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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Bunge Global SA | NYSE:BG | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 77.38 | 0 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C., 20549
Form
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported):
| (Exact name of registrant as specified in its charter) | |
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| N/A | |
(Address of registered office and principal executive office) |
(Zip Code) |
| 1391 Timberlake Manor Parkway | |
| Chesterfield, MO | 63017 |
(Address of corporate headquarters) |
(Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 8.01 Other Events.
As previously announced, on June 13, 2023, Bunge Global SA (the “Company”) entered into a definitive business combination agreement with Viterra Limited (“Viterra”) and its shareholders including certain affiliates of Glencore PLC, Canada Pension Plan Investment Board, and British Columbia Investment Management Corporation (collectively, the ”Sellers”), to acquire Viterra in a stock and cash transaction (the “Acquisition”). The company’s shareholders approved the Acquisition at an extraordinary general meeting held on October 5, 2023. The closing of the Acquisition is subject to the satisfaction of regulatory approvals and other customary closing conditions.
This Current Report on Form 8-K is being filed to provide the financial statements and pro forma information referred to in Item 9.01 of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The audited consolidated financial statements of Viterra as at and for the years ended December 31, 2023 and 2022, and the related Independent Auditor's Report are filed herewith as Exhibit 99.1 and are incorporated by reference into this item 9.01(a), and the unaudited condensed consolidated statements of financial position as of June 30, 2024 and December 31, 2023, and the unaudited condensed consolidated statements of income, comprehensive income, cash flows, and changes in equity for the six months ended June 30, 2024 and June 30, 2023 are filed herewith as Exhibit 99.2 and are incorporated by reference into this item 9.01(a).
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial statements as at and for the six months ended June 30, 2024, and for the year ended December 31, 2023, is filed herewith as Exhibit 99.3 and is incorporated by reference into this item 9.01(b).
(d) Exhibits.
| 1 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BUNGE GLOBAL SA | ||
| Date: September 9, 2024 | By: | /s/Lisa Ware-Alexander |
| Lisa Ware-Alexander | ||
| Secretary | ||
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Nos. 333-281787, 333-75762, 333-130651, 333-159918, 333-211908, 333-218273, 333-238628, and 333-255878 on Form S-8 of Bunge Global SA of our report dated March 1, 2024, relating to the financial statements of Viterra Limited appearing in this Current Report on Form 8-K dated September 9, 2024.
/s/ Deloitte LLP
London, United Kingdom
September 9, 2024
Exhibit 99.1
Viterra
LIMITED
INDEPENDENT AUDITOR’S REPORT
The Board of Directors
Viterra Limited
13-14 Esplanade
St Helier
JE1 1EE
Jersey
Opinion
We have audited the consolidated financial statements of Viterra Limited (the "Company" or "Parent") and subsidiaries (the "Group" or "Viterra"), which comprise the consolidated statements of financial position as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes of equity, and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Viterra as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Viterra and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing Viterra’s ability to continue as a going concern at least, but not limited to, twelve months from the end of the reporting period, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Viterra or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| · | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| · | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| · | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Viterra’s internal control. Accordingly, no such opinion is expressed. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| · | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Viterra’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/ Deloitte LLP
London, United Kingdom
1 March 2024
Consolidated Financial Statements
Viterra Limited 2023 Financial Statements - 2
Consolidated statement of income
For the year ended 31 December
| US$ million | Notes | 2023 | 2022 | |||||||||
| Revenue | 2 | 54,673 | 53,854 | |||||||||
| Cost of goods sold | (52,971 | ) | (51,796 | ) | ||||||||
| Gross margin | 1,702 | 2,058 | ||||||||||
| Selling and administrative expenses | (467 | ) | (385 | ) | ||||||||
| Share of income from associates and joint ventures | 12 | 52 | 38 | |||||||||
| Gain on disposals of investments | 4 | 31 | 11 | |||||||||
| Loss on remeasurement of disposal group held for sale | 3 | (162 | ) | — | ||||||||
| Impairment release on trade receivables | 16 | 6 | 1 | |||||||||
| Other income | 5 | 124 | 143 | |||||||||
| Other expense | 5 | (99 | ) | (162 | ) | |||||||
| Dividend income | 3 | 3 | ||||||||||
| Interest income | 47 | 23 | ||||||||||
| Interest expense | 7 | (573 | ) | (374 | ) | |||||||
| Income before income taxes | 664 | 1,356 | ||||||||||
| Current income tax expense | 8 | (305 | ) | (434 | ) | |||||||
| Deferred income tax recovery | 8 | 94 | 120 | |||||||||
| Income for the year | 453 | 1,042 | ||||||||||
| Attributable to: | ||||||||||||
| Non-controlling interests | 7 | (1 | ) | |||||||||
| Equity holders | 446 | 1,043 | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
Viterra Limited 2023 Financial Statements - 3
Consolidated statement of comprehensive income
For the year ended 31 December
| US$ million | Notes | 2023 | 2022 | |||||||||
| Income for the year | 453 | 1,042 | ||||||||||
| Other comprehensive income1 | ||||||||||||
| Items not to be reclassified to the statement of income in subsequent periods: | ||||||||||||
| Gain/(loss) on remeasurement of defined benefit plan | 21 | 9 | (33 | ) | ||||||||
| Gain/(loss) on financial assets measured at fair value through
other comprehensive income | 2 | (1 | ) | |||||||||
Net items not to be reclassified to the statement of income in subsequent periods1: | 11 | (34 | ) | |||||||||
| Items that are or may be reclassified to the statement of comprehensive income in subsequent periods: | ||||||||||||
| Exchange gain/(loss) on translation of foreign operations | 53 | (104 | ) | |||||||||
| Gain/(loss) on cash flow hedges | 19 | (5 | ) | |||||||||
| Net items that are or may be reclassified to the statement of income in subsequent periods: | 72 | (109 | ) | |||||||||
| Other comprehensive income/(loss) | 83 | (143 | ) | |||||||||
| Total comprehensive income | 536 | 899 | ||||||||||
| Attributable to: | ||||||||||||
| Non-controlling interests | 7 | (3 | ) | |||||||||
| Equity holders of the parent | 529 | 902 | ||||||||||
1 Amounts are net of deferred tax.
The accompanying notes are an integral part of the consolidated financial statements.
Viterra Limited 2023 Financial Statements - 4
Consolidated statement of financial position
As at 31 December
| US$ million | Notes | 2023 | 2022 | |||||||||
| Assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment1 | 9 | 4,988 | 4,994 | |||||||||
| Intangible assets1 | 10 | 1,397 | 1,405 | |||||||||
| Investments in associates and joint ventures1 | 12 | 382 | 510 | |||||||||
| Other investments | 25 | 19 | 15 | |||||||||
| Advances and loans | 13 | 98 | 93 | |||||||||
| Pension surplus | 21 | 57 | 43 | |||||||||
| Deferred tax assets | 8 | 324 | 234 | |||||||||
| 7,265 | 7,294 | |||||||||||
| Current assets | ||||||||||||
| Biological assets | 14 | 29 | 26 | |||||||||
| Inventories | 15 | 7,117 | 9,111 | |||||||||
| Accounts receivable1 | 16 | 3,192 | 4,625 | |||||||||
| Other investments | 25 | 90 | 8 | |||||||||
| Other financial assets | 26 | 1,055 | 1,750 | |||||||||
| Cash and cash equivalents | 17 | 530 | 637 | |||||||||
| Income tax receivable | 211 | 97 | ||||||||||
| 12,224 | 16,254 | |||||||||||
| Total assets | 19,489 | 23,548 | ||||||||||
| Equity and liabilities | ||||||||||||
| Capital and reserves – attributable to equity holders | ||||||||||||
| Share capital | 18 | 1 | 1 | |||||||||
| Reserves and retained earnings | 5,180 | 5,102 | ||||||||||
| 5,181 | 5,103 | |||||||||||
| Non-controlling interests | 30 | 163 | 156 | |||||||||
| Total equity | 5,344 | 5,259 | ||||||||||
| Non-current liabilities | ||||||||||||
| Borrowings | 19 | 5,480 | 5,723 | |||||||||
| Deferred tax liabilities1 | 8 | 463 | 455 | |||||||||
| Post-employment benefits | 20 | 15 | 14 | |||||||||
| Provisions | 20 | 145 | 125 | |||||||||
| Other long-term liabilities1 | 39 | 37 | ||||||||||
| Other financial liabilities | 26 | 136 | 210 | |||||||||
| 6,278 | 6,564 | |||||||||||
| Current liabilities | ||||||||||||
| Borrowings | 19 | 2,430 | 4,942 | |||||||||
| Accounts payable1 | 22 | 4,555 | 5,458 | |||||||||
| Provisions | 20 | 70 | 45 | |||||||||
| Other financial liabilities | 26 | 640 | 1,052 | |||||||||
| Income tax payable1 | 168 | 227 | ||||||||||
| Other current liabilities | 4 | 1 | ||||||||||
| 7,867 | 11,725 | |||||||||||
| Total equity and liabilities | 19,489 | 23,548 | ||||||||||
1 Prior year figures are adjusted to reflect the finalisation of the purchase acquisition accounting for the acquisition of Gavilon, refer to note 23.
The accompanying notes are an integral part of the consolidated financial statements.
These consolidated financial statements were approved by the Board of Directors on 29 February 2024 and signed on behalf of the Board.
Viterra Limited 2023 Financial Statements - 5
Consolidated statement of cash flows
For the year ended 31 December
| US$ million | Notes | 2023 | 2022 | |||||||||
| Operating activities | ||||||||||||
| Income before income taxes | 664 | 1,356 | ||||||||||
| Adjustments for: | ||||||||||||
| Depreciation and amortisation | 9, 10 | 851 | 930 | |||||||||
| Share of income from associates and joint ventures | 12 | (52 | ) | (38 | ) | |||||||
| Increase in other long-term liabilities | 3 | 5 | ||||||||||
| Gain on disposals of investments | 4 | (31 | ) | (11 | ) | |||||||
| Impairment (reversal)/charge - net | 6 | (79 | ) | 7 | ||||||||
| Loss on remeasurement of disposal group held for sale | 3 | 162 | — | |||||||||
| (Gain)/loss in mark-to-market valuations on investments held for trading1 | 4 | (1 | ) | 22 | ||||||||
| Net foreign exchange losses1 | 5 | 62 | 5 | |||||||||
| Gain on sale of property, plant and equipment1 | (12 | ) | (7 | ) | ||||||||
| Other non-cash items – net1 | (1 | ) | (11 | ) | ||||||||
| Interest income | (47 | ) | (23 | ) | ||||||||
| Interest expense | 7 | 573 | 374 | |||||||||
| Cash generated by operating activities before working capital changes | 2,092 | 2,609 | ||||||||||
| Working capital changes | ||||||||||||
| Decrease in inventories2 | 1,981 | 589 | ||||||||||
| Decrease/(increase) in accounts receivable | 1,360 | (903 | ) | |||||||||
| Increase in other financial assets | 729 | 15 | ||||||||||
| (Decrease)/increase in accounts payable | (1,057 | ) | 1,022 | |||||||||
| (Decrease)/increase in other financial liabilities | (479 | ) | (386 | ) | ||||||||
| Total working capital changes | 2,534 | 337 | ||||||||||
| Income taxes paid | (489 | ) | (318 | ) | ||||||||
| Interest received | 45 | 2 | ||||||||||
| Interest paid | (579 | ) | (322 | ) | ||||||||
| Net cash generated by operating activities | 3,603 | 2,308 | ||||||||||
| Investing activities | ||||||||||||
| Net cash received/(disposed) in acquisition of subsidiaries | 23 | 54 | (2,235 | ) | ||||||||
| Net cash (disposed)/received from disposal of subsidiaries | 23 | (44 | ) | 8 | ||||||||
| Proceeds from sale of investments in associates | 4 | 82 | — | |||||||||
| Purchase of other investments | 25 | (92 | ) | (2 | ) | |||||||
| Proceeds from sale of other investments | 10 | 3 | ||||||||||
| Purchase of property, plant and equipment and intangibles3 | 9, 10 | (299 | ) | (271 | ) | |||||||
| Proceeds from sale of property, plant and equipment and intangibles | 9, 10 | 23 | 25 | |||||||||
| Dividends received | 36 | 11 | ||||||||||
| Net cash used by investing activities | (230 | ) | (2,461 | ) | ||||||||
Viterra Limited 2023 Financial Statements - 6
Consolidated statement of cash flows
For the year ended 31 December
| US$ million | Notes | 2023 | 2022 | |||||||||
| Financing activities4 | ||||||||||||
| Proceeds of other non-current bank facilities other than revolving credit facilities | 19 | 13 | 82 | |||||||||
| Repayment of other non-current bank facilities other than revolving credit facilities | 19 | (63 | ) | (143 | ) | |||||||
| Net (repayment)/proceeds of revolving credit facilities | (1,225 | ) | 1,618 | |||||||||
| Proceeds from issuance of capital market notes | — | 747 | ||||||||||
| Issuance costs for capital market notes | — | (3 | ) | |||||||||
| Net repayment of current borrowings | 19 | (1,292 | ) | (989 | ) | |||||||
| Repayments of lease liabilities | 19 | (468 | ) | (589 | ) | |||||||
| Return of capital | 18 | (451 | ) | (400 | ) | |||||||
| Distribution to non-controlling interest | (3 | ) | — | |||||||||
| Net cash (used in)/generated by financing activities | (3,489 | ) | 323 | |||||||||
| (Decrease)/increase in cash and cash equivalents | (116 | ) | 170 | |||||||||
| Foreign exchange movement in cash | 9 | (8 | ) | |||||||||
| Cash and cash equivalents, beginning of the year | 637 | 475 | ||||||||||
| Cash and cash equivalents, end of the year | 530 | 637 | ||||||||||
1 Starting in 2023, the Group has disaggregated other non cash items - net within the consolidated statement of cash flows. This information was previously presented on a net basis within the consolidated statement of cash flows, and on a gross basis in a related footnote. Comparative amounts have been reclassified from their prior period presentation to conform with the current period presentation.
2 Includes movements in biological assets.
3 Included within accounts payable as at 31 December 2023 are amounts of $7 million (2022: $8 million) relating to purchases of property, plant and equipment which are unpaid.
4 Refer to note 19 for reconciliation of movement in financing liabilities.
The accompanying notes are an integral part of the consolidated financial statements.
Viterra Limited 2023 Financial Statements - 7
Consolidated statement of changes of equity
For the year ended 31 December
| US$ million | Retained earnings | Share premium (note 18) | Other reserves (note 18) | Total reserves and retained earnings | Share capital (note 18) | Total equity
attributable to equity holders | Non- controlling interests (note 30) | Total equity | ||||||||||||||||||||||||
| At 1 January 2023 | 3,756 | 2,396 | (1,050 | ) | 5,102 | 1 | 5,103 | 156 | 5,259 | |||||||||||||||||||||||
| Income for the period | 446 | — | — | 446 | — | 446 | 7 | 453 | ||||||||||||||||||||||||
| Other comprehensive gain | 11 | — | 72 | 83 | — | 83 | — | 83 | ||||||||||||||||||||||||
| Total comprehensive income | 457 | — | 72 | 529 | — | 529 | 7 | 536 | ||||||||||||||||||||||||
| Changes in ownership | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||
| Distributions paid | — | — | — | — | — | — | (3 | ) | (3 | ) | ||||||||||||||||||||||
| Return of capital | — | (451 | ) | — | (451 | ) | — | (451 | ) | — | (451 | ) | ||||||||||||||||||||
| At 31 December 2023 | 4,213 | 1,945 | (978 | ) | 5,180 | 1 | 5,181 | 163 | 5,344 | |||||||||||||||||||||||
| US$ million | Retained earnings | Share premium (note 18) | Other reserves (note 18) | Total reserves and retained earnings | Share capital (note 18) | Total equity
attributable to equity holders | Non- controlling interests (note 30) | Total equity | ||||||||||||||||||||||||
| At 1 January 2022 | 2,747 | 2,796 | (943 | ) | 4,600 | 1 | 4,601 | 157 | 4,758 | |||||||||||||||||||||||
| Income/(loss) for the period | 1,043 | — | — | 1,043 | — | 1,043 | (1 | ) | 1,042 | |||||||||||||||||||||||
| Other comprehensive loss | (34 | ) | — | (107 | ) | (141 | ) | — | (141 | ) | (2 | ) | (143 | ) | ||||||||||||||||||
| Total comprehensive income/(loss) | 1,009 | — | (107 | ) | 902 | — | 902 | (3 | ) | 899 | ||||||||||||||||||||||
| Acquisition of business1 | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||
| Return of capital | — | (400 | ) | — | (400 | ) | — | (400 | ) | — | (400 | ) | ||||||||||||||||||||
| At 31 December 2022 | 3,756 | 2,396 | (1,050 | ) | 5,102 | 1 | 5,103 | 156 | 5,259 | |||||||||||||||||||||||
1 Refer to note 23 for acquisition of business.
The accompanying notes are an integral part of the consolidated financial statements.
Viterra Limited 2023 Financial Statements - 8
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES
Corporate information
Viterra Limited (the “Company” or “Parent”) together with its subsidiaries (the “Group” or “Viterra”), is a leading integrated originator and marketer of agricultural products, with worldwide activities in the production, refining, processing, storage, transport and marketing of agricultural products. Viterra operates on a global scale, marketing and distributing physical commodities mainly sourced from third party producers to industrial consumers, such as those in the oil and food processing industries. Viterra also provides financing, logistics and other services to producers and consumers of commodities. In this regard, Viterra seeks to capture value throughout the commodity supply chain. Viterra’s long experience in production, processing, storage and handling, and marketing of commodities has allowed it to develop and build upon its expertise in the commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across diverse industries and in multiple geographic regions.
Viterra Limited is a privately held company incorporated and domiciled in Jersey.
On 13 June 2023, the Company entered into a definitive business combination agreement with Bunge Global SA (formerly known as Bunge Limited), a company incorporated in Switzerland, based in the United States and listed on the New York Stock Exchange (“Bunge”). Under the terms of the agreement, which was unanimously approved by the Boards of Directors of the Company and Bunge, Viterra shareholders will receive approximately 65.6 million shares of Bunge stock with an aggregate value at the time of the agreement of approximately $6.2 billion and approximately $2.0 billion in cash. In exchange, Bunge will acquire 100% of the outstanding share capital of Viterra, and will acquire full ownership and sole control of Viterra. In addition, as part of the transaction, Bunge will assume $9.8 billion of Viterra debt. The closure of the transaction is contingent on the fulfilment of customary closing conditions, including receipt of regulatory approvals.
These audited consolidated financial statements for the year ended 31 December 2023 were authorised for issue on 29 February 2024.
Statement of compliance
These consolidated financial statements have been prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IFRS’).
The consolidated financial statements are prepared under the historical cost convention except for the revaluation of certain financial assets, financial liabilities, biological assets, pension obligations and marketing inventories that are measured at revalued amounts or fair values at the end of each reporting period as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The principal accounting policies adopted are set out below.
Viterra Limited 2023 Financial Statements - 9
Notes to the consolidated financial statements
The Directors have assessed that they have, at the time of approving the consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the consolidated financial statements. Therefore, they continue to adopt the going concern basis of accounting in preparing these consolidated financial statements. Further information on Viterra’s objectives, policies and processes for managing its capital and financial risks is detailed in note 24.
Viterra Limited 2023 Financial Statements - 10
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
All amounts are expressed in millions of United States dollars (“USD” or “US dollar”), unless otherwise stated, consistent with the predominant functional currency of Viterra’s operations.
Adoption of new and revised standards
The following amendments to existing accounting pronouncements became effective as of 1 January 2023 and have been adopted by the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
(i) Amendments to IAS 12 Income Taxes titled Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
These amendments introduce clarification on the application of the initial recognition exemption in IAS 12. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences. The amendments did not have a material impact on the consolidated financial statements of the Group.
(ii) Amendments to IAS 12 Income Taxes International Tax Reform Pillar Two Model Rules
The Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting (OECD/G20 BEPS) published the Pillar Two model rules designed to address the tax challenges arising from the digitalisation of the global economy. It is currently unclear to the Group if the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes for the Pillar Two model rules and which tax rate to use to measure deferred taxes. In response to this uncertainty, on 23 May 2023 and 27 June 2023 the IASB issued amendments to IAS 12 Income Taxes introducing a mandatory temporary exception to the requirements of IAS 12 under which a company does not recognise or disclose information about deferred tax assets and liabilities related to the proposed OECD/G20 BEPS Pillar Two model rules. The Group applied the temporary exception for the year ended 31 December 2023. Refer to note 8.
(iii) Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates.
The amendments did not have a material impact on the Group's consolidated financial statements.
(iv) Amendments to IAS 1 Presentation of Financial Statements – Materiality of Accounting Policy Disclosure
The amendments replace the requirement for entities to disclose their significant accounting policies with the requirement to disclose their material accounting policy information. The amendments also include guidance to help entities apply the definition of material in making decisions about accounting policy disclosures.
The amendments did not have a material impact on the Group's consolidated financial statements.
Viterra Limited 2023 Financial Statements - 11
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
(v) IFRS 17 – Insurance Contracts
IFRS 17 replaces IFRS 4 Insurance Contracts and provides a new general model for accounting for contracts where the issuer accepts significant insurance risk from another party and agrees to compensate that party if a future uncertain event adversely affects them.
The adoption of the new standard did not have a material impact on the Group's consolidated financial statements.
