Nufarm Limited (NUF) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is John Gillam, I'm the newly appointed Chairman of Nufarm, and welcome to the 2020 Annual General Meeting of Nufarm Limited. Our company secretary has informed me that we have a quorum present, and I officially declare the meeting open. Our meeting today is being held in the lands of the Wurundjeri people of the Kulin Nation, and I wish to acknowledge them as traditional owners. I would also like to pay my respects to their elders, past and present, and to Aboriginal elders of other communities who may be joining us today. Life this year has been very challenging for all of us. At Nufarm, the health and safety of our employees, customers and shareholders has been our #1 focus since the commencement of the COVID-19 pandemic. Like other companies at the time, we had to make a decision as to how to hold our AGM, and we decided that the approach -- that the appropriate approach this year was to have a virtual meeting rather than to hold a physical meeting. Hopefully, next year, we'll be able to hold a physical meeting again. This year, we have 2 Annual General Meetings, both being held today, this is due to Nufarm changing its financial year-end from 31 July to 30 September. The change has required Nufarm to have 2 reporting periods during this calendar year, the first being for the financial year ended 31 July 2020, and the second for the 2-month period ended 30 September 2020. You will have received 2 notices of meeting and 1 proxy form, which applies for both meetings. This first meeting relates to the financial year ended 31 July 2020. You can participate in the second meeting by remaining connected through this platform, the Lumi platform, and I will provide further directions about the second meeting at the conclusion of this meeting. Today's meeting is being held online via the Lumi platform. This allows shareholders, proxies and guests to attend our meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit votes. Before I turn to how to participate in this meeting, I'd like to welcome my fellow Board members who are in attendance today. In the room with me today, I have Greg Hunt, our CEO and Managing Director; and fellow Nonexecutive Directors, Gordon Davis, Frank Ford, Peter Margin and Marie McDonald. Joining us from Sydney is Anne Brennan; and in Tokyo, our Director, Toshi Takasaki. And both Anne and Toshi are unable to travel today due to ongoing travel restrictions. And we wish everyone good luck in terms of the new restrictions that are emerging in Australia right as we speak. In addition, we are joined in the room by Paul Townsend, our Chief Financial Officer, who joined Nufarm on 1 December 2020, our company secretary, Fiona Smith; Nerida Mossop, our Investor Relations Manager; and Paul Binfield, who has been our Chief Financial Officer since 2011, and will be leaving us at the end of the year to pursue a new role. Paul has been an integral part of the Nufarm leadership team through a period of significant change. And on behalf of the Board and everyone at Nufarm, I thank him for his commitment and wish him every success for his future. We're also joined by Chris Sargent, representing our auditor, KPMG, and Chris is available to answer any questions in relation to the audit later in the meeting. This is my first Nufarm AGM. It is a great honor to be appointed Chairman of Nufarm, and I'm looking forward to updating you on the past year and what we expect in the future. Greg will also be addressing you later in the meeting. And before we move to the formalities, there are several housekeeping matters regarding how to participate in this virtual meeting that I'd like to cover. Firstly, questions can be submitted at any time. [Operator Instructions] And please note that while you can submit questions from now on, I will address these later in our meeting. These questions will be moderated to avoid repetition. And if the questions are particularly long, we may need to summarize them in the interest of time, but I do expect that we'll be able to answer all questions that are asked today. In the event that we're not in a position to do so, we will answer them via an e-mail or by posting responses on our website. Depending on the questions, I'll make a decision whether I will answer or ask a member of management, another director or the auditor to respond. Voting. Voting today will be conducted by way of a poll on all items of business. And in order to provide you with enough time to vote, I will open the poll now for voting on all the resolutions at this meeting and keep the poll open until the conclusion of the meeting so you can vote at any time during the meeting. You do not have to wait for the formal items of business. So just to confirm, the polls for voting on all items of business are now open. If you are eligible to vote at this meeting, a new polling icon should now appear. Selecting this icon will present -- will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit or submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. Please submit your votes at any time from now until the end of question time, and I will give you a warning before I move to close the voting. Michael Hutchison from Computershare will act as the returning officer for the purposes of conducting and determining the results of the poll, the results of which will be announced to the ASX later today. And if you are having difficulties in locating the voting icon, please refer to the detailed Lumi guidance on Nufarm's website. That deals with the formalities of today's meeting. Greg Hunt will provide you with a detailed commentary on the year just completed in a few minutes' time, but I wanted to start off by making a few formal remarks. I'm very honored to be here at my first AGM for Nufarm since joining the company in July. I want to begin by acknowledging the tremendous contribution of our previous Chairman, Donald McGauchie, who retired from the Board in September. Donald served on the Nufarm Board for 17 years, including as Chairman for the past 10. 