September 25 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 2022 25 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 September 26 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 2022 27 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 September 28 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 2022 29 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 September The group’s maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region was:
Carrying amount
Australia/New Zealand
Asia
Europe
North America
South America
Trade and other receivables
Consolidated
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 2022 29 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 September The 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 2022 29 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 September Sensitivity 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 2022 29 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 September Consolidated
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 2022 29 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 2022 31 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 September Marman (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 2022 33 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 September Nuseed 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 2022 34 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 September 35 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 2022 2022
$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 September 36 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 2022 36 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 September 37 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 2022 Directors’ 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 2022 Independent 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 2022 Shareholder 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 2022 Shareholder 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 2022 Corporate 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
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