Revised standards not yet effective
At the date of these consolidated financial statements, the following revised IFRS standards, which are applicable to the Group, were endorsed by the EU and became effective for the reporting period beginning 1 January 2024:
| · | Classification of Liabilities as Current or Non-current (Amendments to IAS 1) |
| · | Non-current Liabilities with Covenants (Amendments to IAS 1) |
| · | Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) |
| · | Amendments to IAS 7 and IFRS 7 on Supplier Finance Arrangements |
The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. None of the above amendments are expected to have a material effect on the consolidated financial statements of the Group.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances, independent estimates, quoted market prices, and common, industry-standard modelling techniques. Actual outcomes could result in a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Viterra has identified the following areas as being critical to understanding Viterra’s financial position as they require management to make complex and/or subjective judgements, estimates and assumptions about matters that are inherently uncertain:
Critical accounting judgements
In the process of applying Viterra’s accounting policies, management has made the following judgements based on the relevant facts and circumstances including macro-economic circumstances and, where applicable, interpretation of underlying agreements, which have the most significant effect on the amounts recognised in the consolidated financial statements.
Viterra Limited 2023 Financial Statements - 12
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
(i) Determination of control of subsidiaries and joint arrangements (notes 12, 23 and 33)
Judgement is required to determine when Viterra has control of subsidiaries or joint control of joint arrangements. This requires an assessment of the relevant activities (those relating to the operating and capital decisions of the arrangement, such as the approval of the capital expenditure programme for each year, and appointing, remunerating and terminating the key management personnel or service providers of the operations) and whether the decisions in relation to those activities are under the control of Viterra or require unanimous consent. See note 23 for a summary of the acquisition of subsidiaries completed during the year and the key judgements made in determining control thereof. In the current year there were no material acquisitions of subsidiaries or changes in control that required significant judgements.
Judgement is also required in determining the classification of a joint arrangement between a joint venture or a joint operation through an evaluation of the rights and obligations arising from the arrangement and, in particular, if the joint arrangement has been structured through a separate vehicle, further consideration is required of whether
| (1) | the legal form of the separate vehicle gives the parties rights to the assets and obligations for the liabilities; |
| (2) | the contractual terms and conditions give the parties rights to the assets and obligations for the liabilities; and |
| (3) | other facts and circumstances give the parties rights to the assets and obligations for the liabilities. |
Joint arrangements in which the primary activity is the provision of output to the shareholders typically convey substantially all the economic benefits of the assets to the parties and judgement is required in assessing whether the terms of the offtake agreements and any other obligations for liabilities of the arrangement result in the parties being substantially the only source of cash flows contributing to the continuity of the operations of the arrangement.
Differing conclusions around these judgements may materially impact how these businesses are presented in the consolidated financial statements – under the full consolidation method, equity method, or recognition of Viterra’s share of assets, liabilities, revenue and expenses, including any assets or liabilities held jointly. See note 12 for a summary of joint ventures and associates.
(ii) Recognition of deferred tax assets (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs. The recoverability of deferred tax assets including the estimates and assumptions contained therein are reviewed regularly by management.
Viterra Limited 2023 Financial Statements - 13
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Key sources of estimation uncertainty
In applying Viterra’s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant impact on the financial position and the results of operations are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.
(i) Impairments (notes 5, 6, 9, 10, 11, 12 and 13)
Investments in associates and joint ventures, other investments, advances and loans, property, plant and equipment, and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable or at least annually for goodwill and other indefinite life intangible assets. If an asset’s recoverable amount is less than the asset’s carrying amount, an impairment loss is recognised in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset’s fair value are discounted using asset specific discount rates and are based on expectations about future operations, primarily comprising estimates about production and sales volumes, commodity prices (considering current and historical prices, price trends and related factors), operating, rehabilitation and restoration costs, and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates could impact the recoverable values of these assets whereby some or all of the carrying amount may be impaired or the impairment charge reduced with the impact recorded in the consolidated statement of income.
(ii) Estimation of current tax payable and current tax expense in relation to an uncertain tax position (notes 8 and 28)
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the most likely amount or expected value of the tax treatment. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.
Further information around uncertain tax positions can be found within note 28.
(iii) Business combinations (note 23)
Fair value measurements used in recognition of business combinations are estimated based on the amounts for which the assets and liabilities could be exchanged at the relevant transaction date or reporting period end. As the fair values for the net assets acquired in the business combination as well as the fair value of previously held equity interests cannot be derived from publicly available information, the fair value measurement is estimated using discounted future cash flow models, discounting future cash flows at the relevant WACC (weighted average cost of capital) rate, and other valuation methods with the involvement of external experts.
Viterra Limited 2023 Financial Statements - 14
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The principal valuation techniques used in valuing property, plant and equipment acquired in the acquisition of Gavilon were as follows:
| · | Land: sales comparison approach |
| · | Buildings and building improvements: direct and trending method of the cost approach |
| · | Plant and equipment: trending method of the cost approach |
To the extent possible, the assumptions and inputs used take into account externally verifiable inputs. The valuations use Level 3 valuation techniques and inputs, such as management generated internal forecasts, historic management information and estimates of useful economic lives of acquired assets. Such information is by nature subject to uncertainty, particularly where comparable transactions often do not exist.
Further analysis in relation to business combinations is included within note 23.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when Viterra is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Viterra controls an investee if, and only if, Viterra has all of the following:
| · | power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); |
| · | exposure, or rights, to variable returns from its involvement with the investee; and |
| · | the ability to use its power over the investee to affect its returns. |
When Viterra has less than a majority of the voting rights of an investee or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over the investee, including
| · | the size of Viterra’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; |
| · | potential voting rights held by Viterra, other vote holders or other parties; |
| · | rights arising from other contractual arrangements; and |
| · | any additional facts and circumstances that indicate that Viterra has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings. |
Viterra Limited 2023 Financial Statements - 15
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when Viterra obtains control over the subsidiary and ceases when Viterra loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income and consolidated statement of comprehensive income/(loss) from the date Viterra gains control until the date when Viterra ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Viterra’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received being recognised directly in equity and attributed to equity holders of Viterra.
When Viterra loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Viterra had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRS). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or the cost on initial recognition of an investment in an associate or a joint venture.
Viterra Limited 2023 Financial Statements - 16
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of the acquisition is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree. The identifiable assets, liabilities and contingent liabilities (“identifiable net assets”) are recognised at their fair value at the date of acquisition. Acquisition related costs are recognised in the consolidated statement of income as incurred.
Where a business combination is achieved in stages, Viterra’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date Viterra attains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units (CGUs) that are expected to benefit from the synergies of the combination. The CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Viterra reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted for additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.
Viterra Limited 2023 Financial Statements - 17
Notes to the consolidated financial statements
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
Viterra Limited 2023 Financial Statements - 18
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Similar procedures are applied in accounting for the purchases of interests in associates. Any goodwill arising from such purchases is included within the carrying amount of the investment in associates, but not amortised thereafter. Any excess of Viterra’s share of the net fair value of the associate’s identifiable net assets over the cost of the investment is included in the consolidated statement of income in the period of the purchase.
Viterra recognises negative goodwill in situations where the Group as an acquirer paid less to acquire an entity than the fair value of its net assets. When a bargain purchase takes place, the negative goodwill is recognised in the consolidated profit and loss for the period.
Investments in associates and joint ventures
Associates and joint ventures (together “Associates”) in which Viterra exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Viterra holds between 20% and 50% of the voting rights unless evidence exists to the contrary.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing control.
Equity accounting involves Viterra recording its share of the Associate’s net income and equity. Viterra’s interest in an Associate is initially recorded at cost and is subsequently adjusted for Viterra’s share of changes in net assets of the Associate, less any impairment in the value of individual investments.
Changes in Viterra’s interests in Associates are accounted for as a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of income.
Interest in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. When Viterra undertakes its activities under joint operations, Viterra recognises in relation to its interest in a joint operation
| · | its assets, including its share of any assets held jointly; |
| · | its liabilities, including its share of any liabilities incurred jointly; |
| · | its revenue from the sale of its share of the output arising from the joint operation; and |
| · | its expenses, including its share of any expenses incurred jointly. |
Viterra Limited 2023 Financial Statements - 19
Notes to the consolidated financial statements
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. Where Viterra transacts with a joint operation, unrealised profits and losses are eliminated to the extent of Viterra’s interest in that joint operation.
Viterra Limited 2023 Financial Statements - 20
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Revenue from contracts with customers
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. Revenue also includes mark-to-market movements on physical forward sales contracts that do not meet own use exemption. These contracts are financial instruments that are measured at fair value through profit and loss.
Sales of goods
Revenue is derived principally from the sale of goods and recognised when control of the goods has transferred to the customer based on the contract terms. Normally, revenue is recognised when the contract terms are fulfilled, which could be when the product is delivered to the destination specified by the customer or cash is received, which is when the performance obligations are met. Mark-to-market gains and losses on such contracts, prior to physical delivery, are presented in revenue.
Revenue from the sale of material by-products is included within revenue. Where a by-product is not regarded as significant, revenue may be credited against cost of goods sold.
Rendering of services
Revenue is recognised in the accounting period in which services are rendered.
The main types of services provided by the Group are transhipment services by port terminals, chartering of seagoing vessels, and crop cleaning, drying and storage services by the Group’s silo network. Revenue from transhipment services is recognised over time based on the percentage of completion method. Revenue from seagoing vessels/chartering services provided to customers is recognised as the performance obligation is satisfied over time, as the vessel travels to its destination. Revenue from grain cleaning and drying is recognised at the point in time when the service is provided; revenue from storage services is recognised over time.
Interest and dividend income
Interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Viterra and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
Foreign currency translation, transactions and advance considerations
Viterra’s reporting currency and the functional currency of the majority of its operations is the US dollar as this is assessed to be the principal currency of the economic environment in which it operates.
Viterra Limited 2023 Financial Statements - 21
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
(i) Translation of financial statements
For the purposes of consolidation, assets and liabilities of Group companies whose functional currency is in a currency other than the US dollar are translated into US dollars using year-end exchange rates, while their statements of income are translated using average rates of exchange for the year.
Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate. Translation adjustments are included as a separate component of shareholders’ equity and have no impact to the consolidated statement of income to the extent that no disposal of the foreign operation has occurred.
(ii) Foreign currency transactions and advance considerations
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then Viterra has determined a date of the transaction for each payment or receipt of advance consideration.
Borrowing costs
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets, in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
Retirement benefits
Viterra operates various pension schemes in accordance with local requirements and practices of the respective countries. The annual costs for defined contribution plans that are funded by payments to separate trustee administered funds or insurance companies equal the contributions that are required under the plans and accounted for as an expense.
Viterra uses the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
The cost of providing pensions is charged to the consolidated statement of income so as to recognise current and past service costs, interest cost on defined benefit obligations, and the effect of any curtailments or settlements, net of expected returns on plan assets. Actuarial gains and losses are recognised directly in other comprehensive income and will not be reclassified to the consolidated statement of income in future periods.
Viterra Limited 2023 Financial Statements - 22
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The retirement benefit obligation/asset recognised in the consolidated statement of financial position represents the actual deficit or surplus in Viterra’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Viterra also provides post-retirement healthcare benefits to certain employees in Canada. These are accounted for in a similar manner to the defined benefit pension plans; however, they are unfunded.
Income taxes
Income taxes consist of current and deferred income taxes. Current taxes represent income taxes expected to be payable based on enacted or substantively enacted tax rates at the period end on expected current taxable income, and any adjustment to tax payable in respect of previous years. Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable income, using enacted or substantively enacted income tax rates which are expected to be effective at the time of reversal of the underlying temporary difference. Deferred tax assets and unused tax losses are only recognised to the extent that their recoverability is probable. Deferred tax assets are reviewed at reporting period end and amended to the extent that it is no longer probable that the related benefit will be realised. An asset is recognised for a previously unrecognised deferred tax asset that subsequently fulfils the criteria for recognition, to the extent that this criteria is fulfilled.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same authority and Viterra has both the right and the intention to settle its current tax assets and liabilities on a net or simultaneous basis. The tax effect of certain temporary differences is not recognised principally with respect to the initial recognition of an asset or liability (other than those arising in a business combination or in a manner that initially impacted accounting or taxable profit) and temporary differences relating to investments in subsidiaries and associates to the extent that Viterra can control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided in respect of fair value adjustments on acquisitions. These adjustments may relate to assets that, in general, are not eligible for income tax allowances.
Current and deferred taxes are recognised as an expense or income in the consolidated statement of income, except when they relate to items that are recognised outside the consolidated statement of income (whether in other comprehensive income or directly in equity) or where they arise from the initial accounting for a business combination.
Viterra Limited 2023 Financial Statements - 23
Notes to the consolidated financial statements
Viterra assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
Property, plant and equipment
Property, plant and equipment are stated at cost, being the fair value of the consideration given to acquire or construct the asset, including directly attributable costs required to bring the asset to the location or to a condition necessary for operation and the direct cost of dismantling and removing the asset, less accumulated depreciation and any accumulated impairment losses.
Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the specific asset.
Viterra Limited 2023 Financial Statements - 24
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Right-of-use assets, where a lease contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, are capitalised and amortised over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.
Depreciation commences when the asset is available for use. The major categories of property, plant and equipment are depreciated/amortised on a straight-line basis as follows:
| Buildings | 7 – 45 years |
| Freehold land | not depreciated |
| Plant and equipment | 3 – 30 years |
| Bearer plants | Unit of production method |
Useful lives of assets are reviewed annually.
Restoration, rehabilitation and decommissioning
Restoration, rehabilitation and decommissioning costs arising from the installation of plant and other site preparation work, discounted using a risk free discount rate to their net present value, are provided for and capitalised at the time such an obligation arises. The costs are charged to the consolidated statement of income over the life of the operation through depreciation of the asset and the unwinding of the discount on the provision.
Changes in the estimated timing of the rehabilitation or changes to the estimated future costs are accounted for prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, provided the reduction in the provision is not greater than the depreciated capitalised cost of the related asset, in which case the capitalised cost is reduced to $Nil and the remaining adjustment recognised in the consolidated statement of income. In the case of closed sites, changes to estimated costs are recognised immediately in the consolidated statement of income.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition intangible assets are carried at cost less any accumulated amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Viterra shall recognise an internally generated intangible asset only if it is probable that the future economic benefits attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. Future economic benefits are based on reasonable and supportable assumptions about conditions over the life of the asset. Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation policy is reviewed annually and impairment testing is undertaken once circumstances indicate the carrying amount may not be recoverable. Other than goodwill, which is not depreciated, Viterra has no identifiable intangible assets with an indefinite life.
Viterra Limited 2023 Financial Statements - 25
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The major categories of intangibles are amortised on a straight-line basis as follows:
| Port allocation rights | 20 – 54 years |
| Licences, trademarks and software | 3 – 20 years |
Other investments
Equity investments, other than investments in associates and joint ventures, are recorded at fair value. Changes in fair value are recorded in the consolidated statement of income.
Impairment
Viterra conducts, at least annually, an internal review of asset values which is used as a source of information to assess for any indications of impairment. Formal impairment tests are carried out, at least annually, for CGUs containing goodwill and for all other non-current assets when events or changes in circumstances indicate the carrying value may not be recoverable.
Investments in associates and joint ventures are assessed for impairment if there is objective evidence of impairment as a result of a loss event and that loss event has an impact on the estimated future cash flows from the net investment that can be reliably estimated.
The test involves determining whether the carrying amounts are in excess of their recoverable amounts.
An asset’s recoverable amount is determined as the higher of its fair value less costs of disposal and its value in use (VIU). Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the CGU level. The recoverable amounts of the property, plant and equipment are measured based on VIU, determined by discounted cash flow techniques based on the most recent approved financial budgets and three-year business plans. The valuation models use the most recent estimates, relevant cost assumptions generally based on past experience and, where possible, market forecasts of commodity price and foreign exchange rate assumptions discounted using operation specific discount rates. The valuations remain sensitive to price and further deterioration/improvements in the pricing outlook may result in additional impairments/impairment reversals. The determination of VIU uses Level 3 valuation techniques.
In cases where the carrying amount of an asset will principally be recovered through sale and not use, the recoverable amounts of assets are based on the estimated fair value less costs of disposal, if this can be reasonably estimated.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of income to reflect the asset at the lower amount.
Viterra Limited 2023 Financial Statements - 26
Notes to the consolidated financial statements
An impairment loss is reversed in the consolidated statement of income if there is a change in the estimates used to determine the recoverable amount since the prior impairment loss was recognised. The carrying amount is increased to the recoverable amount but not beyond the carrying amount net of depreciation or amortisation which would have arisen if the prior impairment loss had not been recognised.
Viterra Limited 2023 Financial Statements - 27
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Non-current assets and disposal groups held for sale
In compliance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition.
Non-current assets are measured at the lower of the previous carrying amount or the fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment, and intangible assets, are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position.
If an asset or disposal group no longer meets the requirements to be classified as held for sale, the asset or disposal group is remeasured to the lower of its previous carrying amount adjusted for any depreciation, impairment or revaluations if it had not been held for sale or at its recoverable amount at the date of the decision not to sell.
A disposal group qualifies as a discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and
· represents a separate major line of business or geographical area of operations;
· is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
· is a subsidiary acquired exclusively with a view to re-sell.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated statement of income.
Viterra Limited 2023 Financial Statements - 28
Notes to the consolidated financial statements
Provisions
Provisions are recognised when Viterra has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources embodying economic benefits that can be reliably estimated will be required to settle the liability.
Viterra Limited 2023 Financial Statements - 29
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Leases
The Group recognises a right-of-use asset and a corresponding lease liability at the lease commencement date if a contract is or contains a lease. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not yet paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
For short-term leases (lease term of 12 months or less) and leases of low-value assets, the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This lease expense is presented within cost of goods sold and selling and administrative expenses in the statement of income.
Inventories
The vast majority of inventories held by the marketing activities (“marketing inventories”) are valued at fair value less costs of disposal with the remainder valued at the lower of cost or net realisable value. Unrealised gains and losses from changes in fair value are reported in cost of goods sold.
Inventories held by the industrial activities (“production inventories”) are valued either at fair value less costs of disposal or at the lower of cost or net realisable value, depending on the nature of the inventory. Inventories of agricultural produce after harvest are measured at net realisable value. Cost is determined using the first-in-first-out (FIFO) method or the weighted average method and comprises material costs, labour costs and allocated production related overhead costs. Financing and storage costs related to inventory are expensed as incurred.
Viterra Limited 2023 Financial Statements - 30
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Biological assets
Biological assets are carried at their fair value less estimated selling costs. Any changes in fair value less estimated selling costs are included in the consolidated statement of income in the period in which they arise. Costs to sell include all costs that would be necessary to sell the assets, including costs necessary to get the assets to market.
Agricultural produce harvested from biological assets is measured at its fair value less costs to sell at the point of harvest. A gain or loss arising from the initial recognition of agricultural produce at fair value less costs to sell is included in the consolidated statement of income.
Biological assets for which quoted market prices are not available and for which alternative estimates of fair value are considered to be clearly unreliable are measured using the present value of expected net cash flows from the sale of an asset discounted at a current market-determined rate, using Level 3 valuation techniques.
The objective of a calculation of the present value of expected net cash flows is to determine the fair value of a biological asset in its present location and condition.
The Group classifies biological assets as current or non-current depending upon the average useful life of the particular group of biological assets. All of the Group’s biological assets were classified as current, as their average useful life is less than one year.
Cash and cash equivalents
Cash and cash equivalents comprise cash held at bank, cash in hand and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVtOCI) or at fair value through profit and loss (FVtPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not recorded at fair value through profit and loss, directly attributable transaction costs. Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value, and trade receivables, loans and other receivables are carried at amortised cost adjusted for any loss allowance.
Viterra Limited 2023 Financial Statements - 31
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features are measured as financial liabilities that include embedded derivatives, separating the host contract from the embedded derivative under trade payables. The host contract will be classified at amortised cost and the embedded derivative at fair value through profit or loss.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets, other than those at FVtPL, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets is estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by
| · | a review of overdue amounts and for those balances that are beyond 30 days overdue it is presumed to be indicative of a significant increase in credit risk; |
| · | comparing the risk of default at the reporting date and at the date of initial recognition; and |
| · | an assessment of relevant historical and forward-looking quantitative and qualitative information. |
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12 months' expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Viterra Limited 2023 Financial Statements - 32
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
The Group derecognises financial liabilities when the Group’s obligations are discharged or cancelled, or have expired.
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVtOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
(iii) Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, and provisionally priced sales and purchases are initially recognised at fair value when Viterra becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, volatility of the underlying instrument, and counterparty risk.
Gains and losses on derivative instruments for which hedge accounting is not applied are recognised in either cost of goods sold or revenue. Gains and losses arising on physical forward sales contracts are recognised in revenue and all other gains and losses on derivative instruments are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability.
At the inception of the hedge and on an ongoing basis, Viterra documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Viterra discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met. A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised as a cash flow hedge reserve in shareholders’ equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it occurs.
Viterra Limited 2023 Financial Statements - 33
Notes to the consolidated financial statements
1. MATERIAL ACCOUNTING POLICIES (continued)
When a hedging instrument expires or is sold, 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 shareholders’ equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative “host contract”. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVtPL in accordance with IFRS 9.
The Group applied cash flow hedge accounting in 2023 to hedge foreign currency risk on its future expected cash flows on Euro denominated debt: refer to note 24. Where hedge accounting is not applied, realised and unrealised gains and losses on the hedging instrument are recognised in the statement of comprehensive income.