17 years is a remarkable commitment, and Nufarm has earned its respected standing amongst global peers during Donald's tenure. On behalf of the Board, employees and shareholders, I sincerely thank Donald for his terrific service and dedication and wish him well for the future. Before I talk about financial performance, let me begin with safety. The safety of our people is the most critical responsibility we have as a Board and management team. Our visible commitment to the priority of safety ensures our employees know they are cared for and can trust their employer. A strong safety culture is a foundation for a strong performance culture. Nufarm's statutory net profit for the year ended 31 July 2020, was a loss of $456 million. While we acknowledge that there were commercial industry-wide challenges during the year, this outcome did not meet the expectations of the Board nor of management. The Board and management are also very conscious that this result was greatly disappointing for our shareholders. Actions to quickly restore stronger performance are being implemented. In crop protection, Nufarm has a highly valuable global distribution and supply chain footprint with a strong product portfolio that is enhanced by our pipeline of innovation and product development. The work being done now to realize the full potential of this business is focused on growing volumes, improving margins, cash generation and return on assets. Greg will speak to this in further detail in his presentation. Our Nuseed business is entering an exciting phase driving its core seeds business and commercializing the innovation investments in the omega-3 canola and Carinata seed platforms through the Value Beyond Yield strategy. Strong support for Nuseed continues with an emphasis on high-value commercialization pathways. We are able to focus in this way due to the sale of our South American Crop Protection business to Sumitomo Chemical Company. This was a significant milestone for Nufarm during the year. The sale has supported a refocus of resources into the regions of businesses where we believe we can generate better long-term growth and cash returns for shareholders, whilst also returning our balance sheet to a position of strength. We believe this transaction has created genuine value for both parties, and I'm very grateful to Sumitomo for the warm welcome they have given me since becoming Chairman. To achieve full potential for Nufarm's businesses, processes and systems that support high-quality performance must be enhanced. Being able to better serve the needs of customers is fundamental to this. There is impressive industry knowledge and expertise across Nufarm's senior management team and employees, and actions that are underway to better leverage and support these attributes will help achieve stronger commercial outcomes with enduring characteristics. The task of Board renewal was commenced by the Board under the leadership of the previous Chairman, and my appointment was part of that renewal. As previously announced, after almost 9 years on the Board, Anne Brennan is retiring, and today is Anne's last day, on behalf of the Board and shareholders, I sincerely thank her for her counsel and contribution to Nufarm and wish her all the best. Long-serving Board members, Peter Margin and Gordon Davis, are standing for reelection today. Both Peter and Gordon have advised that they will not serve the full term and will retire during this term in line with the overall succession planning for the Board. Marie McDonald is standing for reelection for the first time since being elected by shareholders in 2017, and Lynne Saint would stand for election as a new director at the second Annual General Meeting later today. You will have the opportunity to hear from Peter, Gordon, Marie and Lynne later this morning. I'd like to finish my formal comments today by encouraging shareholders to read our recently released 2020 sustainability review which sets out how Nufarm continues to meet its environmental, social and governance responsibilities. Nufarm's purpose is to create long-term shareholder value by helping farmers get more from their land through the provision of crop protection solutions and seed technologies. With the world's population increasing in size and prosperity, our products and solutions play an important role in helping farmers feed more people while using fewer natural resources. In summary, notwithstanding the disappointing financial result for the 2020 year, your company is well positioned for the future, and I am optimistic about Nufarm's long-term prospects. I look forward to my involvement with Nufarm, assuming I'm fortunate enough to be elected today. Together with my fellow Board members, I sincerely look forward to quickly restoring stronger performance. I have confidence in our Managing Director and Chief Executive Officer, Greg Hunt, and his team for the task that lies ahead. And on that note, I'd very much like to thank all Nufarm employees for their ongoing commitment. COVID-19 has made 2020 a particularly trying and demanding year, and they are to be congratulated for the manner in which they have adapted to ensure minimal disruption to our customers. We are mindful in that regard of the difficult pandemic challenges being faced now by our employees, customers and suppliers in the Northern Hemisphere, and we send them our very best wishes at this trying time. I also sincerely thank shareholders for your continued support. I now invite Greg to address you before we will move to the formal business of the meeting.