2. REVENUE
Revenue for the year comprises the following:
| US$ million | 2023 | 2022 | ||||||
| Grain | 26,004 | 26,229 | ||||||
| Oilseeds | 25,929 | 24,151 | ||||||
| Sugar | 1,256 | 1,196 | ||||||
| Cotton | 896 | 1,683 | ||||||
| Freight1 | 588 | 595 | ||||||
| Total | 54,673 | 53,854 | ||||||
1 Freight revenue is recognised over time as the related performance obligation is satisfied over time.
Viterra Limited 2023 Financial Statements - 34
Notes to the consolidated financial statements
3. REMEASUREMENT LOSS OF ASSETS HELD FOR SALE
Advanced Organic Materials
In Q3 2023, Viterra determined to sell its 50% interest in Advanced Organic Materials S.A. (“AOM”), a manufacturing facility located in Argentina involved in the production of vegetable oil products, including tocopherols and vitamin E products, and reached agreements containing definitive terms and conditions for sale. Consequently, as of 30 September 2023, AOM was classified as an asset held for sale. No remeasurement loss was recognised on reclassification because the estimated fair value less cost of disposal of the asset exceeded the carrying amount. The sale was completed on 2 October 2023 (refer to note 4).
Russian businesses
In March 2023, Viterra announced that it would exit the Russian market and divest entirely its Russian businesses. Subsequently, Viterra reached agreements in principle containing definitive terms and conditions for the sale of these entities, subject to approval by the local authorities. The Russian businesses were therefore classified as a disposal group held for sale as of 30 June 2023.
In determining the fair value less cost to sell, an impairment loss of $162 million was recognised in relation to the remeasurement of the disposal group classified as held for sale based on the expected proceeds arising from the transactions.
The below table provides detail of the allocation of the impairment losses to individual financial statement captions.
| US$ million | 2023 | |||
| Property, plant and equipment | (38 | ) | ||
| Intangible assets | (3 | ) | ||
| Investments in associates and joint ventures | (85 | ) | ||
| Accounts receivable | (36 | ) | ||
| Total | (162 | ) | ||
In September 2023, Viterra obtained approval from the Government Commission on Control over Foreign Investments in the Russian Federation to complete the disposals. The final sale of the assets was concluded in October 2023 (refer to note 4).
Viterra Limited 2023 Financial Statements - 35
Notes to the consolidated financial statements
4. GAIN ON DISPOSAL OF INVESTMENTS
| US$ million | Note | 2023 | 2022 | |||||||||
| Gain on disposal of subsidiaries1 | 23 | 3 | 8 | |||||||||
| Gain on sale of share in joint ventures1 | 28 | 1 | ||||||||||
| Other | — | 2 | ||||||||||
| Total | 31 | 11 | ||||||||||
1 Includes foreign currency translation losses recycled to the consolidated statement of income upon entity disposal.
2023
In October 2023, Viterra sold its 50% equity interest in AOM for an initial total consideration of $46 million, of which $42 million was received in cash and $4 million is cash in escrow which is to be received in the future, resulting in a gain of $28 million. The final consideration is subject to purchase price adjustments including an earn-out which is contingent on the performance of the entity during 2024. The maximum potential additional consideration amounts to $8 million. No amounts have been recognised in respect of this contingent consideration as management does not believe that it is probable that the conditions stated in the agreement will be satisfied.
In October 2023, Viterra sold all of its Russian businesses for an aggregate consideration of $82 million, none of which remained payable at 31 December 2023, resulting in a gain of $3 million (after taking into consideration the remeasurement of the disposal group on reclassification to held for sale, refer to note 3). The disposals included the (a) wholly owned subsidiaries MZK Export LLC, Rostovsky KHP LLC and Antex+ LLC, sold for an aggregated cash consideration of $42 million, and (b) a 50% equity interest in a joint venture, Taman Grain Terminal Holdings Ltd, sold for a cash consideration of $40 million.
2022
In April 2022, Viterra completed the sale of its 100% interest in Agrosiloz EOOD, an entity with a silo located in Bulgaria, for a cash consideration of $4 million, resulting in a gain of $4 million.
In May 2022, Viterra completed the sale of its interest in three subsidiaries containing rice assets located in Argentina and Uruguay for a cash consideration of $12 million (including a deferred element amounting to $11 million, which was received in January and February 2024), resulting in a gain of $4 million.
In May 2022, Viterra completed the sale of its 50% interest in Wolomax B.V. for a cash consideration of $3 million, resulting in a gain of $1 million.
Viterra Limited 2023 Financial Statements - 36
Notes to the consolidated financial statements
5. OTHER INCOME/EXPENSE - NET
| US$ million | Notes | 2023 | 2022 | |||||||||
| Reversals of impairments | 6 | 82 | — | |||||||||
| Indemnification of legal provision | 28 | 128 | ||||||||||
| Gain from sale of assets | 13 | 7 | ||||||||||
| Change in mark-to-market valuations on investments held for trading | 1 | — | ||||||||||
| Other income - net | — | 8 | ||||||||||
| Other income | 124 | 143 | ||||||||||
| Foreign exchange loss | (62 | ) | (5 | ) | ||||||||
| Legal provision | (28 | ) | (128 | ) | ||||||||
| Change in mark-to-market valuations on investments held for trading | — | (22 | ) | |||||||||
| Impairments | 6 | (3 | ) | (7 | ) | |||||||
| Other expense - net | (6 | ) | — | |||||||||
| Other expense | (99 | ) | (162 | ) | ||||||||
Together with foreign exchange movements and mark-to-market movements on investments held for trading, other income/expense – net includes other items of income and expense which due to their non-operational or incidental nature are reported separately from operating results.
Legal provisions and indemnification rights are related items presented on a gross basis. During 2022, provisions relating to historic litigation were recorded amounting to $128 million. During 2023 provisions relating to the same litigation were recorded amounting to $28 million. Viterra is fully indemnified for these costs. The indemnified amount is recorded within other income.
6. IMPAIRMENTS
| US$ million | Notes | 2023 | 2022 | |||||||||
| Impairment of property, plant and equipment | 9 | (3 | ) | (7 | ) | |||||||
| Biodiesel assets impairment reversals | 9 | 82 | — | |||||||||
| Total | 79 | (7 | ) | |||||||||
In the annual impairment testing for 2023 and 2022, the recoverable amounts of the goodwill and property, plant and equipment were measured based on the value in use (VIU), determined by discounted cash flow techniques based on the most recent approved financial budgets and three-year business plans. The budgets and valuation models use the most recent estimates, relevant cost assumptions which are generally based on past experience and, where possible, market forecasts of commodity prices and exchange rates. The future cash flows are discounted using the Group’s weighted average cost of capital at 8% (2022: 6%). The determination of the VIU uses Level 3 valuation techniques for the current and prior year.
2023
During 2023 impairments amounting to $82 million relating to biodiesel assets were reversed. This amount is recognised as other income in the consolidated statement of income (refer to note 5). The total reversal comprises $88 million of reversal of impairments to property, plant and equipment, offset by the recognition of $6 million of other financial liabilities relating to government grants connected to the acquisition of the property, plant and equipment.
Viterra Limited 2023 Financial Statements - 37
Notes to the consolidated financial statements
6. IMPAIRMENTS (continued)
The positive performance of Viterra’s biodiesel activities over recent years in combination with favourable market developments were indicators to assess whether previously recorded impairments of property, plant and equipment may no longer exist. Based on this assessment, management determined that the recoverable amount of the impaired property, plant and equipment at 31 December 2023 exceeded what would have been the carrying amount at that date if no impairment had been recognised in the past. Therefore, an impairment reversal of property, plant and equipment was recognised for an amount of $88 million at 31 December 2023, equal to the carrying amount if no impairment had been recognised in the past. The reversal relates both to freehold land and buildings, plant and equipment and right-of-use assets (refer to note 9).
Of the total impairment reversal of $82 million, $60 million relates to a separate CGU with biodiesel activities located in Germany. In addition to the impairment reversal of the property, plant and equipment of this CGU, amounting to $66 million, other financial liabilities were recognised amounting to $6 million, resulting in a net increase of assets for the CGU of $60 million. The value in use assessed for the reversed property, plant and equipment of this CGU amounted to $69 million and is calculated with a weighted average cost of capital of 8%.
2022
As at 31 December 2022, certain storage tanks in Viterra's Everi terminal in Ukraine with a carrying amount of $6 million were partially destroyed due to hostile activities, resulting in an impairment of plant and equipment of $5 million (refer to note 31).
7. INTEREST EXPENSE
Interest expense for the year comprises the following:
| US$ million | Notes | 2023 | 2022 | |||||||||
| Revolving credit facilities | 19 | (222 | ) | (111 | ) | |||||||
| Other bank loans | 19 | (161 | ) | (118 | ) | |||||||
| Capital market notes | 19 | (126 | ) | (93 | ) | |||||||
| Lease obligations | 19 | (53 | ) | (44 | ) | |||||||
| Other | (11 | ) | (8 | ) | ||||||||
| Total | (573 | ) | (374 | ) | ||||||||
Viterra Limited 2023 Financial Statements - 38
Notes to the consolidated financial statements
8. INCOME TAXES
The major components of income tax expense in the consolidated statement of income are:
| US$ million | 2023 | 2022 | ||||||
| Current income tax expense | (305 | ) | (434 | ) | ||||
| Deferred income tax recovery relating to origination and reversal of temporary differences | 94 | 120 | ||||||
| Total tax expense reported in the consolidated statement of income | (211 | ) | (314 | ) | ||||
The effective Group tax rate is 35% (2022: 24%), different from the weighted average income tax rate of 31% (2022: 26%) for the following reasons:
| US$ million | 2023 | 2022 | ||||||
| Income before income taxes and attribution | 664 | 1,356 | ||||||
| Less: Share of income from associates and joint ventures | (52 | ) | (38 | ) | ||||
| Group income before income tax | 612 | 1,318 | ||||||
| Income tax expense calculated at the weighted average income tax rate | (193 | ) | (336 | ) | ||||
| Tax effects of: | ||||||||
| Tax exempt income | 14 | 17 | ||||||
| Items not tax deductible | (61 | ) | (20 | ) | ||||
| Foreign exchange fluctuations | (28 | ) | 7 | |||||
| Changes in tax rates and adjustments in respect of prior years | 44 | — | ||||||
| Utilisation and changes in recognition of tax losses and temporary differences | 50 | 43 | ||||||
| Tax losses of current year not recognised | (1 | ) | (5 | ) | ||||
| Inflation adjustments | (12 | ) | (20 | ) | ||||
| Other | (24 | ) | — | |||||
| Income tax expense | (211 | ) | (314 | ) | ||||
The weighted average income tax rate is calculated as a product of the standalone profit/(loss) before tax generated by the Company and its subsidiaries and the prevailing tax rate of the relevant jurisdiction.
Viterra Limited 2023 Financial Statements - 39
Notes to the consolidated financial statements
8. INCOME TAXES (continued)
Deferred taxes as at 31 December 2023 and 2022 are attributable to the items detailed in the table below:
| US$ million | 2023 | 2022 | ||||||
| Deferred tax assets1 | ||||||||
| Tax losses carried forward | 195 | 91 | ||||||
| Mark-to-market valuations | 83 | 99 | ||||||
| Property, plant and equipment, and intangible assets | 12 | 14 | ||||||
| Leases | 19 | 17 | ||||||
| Other | 15 | 13 | ||||||
| Total | 324 | 234 | ||||||
| US$ million | Note | 2023 | 2022 | |||||||||
| Deferred tax liabilities1 | ||||||||||||
| Property, plant and equipment, and intangible assets | 23 | (412 | ) | (356 | ) | |||||||
| Mark-to-market valuations | (39 | ) | (45 | ) | ||||||||
| Other | 23 | (12 | ) | (54 | ) | |||||||
| Total | (463 | ) | (455 | ) | ||||||||
| Total deferred tax - net | (139 | ) | (221 | ) | ||||||||
| US$ million | Note | 2023 | 2022 | |||||||||
| Reconciliation of deferred tax - net | ||||||||||||
| 1 January | (221 | ) | (348 | ) | ||||||||
| Recognised in income for the year | 94 | 120 | ||||||||||
| Recognised in other comprehensive income | (9 | ) | 19 | |||||||||
| Business combinations | 23 | — | (43 | ) | ||||||||
| Disposal of business | 3 | — | ||||||||||
| Effect of foreign currency exchange movements | 4 | 4 | ||||||||||
| Reclassification | (10 | ) | 27 | |||||||||
| Total deferred tax - net | (139 | ) | (221 | ) | ||||||||
1Asset and liability positions in the same category reflect the impact of tax assets and liabilities arising in local tax jurisdictions that cannot be offset against tax assets and liabilities arising in other tax jurisdictions.
Viterra Limited 2023 Financial Statements - 40
Notes to the consolidated financial statements
8. INCOME TAXES (continued)
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable. As at 31 December 2023, $225 million (2022: $108 million) of deferred tax assets related to available loss carry forwards have been brought to account, of which $195 million (2022: $91 million) are disclosed as deferred tax assets with the remaining balance being offset against deferred tax liabilities arising in the same respective entity. Net deferred tax assets include $97 million (2022: $11 million) that arise in entities that have been loss making for tax purposes in either 2023 or 2022 (among these entities, none of them are loss making in both years 2022 and 2023). In evaluating whether it is probable that taxable profits will be earned in future accounting periods prior to any tax loss expiry as may be the case, all available evidence was considered, including approved budgets, forecasts and business plans and, in certain cases, analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes. Following this evaluation, it was determined there would be sufficient taxable income generated to realise the benefit of the deferred tax assets and that no reasonably possible change in any of the key assumptions would result in a material reduction in forecast headroom of tax profits so that the recognised deferred tax asset would not be realised.
Available gross tax losses carried forward, for which no deferred tax assets have been recognised in the consolidated financial statements, are detailed below and will expire as follows:
| US$ million | 2023 | 2022 | ||||||
| 1 year | — | — | ||||||
| 2 years | — | — | ||||||
| 3 years | — | — | ||||||
| Thereafter | 9 | 9 | ||||||
| Unlimited | 33 | 147 | ||||||
| Total | 42 | 156 | ||||||
The Group has available tax credits of $20 million and deductible temporary differences of $2 million, for which no deferred tax assets have been recognised in the consolidated financial statements.
As at 31 December 2023, unremitted earnings of $4,240 million (2022: $3,903 million) have been retained by subsidiaries, joint ventures and associates for reinvestment. The Group does not recognise a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, joint ventures and associates as it is able to control the timing of the reversal of such temporary differences and it is probable that they will not reverse in the foreseeable future.
Viterra Limited 2023 Financial Statements - 41
Notes to the consolidated financial statements
8. INCOME TAXES (continued)
Pillar Two income taxes
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions the Group operates. The legislation will be effective for the Group’s financial year beginning 1 January 2024. The Group is in scope of the enacted or substantively enacted legislation and has performed an assessment of the Group’s potential exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial statements for the constituent entities in the Group.
Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbour relief is not expected to apply and the Pillar Two effective tax rate is close to 15%. The Group does not expect a material exposure to Pillar Two income taxes in those jurisdictions.
9. PROPERTY, PLANT AND EQUIPMENT
| US$ million | Notes | Freehold land and buildings | Plant
and equipment | Right-of- use assets - Freehold land and buildings | Right-of- -
Plant | Bearer
plants | Total | |||||||||||||||||||||
| Gross carrying amount1: | ||||||||||||||||||||||||||||
| 1 January 2023 | 1,255 | 5,154 | 363 | 1,652 | 142 | 8,566 | ||||||||||||||||||||||
| Remeasurement on assets held for sale | 3 | — | (60 | ) | (3 | ) | — | — | (63 | ) | ||||||||||||||||||
| Additions | 10 | 273 | — | — | 23 | 306 | ||||||||||||||||||||||
| Additions of right-of-use assets | — | — | 47 | 396 | — | 443 | ||||||||||||||||||||||
| Disposals | (6 | ) | (35 | ) | (19 | ) | (286 | ) | (29 | ) | (375 | ) | ||||||||||||||||
| Effect of foreign currency exchange movements | 19 | 52 | 19 | 4 | 11 | 105 | ||||||||||||||||||||||
| Other movements | 34 | (38 | ) | 1 | — | — | (3 | ) | ||||||||||||||||||||
| 31 December 2023 | 1,312 | 5,346 | 408 | 1,766 | 147 | 8,979 | ||||||||||||||||||||||
| Accumulated depreciation and impairment1: | ||||||||||||||||||||||||||||
| 1 January 2023 | 291 | 2,051 | 108 | 1,054 | 68 | 3,572 | ||||||||||||||||||||||
| Remeasurement on assets held for sale | 3 | (1 | ) | (23 | ) | (1 | ) | — | — | (25 | ) | |||||||||||||||||
| Depreciation | 49 | 299 | 50 | 415 | 28 | 841 | ||||||||||||||||||||||
| Impairment (reversal) | 6 | (28 | ) | (56 | ) | (1 | ) | — | — | (85 | ) | |||||||||||||||||
| Disposals | (1 | ) | (29 | ) | (19 | ) | (286 | ) | (30 | ) | (365 | ) | ||||||||||||||||
| Effect of foreign currency exchange movements | 8 | 30 | 7 | 2 | 5 | 52 | ||||||||||||||||||||||
| Other movements | 1 | (4 | ) | 4 | — | — | 1 | |||||||||||||||||||||
| 31 December 2023 | 319 | 2,268 | 148 | 1,185 | 71 | 3,991 | ||||||||||||||||||||||
| Net book value 31 December 2023 | 993 | 3,078 | 260 | 581 | 76 | 4,988 | ||||||||||||||||||||||
| Net book value 31 December 2022 | 964 | 3,103 | 255 | 598 | 74 | 4,994 | ||||||||||||||||||||||
1 Prior year figures are adjusted to reflect the finalisation of the purchase acquisition accounting for the acquisition of Gavilon (refer to note 23).
Viterra Limited 2023 Financial Statements - 42
Notes to the consolidated financial statements
9. PROPERTY, PLANT AND EQUIPMENT (continued)
| US$ million | Notes | Freehold land and buildings | Plant and equipment | Right-of-use assets - Freehold land and buildings | Right-of-use assets - Plant and equipment | Bearer plants | Total | |||||||||||||||||||||
| Gross carrying amount1: | ||||||||||||||||||||||||||||
| 1 January 2022 | 853 | 4,853 | 295 | 1,373 | 127 | 7,501 | ||||||||||||||||||||||
| Business combination | 23 | 480 | 285 | 29 | 32 | — | 826 | |||||||||||||||||||||
| Disposal of subsidiaries | 23 | (23 | ) | (72 | ) | — | — | — | (95 | ) | ||||||||||||||||||
| Additions | 7 | 228 | — | — | 26 | 261 | ||||||||||||||||||||||
| Additions of right-of-use assets | — | — | 43 | 482 | — | 525 | ||||||||||||||||||||||
| Disposals | (11 | ) | (48 | ) | (11 | ) | (227 | ) | (19 | ) | (316 | ) | ||||||||||||||||
| Effect of foreign currency exchange movements | (19 | ) | (84 | ) | 7 | (8 | ) | 8 | (96 | ) | ||||||||||||||||||
| Other movements | (32 | ) | (8 | ) | — | — | — | (40 | ) | |||||||||||||||||||
| 31 December 2022 | 1,255 | 5,154 | 363 | 1,652 | 142 | 8,566 | ||||||||||||||||||||||
| Accumulated depreciation and impairment1: | ||||||||||||||||||||||||||||
| 1 January 2022 | 302 | 1,927 | 70 | 729 | 58 | 3,086 | ||||||||||||||||||||||
| Disposal of subsidiaries | (22 | ) | (71 | ) | — | — | — | (93 | ) | |||||||||||||||||||
| Depreciation | 26 | 266 | 46 | 556 | 26 | 920 | ||||||||||||||||||||||
| Impairment | 6 | — | 7 | — | — | — | 7 | |||||||||||||||||||||
| Disposals | (6 | ) | (33 | ) | (10 | ) | (228 | ) | (20 | ) | (297 | ) | ||||||||||||||||
| Effect of foreign currency exchange movements | (8 | ) | (45 | ) | 2 | (3 | ) | 4 | (50 | ) | ||||||||||||||||||
| Other movements | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||||||
| 31 December 2022 | 291 | 2,051 | 108 | 1,054 | 68 | 3,572 | ||||||||||||||||||||||
| Net book value 31 December 2022 | 964 | 3,103 | 255 | 598 | 74 | 4,994 | ||||||||||||||||||||||
1 Prior year figures are adjusted to reflect the finalisation of the purchase acquisition accounting for the acquisition of Gavilon.
Plant and equipment includes expenditure for construction in progress of $198 million (2022: $244 million). Depreciation expenses included in cost of goods sold are $822 million (2022: $905 million) and in selling and administrative expenses $19 million (2022: $15 million). Property, plant and equipment with a carrying amount of $542 million (2022: $620 million) have been pledged to secure borrowings of the Group.
Viterra Limited 2023 Financial Statements - 43
Notes to the consolidated financial statements
9. PROPERTY, PLANT AND EQUIPMENT (continued)
Leases
The Group leases various assets including land and buildings and plant and equipment. The Group has recognised the following income/(expenses) in relation to leases:
| US$ million | 2023 | 2022 | ||||||
| Interest cost | (53 | ) | (44 | ) | ||||
| Sublease income1 | 82 | 115 | ||||||
| Depreciation expenses | (465 | ) | (602 | ) | ||||
| Expenses from short-term lease | (487 | ) | (907 | ) | ||||
| Expenses from low-value lease | (1 | ) | (1 | ) | ||||
| Total expenses - net | (924 | ) | (1,439 | ) | ||||
1 Sublease income is included within revenue in the consolidated statement of income.
Disclosure of amounts recognised as lease liabilities in the consolidated statement of financial position during the year are included in note 19 and their maturity is included in the analysis in note 24; future commitments are disclosed in note 27.
10. INTANGIBLE ASSETS
| US$ million | Notes | Goodwill | Port allocation rights | Licences, software and other | Total | |||||||||||||||
| Cost: | ||||||||||||||||||||
| 1 January 2023 | 1,370 | 36 | 77 | 1,483 | ||||||||||||||||
| Remeasurement on assets held for sale | 3 | — | (15 | ) | — | (15 | ) | |||||||||||||
| Additions | — | — | 1 | 1 | ||||||||||||||||
| Disposals | — | — | (2 | ) | (2 | ) | ||||||||||||||
| Effect of foreign currency exchange movements | 2 | — | 2 | 4 | ||||||||||||||||
| Other movements | — | — | 2 | 2 | ||||||||||||||||
| 31 December 2023 | 1,372 | 21 | 80 | 1,473 | ||||||||||||||||
| Accumulated amortisation and impairment: | ||||||||||||||||||||
| 1 January 2023 | 26 | 16 | 36 | 78 | ||||||||||||||||
| Remeasurement on assets held for sale | 3 | — | (12 | ) | — | (12 | ) | |||||||||||||
| Amortisation expense1 | — | — | 10 | 10 | ||||||||||||||||
| Disposals | — | — | (2 | ) | (2 | ) | ||||||||||||||
| Effect of foreign currency exchange movements | 1 | — | 1 | 2 | ||||||||||||||||
| 31 December 2023 | 27 | 4 | 45 | 76 | ||||||||||||||||
| Net carrying amount 31 December 2023 | 1,345 | 17 | 35 | 1,397 | ||||||||||||||||
1 Amortisation of $5 million recognised in cost of goods sold, and $5 million recognised in selling and administrative expenses.
Viterra Limited 2023 Financial Statements - 44
Notes to the consolidated financial statements
10. INTANGIBLE ASSETS (continued)
| US$ million | Notes | Goodwill | Port allocation rights | Licences, software and other | Total | |||||||||||||||
| Cost: | ||||||||||||||||||||
| 1 January 2022 | 1,010 | 36 | 78 | 1,124 | ||||||||||||||||
| Additions | — | — | 3 | 3 | ||||||||||||||||
| Business combination | 23 | 370 | — | — | 370 | |||||||||||||||
| Disposals | — | — | (5 | ) | (5 | ) | ||||||||||||||
| Effect of foreign currency exchange movements | (10 | ) | — | (1 | ) | (11 | ) | |||||||||||||
| Other movements | — | — | 2 | 2 | ||||||||||||||||
| 31 December 2022 | 1,370 | 36 | 77 | 1,483 | ||||||||||||||||
| Accumulated amortisation and impairment: | ||||||||||||||||||||
| 1 January 2022 | 24 | 15 | 35 | 74 | ||||||||||||||||
| Amortisation expense1 | — | 1 | 9 | 10 | ||||||||||||||||
| Disposals | — | — | (7 | ) | (7 | ) | ||||||||||||||
| Effect of foreign currency exchange movements | 2 | — | (1 | ) | 1 | |||||||||||||||
| 31 December 2022 | 26 | 16 | 36 | 78 | ||||||||||||||||
| Net carrying amount 31 December 2022 | 1,344 | 20 | 41 | 1,405 | ||||||||||||||||
1 Amortisation of $6 million recognised in cost of goods sold, and $4 million recognised in selling and administrative expenses.
Goodwill
The carrying amount of goodwill has been allocated to the Grains business CGU in the amount of $1,114 million (2022: $1,113 million) and to the Oilseeds business CGU in the amount of $231 million (2022: $231 million). The goodwill of $1,345 million (2022: $1,344 million) is attributable to synergies expected to accrue to the respective grains and oilseeds components as a result of increased volumes and freight and logistics arbitrage opportunities.
In October 2022 the Group acquired a 100% interest in Gavilon Agriculture Investment, Inc. (see note 23), a US entity which originates, stores and distributes grains, oilseeds, and feed and food ingredients worldwide. The goodwill is allocated to the Grains business CGU, which amounts to $370 million and is attributable to expected increased volumes, increased commercial opportunities and accumulated workforce of the acquired entity. The goodwill is not tax deductible.
Port allocation rights
Port allocation rights represent contractual entitlements to export certain amounts on an annual basis from terminals. The port allocation rights for the Russian business were disposed during 2023 (refer to note 23 for details). The Group's remaining port allocation rights as per 31 December 2023 relate to the terminals in Brazil, which are amortised on a straight-line basis over the estimated economic life of 54 years.
Licences, software and other
Intangibles related to internally developed and purchased software and patents recognised in previous business combinations are amortised over their estimated economic life, which ranges between three and 20 years.
Viterra Limited 2023 Financial Statements - 45
Notes to the consolidated financial statements
11. GOODWILL IMPAIRMENT TESTING
For the purpose of impairment testing, goodwill has been allocated to the CGU that is expected to benefit from the synergies of the historical business combination and that represents the level at which management monitors and manages the goodwill as follows:
| US$ million | 2023 | 2022 | ||||||
| Grains business | 1,114 | 1,113 | ||||||
| Oilseeds business | 231 | 231 | ||||||
| Total | 1,345 | 1,344 | ||||||
In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill is not reversed in subsequent periods.
Given the nature of the CGUs' activities, information on their fair value is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the recoverable amount for all CGUs containing goodwill is determined by reference to the VIU cash flow projection, which utilises a discounted cash flow approach.
The calculations use cash flow projections based on the 2024 approved financial budget and financial plans for 2025 to 2027 approved by management. The calculation of VIU for all CGUs is most sensitive to the following assumptions:
| · | Gross margins |
| · | Discount rates |
| · | Growth rates used to extrapolate cash flows beyond the forecast period |
Gross margins: Gross margins are determined with reference to relevant commodity market prices and historical financial data reported by the Group.
Discount rate: The discount rate is calculated based on the specific circumstances of the Group and derived from its weighted average cost of capital (WACC), which takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. The Group performed impairment testing using a range of pre-tax WACC rates from 8% to 9%.
Prior to 2023 the Group applied a range of post-tax WACC rates when performing impairment testing (2022: from 6% to 7%). As such amounts were applied to post tax amounts, the impact of the change in the 2023 impairment valuation technique was not material compared with the previous impairment valuation technique.
Viterra Limited 2023 Financial Statements - 46
Notes to the consolidated financial statements
11. GOODWILL IMPAIRMENT TESTING (continued)
Growth rate estimates: Cash flows beyond the forecast periods are extrapolated using the estimated growth rate of 2% (2022: 2%), which is based on industry research and global consumption forecasts.
For the grains and oilseeds CGUs, Viterra believes that no reasonably possible change in any of the above key assumptions would cause a material change in the overall outcome of the impairment testing. The determination of VIU for the CGUs uses Level 3 valuation techniques in both years.
12. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Investments in associates, joint ventures and joint operations
| US$ million | Notes | 2023 | 2022 | |||||||||
| 1 January | 510 | 396 | ||||||||||
| Business combination | 23 | — | 82 | |||||||||
| Additions | — | 2 | ||||||||||
| Disposals1 | (143 | ) | — | |||||||||
| Share of income from associates and joint ventures | 52 | 38 | ||||||||||
| Share of other comprehensive income from associates and joint ventures | — | — | ||||||||||
| Dividends received | (37 | ) | (8 | ) | ||||||||
| 31 December | 382 | 510 | ||||||||||
1 For further details on the disposal of joint ventures please refer to note 4.
2023 Details of material associates and joint ventures
During 2023, Viterra disposed of its 50% equity interest in Taman Grain Terminal, and of its 50% equity interest in Advanced Organic Materials S.A. Refer to note 4 for additional details relating to disposals of ownership interests in joint ventures.
Viterra Limited 2023 Financial Statements - 47
Notes to the consolidated financial statements
12. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
Summarised financial information in respect of Viterra’s material associates and joint ventures for the year ended 31 December 2023, reflecting 100% of the underlying entities' relevant figures, is set out below:
| US$ million 2023 | IGT | Barcarena | Lartirigoyen y Cia | Kalama Holdco, LLC2 | Total
of | |||||||||||||||
| Non-current assets | 91 | 229 | 108 | 562 | 990 | |||||||||||||||
| Current assets | 27 | 16 | 292 | 210 | 545 | |||||||||||||||
| Non-current liabilities | (3 | ) | (1 | ) | (4 | ) | (14 | ) | (22 | ) | ||||||||||
| Current liabilities | (9 | ) | (14 | ) | (213 | ) | (144 | ) | (380 | ) | ||||||||||
| The above assets and liabilities include the following: | ||||||||||||||||||||
| Cash and cash equivalents | 26 | 6 | 28 | 2 | 62 | |||||||||||||||
| Current financial liabilities1 | — | (9 | ) | (62 | ) | (30 | ) | (101 | ) | |||||||||||
| Non-current financial liabilities1 | (1 | ) | — | — | (14 | ) | (15 | ) | ||||||||||||
| Net assets 31 December 2023 | 106 | 230 | 183 | 614 | 1,133 | |||||||||||||||
| Viterra’s ownership interest | 50 | % | 50 | % | 50 | % | 15 | % | ||||||||||||
| Carrying value | 53 | 115 | 92 | 56 | 316 | |||||||||||||||
1 Financial liabilities exclude trade payables, other payables and provisions.
2 Viterra’s share in the net assets of KHC is different from the carrying value recognised for KHC. The origination of this difference comes from the initial measurement of KHC as part of the purchase acquisition accounting for the acquisition of Gavilon (refer to note 23).
Viterra Limited 2023 Financial Statements - 48
Notes to the consolidated financial statements
12. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
Summarised profit and loss in respect of Viterra’s associates and joint ventures, reflecting 100% of the underlying entities' relevant figures for the year ended 31 December 2023, is set out below:
| US$ million 2023 | IGT | Barcarena | Lartirigoyen y Cia | Kalama Holdco, LLC | Total
of | |||||||||||||||
| Revenue | 30 | 33 | 1,235 | 2,244 | 3,542 | |||||||||||||||
| Profit for the year | 14 | 7 | 48 | 3 | 72 | |||||||||||||||
| Other comprehensive income | — | — | — | — | — | |||||||||||||||
| Total comprehensive profit | 14 | 7 | 48 | — | 69 | |||||||||||||||
| Viterra’s share of dividends paid | (14 | ) | — | (13 | ) | (3 | ) | (30 | ) | |||||||||||
| The above results include the following: | ||||||||||||||||||||
| Depreciation and amortisation | (5 | ) | (10 | ) | (5 | ) | (9 | ) | (29 | ) | ||||||||||
| Interest income | — | — | — | — | — | |||||||||||||||
| Interest expense | — | (1 | ) | (21 | ) | — | (22 | ) | ||||||||||||
| Income tax expense | (3 | ) | (2 | ) | (8 | ) | — | (13 | ) | |||||||||||
| Foreign currency gain/(loss) | — | 1 | — | — | 1 | |||||||||||||||
2022 Details of material associates and joint ventures
During 2022, new joint ventures were acquired by the Company as a consequence of the acquisition of Gavilon (see note 23). This included one material joint venture, Kalama Holdco, LLC (KHC), a holding company entity incorporated in the United States of America. The Group has a 15% share of the equity interests of KHC. Other additions to joint ventures arising on the acquisition of Gavilon are not material to the Company.
Viterra Limited 2023 Financial Statements - 49
Notes to the consolidated financial statements
Summarised financial information in respect of Viterra’s material associates and joint ventures for the year ended 31 December 2022, reflecting 100% of the underlying entities' relevant figures, is set out below:
| US$
million 2022 | IGT | Taman Grain Terminal | Barcarena | Lartirigoyen
y Cia | Kalama Holdco, LLC2 | Total of material entities | ||||||||||||||||||
| Non-current assets | 96 | 330 | 236 | 103 | 564 | 1,329 | ||||||||||||||||||
| Current assets | 35 | 52 | 9 | 266 | 227 | 589 | ||||||||||||||||||
| Non-current liabilities | (3 | ) | (125 | ) | (15 | ) | (11 | ) | (13 | ) | (167 | ) | ||||||||||||
| Current liabilities | (8 | ) | (32 | ) | (8 | ) | (198 | ) | (120 | ) | (366 | ) | ||||||||||||
| The above assets and liabilities include the following: | ||||||||||||||||||||||||
| Cash and cash equivalents | 33 | 3 | 2 | 15 | 48 | 101 | ||||||||||||||||||
| Current financial liabilities1 | — | (30 | ) | (4 | ) | (37 | ) | (1 | ) | (72 | ) | |||||||||||||
| Non-current financial liabilities1 | (1 | ) | (89 | ) | (14 | ) | (11 | ) | (13 | ) | (128 | ) | ||||||||||||
| Net assets 31 December 2022 | 120 | 225 | 222 | 160 | 658 | 1,385 | ||||||||||||||||||
| Viterra’s ownership interest | 50 | % | 50 | % | 50 | % | 50 | % | 15 | % | ||||||||||||||
| Carrying value | 60 | 113 | 111 | 80 | 63 | 427 | ||||||||||||||||||
1 Financial liabilities exclude trade payables, other payables and provisions.
2 Please refer to note 23 for acquisition of business. Viterra’s share in the net assets of KHC is different from the carrying value recognised for KHC. The origination of this difference comes from the initial measurement of KHC as part of the purchase acquisition accounting for the acquisition of Gavilon.
Viterra Limited 2023 Financial Statements - 50
Notes to the consolidated financial statements
12. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
Summarised profit and loss in respect of Viterra’s associates and joint ventures, reflecting 100% of the underlying entities' relevant figures for the year ended 31 December 2022, is set out below:
| US$ million 2022 | IGT | Taman Grain Terminal | Barcarena | Lartirigoyen y Cia | Kalama Holdco, LLC2 | Total of material entities | ||||||||||||||||||
| Revenue | 24 | 66 | 29 | 1,425 | 1,659 | 3,203 | ||||||||||||||||||
| Profit for the year | 9 | 14 | 3 | 43 | 2 | 71 | ||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||
| Total comprehensive profit | 9 | 14 | 3 | 43 | — | 69 | ||||||||||||||||||
| Viterra’s share of dividends paid | — | — | — | (7 | ) | — | (7 | ) | ||||||||||||||||
| The above results include the following: | ||||||||||||||||||||||||
| Depreciation and amortisation | (5 | ) | (12 | ) | (10 | ) | (5 | ) | 3 | (29 | ) | |||||||||||||
| Interest income | — | 2 | — | 1 | — | 3 | ||||||||||||||||||
| Interest expense | — | (17 | ) | (1 | ) | (16 | ) | (1 | ) | (35 | ) | |||||||||||||
| Income tax expense | (4 | ) | (5 | ) | (2 | ) | (19 | ) | — | (30 | ) | |||||||||||||
| Foreign currency gain/(loss) | — | (9 | ) | (1 | ) | — | — | (10 | ) | |||||||||||||||
1 Please refer to note 23 for acquisition of business. For acquired joint ventures the summarised profit and loss reflects the period from the date of acquisition until 31 December 2022.
Aggregate information of associates and joint ventures that are not individually material:
| US$ million | 2023 | 2022 | ||||||
| The Group’s share of income | 18 | 4 | ||||||
| The Group’s share of other comprehensive income | — | — | ||||||
| The Group’s share of total comprehensive income | 18 | 4 | ||||||
| Aggregate carrying value of the Group’s interests | 66 | 83 | ||||||
13. ADVANCES AND LOANS
| US$ million | Notes | 2023 | 2022 | |||||||||
| Financial assets at amortised cost | ||||||||||||
| Loans to associates | 25 | 17 | 17 | |||||||||
| Other non-current receivables and loans | 25 | 37 | 39 | |||||||||
| Non-financial instruments | ||||||||||||
| Advances repayable with product | 16 | 12 | ||||||||||
| Other non-current receivables | 28 | 25 | ||||||||||
| Total | 98 | 93 | ||||||||||
Other non-current receivables and loans (financial assets at amortised cost) consists mainly of loan receivables which are due more than twelve months after the reporting date. Other non-current receivables (non-financial instruments) consists mainly of long-term VAT and other taxes receivables.
Viterra Limited 2023 Financial Statements - 51
Notes to the consolidated financial statements
13. ADVANCES AND LOANS (continued)
Loss allowances of financial assets at amortised cost
The Group determines the expected credit loss of other non-current receivables and loans based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. The movement in loss allowance for financial assets classified at amortised cost is detailed below:
| US$ million | 2023 | 2022 | ||||||
| 1 January | 7 | 10 | ||||||
| Effect of foreign currency exchange movements | — | (1 | ) | |||||
| Charged during the year | 9 | — | ||||||
| Disposal of business | — | (2 | ) | |||||
| 31 December | 16 | 7 | ||||||
14. BIOLOGICAL ASSETS
| US$ million | 2023 | 2022 | ||||||
| 1 January | 26 | 20 | ||||||
| Increase due to production and subsequent expenditures capitalised in biological assets | 28 | 32 | ||||||
| Changes in fair value due to physical changes and market price fluctuations | 5 | — | ||||||
| Decrease due to harvest | (34 | ) | (30 | ) | ||||
| Effect of foreign currency exchange movement | 4 | 4 | ||||||
| 31 December | 29 | 26 | ||||||
The Group's biological assets correspond to the agricultural products under development (standing-sugarcane) produced at sugarcane plantations, which will be used as a raw material for the production of sugar, ethanol and bioenergy at the time of harvest. Fair value is estimated using the discounted cash flow method, using Level 3 valuation techniques. The valuation model considers net present value of cash flows to be generated by the sugarcane that is expected to be harvested in the upcoming crop. Planted areas refer only to sugarcane plantations.
The main assumptions which impact the net present value of future expected cash flows include crop care costs, harvest area, sugar yields, and sugarcane price per ton and WACC rate for the sugar business. These are summarised below:
| 2023 | 2022 | |||||||
| Estimated harvest area (ha) | 54,874 | 65,300 | ||||||
| Productivity expected (MT of sugarcane per ha) | 69 | 65 | ||||||
| Amount of total recoverable sugar (TRS) (kg/MT of sugarcane) | 136 | 141 | ||||||
| TRS price per ton projected ($/ton) | $ | 0.25 | $ | 0.22 | ||||
| Weighted average cost of capital for sugar business | 14 | % | 9 | % | ||||
Viterra Limited 2023 Financial Statements - 52
Notes to the consolidated financial statements
14. BIOLOGICAL ASSETS (continued)
When determining the fair value, the Group takes the following into consideration:
Market overview
Own or third party sugarcane is processed by the plants. Own sugarcane is grown by the Group on land belonging to third parties under agricultural partnerships. The Group typically enters into agricultural partnerships with such land owners for a duration of a minimum of six years (one sugarcane cycle) and is responsible for all farming and harvesting activities. The sugarcane from third parties is acquired by the plant under supply contracts. Either the supplier or the plant itself can be responsible for the transportation of sugarcane to the plant.
The price is determined based on the formula used by Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool (CONSECANA), which calculates the consideration per ton of sugarcane based on i) the volume of TRS/kg delivered by the sugarcane supplier; ii) the share of the sugarcane production cost as a percentage of the sugar, ethanol residue, anhydrous ethanol and hydrated ethanol; iii) the net prices of sugar in the domestic and foreign markets, and the prices of anhydrous ethanol and ethyl ethanol fuel, hydrated ethanol, and ethanol for other purposes; and iv) the plant’s production mix for said crop. CONSECANA’s reference price is published on a monthly basis. The Company periodically reviews assumptions used to calculate biological assets, adjusting it in case there are significant variations in relation to those previously projected.
Risks
The Group is exposed to certain risks related to its plantations, such as (i) supply offer and demand, based on which the Group continuously monitors the market of its products and analyses the trends that regularly support the selling strategy in order to define and/or adjust the purchase and sale volumes of products or raw materials; (ii) regulatory and environmental risks, subject to specific laws and regulations, which are monitored by establishing policies and procedures to ensure the compliance with these rules; and (iii) climate risks, which expose the Company to the damages arising from climate changes, which are mitigated by monitoring the progress of these risks in the Company’s routine and operating strategically in the sugarcane crops in order to minimise the damages to its biological assets. The Company seeks to optimise the crop sequence in order to avoid dry and frost periods, handle various products in accordance with the edaphoclimatic environments, and adopt good agricultural practices in the field to maintain the sugarcane crop productivity.
15. INVENTORIES
Total inventories of $7,117 million (2022: $9,111 million) comprise $6,922 million (2022: $8,582 million) of inventories carried at fair value less costs of disposal and $195 million (2022: $529 million) valued at the lower of cost or net realisable value.
Viterra Limited 2023 Financial Statements - 53
Notes to the consolidated financial statements
15. INVENTORIES (continued)
Readily marketable inventories (RMI), comprising the core inventories which underpin and facilitate Viterra’s marketing activities, represent inventories that, in Viterra’s assessment, are readily convertible into cash in the short term due to their liquid nature, widely available markets, and the fact that price risk is covered either by a forward physical sale or hedge transaction. Viterra regularly assesses the composition of these inventories and their applicability, relevance and availability to the marketing activities. As at 31 December 2023, $6,960 million (2022: $8,966 million) of inventories were considered readily marketable. This comprises $6,882 million (2022: $8,582 million) of inventories carried at fair value less costs of disposal and $78 million (2022: $384 million) carried at the lower of cost or net realisable value. Given the highly liquid nature of these inventories, which represent a significant share of current assets, the Group believes it is appropriate to consider them together with cash equivalents in analysing the Group's net debt levels and computing certain debt coverage ratios and credit trends.
A total amount of $7 million was recognised during 2022 in respect of write-downs of inventory to net realisable value (refer to note 31).
Fair value of inventories is a Level 2 fair value measurement (see note 26) using observable market prices obtained from exchanges, traded reference indices, or market survey services adjusted for relevant location and quality differentials. There are no significant unobservable inputs in the fair value measurement of such inventories. In 2022, a total amount of $8 million was recognised in respect of fair value change of inventory in Ukraine; refer to note 31.
Viterra has a number of dedicated financing facilities, which finance a portion of its inventories. In each case, the inventory has not been derecognised as the Group retains control of the inventory. The proceeds received are recognised as current borrowings (see note 19). As at 31 December 2023, the total amount of inventory secured under such facilities was $393 million (2022: $261 million) and proceeds received and classified as current borrowings amounted to $340 million (2022: $212 million).