Thank you, John, and good morning, and welcome to everybody joining us today. 2020 certainly wasn't the year that anyone would have planned. We are fortunate that Nufarm's products are an essential input to the agricultural industry, and therefore, our business proved resilient to COVID-19. Although our supply chains were disrupted by external factors and there was some lessening of demand in niche markets, seasonal factors and market conditions were the main driver of performance this year. With more favorable trading conditions recently, our performance has improved, and I will expand on current trading later. Before I turn to a review of the business performance, I would like to reinforce the Chairman's comments in relation to safety. This is our #1 priority, and I am pleased to report that we achieved our best-ever safety performance in 2020. Our financial performance for the year, however, was disappointing. The statutory result for the group was a loss of $456 million, and underlying EBITDA in our continuing businesses was down 21% to $236 million. The main driver of the decline in underlying performance was lower earnings in Europe and reduced first half earnings in North America. We gained momentum in Australia, Asia and North America as seasonal conditions improved, and I was pleased with the rebound in earnings in these regions in the second half. Our major focus in the short term is driving value from our European business. Financial year 2020 was a difficult year in this region with 4 main factors impacting earnings. Firstly, poor seasonal conditions; reduced demand in key countries, including France, Germany and the U.K.; a continuation of high raw material costs for many of our differentiated products; and increased logistics costs also impacted earnings. The final factor relates to increased competition, which pressured margins, particularly in our base portfolio. We expect margins in the base portfolio to remain constrained. This is largely why we recognized an impairment this year to the carrying value of our European asset base. Despite the decline in overall earnings, we made progress on our objective to improve cash generation. Underlying cash from operating activities increased $137 million with better working capital outcomes more than offsetting the decline in earnings. Our balance sheet was strengthened by the sale of the South American Crop Protection business. As John outlined, this returns us to a position of strength, and it allows us to refocus our resources. Management is very conscious of the unacceptable result this year, and we are taking action to improve performance. As John mentioned in his address, our focus is on improving volumes, improving margins, cash generation and return on assets. We have actions in play to grow market share in the key crops and markets where we believe that we have strong relevance. We are making good progress, and we have good leverage to improve seasonal conditions in our key markets. To improve margins, we are focusing on our supply chain operations. We have announced 2 major initiatives with the manufacturer of 2,4-D herbicide in Austria and the insecticide and fungicide manufacturing in Australia to cease in 2021. The scale and cost position of these facilities has declined relative to global peers over the past few years. We expect these changes will generate benefits in the order of $15 million per annum. Elsewhere, we are reinvesting and expanding our manufacturing footprint. We commenced operation of our new formulation facility in Mississippi this year. We are also planning a modest investment this year to improve the cost position of our phenoxies facility in the U.K. The review of our supply chain is ongoing. We will continue to explore opportunities so that we can strike the right balance between optimizing our sourcing cost and retaining flexibility to ensure the reliable supply to our customers. We are also working to reduce our cost base to improve margins and to provide a buffer against unforeseen headwinds. We are targeting $20 million to $25 million of improvement by the end of financial year 2022. $10 million to $15 million of savings will come from the European business. We expect the reduction in SG&A expenses, combined with an anticipated easing in raw material costs and improved weather conditions, to be the major drivers of improved profitability in 2021. Improving cash generation has been prioritized. Following the sale of the South American Crop Protection business, our resources are now based on the markets and segments where we believe that we can generate better cash returns. The work we are doing to improve net working capital is releasing cash from our balance sheet. There is scope for further improvement as we lift profitability and bring our net working capital metrics back towards the targets we have set. Finally, return on assets. We have made significant investments in the past few years in our European and Nuseed businesses. Delivering value from these investments will drive improved returns. While the work we are doing to improve margins spans the entire business, there is significant focus on the European business. We are experiencing improved seasonal conditions and better supply and pricing of products. Assuming this continues, and with the work that we have already commenced, we will deliver improved earnings and returns from this region in 2021. We will continue to build on this foundation through 2022. The investment in our Nuseed business is set to deliver an increasing contribution in the coming years. We made the first commercial sales of our proprietary omega-3 canola oil in September this year. We have secured additional sales to additional customers in the past 2 months. The EBITDA contribution from this investment will ramp up as we continue to build scale over the next few years, and we believe it has potential to deliver significant value for shareholders. Our recent modest investment in another seed technology platform, Carinata, is also showing pleasing early potential. Carinata has been developed as a feedstock for renewable fuels and high protein meal for livestock feed. We have already made our first commercial sales and secured a multiyear offtake agreement that will underpin future revenue growth. While the contribution from these new technologies will drive future revenue, we expect to see growth in the short term from the hybrid technologies that we've launched across our canola, sunflower and sorghum platforms. Following the sale of our South American assets, we decided to change our financial year-end because our earnings would be very heavily weighted to the second half. By changing our financial year-end to the 30th of September, we can better align our half year reporting with key sales periods. It will also make it easier to compare our performance with industry peers. To complete the transition to the new financial year-end, 4 weeks ago, we reported results for the 2 months ended 30th of September 2020. While these 2 months are traditionally a quiet period for trading, we generated revenue growth of 23% in this period. The growth was driven by -- primarily by stronger demand in Australia and Europe. Full details of the results for the 2 months are available in our annual report. Today, I'm able to provide a further update on trading performance for October and November. These 2 months typically see stronger demand than August and September, however, they are still relatively quiet months in the context of the full year of trading. Our results for October and November show revenues up 47% on the prior comparative period with growth in all regions and Seed Technologies. I do caution, however, that the prior comparative period was a period of very weak trading, which is why we have provided a comparative for the same period in 2018. While it is still early in the season, our trading performance has improved on last year, and we are making progress on our performance improvement program. This is locking in savings to our cost base. Our net working capital to sales metric continues to track towards our short-term target of less than 40%. We would normally provide the next trading update in March with our half year results. However, given the change in our financial year-end pushes this out to May, we have decided to provide a further update in late February. This update will give you comparative sales data to the end of January 2021. Before handing back to John, I would like to thank our employees for their efforts, agility and resilience over the past 12 months. It's been a very trying year and I'm proud of the way that our teams rose to meet the challenges that were thrown at them. At this time, our thoughts are with our northern hemisphere colleagues who are being challenged by further outbreaks of the virus. In conclusion, I would like to take this opportunity to wish you all a safe and peaceful festive season, and I look forward to presenting an improved financial result to shareholders in 2021. Thank you.