16. ACCOUNTS RECEIVABLE
| US$ million | 2023 | 2022 | ||||||
| Financial assets at amortised cost | ||||||||
| Trade receivables1 | 1,993 | 2,706 | ||||||
| Margin calls paid | 256 | 606 | ||||||
| Associated companies1 | 33 | 31 | ||||||
| Other receivables2 | 60 | 92 | ||||||
| Non-financial instruments | ||||||||
| Advances repayable with product | 287 | 411 | ||||||
| Prepaid expenses | 44 | 53 | ||||||
| Other tax and related receivables | 519 | 726 | ||||||
| Total | 3,192 | 4,625 | ||||||
1 Collectively referred to as receivables presented net of allowance for expected credit losses.
2 Includes loans receivable in the amount of $11 million (2022: $13 million), presented net of loss allowance of $14 million (2022: $14 million).
The average credit period on sales of goods is 12 days (2022: 15 days).
Viterra Limited 2023 Financial Statements - 54
Notes to the consolidated financial statements
16. ACCOUNTS RECEIVABLE (continued)
As at 31 December 2023, 21% (2022: 15%) of the trade related receivables were between one and 60 days overdue, and 5% (2022: 3%) were greater than 60 days overdue. Such receivables, although contractually past their due dates, are not considered impaired as there has not been a significant change in credit quality of the relevant counterparty, and the amounts are still considered recoverable taking into account customary payment patterns and, in many cases, offsetting accounts payable balances.
Viterra has a number of dedicated financing facilities, which finance a portion of its receivables. Part of these facilities meet the criteria of derecognition of the receivables according to IFRS. As at 31 December 2023, $95 million (2022: $Nil) was derecognised, as the Group transferred substantially all the risks and rewards of ownership of the financial asset with non-recourse. In other cases, receivables have not been derecognised, as the Group retains the principal risks and rewards of ownership. The proceeds received are recognised as current borrowings (see note 19). As at 31 December 2023, the total amount of trade receivables secured was $440 million (2022: $721 million) and proceeds received and classified as current borrowings amounted to $399 million (2022: $550 million).
As at 31 December 2022, Viterra created a provision for receivables of $19 million in Ukraine as they became unrecoverable (refer to note 31). During the year ended 31 December 2023, $17 million of this amount was released as the related receivables were recovered. Both the charge in 2022 and the release in 2023 related to the provision for receivables in Ukraine are presented under cost of goods sold in the consolidated statement of income.
The movement in allowance for expected credit losses is detailed below:
| US$ million | 2023 | 2022 | ||||||
| 1 January | 128 | 118 | ||||||
| Released during the period | (72 | ) | (41 | ) | ||||
| Charged during the period | 49 | 59 | ||||||
| Utilised during the period | (3 | ) | (8 | ) | ||||
| Disposed1 | (1 | ) | — | |||||
| 31 December | 101 | 128 | ||||||
1 Refer to note 23.
17. CASH AND CASH EQUIVALENTS
| US$ million | 2023 | 2022 | ||||||
| Banks and cash on hand | 426 | 386 | ||||||
| Deposits and treasury bills | 104 | 251 | ||||||
| Total | 530 | 637 | ||||||
Restricted cash on hand as at 31 December 2023 amounted to $Nil (2022: $Nil).
Viterra Limited 2023 Financial Statements - 55
Notes to the consolidated financial statements
18. SHARE CAPITAL AND RESERVES
| Number of shares | Share capital (US$ million) | Share premium (US$ million) | ||||||||||
| 1 January 2022 | 350,100 | 1 | 2,796 | |||||||||
| Return of capital | — | (400 | ) | |||||||||
| 31 December 2022 - Ordinary and restricted shares | 350,100 | 1 | 2,396 | |||||||||
| 1 January 2023 | 350,100 | 1 | 2,396 | |||||||||
| Return of capital | — | (451 | ) | |||||||||
| 31 December 2023 - Ordinary and restricted shares | 350,100 | 1 | 1,945 | |||||||||
The number of shares relates to authorised, issued, called-up and fully paid share capital. All ordinary shares carry equal voting rights. Total authorised share capital is 800,000 ordinary shares with par value of $0.01 each and 200,000 restricted shares with a par value of $0.01 each.
2023
During 2023, an aggregate of $451 million of distributions, accounted for as a reduction of share premium, was returned to Viterra's shareholders in proportion to their respective ownership interest in Viterra Limited. The distributions and the reduction of share premium had no impact on shareholding.
2022
During 2022, an aggregate of $400 million of distributions, accounted for as a reduction of share premium, was returned to Viterra's shareholders in proportion to their respective ownership interest in Viterra Limited. The distributions and the reduction of share premium had no impact on shareholding.
Other reserves
| US$ million | Translation adjustment | Cash flow hedge reserve | Net unrealised loss | Net ownership changes in subsidiaries | Total | |||||||||||||||
| 1 January 2022 | (878 | ) | (17 | ) | (1 | ) | (47 | ) | (943 | ) | ||||||||||
| Exchange loss on translation of foreign operations | (102 | ) | — | — | — | (102 | ) | |||||||||||||
| Loss on cash flow hedges | — | (5 | ) | — | — | (5 | ) | |||||||||||||
| 31 December 2022 | (980 | ) | (22 | ) | (1 | ) | (47 | ) | (1,050 | ) | ||||||||||
| 1 January 2023 | (980 | ) | (22 | ) | (1 | ) | (47 | ) | (1,050 | ) | ||||||||||
| Exchange gain on translation of foreign operations | 53 | — | — | — | 53 | |||||||||||||||
| Gain on cash flow hedges | — | 19 | — | — | 19 | |||||||||||||||
| 31 December 2023 | (927 | ) | (3 | ) | (1 | ) | (47 | ) | (978 | ) | ||||||||||
Viterra Limited 2023 Financial Statements - 56
Notes to the consolidated financial statements
19. BORROWINGS
| US$ million | Notes | 2023 | 2022 | |||||||||
| Non-current borrowings | ||||||||||||
| Capital market notes1 | 3,212 | 3,156 | ||||||||||
| Revolving credit facilities2 | 1,505 | 1,789 | ||||||||||
| Lease liabilities | 566 | 530 | ||||||||||
| Other bank loans3 | 197 | 248 | ||||||||||
| Total non-current borrowings | 5,480 | 5,723 | ||||||||||
| Current borrowings | ||||||||||||
| Secured inventory/receivables facilities | 15, 16 | 739 | 762 | |||||||||
| Revolving credit facilities2 | — | 950 | ||||||||||
| Lease liabilities | 324 | 375 | ||||||||||
| Other bank loans3 | 1,367 | 2,855 | ||||||||||
| Total current borrowings | 2,430 | 4,942 | ||||||||||
1 Includes capitalised issuance costs of $3 million (2022: $6 million).
2 Includes capitalised issuance costs of $18 million (2022: $8 million).
3 Comprises various uncommitted and unsecured bilateral bank credit facilities.
Other non-current bank loans mainly include a loan with an outstanding balance of $53 million (2022: $103 million) at an interest rate of SOFR (Secured Overnight Financing Rate) +503 basis points (2022: LIBOR (London interbank offer rate) +453 basis points), a facility in Hungary with an outstanding balance of $52 million (2022: $51 million) bearing a fixed interest rate, and various loans received by sugar, wheat milling and port assets in Brazil of $57 million (2022: $30 million) denominated in USD and Brazilian Real (BRL) and bearing various fixed interest rates.
The outstanding secured inventory/receivables facilities of $739 million (2022: $762 million) comprise an inventory borrowing base facility of $239 million (2022: $132 million) that accumulates interest at a rate of BBSY (bank bill swap bid rate) +77 basis points (2022: +80 basis points) and a borrowing base facility of $500 million (2022: $630 million) at an interest rate of Daily Simple SOFR (2022: +75 basis points) as at 31 December 2023.
Capital market notes
The capital market notes include bonds issued under Rule 144A of the Securities Act of 1933 (US 144A Bonds) in April 2022, in the amounts of $450 million and $300 million, respectively. The first tranche of $450 million carries a 4.90% coupon with maturity in April 2027 and the second tranche of $300 million carries a 5.25% coupon with maturity in April 2032. Interest payments are due semi-annually in April and October of each year, commencing in October 2022. Viterra applies fair value hedge accounting to account for the hedge of interest rate risks on these two bonds (refer to note 24).
Viterra Limited 2023 Financial Statements - 57
Notes to the consolidated financial statements
Viterra issued US 144A Bonds during April 2021, and issued Eurobonds during September 2021. Interest on the USD 144A Bonds is payable semi-annually in arrears. Interest on the Eurobonds is payable annually in arrears. Viterra applies cash flow hedge accounting to account for the hedge of foreign currency risk on its Euro denominated debt (refer to note 24).
The details of the capital market notes and the carrying amounts are outlined below:
| US $ million | Maturity | 2023 | 2022 | |||||||||
| USD 450 million 4.9% coupon bonds | April 2027 | 427 | 421 | |||||||||
| USD 300 million 5.25% coupon bonds | April 2032 | 273 | 270 | |||||||||
| USD 600 million 2.00% coupon bonds | April 2026 | 598 | 597 | |||||||||
| USD 600 million 3.20% coupon bonds | April 2031 | 595 | 595 | |||||||||
| EUR 500 million 0.375% coupon bonds | September 2025 | 551 | 532 | |||||||||
| EUR 700 million 1.00% coupon bonds | September 2028 | 768 | 741 | |||||||||
| Total capital market notes | 3,212 | 3,156 | ||||||||||
Revolving credit facility
2023
On 5 May 2023, Viterra signed a new $4.1 billion one-year revolving credit facility agreement with a one-year borrower’s term-out option (to May 2025), and a one-year extension option at lender’s discretion. This facility refinanced the $4.1 billion revolving credit facility signed in May 2022. Funds drawn under the new facility bear interest at Daily Simple SOFR +65 basis points per annum.
On 1 May 2023, Viterra extended the $1 billion three-year revolving credit facility agreement by executing one of the two extension options (at lender’s discretion). Funds drawn under the facility bear interest at compounded SOFR +70 basis points per annum.
During April 2023, the interest margin charged on the $2.5 billion three-year revolving credit facility agreement signed in September 2022 decreased from SOFR +130 basis points to SOFR +117.5 basis points per annum.
In December 2023, the $570 million twelve-month revolving credit facility agreement expired and was not renewed.
Viterra Limited 2023 Financial Statements - 58
Notes to the consolidated financial statements
19. BORROWINGS (continued)
2022
On 26 January 2022, Viterra signed a committed acquisition financing facility of $1.7 billion for the agreed purchase price and a portion of the assumed working capital of Gavilon (see note 23). In April 2022, the available commitments under this facility were reduced to $950 million. The purpose of the facility was to provide a committed source of financing for the Gavilon acquisition. Proceeds from this facility were not available for general working capital purposes. The facility was repaid in full on 9 January 2023.
On 10 May 2022, Viterra signed a new $1 billion three-year revolving credit facility agreement with two one-year extension options at lender’s discretion. This facility refinanced the $570 million revolving credit facility signed in May 2021. Funds drawn under the new facility bear interest at compounded SOFR +70 basis points per annum.
On 10 May 2022, Viterra signed a new $4.1 billion one-year revolving credit facility agreement with a one-year borrower’s term-out option (to May 2024), and one-year extension options at the lender’s discretion. This facility refinanced the $3.515 billion revolving credit facility signed in May 2021. Funds drawn under the new facility bear interest at compounded SOFR +60 basis points per annum.
On 23 September 2022, Viterra signed a new $2.5 billion three-year revolving credit facility agreement. Funds drawn under the new facility bear interest at SOFR +130 basis points per annum.
On 9 December 2022, Viterra signed a new $570 million twelve-month revolving credit facility agreement with two one-year lender’s extension options. This facility refinanced the $575 million revolving credit facility signed in December 2021. Funds drawn under the new facility bear interest at compounded SOFR +75 basis points per annum.
Viterra Limited 2023 Financial Statements - 59
Notes to the consolidated financial statements
19. BORROWINGS (continued)
Reconciliation of cash flow to movement in financing liabilities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
| US$ million | Borrowings excluding lease liabilities | Lease liabilities | Total borrowings | Cross
currency and interest rate swaps2 | Total
liabilities arising from financing activities1 | |||||||||||||||
| 1 January 2023 | 9,760 | 905 | 10,665 | 210 | 10,875 | |||||||||||||||
| Cash related movements in financing liabilities1 | ||||||||||||||||||||
| Proceeds of other non-current bank facilities other than revolving credit facilities | 13 | — | 13 | — | 13 | |||||||||||||||
| Repayment of other non-current bank facilities other than revolving credit facilities | (63 | ) | — | (63 | ) | — | (63 | ) | ||||||||||||
| Net (repayment)/proceeds of RCF | (1,225 | ) | — | (1,225 | ) | — | (1,225 | ) | ||||||||||||
| Net repayment of current borrowings | (1,292 | ) | — | (1,292 | ) | — | (1,292 | ) | ||||||||||||
| Repayments of finance leases | — | (468 | ) | (468 | ) | — | (468 | ) | ||||||||||||
| Subtotal | (2,567 | ) | (468 | ) | (3,035 | ) | — | (3,035 | ) | |||||||||||
| Non-cash related movements in financing liabilities | ||||||||||||||||||||
| Derecognition of loans as part of disposals | (162 | ) | — | (162 | ) | — | (162 | ) | ||||||||||||
| Foreign exchange movements | (14 | ) | 16 | 2 | — | 2 | ||||||||||||||
| Fair value adjustment to fair value hedged borrowings | — | — | — | (66 | ) | (66 | ) | |||||||||||||
| Fair value movement of hedging derivatives | 8 | — | 8 | (8 | ) | — | ||||||||||||||
| Change in finance lease obligations | — | 437 | 437 | — | 437 | |||||||||||||||
| Other non-cash movements | (5 | ) | — | (5 | ) | — | (5 | ) | ||||||||||||
| Subtotal | (173 | ) | 453 | 280 | (74 | ) | 206 | |||||||||||||
| Decrease in financing liabilities for the period | (2,740 | ) | (15 | ) | (2,755 | ) | (74 | ) | (2,829 | ) | ||||||||||
| 31 December 2023 | 7,020 | 890 | 7,910 | 136 | 8,046 | |||||||||||||||
1See consolidated statement of cash flows.
2The cross currency and interest rate swaps are reported on the balance sheet within the heading Other financial liabilities.
Viterra Limited 2023 Financial Statements - 60
Notes to the consolidated financial statements
19. BORROWINGS (continued)
| US$ million | Borrowings excluding lease liabilities | Lease liabilities | Total borrowings | Cross
currency and interest rate swaps2 | Total
liabilities arising from financing activities1 | |||||||||||||||
| 1 January 20221 | 8,050 | 903 | 8,953 | 66 | 9,019 | |||||||||||||||
| Cash related movements in financing liabilities1 | ||||||||||||||||||||
| Proceeds from issuance of capital market notes | 744 | — | 744 | — | 744 | |||||||||||||||
| Proceeds from other non-current bank facilities other than revolving credit facilities | 82 | — | 82 | — | 82 | |||||||||||||||
| Repayment of other non-current bank facilities other than revolving credit facilities | (143 | ) | — | (143 | ) | — | (143 | ) | ||||||||||||
| Net (repayment)/proceeds of RCF | 1,618 | — | 1,618 | — | 1,618 | |||||||||||||||
| Net repayment of current borrowings | (989 | ) | — | (989 | ) | — | (989 | ) | ||||||||||||
| Repayments of finance lease facilities | — | (589 | ) | (589 | ) | — | (589 | ) | ||||||||||||
| Subtotal | 1,312 | (589 | ) | 723 | — | 723 | ||||||||||||||
| Non-cash related movements in financing liabilities1 | ||||||||||||||||||||
| Borrowings acquired in business combinations3 | 599 | 74 | 673 | — | 673 | |||||||||||||||
| Derecognition of loans as part of disposals | (20 | ) | — | (20 | ) | — | (20 | ) | ||||||||||||
| Foreign exchange movements | (162 | ) | (5 | ) | (167 | ) | — | (167 | ) | |||||||||||
| Fair value adjustment to fair value hedged borrowings | — | — | — | 92 | 92 | |||||||||||||||
| Fair value movement of hedging derivatives | (52 | ) | — | (52 | ) | 52 | — | |||||||||||||
| Change in finance lease obligations | — | 522 | 522 | — | 522 | |||||||||||||||
| Other non-cash movements | 33 | — | 33 | — | 33 | |||||||||||||||
| Subtotal | 398 | 591 | 989 | 144 | 1,133 | |||||||||||||||
| Increase in financing liabilities for the period | 1,710 | 2 | 1,712 | 144 | 1,856 | |||||||||||||||
| 31 December 2022 | 9,760 | 905 | 10,665 | 210 | 10,875 | |||||||||||||||
1See consolidated statement of cash flows.
2The cross currency and interest rate swaps are reported on the balance sheet within the heading Other financial liabilities.
3Please refer to note 23 for acquisition of business.
Viterra Limited 2023 Financial Statements - 61
Notes to the consolidated financial statements
20. PROVISIONS AND OTHER LIABILITIES
| US$ million | Rehabilitation
costs | Post-employment
benefits | Other provisions | Total | ||||||||||||
| 1 January 2023 | 87 | 14 | 83 | 184 | ||||||||||||
| Accretion in the year | 2 | (2 | ) | — | — | |||||||||||
| (Reduced)/additional provision in the year | 8 | (10 | ) | 52 | 50 | |||||||||||
| Effect of foreign currency exchange movement | 1 | — | 2 | 3 | ||||||||||||
| Other movements | (2 | ) | 13 | (18 | ) | (7 | ) | |||||||||
| 31 December 2023 | 96 | 15 | 119 | 230 | ||||||||||||
| Current | 2 | — | 68 | 70 | ||||||||||||
| Non-current | 94 | 15 | 51 | 160 | ||||||||||||
| 1 January 2022 | 113 | 18 | 122 | 253 | ||||||||||||
| Business combination | 14 | 2 | 27 | 43 | ||||||||||||
| Accretion in the year | 2 | (2 | ) | — | — | |||||||||||
| (Reduced)/additional provision in the year | (36 | ) | 46 | (73 | ) | (63 | ) | |||||||||
| Effect of foreign currency exchange difference | (6 | ) | (2 | ) | — | (8 | ) | |||||||||
| Other movements | — | (48 | ) | 7 | (41 | ) | ||||||||||
| 31 December 2022 | 87 | 14 | 83 | 184 | ||||||||||||
| Current | 3 | — | 42 | 45 | ||||||||||||
| Non-current | 84 | 14 | 41 | 139 | ||||||||||||
Rehabilitation costs
Rehabilitation provision represents the accrued cost required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally at the end of a project’s life, with the majority of the costs expected to be incurred in the final years of the underlying operations. The majority of the Group’s rehabilitation obligations are in Australia and Canada. The estimated future cash flows are discounted at a rate of 4% (2022: 4%), which is based on current market risk free rates.
Other
Other provisions include provisions for legal related claims of $39 million (2022: $35 million) and tax (other than income tax) related claims of $10 million (2022: $2 million).
Viterra assessed its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its reasoned estimate of these tax liabilities, including related interest charges. These current open tax matters are spread across numerous jurisdictions and consist primarily of legacy transfer pricing and VAT matters that have been open for a number of years and may take several more years to resolve, none of which are individually material.
Viterra Limited 2023 Financial Statements - 62
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS
Total personnel costs, which include salaries, wages, social security and other personnel costs, incurred for the years ended 31 December 2023 and 2022, were $832 million and $720 million, respectively. Personnel costs related to consolidated industrial subsidiaries of $573 million (2022: $454 million) are included in cost of goods sold. Other personnel costs are included in selling and administrative expenses.
The Company and certain subsidiaries sponsor various pension schemes in accordance with local regulations and practices. Eligibility for participation in the various plans is either based on completion of a specified period of continuous service or date of hire. Among these schemes are defined contribution plans as well as defined benefit plans.
Defined contribution plans
Viterra’s contributions under these plans amounted to $19 million in 2023 (2022: $13 million).
Post-retirement medical plans
The Company participates in one post-retirement medical plan in Canada, which provides coverage for prescription drugs, medical, dental, hospital and life insurance to eligible retirees. The post-retirement medical plan is unfunded. The expense for this plan amounted to $1 million in 2023 (2022: $3 million income).
Defined benefit pension plans
The Company operates defined benefit plans in a handful of countries, the main location being Canada, to which 78% (2022: 80%) of the present value of obligations accrued to date relates. These defined benefit plans are pension plans that provide benefits to members in the form of a guaranteed level of pension payable for life. Contributions to the Canadian plans are made to meet or exceed minimum funding requirements based on provincial statutory requirements and associated federal taxation rules.
The majority of benefit payments are from trustee-administered funds; however, there are also a number of unfunded plans where Viterra meets the benefit payments as they fall due. Plan assets held in trusts are governed by local regulations and practices in each country. Responsibility for governance of the plans – overseeing all aspects of the plans including investment decisions and contribution schedules – lies with Viterra. Viterra has set up committees to assist in the management of the plans and has also appointed experienced, independent professional experts such as investment managers, actuaries, custodians and trustees.