Thanks, Greg. I'll now move to the discussion on the formal items of business as set out in the Notice of Meeting. I remind you that the poll is open for voting. And if you've not already done so, I encourage you to vote now. The Notice of Meeting contains all the material information in the Board's possession to assist you in determining how you wish to vote. This includes the Board's recommendation for shareholders to vote in favor of all resolutions. I'd like to turn now to the issue of the director elections and Board succession planning. Gordon Davis, Peter Margin and Marie McDonald are standing for reelection at this meeting, and I'm putting myself forward for election as a director. During financial year '20, the Board introduced a 10-year policy that provides for nonexecutive directors to retire after 9 years from the first date of election by shareholders. The Board can, in exceptional circumstances, exercise its discretion to extend the maximum term where it considers it in the best interest for Nufarm to do so. And in introducing this policy, the Board determined that it would not prevent those directors who had served 9 years as of the date the policy was introduced from seeking an additional term. Gordon Davis and Peter Margin have both served on the Board for 9 years, and the Board considers that they continue to make a very valuable contribution to Nufarm, particularly as Chair of the Risk and Compliance Committee, in Gordon's case; and as Chair of the Human Resources Committee in Peter's case. Both are standing for reelection, but have indicated that they will not serve the full term and will retire during this term, in line with the overall succession planning for the Board. The Board has commenced succession planning for these key roles to ensure there is an orderly transition as well as maintaining the necessary mix of skills, expertise and experience required by the Board looking into the future to ensure Nufarm prospers. Marie McDonald is also standing for reelection having first been elected by shareholders in 27 (sic) [ 2017 ]. The Board considers that Mary makes a valuable contribution to Nufarm, in particular, as Chair of the Nomination and Governance Committee. I would now like to invite Gordon, Peter and then Mary to address the meeting.