Viterra Limited 2023 Financial Statements - 63
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS (continued)
The movement in the defined benefit pension and post-retirement medical plans over the year is as follows:
| Defined benefit pension plans | ||||||||||||||||||||||||
| US$ million | Notes | Post- retirement medical plans | Present value of defined benefit obligation | Fair value of
plan assets | Asset ceiling | Net
(asset)/ liability for defined benefit pension plans | ||||||||||||||||||
| 1 January 2023 | 9 | 298 | (399 | ) | 62 | (39 | ) | |||||||||||||||||
| Current service cost | — | 1 | — | — | 1 | |||||||||||||||||||
| Interest expense/(income) | — | 14 | (19 | ) | 3 | (2 | ) | |||||||||||||||||
Total expense/(income) recognised in consolidated statement of income | — | 15 | (19 | ) | 3 | (1 | ) | |||||||||||||||||
| Gain on plan assets, excluding amounts included in interest expense – net | — | — | (14 | ) | — | (14 | ) | |||||||||||||||||
| Loss from change in financial assumptions | 1 | 11 | — | — | 11 | |||||||||||||||||||
| Gain from actuarial experience | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||
| Change in asset ceiling, excluding amounts in interest expense | — | — | — | (5 | ) | (5 | ) | |||||||||||||||||
Actuarial (gains)/losses recognised in consolidated statement of comprehensive income | 1 | 10 | (14 | ) | (5 | ) | (9 | ) | ||||||||||||||||
| Employer contributions | — | — | (3 | ) | — | (3 | ) | |||||||||||||||||
| Benefits paid directly by the Company | — | (1 | ) | 1 | — | — | ||||||||||||||||||
| Benefits paid from plan assets | — | (23 | ) | 23 | — | — | ||||||||||||||||||
| Net cash (outflow)/inflow | — | (24 | ) | 21 | — | (3 | ) | |||||||||||||||||
| Exchange differences | — | 10 | (11 | ) | 1 | — | ||||||||||||||||||
| 31 December 2023 | 10 | 309 | (422 | ) | 61 | (52 | ) | |||||||||||||||||
| Of which: | ||||||||||||||||||||||||
| Pension surpluses | — | — | — | — | (57 | ) | ||||||||||||||||||
| Pension deficits | 20 | 10 | — | — | — | 5 | ||||||||||||||||||
The Group expects to make a contribution of $2 million to the defined benefit pension and post-retirement medical plans during the next financial year.
Viterra Limited 2023 Financial Statements - 64
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS (continued)
| Defined benefit pension plans | ||||||||||||||||||||||||
| US$ million | Notes | Post- retirement medical | Present value of defined benefit obligation | Fair value of
plan assets | Asset ceiling | Net
(asset)/ liability for defined benefit pension plans | ||||||||||||||||||
| 1 January 2022 | 13 | 429 | (557 | ) | 38 | (90 | ) | |||||||||||||||||
| Current service cost | — | 1 | — | — | 1 | |||||||||||||||||||
| Interest expense/(income) | — | 10 | (13 | ) | 1 | (2 | ) | |||||||||||||||||
Total expense/(income) recognised in consolidated statement of income | — | 11 | (13 | ) | 1 | (1 | ) | |||||||||||||||||
| Loss on plan assets, excluding amounts included in interest expense - net | — | — | 113 | — | 113 | |||||||||||||||||||
| Loss from change in demographic assumptions | — | 1 | — | — | 1 | |||||||||||||||||||
| Gain from change in financial assumptions | (3 | ) | (90 | ) | — | — | (90 | ) | ||||||||||||||||
| Change in asset ceiling, excluding amounts in interest expense | — | — | — | 26 | 26 | |||||||||||||||||||
Actuarial (gains)/losses recognised in consolidated statement of comprehensive income | (3 | ) | (89 | ) | 113 | 26 | 50 | |||||||||||||||||
| Employer contributions | — | — | (2 | ) | — | (2 | ) | |||||||||||||||||
| Benefits paid from plan assets | — | (25 | ) | 25 | — | — | ||||||||||||||||||
| Net cash (outflow)/inflow | — | (25 | ) | 23 | — | (2 | ) | |||||||||||||||||
| Exchange differences | (1 | ) | (28 | ) | 35 | (3 | ) | 4 | ||||||||||||||||
| 31 December 2022 | 9 | 298 | (399 | ) | 62 | (39 | ) | |||||||||||||||||
| Of which: | ||||||||||||||||||||||||
| Pension surpluses | — | — | — | — | (43 | ) | ||||||||||||||||||
| Pension deficits | 20 | 9 | — | — | — | 4 | ||||||||||||||||||
Viterra Limited 2023 Financial Statements - 65
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS (continued)
The defined benefit obligation accrued to date in Canada represents the majority of the total obligation of the Company. The breakdown below provides details of the Canadian plans for both the balance sheet and the weighted average duration of the defined benefit obligation as at 31 December 2023 and 2022. The defined benefit obligation of any other of the Group’s defined benefit plans as at 31 December 2023 does not exceed $46 million (2022: $39 million).
| US$ million
2023 | Canada | Other | Total | |||||||||
| Post-retirement medical plans | ||||||||||||
| Present value of defined benefit obligation | 10 | — | 10 | |||||||||
| Of which: amounts owing to active members | 3 | — | 3 | |||||||||
| Of which: amounts owing to pensioners | 7 | — | 7 | |||||||||
| Defined benefit pension plans | ||||||||||||
| Present value of defined benefit obligation | 241 | 68 | 309 | |||||||||
| Of which: amounts owing to active members | 25 | 1 | 26 | |||||||||
| Of which: amounts owing to inactive members | 12 | 50 | 62 | |||||||||
| Of which: amounts owing to pensioners | 204 | 17 | 221 | |||||||||
| Fair value of plan assets | (356 | ) | (66 | ) | (422 | ) | ||||||
| Asset ceiling | 61 | — | 61 | |||||||||
| Net defined benefit (asset)/liability at 31 December 2023 | (54 | ) | 2 | (52 | ) | |||||||
| Weighted average duration of defined benefit obligation - years | 9.01 | 20.31 | 11.42 | |||||||||
| US$ million
2022 | Canada | Other | Total | |||||||||
| Post-retirement medical plans | ||||||||||||
| Present value of defined benefit obligation | 9 | — | 9 | |||||||||
| Of which: amounts owing to active members | 3 | — | 3 | |||||||||
| Of which: amounts owing to pensioners | 6 | — | 6 | |||||||||
| Defined benefit pension plans | ||||||||||||
| Present value of defined benefit obligation | 238 | 61 | 299 | |||||||||
| Of which: amounts owing to active members | 25 | 1 | 26 | |||||||||
| Of which: amounts owing to inactive members | 12 | 44 | 56 | |||||||||
| Of which: amounts owing to pensioners | 201 | 16 | 217 | |||||||||
| Fair value of plan assets | (339 | ) | (60 | ) | (399 | ) | ||||||
| Asset ceiling | 62 | — | 62 | |||||||||
| Net defined benefit (asset)/liability at 31 December 2022 | (39 | ) | 1 | (38 | ) | |||||||
| Weighted average duration of defined benefit obligation - years | 9.30 | 19.87 | 11.45 | |||||||||
The actual return on plan assets in respect of defined benefit pension plans amounted to a gain of $44 million (2022: $89 million loss), mainly resulting from actuarial gains, interest income and foreign exchange movements.
Viterra Limited 2023 Financial Statements - 66
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS (continued)
The plan assets consist of the following:
| US$ million | 2023 | 2022 | ||||||
| Cash and short-term investments | 7 | 7 | ||||||
| Fixed income | 296 | 268 | ||||||
| Equities | 43 | 48 | ||||||
| Other1 | 76 | 76 | ||||||
| Total | 422 | 399 | ||||||
1 Includes securities in non-active markets in the amount of $45 million (2022: $38 million).
The fair value of plan assets includes none of Viterra’s own financial instruments and no property occupied by, or other assets used by, Viterra. For many of the plans, representing a large portion of the global plan assets, asset-liability matching strategies are in place, where the fixed-income assets are invested broadly in alignment with the duration of the plan liabilities, and the proportion allocated to fixed-income assets is raised when the plan funding level increases.
Through its defined benefit plans, Viterra is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. The funded plans hold a significant proportion of equities, which are expected to outperform bonds in the long term while contributing volatility and risk in the short term. Viterra believes that, due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of Viterra’s long-term strategy to manage the plans efficiently.
Change in bond yields: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
Inflation risk: Some of the plans’ benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities, although in most cases caps on the level of inflationary increases are in place to protect the plan against extreme inflation.
Life expectancy: The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liability.
Salary increases: Some of the plans’ benefit obligations related to active members are linked to their salaries. Higher salary increases will therefore tend to lead to higher plan liabilities.
Viterra Limited 2023 Financial Statements - 67
Notes to the consolidated financial statements
The principal weighted average actuarial assumptions used were as follows:
| Post-retirement
medical plans | Defined benefit pension plans | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Discount rate | 4.6 | % | 5.0 | % | 4.4 | % | 4.7 | % | ||||||||
| Future salary increases | 3.0 | % | 3.0 | % | 3.0 | % | 2.4 | % | ||||||||
| Future pension increases | — | % | — | % | 1.2 | % | 1.2 | % | ||||||||
| Ultimate medical cost trend rate | 4.1 | % | 4.1 | % | — | % | — | % | ||||||||
Viterra Limited 2023 Financial Statements - 68
Notes to the consolidated financial statements
21. PERSONNEL COSTS AND EMPLOYEE BENEFITS (continued)
Mortality assumptions are based on the latest available standard mortality tables for the individual countries concerned. As at 31 December 2023, these tables imply expected future life expectancy, for employees aged 65, 21 to 23 years for males (2022: 21 to 23) and 23 to 26 years for females (2022: 23 to 26). The assumptions for each country are reviewed each year and are adjusted where necessary to reflect changes in fund experience and actuarial recommendations.
The sensitivity of the defined benefit obligation to changes in principal assumptions as at 31 December 2023 is set out below, assuming that all other assumptions are held constant, and the effect of interrelationships is excluded. There has been no change in the sensitivity calculation methodology from the prior year.
| Increase/(decrease) in pension obligation | ||||||||||||
| US$ million | Post-retirement medical plans | Defined benefit pension plans | Total | |||||||||
| Discount rate | ||||||||||||
| Increase by 100 basis points | — | (32 | ) | (32 | ) | |||||||
| Decrease by 100 basis points | — | 35 | 35 | |||||||||
| Rate of future salary increase | ||||||||||||
| Increase by 100 basis points | — | 1 | 1 | |||||||||
| Decrease by 100 basis points | — | (1 | ) | (1 | ) | |||||||
| Rate of future pension benefit increase | ||||||||||||
| Increase by 100 basis points | — | 1 | 1 | |||||||||
| Decrease by 100 basis points | — | (1 | ) | (1 | ) | |||||||
| Medical cost trend rate | ||||||||||||
| Increase by 100 basis points | — | — | — | |||||||||
| Decrease by 100 basis points | — | — | — | |||||||||
| Life expectancy | ||||||||||||
| Increase in longevity by one year | — | 9 | 9 | |||||||||
Viterra Limited 2023 Financial Statements - 69
Notes to the consolidated financial statements
22. ACCOUNTS PAYABLE
| US$ million | 2023 | 2022 | ||||||
| Financial liabilities at amortised cost | ||||||||
| Trade payables | 3,689 | 4,685 | ||||||
| Margin calls received | 9 | 2 | ||||||
| Associated companies | 11 | 35 | ||||||
| Other payables and accrued liabilities | 213 | 286 | ||||||
| Non-financial instruments | ||||||||
| Advances settled in product | 376 | 220 | ||||||
| Payables to employees | 190 | 171 | ||||||
| Other tax and related payables | 67 | 59 | ||||||
| Total | 4,555 | 5,458 | ||||||
Trade payables are obligations to pay for goods and services. Trade payables typically have maturities up to 90 days depending on the commodity and the geographic area in which the purchase transaction occurs and the agreed terms. The carrying value of trade payables approximates fair value.
Included within trade payables at 31 December 2023 is an amount of $88 million (2022: $Nil) which relates to amounts received in advance for receivables which have been sold by the Group but which do not meet the criteria for derecognition as the Group retains the principal risks and rewards of ownership. The corresponding receivables are included in trade receivables.
23. ACQUISITION AND DISPOSALS OF SUBSIDIARIES
2023 Acquisition
For the year ended 31 December 2023, Viterra had no material acquisitions of subsidiaries.
2022 Acquisition
Gavilon
On 3 October 2022, Viterra concluded the acquisition of a 100% interest in Gavilon Agriculture Investment, Inc., for an initial cash consideration of $1,125 million, plus working capital amounting to $1,801 million. In 2023, the final purchase price was assessed resulting in a repayment to the Group of $54 million and a final cash consideration for the acquisition of $1,071 million.
The valuation of the acquisition had not been completed by the date the 2022 consolidated financial statements were issued and therefore Viterra reported in its consolidated financial statements for the year ended 31 December 2022 provisional amounts for the assets and liabilities acquired. In these consolidated financial statements Viterra has retrospectively adjusted the provisional amounts recognised at the acquisition date to reflect the updated valuation of assets and liabilities.
Viterra Limited 2023 Financial Statements - 70
Notes to the consolidated financial statements
Gavilon is based in Omaha, Nebraska, USA, and originates, stores and distributes grains and oilseeds, as well as feed and food ingredients, to food manufacturers, livestock producers, poultry processors, soybean processors and ethanol producers worldwide.
The primary reason for the transaction was to expand Viterra’s operations in the markets in which Gavilon operates. Gavilon’s asset network is located in key growing areas across the United States, with access to major railroads, rivers and ports. It also has international operations in Mexico, South America, Europe and Asia.
Viterra Limited 2023 Financial Statements - 71
Notes to the consolidated financial statements
23. ACQUISITION AND DISPOSALS OF SUBSIDIARIES (continued)
The table below reflects the adjustments recorded to the provisional amounts recorded in the consolidated financial statements as at 31 December 2022:
| US$ million | Provisional fair values as reported at acquisition date | Fair value adjustments to the provisional allocation | Revised acquisition date fair values | |||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 905 | (79 | ) | 826 | ||||||||
| Investments in associates and joint ventures | 62 | 20 | 82 | |||||||||
| 967 | (59 | ) | 908 | |||||||||
| Current assets | ||||||||||||
| Inventories | 1,818 | — | 1,818 | |||||||||
| Accounts receivable | 722 | — | 722 | |||||||||
| Cash and cash equivalents | 678 | — | 678 | |||||||||
| Other current assets | 686 | — | 686 | |||||||||
| 3,904 | — | 3,904 | ||||||||||
| Non-current liabilities | ||||||||||||
| Borrowings | 74 | — | 74 | |||||||||
| Other non-current liabilities | 45 | 29 | 74 | |||||||||
| 119 | 29 | 148 | ||||||||||
| Current liabilities | ||||||||||||
| Borrowings | 599 | — | 599 | |||||||||
| Accounts payable | 1,145 | (6 | ) | 1,139 | ||||||||
| Other current liabilities | 425 | (3 | ) | 422 | ||||||||
| 2,169 | (9 | ) | 2,160 | |||||||||
| Non-controlling interest | 2 | — | 2 | |||||||||
| Total fair value of net assets acquired | 2,581 | (79 | ) | 2,502 | ||||||||
| Consideration paid/(received) | 2,926 | (54 | ) | 2,872 | ||||||||
| Goodwill arising on acquisition | 345 | 25 | 370 | |||||||||
| Net cash used in acquisition of subsidiary | (2,235 | ) | 54 | (2,181 | ) | |||||||
| Acquisition related costs1 | 28 | — | 28 | |||||||||
1The Group incurred acquisition related costs of $28 million related to closing legal, consulting and advisory expenses. These costs have been recognised in selling and administrative expenses in the consolidated statement of income.
The finalisation of the estimated fair value of property, plant and equipment was due mainly to the availability of additional information about the nature and condition of the acquired assets. The fair value of the consideration transferred on acquisition was adjusted based on the finalisation of the purchase price in accordance with the share purchase agreement.
If the acquisition had taken place effective 1 January 2022, the operation would have contributed additional revenue of $22,567 million and additional attributable net profit of $75 million for 2022.
From the date of acquisition until 31 December 2022, the operations contributed $4,011 million of revenue and $55 million of attributable net income.
Viterra Limited 2023 Financial Statements - 72
Notes to the consolidated financial statements
23. ACQUISITION AND DISPOSALS OF SUBSIDIARIES (continued)
The table below shows the movement between the figures reported as at 31 December 2022 in the consolidated statement of financial position as included in the consolidated financial statements for the year ended 31 December 2022 and those shown in these consolidated financial statements. All other amounts in the respective statements of financial position are unchanged.
| US$ million | Amount per 2022 annual consolidated financial statements | Purchase price allocation adjustments | Revised 2022 amount | |||||||||
| Assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 5,073 | (79 | ) | 4,994 | ||||||||
| Intangible assets | 1,380 | 25 | 1,405 | |||||||||
| Investments in associates and joint ventures | 490 | 20 | 510 | |||||||||
| Total non-current assets | 7,328 | (34 | ) | 7,294 | ||||||||
| Current assets | ||||||||||||
| Accounts receivable | 4,571 | 54 | 4,625 | |||||||||
| Total current assets | 16,200 | 54 | 16,254 | |||||||||
| Total assets | 23,528 | 20 | 23,548 | |||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liabilities | 438 | 17 | 455 | |||||||||
| Other long-term liabilities | 25 | 12 | 37 | |||||||||
| Total non-current liabilities | 6,535 | 29 | 6,564 | |||||||||
| Current liabilities | ||||||||||||
| Accounts payable | 5,464 | (6 | ) | 5,458 | ||||||||
| Income tax payable | 230 | (3 | ) | 227 | ||||||||
| Total current liabilities | 11,734 | (9 | ) | 11,725 | ||||||||
| Total equity and liabilities | 23,528 | 20 | 23,548 | |||||||||
2023 Disposals
In March 2023, Viterra announced that it would exit the Russian market and divest entirely its Russian businesses. On 20 October 2023, Viterra concluded the sale of all of its Russian businesses for an aggregate consideration in cash of $42 million and a gain of $3 million. Refer to note 4 for details. Until final completion of the transaction on 20 October 2023, Viterra continued to operate its businesses in Russia in compliance with all existing sanctions and applicable laws.
Viterra Limited 2023 Financial Statements - 73
Notes to the consolidated financial statements
23. ACQUISITION AND DISPOSALS OF SUBSIDIARIES (continued)
The carrying value of the assets and liabilities of the disposed Russian subsidiaries over which control was lost and for which cash consideration was received is detailed below:
| US$ million | Note | 2023 | ||||||
| Assets | ||||||||
| Non-current assets | ||||||||
| Advances and loans | 42 | |||||||
| Total non-current assets | 42 | |||||||
| Current assets | ||||||||
| Inventories | 45 | |||||||
| Accounts receivable | 57 | |||||||
| Other financial assets | 5 | |||||||
| Cash and cash equivalents | 86 | |||||||
| Income tax receivable | 2 | |||||||
| Total current assets | 195 | |||||||
| Total assets | 237 | |||||||
| Non-current liabilities | ||||||||
| Borrowings | 17 | |||||||
| Deferred tax liabilities | 3 | |||||||
| Total non-current liabilities | 20 | |||||||
| Current liabilities | ||||||||
| Borrowings | 145 | |||||||
| Accounts payable | 29 | |||||||
| Other financial liabilities | 8 | |||||||
| Total current liabilities | 182 | |||||||
| Carrying value of net assets | 35 | |||||||
| Consideration received (in cash) | 42 | |||||||
| Less: expense recycled to profit or loss | (4 | ) | ||||||
| Net gain on disposal | 4 | 3 | ||||||
| Consideration received (in cash) | 42 | |||||||
| Cash and cash equivalents disposed | (86 | ) | ||||||
| Net cash used for disposal | (44 | ) | ||||||
Viterra Limited 2023 Financial Statements - 74
Notes to the consolidated financial statements
23. ACQUISITION AND DISPOSALS OF SUBSIDIARIES (continued)
2022 Disposal
In the year ended 31 December 2022 Viterra had no material disposals of subsidiaries. Details of non-material disposals of investments are provided in note 4.
24. FINANCIAL AND CAPITAL RISK MANAGEMENT
Financial risks arising in the normal course of business from Viterra’s operations comprise market risk (including commodity price risk, interest rate risk and currency risk), credit risk (including performance risk) and liquidity risk. It is Viterra’s policy and practice to identify and, where appropriate and practical, actively manage such risks to support its objectives in managing its capital and future financial security and flexibility. It is under this objective that Viterra only undertakes risks which are in line with the corporate risk appetite and any unintended risks identified are suppressed. Viterra’s overall risk management programme is described in the Enterprise Risk Management Policy as adopted by the Board of Directors and focuses on the unpredictability of financial markets and seeks to protect its financial security and flexibility by using derivative financial instruments where possible to substantially hedge these financial risks. Viterra’s finance and risk professionals ensure compliance with the Enterprise Risk Management Policy, working in coordination with the commodity departments, by monitoring, managing and reporting regularly Viterra’s risk to senior management and the Board of Directors on the approach and effectiveness in managing financial risks along with the financial exposures facing the Group.
Viterra’s objectives in managing its “capital attributable to equity holders” include preserving its overall financial health and strength for the benefit of all stakeholders, maintaining an optimal capital structure in order to provide a high degree of financial flexibility at an attractive cost of capital, and safeguarding its ability to continue as a going concern, while generating sustainable long-term profitability.
Distribution policy and other capital management initiatives
The manner and timing of future distributions will be determined after consultation with shareholders.
Commodity price risk
Viterra is exposed to price movements for the inventory it holds and the products it produces which are not held to meet priced forward contract obligations and forward priced purchase or sale contracts. Viterra manages a significant portion of this exposure through futures and options transactions on worldwide commodity exchanges or in over the counter (OTC) markets, to the extent available.
Viterra Limited 2023 Financial Statements - 75
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Commodity price risk management activities are considered an integral part of Viterra’s physical commodity marketing activities and the related assets and liabilities are included in other financial assets from and other financial liabilities to derivative counterparties, including clearing brokers and exchanges.
Whilst it is Viterra’s policy to substantially hedge its commodity price risks, there remains the possibility that the hedging instruments chosen may not always provide effective mitigation of the underlying price risk. The hedging instruments available to the marketing businesses may differ in specific characteristics to the risk exposure to be hedged, resulting in an ongoing and unavoidable basis risk exposure. Residual basis risk exposures represent a key focus point for Viterra’s commodity department teams who actively engage in the management of such.
Value at risk
One of the tools used by Viterra to monitor and limit its primary market risk exposure, principally commodity price risk related to its physical marketing activities, is the use of a value at risk (VaR) computation. VaR is a risk measurement technique which estimates a threshold for potential loss that could occur on risk positions as a result of movements in risk factors over a specified time horizon, given a specific level of confidence and based on a specific price history. The VaR methodology is a statistically defined, probability based approach that takes into account market volatilities, as well as risk diversification, by recognising offsetting positions and correlations between commodities and markets. In this way, risks can be measured consistently across markets and commodities and risk measures can be aggregated to derive a single risk value. Viterra’s Board has set a consolidated VaR limit (one-day 95% confidence level) of $36 million representing less than 1% of total equity, which the Board reviews annually.
Viterra uses a VaR approach based on Monte Carlo simulations computed at a 95% confidence level and utilising an exponentially weighted data history for a one-day time horizon.
Position sheets are regularly distributed and monitored and daily Monte Carlo simulations are applied to the various business groups’ marketing positions to determine potential losses.
Market risk VaR (one-day 95% confidence interval) ranges and the full-year levels were as follows:
| US$ million | 2023 | 2022 | ||||||
| Average during the year | 18 | 25 | ||||||
| High during the year | 32 | 52 | ||||||
| Low during the year | 11 | 15 | ||||||
The VaR does not purport to represent actual gains or losses in fair value on earnings to be incurred by Viterra, nor does Viterra claim that these VaR results are indicative of future market movements or representative of any actual impact on its future results. VaR should always be viewed in the context of its limitations; notably, the use of historical data as a proxy for estimating future events, market liquidity risks and tail risks. Viterra recognises these limitations, and thus complements and continuously refines its VaR analysis by analysing forward-looking stress scenarios and back testing calculated VaR against the hypothetical portfolio returns arising in the next business day.
Viterra Limited 2023 Financial Statements - 76
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Viterra’s VaR computation currently covers its business with grain, oilseeds, sugar, cotton, rice and ethanol, and assesses the open priced positions which are subject to price risk, including inventories of these commodities.
Net present value at risk
Viterra’s future cash flows related to its forecast production activities are also exposed to commodity price movements. Viterra manages this exposure through a combination of portfolio diversification, occasional hedging via futures and options transactions, and continuous internal monitoring, reporting and quantification of the underlying operations’ estimated cash flows and valuations.
Interest rate risk
Viterra is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its assets and liabilities and cash flows. Matching of assets and liabilities is utilised as the dominant method to hedge interest rate risks. Floating rate debt, which is predominantly used to fund fast turning working capital (interest is internally charged on the funding of this working capital), is primarily based on USD SOFR plus an appropriate premium. Accordingly, prevailing market interest rates are continuously factored into transactional pricing and terms.
Assuming the amount of floating rate liabilities at the reporting period end were outstanding for the whole year, interest rates were 50 basis points higher/lower and all other variables held constant, Viterra’s income and equity for the year ended 31 December 2023 would decrease/increase by $18 million (2022: $33 million).
The capital market notes include a $450 million and a $300 million coupon bond, issued in April 2022 (see note 19). Interest rate swap contracts have been entered into to hedge the interest rate risk associated with these bonds. These swap contracts have been designated as fair value hedges of the interest rate risk associated with the US dollar denominated bonds. The key terms of these swap contracts and the hedged items are matched and Viterra expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite directions in response to movements in the underlying interest rates. Therefore, no gain or loss has been recognised due to hedge ineffectiveness.
The corresponding fair value and notional amounts of these derivatives is as follows:
| Nominal amount | Fair value of hedge derivative | |||||||||||||||
| US$ million | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Fair value hedges - interest rate risk | ||||||||||||||||
| USD Bonds1 | 750 | 750 | (44 | ) | (52 | ) | ||||||||||
| Total | 750 | 750 | (44 | ) | (52 | ) | ||||||||||
1 Refer to note 19 for details of the hedged item.
Viterra Limited 2023 Financial Statements - 77
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Interest rate benchmark reform
On 30 June 2023 the final remaining LIBOR bank panel ended and consequently overnight one-, three- and six-month USD LIBORs are no longer quoted. The Group had previously established a multidisciplinary working group to prepare and implement a LIBOR transition plan. As at 31 December 2023 none of the Group's floating rate debt is linked to LIBOR benchmarks, with the majority of these items having been transitioned to alternative benchmarks (primarily SOFR). See note 19 for details of the Group's floating rate debt.
Currency risk
The US dollar is the predominant functional currency of the Group. Currency risk is the risk of loss from movements in exchange rates related to transactions and balances in currencies other than the US dollar. Such transactions include operating expenditure, capital expenditure, and to a lesser extent purchases and sales in currencies other than the functional currency. Purchases or sales of commodities concluded in currencies other than the functional currency, apart from certain limited domestic sales at industrial operations which act as a hedge against local operating costs, are ordinarily hedged through forward exchange contracts. Consequently, foreign exchange movements against the US dollar on recognised transactions would have an immaterial financial impact. Viterra enters into currency hedging transactions with leading financial institutions.
Viterra’s debt related payments (both principal and interest) are predominantly denominated in or swapped using hedging instruments into US dollars. Viterra’s operating expenses, being a small portion of its revenue base, are incurred in a mix of currencies of which the US dollar, Canadian dollar, Australian dollar, Brazilian real and Euro are the predominant currencies.
Viterra has issued Euro denominated bonds (see note 19). Cross currency swaps were concluded to hedge the currency risk arising on the principal and related interest payments of these bonds. These swap contracts were designated as cash flow hedges of the associated foreign currency risks on the expected future cash flows of the Euro denominated bonds. The key terms of these swap contracts and the hedged items are matched and Viterra expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite directions in response to movements in the underlying exchange rates. Viterra has not recognised any gain or loss due to hedge ineffectiveness.
The corresponding fair value and notional amounts of these derivatives are as follows:
| Nominal amount | Hedged foreign exchange rates | Fair value of hedge derivative | ||||||||||||||||||||||
| US$ million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
| Cash flow hedges - currency risk | ||||||||||||||||||||||||
| Eurobonds1 | 1,414 | 1,414 | 1.11 | 1.07 | (92 | ) | (158 | ) | ||||||||||||||||
| Total | 1,414 | 1,414 | (92 | ) | (158 | ) | ||||||||||||||||||
1 Refer to note 19 for details of the hedged item.
Viterra Limited 2023 Financial Statements - 78
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Credit risk
Credit risk arises from the possibility that counterparties may not be able to settle obligations due to Viterra within their agreed payment terms. Financial assets which potentially expose Viterra to credit risk consist principally of cash and cash equivalents, receivables and advances, derivative instruments, and non-current advances and loans. Viterra’s credit management process includes the assessment, monitoring and reporting of counterparty exposure on a regular basis. Viterra’s cash and cash equivalents are placed overnight with a diverse group of highly credit rated financial institutions. The Group deems these financial institutions to have low credit risk. Credit risk with respect to receivables and advances is mitigated by the large number of customers comprising Viterra’s customer base and their diversity across various industries and geographical areas, as well as Viterra’s policy to mitigate these risks through letters of credit, netting, collateral and insurance arrangements where appropriate. Additionally, it is Viterra’s policy that transactions and activities in trade related financial instruments be concluded under master netting agreements or long form confirmations to enable offsetting of balances due to/from a common counterparty in the event of default by the counterparty. Viterra actively and continuously monitors the credit quality of its counterparties through internal reviews and a credit scoring process, which includes, where available, public credit ratings. Balances with counterparties not having a public investment grade or equivalent internal rating are typically enhanced to investment grade through the extensive use of credit enhancement products, such as letters of credit or insurance products.
Viterra has a diverse customer base, with no customer representing more than 3.2% (2022: 1.6%) of its trade receivables (on a gross basis taking into account credit enhancements) or accounting for more than 1.1% of its revenues over the year ended 31 December 2023 (2022: 4.1%).
The maximum exposure to credit risk (including performance risk - see below), without considering netting agreements or without taking account of any collateral held or other credit enhancements, is equal to the carrying amount of Viterra’s financial assets (see note 25).
Performance risk
Performance risk (part of the broader credit risk subject matter, discussed above) is inherent in contracts, with agreements in the future, to physically purchase or sell commodities with fixed price attributes, and arises from the possibility that counterparties may not be willing or able to meet their future contractual physical sale or purchase obligations to/from Viterra. Viterra undertakes the assessment, monitoring and reporting of performance risk within its overall credit management process. Viterra’s market breadth, and diversified supplier and customer base, as well as the standard pricing mechanism in the vast majority of Viterra’s commodity portfolio, ensure that performance risk is adequately mitigated.
Agricultural markets are characterised by their relatively short-term pricing windows, of which the majority range between spot and six-month forward.
Viterra Limited 2023 Financial Statements - 79
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Liquidity risk
Liquidity risk is the risk that Viterra is unable to meet its payment obligations when due, or that it is unable, on an ongoing basis, to borrow funds in the market on an unsecured or secured basis at an acceptable price to fund actual or proposed commitments. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and availability of adequate committed funding facilities. Viterra’s credit profile, diversified funding sources and committed credit facilities ensure that sufficient liquid funds are maintained to meet its liquidity requirements. As part of its liquidity management, Viterra closely monitors and plans for its future capital expenditure, working capital needs (including matching the significant future payments from purchase obligations with future proceeds from sales contracts) and proposed investments, as well as credit facility refinancing/extension requirements, well ahead of time.
As at 31 December 2023, Viterra had available committed undrawn credit facilities and cash amounting to $6,635 million (2022: $7,018 million). The maturity profile of Viterra’s financial liabilities based on the contractual terms is as follows:
| US$ million 2023 | After 5 years | Due 3-5 years | Due 2-3 years | Due 1-2 years | Due 0-1 year | Total | ||||||||||||||||||
| Borrowings | 886 | 1,286 | 646 | 2,096 | 2,106 | 7,020 | ||||||||||||||||||
| Lease liabilities | 185 | 95 | 86 | 200 | 324 | 890 | ||||||||||||||||||
| Expected future interest payments | 540 | 81 | 316 | 185 | 167 | 1,289 | ||||||||||||||||||
| Accounts payable1 | — | — | — | — | 4,365 | 4,365 | ||||||||||||||||||
| Other financial liabilities | 80 | 18 | 38 | — | 640 | 776 | ||||||||||||||||||
| Total | 1,691 | 1,480 | 1,086 | 2,481 | 7,602 | 14,340 | ||||||||||||||||||
| Current assets | 12,224 | 12,224 | ||||||||||||||||||||||
| US$ million 2022 | After 5 years | Due 3-5 years | Due 2-3 years | Due 1-2 years | Due 0-1 year | Total | ||||||||||||||||||
| Borrowings | 1,667 | 1,621 | 738 | 1,167 | 4,567 | 9,760 | ||||||||||||||||||
| Lease liabilities | 154 | 93 | 91 | 192 | 375 | 905 | ||||||||||||||||||
| Expected future interest payments | 249 | 106 | 151 | 196 | 165 | 867 | ||||||||||||||||||
| Accounts payable1 | — | — | — | — | 5,293 | 5,293 | ||||||||||||||||||
| Other financial liabilities | 122 | 22 | 66 | — | 1,052 | 1,262 | ||||||||||||||||||
| Total | 2,192 | 1,842 | 1,046 | 1,555 | 11,452 | 18,087 | ||||||||||||||||||
| Current assets | 16,254 | 16,254 |
1 Accounts payable excludes payables to employees which are non-financial liabilities.
Viterra Limited 2023 Financial Statements - 80
Notes to the consolidated financial statements
24. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued)
Climate and environmental risk
Our financial reporting, consistent with IFRS guidelines, reflects significant judgements and uncertainties related to environmental and climate risks. Based on the preliminary assessment of the global climate changes, Viterra does not identify climate changes that materially changed the evaluation of the material assets or liabilities, nor critical accounting judgements, in 2023.
25. FINANCIAL INSTRUMENTS
Fair value of financial instruments
The following tables present the carrying values and fair values of Viterra’s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which approximate the fair values with the exception of $3,212 million (2022: $3,156 million) of capital market notes, the fair value of which at 31 December 2023 was $3,029 million (2022: $2,726 million) based on observable market prices applied to the borrowing portfolio (a Level 1 fair value measurement).
| US$ million 2023 | Notes | Amortised cost | FVtPL1 | FVtOCI2 | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Other investments3 | — | 90 | 19 | 109 | ||||||||||||||||
| Advances and loans | 13 | 54 | — | — | 54 | |||||||||||||||
| Accounts receivable | 16 | 2,342 | — | — | 2,342 | |||||||||||||||
| Other financial assets | 26 | — | 1,055 | — | 1,055 | |||||||||||||||
| Cash and cash equivalents | 17 | 530 | — | — | 530 | |||||||||||||||
| Total financial assets | 2,926 | 1,145 | 19 | 4,090 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Borrowings | 19 | 7,910 | — | — | 7,910 | |||||||||||||||
| Accounts payable | 22 | 3,922 | — | — | 3,922 | |||||||||||||||
| Other financial liabilities | 26 | — | 776 | — | 776 | |||||||||||||||
| Total financial liabilities | 11,832 | 776 | — | 12,608 | ||||||||||||||||
1FVtPL - Fair value through profit or loss.
2FVtOCI - Fair value through other comprehensive income. Loss on equity instruments recognised in other comprehensive income in 2023 comprised $2 million.
3Other investments of $100 million are classified as Level 1 measured using quoted market prices with the remaining balance of $9 million being investments in private companies, classified as Level 2 measured using discounted cash flow models.
Viterra Limited 2023 Financial Statements - 81
Notes to the consolidated financial statements
25. FINANCIAL INSTRUMENTS (continued)
| US$ million 2022 | Notes | Amortised cost | FVtPL1 | FVtOCI2 | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Other investments3 | — | 8 | 15 | 23 | ||||||||||||||||
| Advances and loans | 13 | 56 | — | — | 56 | |||||||||||||||
| Accounts receivable | 16 | 3,435 | — | — | 3,435 | |||||||||||||||
| Other financial assets | 26 | — | 1,750 | — | 1,750 | |||||||||||||||
| Cash and cash equivalents | 17 | 637 | — | — | 637 | |||||||||||||||
| Total financial assets | 4,128 | 1,758 | 15 | 5,901 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Borrowings | 19 | 10,665 | — | — | 10,665 | |||||||||||||||
| Accounts payable | 22 | 5,008 | — | — | 5,008 | |||||||||||||||
| Other financial liabilities | 26 | — | 1,262 | — | 1,262 | |||||||||||||||
| Total financial liabilities | 15,673 | 1,262 | — | 16,935 | ||||||||||||||||
1FVtPL - Fair value through profit or loss.
2FVtOCI - Fair value through other comprehensive income. Loss on equity instruments recognised in other comprehensive income in 2022 comprised $1 million.
3Other investments of $11 million are classified as Level 1 measured using quoted market prices with the remaining balance of $12 million being investments in private companies, classified as Level 2 measured using discounted cash flow models.
26. FAIR VALUE MEASUREMENTS
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Viterra classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Viterra can assess at the measurement date; or
Level 2: Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3: Unobservable inputs for the assets or liabilities, requiring Viterra to make market-based assumptions.
Level 1 classifications include futures and options that are exchange traded, whereas Level 2 classifications primarily include swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes.
It is Viterra’s policy that transactions and activities in trade related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
Viterra Limited 2023 Financial Statements - 82
Notes to the consolidated financial statements
26. FAIR VALUE MEASUREMENTS (continued)
The following tables show the fair values of the derivative financial instruments including trade related financial and physical forward purchase and sale commitments by type of contract and non-current other financial liabilities as at 31 December 2023 and 31 December 2022. Other assets and liabilities which are measured at fair value on a recurring basis are biological assets, marketing inventories, other investments, and cash and cash equivalents. Refer to notes 14, 15, 17 and 25 for disclosure in connection with these fair value measurements. There are no non-recurring fair value measurements.
Other financial assets 2023
| US$ million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 127 | 2 | — | 129 | ||||||||||||
| Options | 5 | — | — | 5 | ||||||||||||
| Physical forwards | — | 787 | — | 787 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Interest rate swaps | — | — | — | — | ||||||||||||
| Foreign currency futures and forwards | 2 | 132 | — | 134 | ||||||||||||
| Total | 134 | 921 | — | 1,055 | ||||||||||||
| Current | 134 | 921 | — | 1,055 | ||||||||||||
| Non-current | — | — | — | — | ||||||||||||
Other financial liabilities 2023
| US$ million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 78 | — | — | 78 | ||||||||||||
| Options | 8 | — | — | 8 | ||||||||||||
| Physical forwards | — | 465 | — | 465 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Cross currency swaps | — | 92 | — | 92 | ||||||||||||
| Interest rate swaps | — | 44 | — | 44 | ||||||||||||
| Foreign currency | — | 89 | — | 89 | ||||||||||||
| Total | 86 | 690 | — | 776 | ||||||||||||
| Current | 86 | 554 | — | 640 | ||||||||||||
| Non-current | — | 136 | — | 136 | ||||||||||||
Viterra Limited 2023 Financial Statements - 83
Notes to the consolidated financial statements
26. FAIR VALUE MEASUREMENTS (continued)
Other financial assets 2022
| US$ million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 91 | — | — | 91 | ||||||||||||
| Options | 13 | — | — | 13 | ||||||||||||
| Physical forwards | — | 1,476 | — | 1,476 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Interest rate swaps | — | 2 | — | 2 | ||||||||||||
| Foreign currency futures and forwards | 11 | 157 | — | 168 | ||||||||||||
| Total | 115 | 1,635 | — | 1,750 | ||||||||||||
| Current | 115 | 1,635 | — | 1,750 | ||||||||||||
| Non-current | — | — | — | — | ||||||||||||
Other financial liabilities 2022
| US$ million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 170 | — | — | 170 | ||||||||||||
| Options | 4 | — | — | 4 | ||||||||||||
| Physical forwards | — | 705 | — | 705 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Cross currency swaps | — | 158 | — | 158 | ||||||||||||
| Interest rate swaps | — | 52 | — | 52 | ||||||||||||
| Foreign currency futures and forwards | 9 | 164 | — | 173 | ||||||||||||
| Total | 183 | 1,079 | — | 1,262 | ||||||||||||
| Current | 183 | 869 | — | 1,052 | ||||||||||||
| Non-current | — | 210 | — | 210 | ||||||||||||
During the period no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table provides information about how the fair values of these financial assets and financial liabilities are determined, in particular, the valuation techniques and inputs used.
Viterra Limited 2023 Financial Statements - 84
Notes to the consolidated financial statements
26. FAIR VALUE MEASUREMENTS (continued)
Fair value of financial assets/financial liabilities1 US$ million |
2023 | 2022 | |||
| Futures - Level 1 | Assets | 127 | 91 | ||
| Liabilities | (78) | (170) | |||
| Valuation techniques and key inputs: | Quoted bid prices in an active market | ||||
| Options - Level 1 | Assets | 5 | 13 | ||
| Liabilities | (8) | (4) | |||
| Valuation techniques and key inputs: | Quoted bid prices in an active market | ||||
| Physical forwards - Level 2 | Assets | 787 | 1,476 | ||
| Liabilities | (465) | (705) | |||
| Valuation techniques and key inputs: | Discounted cash flow model Inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, such as history of non-performance, collateral held and current market developments, as required. | ||||
| Cross currency swap - Level 2 | Assets | — | — | ||
| Liabilities | (92) | (158) | |||
| Valuation techniques and key inputs: | Discounted cash flow model Inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required. | ||||
| Interest rate swap - Level 2 | Assets | — | 2 | ||
| Liabilities | (44) | (52) | |||
| Valuation techniques and key inputs: | Discounted cash flow model Inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required. | ||||
| Foreign currency - Level 1 | Assets | 2 | 11 | ||
| Liabilities | — | (9) | |||
| Valuation techniques and key inputs: | Quoted bid prices in an active market | ||||
| Foreign currency - Level 2 | Assets | 132 | 157 | ||
| Liabilities | (89) | (164) | |||
| Valuation techniques and key inputs: | Discounted cash flow model Inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required. | ||||
1 There were no significant unobservable inputs in determining the fair value of instruments.
Viterra Limited 2023 Financial Statements - 85
Notes to the consolidated financial statements
27. FUTURE COMMITMENTS
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow generated by the respective industrial entities. As at 31 December 2023, $33 million (2022: $61 million), of which 99% (2022: 91%) relates to expenditure to be incurred over the next year, was contractually committed for the acquisition of property, plant and equipment.
Viterra procures seagoing vessels/chartering services to meet its overall marketing objectives and commitments. As at 31 December 2023, Viterra has committed to future vessel hire costs to meet future physical delivery and sale obligations and expectations of $115 million (2022: $314 million), of which $55 million, or 48% (2022: 57%), of the total charters are for services to be received over the next two years. Once the chartering date is reached, the vessels and related liabilities are accounted for as leases.