Thank you, Chair. Shareholders, Gordon Davis speaking. I seek the support of the shareholders for my reelection. The Chair's outlined my roles at Nufarm. I've had a career in -- broadly in the natural resources industry, in forestry, in agriculture, mining services, including a period as Managing Director and CEO of AWB Limited. I currently serve as a Nonexecutive Director on Healius Limited and Midway Limited. Nufarm is in a period of refocus. It's in a period of structural change to improve performance in the long term. I feel the Board has an important role to support Greg and the team in achieving those outcomes over the next period. I have the time and commitment available to serve at this -- on this Board. I think also it's important to note the Chair's comments that as part of an orderly transition and Board renewal, I will be retiring during this term, but I feel we've got significant work to do to improve the performance of this company for the shareholders in the long term. I seek your support. Thank you, Chair.

Thanks, Gordon. Peter?

Thank you, Chairman, and I appreciate the opportunity to address our shareholders today. Just by way of background, I initially trained as a scientist and then worked in a number of capacities, including research and development, manufacturing, quality management, marketing and finally, general management. My last 3 executive roles were as Chief Executive of National Foods, Chief Executive of Goodman Fielder and most recently as Executive Chairman of Asahi Beverages in Oceania, from which I've recently retired. All of my executive career has been working within companies that cover the food, beverage and agricultural sectors, and I have a real passion for helping Australia developers as a legitimate food base for Asia. Over the last 10 years, I've also been pursuing a nonexecutive career and was fortunate to join the Nufarm Board in 2011. During the last 9 years, I believe, I've played an active role on the Board through membership of the Audit, Risk, HR and Nomination Committees, and have leveraged my skills, particularly in strategy, integrated supply chain management and marketing to help the company navigate through the many environmental, regulatory and industry challenges with which it's faced. With your support, I put myself forward for reelection acknowledging that during this period, likely would note also stepped down to ensure active renewal at Board level. Thanks, John.

Thanks, Peter. Over to you, Marie.

Thank you, John. and good morning, ladies and gentlemen. I'm pleased to have the opportunity to briefly address you this morning as I seek your support for reelection as a director. As the Chairman said, I was recently appointed to the Board in 2017, and I'm currently a member from Audit and Risk Committees as well as Chair of the Nomination and Governance Committee. It is an honor to have been able to serve your company in these capacities. My professional career was me as a lawyer, specializing in corporate and commercial law, often working on cross-border transactions. This gave me expertise in public markets, corporate governance and regulatory policy matters. Since then, I've become a nonexecutive director of several companies with a science focus, including CSL and Nanosonics. Each of these companies have significant international operations, and that provides me with insights into the challenges of managing risk and people in diverse locations. I believe the combination of these skills and experiences will be valuable to Nufarm as it refocuses its crop protection business and seek to ensure that Nuseed and its innovative technologies for further potential. The last few years have been challenging for Nufarm, and last year's financial performance was disappointing. This is something which I and my colleagues are very aware. The Board and management are highly focused on improving that financial performance and implementing the near-term actions, which the Chairman and Greg outlined earlier. I have both the time and energy to Nufarm. If reelected, I look forward to working with my Board colleagues and with management, with the aim of creating long-term value for you, our shareholders, as well of value for our customers, suppliers, employees and the community from which Nufarm operates. Thank you, ladies and gentlemen. I appreciate the opportunity to speak to you today. Thank you, Chairman.

Thank you, Marie. The last director election is my own, and I'll briefly hand over Chair of the meeting to Frank Ford.

Thank you, John. As shareholders are aware, Donald McGauchie advised at the 2019 AGM of his intention to retire from the Board. As part of the Chairman succession planning, John was identified as a suitably qualified candidate to not only be appointed as a director, but also as having the requisite skills and experience to be appointed as Chairman. John was appointed to a casual vacancy on 31 July this year and became Chairman on 24 September 2020, following Donald's retirement. The Board unanimously recommends John's appointment. I now ask John to address the meeting.

Thanks, Frank. I'm very honored to be appointed Chairman, as I have noted earlier in the meeting. I first qualified as a chartered accountant and then stepped into an executive career, which saw me working in China and Vietnam in different roles before I joined the Wesfarmers Group. Most prominently, during my 20 years in the Wesfarmers Group, I was the CEO of Bunnings and the Chairman of Officeworks, although I also ran the CSBP business within the Wesfarmers Group, which is one of Australia's leading fertilizer manufacturers and suppliers. So I have been close to agricultural operations in the past. And I did work with Greg Hunt during that time with his career was back in Elders at that time. The last few years, I've started a nonexecutive career. Most prominently, I am the Chairman of CSR, and I'm very grateful to the support of fellow Board members and shareholders who I've spoken with and to Sumitomo for their support for my taking on the Chairman's role. I can commit clearly that I will not be taking on any other ASX director responsibilities, while I head both the CSR and Nufarm Chair responsibilities. And that means I can fully commit time and energy to the task that is before us at Nufarm because this is a company with very good bones and a great future, but there's a lot to focus on to ensure that the value of the company is properly represented for shareholders. And I look forward to serving Nufarm and working with Greg and his team and with my fellow Board members. So thank you, Frank.

Thanks, John. I'll now return the Chair of the meeting to you.

Thank you. Before going to questions on all items of business, I briefly want to address the 2 matters that are being put to shareholders as special resolutions. That is the repeal of the current Nufarm constitution and the adoption of a new constitution and the insertion of the proportional takeover approval provisions in the new constitution. As there have been a number of developments in law, in ASX listing rule requirements, corporate governance principles and general corporate and commercial practice since the current constitution was adopted 20 years ago, back in the year 2000, it is proposed to adopt a new constitution. The Board recommends this approach rather than amending the current constitution in a piecemeal way. An explanation of the material differences with the current constitution has been included in the Notice of Meeting, A copy of the proposed constitution has been made available to all shareholders on the Nufarm website, and I formally table the proposed constitution signed by myself for identification. The proportional takeover provisions are contained in the current constitution and were last renewed by shareholders at the 2019 AGM. As a new constitution is being proposed, we are again requesting shareholder approval for their insertion. And all information relevant to this item has been included in the explanatory notes in the Notice of Meeting. We'll now move to the question time for the meeting. I'll take questions on all items of business in the order that they are submitted or any general questions relating to Nufarm that you may have. I encourage you to submit your questions via the online platform, if you've not already done so. As I mentioned earlier, the poll is open on all items of business. The proxy results for all items of business are now being displayed on the screen, and they will stay up for the remainder of this meeting. As you can see from the proxy results, all resolutions have been passed, and we thank shareholders for their support in that regard. I do note that the vote for the remuneration report is lower than in previous years. The Board is aware of the concerns raised by some proxy advisers and supported by some shareholders, and will undertake further engagement with our shareholders in the next year on these matters. I'm now going to ask Nerida Mossop, our General Manager, Investor Relations, to read me to questions, and I'll decide whether to respond myself or ask one of our directors or executives to answer. Chris Sargent from KPMG, as I mentioned earlier, is also available to answer any questions regarding the audit. Nerida, what is our first question, please?

Chairman, the first question is on Mr. [Arthur Sedan] from the Australian Shareholders Association. For some time now, we have urged Nufarm to adopt a shareholding policy for directors and executives. We believe it will fundamentally align with major players in the company who serve as shareholders' portion in the company. We are all in the same boat. Will the Chairman consider introducing a shareholding policy for directors and executives?

Thank you, Mr. [ Sedan ], for your question. Firstly, and as a point of fact, all of our independent nonexecutive directors do currently hold shares in Nufarm. And interestingly, our previous constitution did not allow the Board to create a minimum shareholding requirement. So with the new constitution approved by shareholders today, we're looking forward to being in a position to properly consider the proposal put forward by the ACA in the coming year, and we'll clearly be able to discuss that by the time we're at the AGM next year.

Chairman, we have another follow-up question from Mr. Sedan. Given the [ Crown ] experience, what arrangements are in place with Sumitomo for the sharing of information and policy development?

Thank you, Mr. Sedan again for this question. Firstly, can I state that from my brief, but clearly, inside experience of Nufarm since I joined, and from what I know externally and what I've read about Crown, you could not find 2 more different circumstances than the relationships between Crown and its independent -- and its major shareholder, and Nufarm and Sumitomo. But it is a serious question. And I think all shareholders can take assurance from the fact that there are formal written protocols in place with Sumitomo, and they've been in place for many years and are first implemented in 2012. The protocols ensure that the Sumitomo Board nominee does not receive any competitively sensitive information, nor does he participate in any discussion with other Board members or employees in relation to this information. Putting that aside, from my time on the Board, I've noted that it's quite a normal thing for Takasaki-san to sit aside for a portion of the meeting where the protocols dictate that he can't participate. And there is no fuss or bother about that occurring. And notwithstanding all of this, Takasaki-san makes a very positive and valuable contribution to the Board and to Nufarm. And our relationship with Sumitomo is mutually beneficial and an important part of our long-term plans to ensure value for shareholders.

Thank you, Chairman. Another question from Mr. Sedan. The current auditor has been in place for a long time. Will the company consider changing auditors next year?

Thank you again, Mr. Sedan, for that question. The external auditor's performance is reviewed each year, and the audit partner is also rotated on a regular basis. There are strong practices there that I have observed since joining Nufarm. Any decision in relation to changing the auditor is a very serious one, and that will be made as part of our annual review.

Thank you, Chairman. We have no further questions.

There is advise that we have no further questions. I'll just check again if anything else come through.

Nothing further.

All right. And we've answered all the questions submitted before or during the meeting. So ladies and gentlemen, that now concludes the discussion on the items of business and all matters we need to cover in our meeting today. I will now formally close the poll for this meeting. The final poll results will be released to the ASX and posted on Nufarm's website later today. Before I formally close this meeting, I'd want to invite all shareholders to remain connected to the Lumi platform to participate in our transitional Annual General Meeting for the 2 months ended 30 September, which, on our Notice of Meeting, we said would start at 10:45. Can we start at 10:45? Which is about 7 or so minutes from now. So we'll start the second AGM at 10:45. On behalf of the Board, I'd like to thank you for participating in today's first AGM. I also wish you a safe and happy festive season and hope you get the opportunity to spend some valuable time with family and friends after what's been extraordinary 2020. And of course, we send you our best wishes to stay safe with regards to the pandemic. I now formally close the meeting. Thank you. [Break]

And good morning again. For those that were not present at the financial year 2020 AGM just completed, my name is John Gillam, the Chairman of Nufarm. Welcome to the Transitional Annual General Meeting of Nufarm Limited. Our company secretary has informed me that we have a quorum present, and I officially declare this meeting open. Our meeting today is being held in the lands of the Wurundjeri people of the Kulin Nation, and I wish to acknowledge them as traditional owners. I would also like to pay my respects to their elders, past and present, and Aboriginal elders of all other communities who may be joining us today. Life this year has been very challenging for all of us. At Nufarm, the health and safety of our employees, customers and shareholders has been our #1 focus since the commencement of the COVID-19 pandemic. Like other companies at the time we had to make the decision as to how to hold our AGM, we decided that the appropriate approach this year was to have a virtual meeting for everyone's safety. We are hopeful that next year we'll be able to hold a physical meeting again. Today's meeting is, therefore, being held online via the Lumi platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Before I now turn to how to participate in this meeting, I would like to welcome my fellow Board members who are in attendance today. In the room with me today, I have Greg Hunt, our CEO and Managing Director; Gordon Davis, Frank Ford, Peter Margin, Marie McDonald as well as Lynne Saint, who is standing for election today at this meeting. And joining us from Tokyo is our Director, Toshi Takasaki, who is unable to travel due to the ongoing travel restrictions. In addition, we are joined in the room by Paul Townsend, our Chief Financial Officer, who joined us on 1 December 2020; Fiona Smith, our Company Secretary; Nerida Mossop, our Investor Relations Manager; and Paul Binfield, who has been our Chief Financial Officer from 2011 and who will be leaving us at the end of the year to pursue the opportunities. And on behalf of the Board and everyone at Nufarm, I thank Paul for his wonderful commitment and contributions, and wish him every success in the future. We're also joined by our auditor, Chris Sargent, who represents our auditor, KPMG, who is available to answer any questions in relation to the audit later in the meeting. Before we move to the formalities, there are several housekeeping matters regarding how to participate in this virtual meeting. Questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I'll be addressing them later in the meeting, and these questions will be moderated to avoid repetition. And if the questions are particularly long, we may need to summarize them in the interest of time. I do expect that we'll be able to answer all of your questions today. In the event that we are not in a position to do so, we'll answer them via e-mail or by posting responses on our website. Depending on the questions, I'll make the decision whether I will answer or ask a member of management, another director or the auditor to respond. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will open the poll now for voting on all resolutions at this meeting and keep the poll open until the conclusion of the meeting, so you can vote at any time during the meeting. You do not have to wait for the formal items of business to arise. If you are eligible to vote at this meeting, a new polling icon should now appear on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. Please submit your votes at any time from now until the end of question time. I will give you a warning before I move to close the voting. Michael Hutchison from Computershare will act as the returning officer for the purpose of conducting and determining the results of the poll, the results of which will be announced to the ASX later today. If you are having any difficulties in locating the voting icon, please refer to the detailed Lumi guideline on Nufarm's website. I'll now move to the discussion on the formal items of business as set out in the Notice of Meeting. The Notice of Meeting contains all the material information and the Board's position to assist you in determining how you wish to vote. This includes the Board's recommendations for shareholders to vote in favor of all resolutions. During this 2-month period, we have progressed with orderly succession and renewal of the Board with the announced retirement of Anne Brennan and the proposal today to elect Lynne Saint as a new Nonexecutive Director. Lynne brings to the Board's strong financial skills, corporate government, enterprise risk, supply chain risk and project management experience obtained from a global career. The Board unanimously recommends Lynne's appointment, and I would like to invite Lynne to address the meeting now.

Thanks, John, and good morning, everyone. It's my pleasure to address you today and seek your endorsement for my election to the Nufarm Board as an Independent Nonexecutive Director. My career has spanned 30 years, mostly in mining and mining services, and over the past 20 years as a Principal Vice President of the Bechtel Group. Bechtel is one of the world's largest multinational engineering and construction companies operating across the globe in oil and gas and chemicals, mining, infrastructure and [indiscernible] and with over USD 30 billion to USD 40 billion in revenues. During my 11-year tenure as mining and metals CFO, I played a guiding role in commercial strategy setting, delivering a tenfold growth in the business, prudently balancing risk weighted returns and building some of the world's largest mining and minerals processing plants in the Middle East, Iceland, Norway, Chile, Peru, Canada and Australia. In 2013, I was appointed head of audit for the group, implementing risk and insurance standards across all business lines, in all jurisdictions and across all companies and subsidiaries in which we operated as well as delivering corporate governance programs in areas such as anti-bribery and corruption, supply chain risk, modern slavery, fraud, FX and regulatory compliance. I look forward to bringing to Nufarm this diverse set of skills in finance, corporate governance, capital project delivery, governance and risk. And I thank you again for your support.

Thank you, Lynne. It's terrific to have you joining our Board. I'm now going to take questions on all items of business in the order they are submitted or any general questions relating to Nufarm that you may have. I encourage you to submit your question via the online platform, if you've not already done so. As I mentioned earlier, the poll is open on all items of business. The proxy results for all items of business that are now being displayed on the screen. And this will start for the remainder of the meeting, and I thank shareholders for their support of the resolutions for this meeting. As you can see from the proxy results, all resolutions have been passed. I'm now going to ask Nerida Mossop, our General Manager of Investor Relations, to read me the questions, and I will decide whether to respond myself or ask one of the directors or one of our executives to answer. And I'll remind participants that Chris Sargent from KPMG is also available to answer any questions on the audit. I just want to remind you also at the end of question time, I will be closing the poll, so please submit your votes if you've not already done so. Nerida, do we have any questions?

Chairman, we have a question from Ms. [ Melissa Stevens ]. I understand a number of Chinese agricultural chemical suppliers in offshore markets receive government rebates on their equivalent of the GST VAT. Obviously, this creates a very unlevel playing field for those manufacturing and selling in offshore markets. That is 10% margin free kick in Australia. How can we, as a company, manage and respond to this?

I thank Ms. Stevens for his question. It's a very astute one. The interesting thing about Nufarm is the majority of earnings derived far beyond Australia, in fact, the northern hemisphere, are our largest markets, North America and Europe, in particular. We do have a very diversified supply chain, and there's been significant stresses in recent years that have really driven home the importance of that diversification. And we face competition in all of our markets. It is a very competitive game, crop protection, in particular. As Greg outlined earlier today in the previous meeting, the number of actions we are taking to improve the competitiveness of our supply chain and our cost base and that those plans that they underpin the continued profitability of our operations. In regard to the principle that Ms. Stevens is getting at regarding a level playing field in all countries we operate, we work closely with government and regulators to ensure there are level playing fields and that we continue to do so in Australia. But thank you for the question.

Chairman, we have no further questions.

All right. We've arrived at the end of question time then. There are no questions. I suspect that we may have satisfied questions with the double up of the 2 AGMs. And so ladies and gentlemen, this now concludes the discussion on the items of business and all matters that we need to cover in our meeting today, and I will now formally close the poll for this meeting. The final poll results will be released to the ASX and posted on Nufarm's website later today. On behalf of the Board, I would like to thank shareholders for their continued support. I'd like to thank you all for participating in today's quite unique 2 AGMs and particularly this second AGM, and I'd like to take this opportunity to wish you a safe and happy holiday season and hope you get the opportunity to spend valuable time with family and friends after what's been an extraordinary 2020. We do hope that the pandemic's impacts will resile quickly, hopefully, across 2021 and normality will return in all parts of the globe. Please stay safe. The meeting is now closed. Thank you.