Total future commitments relating to leases are aged as follows:
| US$ million | 2023 | 2022 | ||||||
| Within 1 year | 43 | 131 | ||||||
| Between 2 and 5 years | 78 | 188 | ||||||
| After 5 years | 1 | — | ||||||
| Total | 122 | 319 | ||||||
As part of Viterra’s ordinary sourcing and procurement of physical commodities and other ordinary marketing obligations, the selling party may request that a financial institution act as either i) the paying party upon the delivery of product and qualifying documents through the issuance of a letter of credit or ii) the guarantor by way of issuing a bank guarantee accepting responsibility for Viterra’s contractual obligations. In addition, Viterra is required to post pension guarantees in respect of its future obligations. As at 31 December 2023, $180 million (2022: $313 million) of such commitments have been issued on behalf of Viterra, which will generally be settled simultaneously with the payment for such commodity or rehabilitation and pension obligation.
28. CONTINGENT LIABILITIES
The amount of corporate guarantees in favour of third parties as at 31 December 2023 was $13 million (2022: $15 million).
The Group is subject to various claims which arise in the ordinary course of business as detailed below. These contingent liabilities are reviewed on a regular basis and where practical an estimate is made of the potential financial impact on the Group. As at 31 December 2023 and 31 December 2022, the Group identified no material contingent liabilities.
Litigation
Certain legal proceedings, claims and unresolved disputes are pending against Viterra in respect of which the timing of resolution and potential outcome (including any future financial obligations) are uncertain and no liabilities have been recognised in relation to these matters.
Viterra Limited 2023 Financial Statements - 86
Notes to the consolidated financial statements
28. CONTINGENT LIABILITIES (continued)
Environmental contingencies
Viterra’s operations are subject to various environmental laws and regulations. Viterra is in material compliance with those laws and regulations. Viterra accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Viterra is unaware of any material environmental incidents at its locations.
Tax audits
Viterra is inherently exposed to tax risks and uncertainty over tax treatments. Viterra assesses its tax treatments for all tax years open to audit based upon the latest available information. For those positions that are not expected to be accepted by tax authorities, the Group records its best estimate of these tax liabilities, including related interest charges. Viterra assesses the most likely amount or expected value of the tax treatment in line with IFRIC 23. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. Whilst Viterra believes it has adequately provided for the outcome of these matters, future results may include favourable or unfavourable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved.
In May 2018, the Australian Tax Office (ATO) commenced an audit of Glencore plc’s Australian financing arrangements covering the period 2012 to 2016. As part of these audits, notices were also issued to the current parent company of Viterra’s Australian tax group, namely Glencore Grain Holdings Australia Pty Ltd (GGHA), currently named Viterra Australia Holdings Pty Ltd. The transactions in GGHA during the period under review are material. However, based on the information available, management considers the tax position reflected in GGHA’s tax filings acceptable.
In July 2018, the Canada Revenue Agency (CRA) commenced an audit of Viterra Canada Inc.'s tax return for the fiscal year 2014. Following the completion of the audit, in December 2020 the CRA issued a material reassessment for which the Company has not recognised a provision. Although inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws, the Company is of the view that no significant changes are required to its tax position.
Viterra Canada has also received material final assessments from the CRA relating to the disallowance of non-capital loss balances so utilised by Viterra Canada during the 2016 to 2020 tax periods for which the Company has not recognised a provision. Although inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws, the Company is of the view that no significant changes are required to its tax position.
Viterra Limited 2023 Financial Statements - 87
Notes to the consolidated financial statements
29. RELATED PARTY TRANSACTIONS
In the normal course of business, Viterra enters into various arm’s length transactions with related parties, including commitments to sell and to purchase commodities, agency or brokerage agreements, Group financing, and management service agreements. Outstanding balances at period end are unsecured and settlement occurs in cash (see notes 13, 16 and 22). There have been no guarantees provided or received for any related party receivables or payables.
All transactions between Viterra and its subsidiaries are eliminated on consolidation along with any unrealised profits and losses between its subsidiaries and associates.
US$ million
2023 | Glencore plc and its subsidiaries | Associates and joint ventures | Total | |||||||||
| Transactions | ||||||||||||
| Sales | 43 | 643 | 686 | |||||||||
| Purchases | (6 | ) | (427 | ) | (433 | ) | ||||||
| Interest income | — | 1 | 1 | |||||||||
| Outstanding balances | ||||||||||||
| Trade receivables | 26 | 25 | 51 | |||||||||
| Loans receivable | — | 14 | 14 | |||||||||
| Other financial assets | — | — | — | |||||||||
| Trade payables | 3 | 9 | 12 | |||||||||
| Other financial liabilities | (1 | ) | — | (1 | ) | |||||||
| US$ million 2022 | Glencore plc and its subsidiaries | Associates and joint ventures | Total | |||||||||
| Transactions | ||||||||||||
| Sales | 2 | 333 | 335 | |||||||||
| Purchases | (3 | ) | (149 | ) | (152 | ) | ||||||
| Interest income | — | 2 | 2 | |||||||||
| Outstanding balances | ||||||||||||
| Trade receivables | 2 | 22 | 24 | |||||||||
| Loans receivable | — | 24 | 24 | |||||||||
| Other financial assets | 3 | — | 3 | |||||||||
| Trade payables | 4 | 32 | 36 | |||||||||
| Other financial liabilities | — | 1 | 1 | |||||||||
The remuneration of key management personnel recognised in the consolidated statement of income comprises salaries and other short-term employee benefits of $4 million (2022: $4 million) and other long-term benefits of $7 million (2022: $7 million).
Viterra Limited 2023 Financial Statements - 88
Notes to the consolidated financial statements
30. PRINCIPAL SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS
Non-controlling interest comprises the following:
| US$ million | 2023 | 2022 | ||||||
| Renova SA | 129 | 123 | ||||||
| Cascadia Port Management Corporation | 27 | 28 | ||||||
| Other | 7 | 5 | ||||||
| Total | 163 | 156 | ||||||
Summarised financial information in respect of Viterra’s subsidiaries that have a material non-controlling interest, reflecting 100% of the underlying subsidiary’s relevant figures, is set out below:
| 2023 | 2023 | 2022 | 2022 | |||||||||||||
| US$ million | Renova SA | Cascadia Port Management Corporation | Renova SA | Cascadia Port Management Corporation | ||||||||||||
| 31 December | ||||||||||||||||
| Non-current assets | 727 | 149 | 782 | 149 | ||||||||||||
| Current assets | 69 | 15 | 80 | 14 | ||||||||||||
| Total assets | 796 | 164 | 862 | 163 | ||||||||||||
| Non-current liabilities | 277 | 49 | 337 | 46 | ||||||||||||
| Current liabilities | 132 | 8 | 156 | 5 | ||||||||||||
| Total liabilities | 409 | 57 | 493 | 51 | ||||||||||||
| Net assets | 387 | 107 | 369 | 112 | ||||||||||||
| Equity attributable to owners of the Company | 258 | 80 | 246 | 84 | ||||||||||||
| Non-controlling interests | 129 | 27 | 123 | 28 | ||||||||||||
| Non-controlling interests in % | 33 | % | 25 | % | 33 | % | 25 | % | ||||||||
| US$ million | 2023 | 2023 | 2022 | 2022 | ||||||||||||
| Revenue | 266 | 40 | 352 | 30 | ||||||||||||
| Expenses | (260 | ) | (36 | ) | (352 | ) | (33 | ) | ||||||||
| Net (loss)/profit for the year | 6 | 4 | — | (3 | ) | |||||||||||
| (Loss)/profit attributable to owners of the Company | 12 | 3 | (1 | ) | (2 | ) | ||||||||||
| (Loss)/profit attributable to non-controlling interests | (6 | ) | 1 | 1 | (1 | ) | ||||||||||
| Other comprehensive (loss)/gain attributable to owners of the Company | — | 2 | — | (6 | ) | |||||||||||
| Other comprehensive (loss)/gain attributable to non-controlling interests | — | 1 | — | (2 | ) | |||||||||||
| Total comprehensive (loss)/gain for the year | 6 | 7 | — | (11 | ) | |||||||||||
| Dividends paid to non-controlling interests | — | (3 | ) | — | — | |||||||||||
| Net cash inflow from operating activities | 70 | 20 | 79 | 4 | ||||||||||||
| Net cash outflow from investing activities | (10 | ) | (4 | ) | (9 | ) | (3 | ) | ||||||||
| Net cash outflow from financing activities | (66 | ) | (14 | ) | (65 | ) | (1 | ) | ||||||||
| Total net cash inflow/(outflow) | (6 | ) | 2 | 5 | — | |||||||||||
Viterra Limited 2023 Financial Statements - 89
Notes to the consolidated financial statements
31. WAR IN UKRAINE
On 24 February 2022, Russia invaded Ukraine, initiating a conflict that is still ongoing. As at 31 December 2023, Viterra had business operations and assets only in Ukraine, following the sale of the Group's Russian businesses in October 2023. Management is carefully following the situation on a continuous basis. Viterra has implemented a comprehensive risk management plan, which prioritises the safety of its employees in Ukraine.
In 2022 direct impacts on net income resulted from inventory write-downs and fair value adjustments on inventories ($15 million: refer to note 15), impairment of receivables ($19 million: refer to note 16), and impaired property, plant and equipment ($5 million: refer to note 6). As at 31 December 2023, $17 million of impairment of the receivables was released as the related receivables were recovered. The fair value adjustments on inventories and impairments for property, plant and equipment were unchanged during 2023.
As at 31 December 2023, Viterra had total assets of $261 million (approximately 1% of the total Group assets) and total liabilities of $22 million (less than 1% of the total Group liabilities) in Ukraine, after considering all above-mentioned reductions. As the conflict continues, it may have additional adverse effects.
With regard to Russia, in response to the conflict, a number of jurisdictions around the world, including the United States, the EU, Switzerland and the United Kingdom, imposed a series of sanctions against the Russian Federation, various companies and individuals, and continue to impose further sanctions as the war continues. In response, the Russian Federation reciprocally imposed trade sanctions on certain goods and services originating in the EU and the United States, as well as various companies and individuals. In March 2022, Viterra suspended any new development and expansion projects in Russia. In March 2023, Viterra announced that it would exit the Russian market and in October 2023, Viterra fully disposed its Russian businesses (refer to notes 4 and 23). During 2023 and 2022, Viterra operated its businesses in Russia in compliance with all applicable sanctions.
Management does not believe the uncertainty arising from the conflict impacts the Company’s ability to continue as a going concern.
32. SUBSEQUENT EVENTS
In February 2024, a resolution to distribute to shareholders an amount of $58 million was approved.
No other material subsequent events occurred until the date these audited consolidated financial statements were authorised for issue.
Viterra Limited 2023 Financial Statements - 90
Notes to the consolidated financial statements
33. PRINCIPAL OPERATING, FINANCE AND INDUSTRIAL SUBSIDIARIES AND INVESTMENTS
| Country of incorporation | % interest 2023 | % interest 2022 | Main activity | |||||||||
| Principal subsidiaries | ||||||||||||
| Viterra Argentina S.A. | Argentina | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Viterra Acopio S.A. | Argentina | 100.0 | 100.0 | Storage and handling | ||||||||
| Renova S.A. | Argentina | 66.7 | 66.7 | Oilseeds crushing/ biofuel production | ||||||||
| Viterra Holdings Pty Ltd | Australia | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra Australia Pty Ltd | Australia | 100.0 | 100.0 | Marketing | ||||||||
| Correcta Industria e Comercio Ltda. | Brazil | 100.0 | 100.0 | Wheat milling/oilseeds crushing | ||||||||
| Viterra Bioenergia S.A. | Brazil | 100.0 | 100.0 | Sugarcane/ethanol production | ||||||||
| Moinhos Cruzeiro do Sul S.A. | Brazil | 100.0 | 100.0 | Wheat milling | ||||||||
| Viterra Agriculture Brasil S.A. | Brazil | 100.0 | 100.0 | Marketing | ||||||||
| Cascadia Port Management Corporation | Canada | 75.0 | 75.0 | Storage and handling | ||||||||
| Viterra Canada Inc. | Canada | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra China Co., Ltd. | China | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Czech s.r.o. | Czech Republic | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Viterra Agriculture Egypt for Trading LLC | Egypt | 100.0 | 100.0 | Marketing | ||||||||
| Viterra France S.A.S. | France | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Rostock GmbH | Germany | 100.0 | 100.0 | Biofuel production | ||||||||
| Viterra Magdeburg GmbH | Germany | 100.0 | 100.0 | Oilseeds crushing/ biofuel production | ||||||||
| Viterra Lubmin Oils GmbH | Germany | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Viterra Hungary Kft. | Hungary | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Vegetable Oil Manufacturing LLC | Hungary | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Viterra India Private Limited | India | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Italy S.R.L. | Italy | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Kazakhstan LLP | Kazakhstan | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Agriculture de Mexico, S.A. de C.V. | Mexico | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Botlek B.V. | Netherlands | 100.0 | 100.0 | Biofuel production | ||||||||
| Viterra B.V. | Netherlands | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Finance B.V. | Netherlands | 100.0 | 100.0 | Finance | ||||||||
| Renaisco BV | Netherlands | 100.0 | 100.0 | Holding | ||||||||
| Viterra Chartering B.V. | Netherlands | 100.0 | 100.0 | Marketing | ||||||||
| Viterra New Zealand Limited | New Zealand | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Polska Sp.z o.o. | Poland | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Silos Sp.z o.o. | Poland | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra Bodaczów Sp.z o.o. | Poland | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Viterra Romania S.R.L. | Romania | 100.0 | 100.0 | Marketing | ||||||||
| MZK Export LLC1 | Russia | - | 100.0 | Marketing | ||||||||
| Rostovsky KHP LLC1 | Russia | - | 100.0 | Storage and handling | ||||||||
| Antex + LLC1 | Russia | - | 100.0 | Holding | ||||||||
| Viterra Agriculture Asia Pte. Ltd. | Singapore | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Chartering Asia Pte. Ltd. | Singapore | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Agrícola España, SAU | Spain | 100.0 | 100.0 | Marketing | ||||||||
| Viterra Turkey Tarim LIMITED SIRKETI | Turkey | 100.0 | 100.0 | Marketing | ||||||||
| Viterra UK Ltd. | UK | 100.0 | 100.0 | Marketing | ||||||||
| EFI Viterra Ukraine | Ukraine | 100.0 | 100.0 | Marketing | ||||||||
| Private Joint Stock Company Kolos | Ukraine | 100.0 | 100.0 | Oilseeds crushing | ||||||||
| Everi LLC | Ukraine | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra USA Agriculture LLC | USA | 100.0 | 100.0 | Marketing | ||||||||
| Viterra USA Grain LLC2 | USA | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra USA Ag Holdings LLC2 | USA | 100.0 | 100.0 | Storage and handling | ||||||||
| Viterra USA Ingredients Ingredients LLC2 | USA | 100.0 | 100.0 | Marketing | ||||||||
Viterra Limited 2023 Financial Statements - 91
Notes to the consolidated financial statements
33. PRINCIPAL OPERATING, FINANCE AND INDUSTRIAL SUBSIDIARIES AND INVESTMENTS (continued)
| Country of incorporation | % interest 2023 | % interest 2022 | Main activity | |||||||||||
| Flint Hills Grain LLC2 | USA | 80.0 | 80.0 | Storage and handling | ||||||||||
| Viterra USA LLC | USA | 100.0 | 100.0 | Marketing | ||||||||||
| Viterra Vietnam Company Limited | Vietnam | 100.0 | 100.0 | Marketing | ||||||||||
| Viterra Agriculture Peru S.A.C | Peru | 100.0 | - | Marketing | ||||||||||
| Viterra Chile S.A. | Chile | 100.0 | - | Marketing | ||||||||||
| Principal associates and joint ventures | ||||||||||||||
| Lartirigoyen y Cia S.A. | Argentina | 50.0 | 50.0 | Storage and handling | ||||||||||
| Advanced Organic Materials S.A.3 | Argentina | - | 50.0 | Storage and handling | ||||||||||
| Terminal de Grãos Ponta da Montanha S.A. (‘Barcarena’) | Brazil | 50.0 | 50.0 | Storage and handling | ||||||||||
| Szczecin Bulk Terminal Polska Sp.z o.o. | Poland | 49.0 | 49.0 | Storage and handling | ||||||||||
| Taman Grain Terminal Holdings Ltd3 | Cyprus | - | 50.0 | Storage and handling | ||||||||||
| Company Ukrmill LLC | Ukraine | 50.0 | 50.0 | Storage and handling | ||||||||||
| IGT, LLC | Ukraine | 50.0 | 50.0 | Storage and handling | ||||||||||
| Wings Agriculture Pvt Ltd | India | 50.0 | 50.0 | Pea processing and marketing | ||||||||||
| Kalama Holdco, LLC2 | USA | 15.0 | 15.0 | Storage and handling | ||||||||||
1 Refer to disposals of subsidiaries in notes 4 and 23.
2 Acquired through business combination (see note 23).
3 Refer to disposals of joint ventures in note 4.
Viterra Limited 2023 Financial Statements - 92
Exhibit 99.2
Viterra
LIMITED
Unaudited Condensed Consolidated Interim Financial Statements
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 2
Condensed consolidated statement of income
For the six months ended 30 June (unaudited)
| US$ million | Notes | 2024 | 2023 | ||||||||
| Revenue | 2 | 22,572 | 28,762 | ||||||||
| Cost of goods sold | (22,099 | ) | (27,873 | ) | |||||||
| Gross margin | 473 | 889 | |||||||||
| Selling and administrative expenses | (256 | ) | (256 | ) | |||||||
| Share of income from associates and joint ventures | 24 | 27 | |||||||||
| Gain on disposals of investments | 1 | — | |||||||||
| Loss on remeasurement of disposal group held for sale | 3 | — | (163 | ) | |||||||
| Impairment (expense)/release on trade receivables | (6 | ) | 2 | ||||||||
| Other income | 9 | 1 | |||||||||
| Other expense | (12 | ) | (21 | ) | |||||||
| Dividend income | 1 | 1 | |||||||||
| Interest income | 22 | 21 | |||||||||
| Interest expense | 4 | (257 | ) | (299 | ) | ||||||
| (Loss)/income before income taxes | (1 | ) | 202 | ||||||||
| Current income tax expense | 5 | (64 | ) | (183 | ) | ||||||
| Deferred income tax recovery | 5 | 135 | 122 | ||||||||
| Income for the period | 70 | 141 | |||||||||
| Attributable to: | |||||||||||
| Non-controlling interests | (1 | ) | 11 | ||||||||
| Equity holders | 71 | 130 | |||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 3
Condensed consolidated statement of comprehensive income
For the six months ended 30 June (unaudited)
| US$ million | 2024 | 2023 | ||||||
| Income for the period | 70 | 141 | ||||||
| Other comprehensive income1 | ||||||||
| Items not to be reclassified to the statement of income in subsequent periods: | ||||||||
| Gain on remeasurement of defined benefit plan | 1 | 2 | ||||||
| (Loss)/gain on financial assets measured at fair value through other comprehensive income | (1 | ) | 1 | |||||
| Net items not to be reclassified to the statement of income in subsequent periods1: | — | 3 | ||||||
| Items that are or may be reclassified to the statement of income in subsequent periods: | ||||||||
| Exchange (loss)/gain on translation of foreign operations | (114 | ) | 11 | |||||
| Gain on cash flow hedges | 6 | 11 | ||||||
| Net items that are or may be reclassified to the statement of income in subsequent periods: | (108 | ) | 22 | |||||
| Other comprehensive (loss)/income | (108 | ) | 25 | |||||
| Total comprehensive (loss)/income | (38 | ) | 166 | |||||
| Attributable to: | ||||||||
| Non-controlling interests | (2 | ) | 12 | |||||
| Equity holders of the parent | (36 | ) | 154 | |||||
1 Amounts are presented net of deferred tax.
The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 4
Condensed consolidated statement of financial position
As at 30 June 2024 and 31 December 2023 (unaudited)
| US$ million | Notes | 2024 | 2023 | |||||||
| Assets | ||||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 6 | 4,798 | 4,988 | |||||||
| Intangible assets | 1,394 | 1,397 | ||||||||
| Investments in associates and joint ventures | 402 | 382 | ||||||||
| Other investments | 13 | 15 | 19 | |||||||
| Advances and loans | 87 | 98 | ||||||||
| Pension surplus | 57 | 57 | ||||||||
| Deferred tax assets | 375 | 324 | ||||||||
| 7,128 | 7,265 | |||||||||
| Current assets | ||||||||||
| Biological assets | 25 | 29 | ||||||||
| Inventories | 7 | 6,487 | 7,117 | |||||||
| Accounts receivable | 8 | 2,810 | 3,192 | |||||||
| Other investments | 13 | — | 90 | |||||||
| Other financial assets | 13,14 | 1,085 | 1,055 | |||||||
| Income tax receivable | 213 | 211 | ||||||||
| Cash and cash equivalents | 9,13 | 567 | 530 | |||||||
| 11,187 | 12,224 | |||||||||
| Assets held for sale | 2 | — | ||||||||
| 11,189 | 12,224 | |||||||||
| Total assets | 18,317 | 19,489 | ||||||||
| Equity and liabilities | ||||||||||
| Capital and reserves - attributable to equity holders | ||||||||||
| Share capital | 1 | 1 | ||||||||
| Reserves and retained earnings | 5,028 | 5,180 | ||||||||
| 5,029 | 5,181 | |||||||||
| Non-controlling interests | 160 | 163 | ||||||||
| Total equity | 5,189 | 5,344 | ||||||||
| Non-current liabilities | ||||||||||
| Borrowings | 11,13 | 6,490 | 5,480 | |||||||
| Deferred tax liabilities | 387 | 463 | ||||||||
| Post-employment benefits | 15 | 15 | ||||||||
| Provisions | 152 | 145 | ||||||||
| Other long-term liabilities | 21 | 39 | ||||||||
| Other financial liabilities | 13,14 | 184 | 136 | |||||||
| 7,249 | 6,278 | |||||||||
| Current liabilities | ||||||||||
| Borrowings | 11,13 | 1,294 | 2,430 | |||||||
| Accounts payable | 12 | 3,652 | 4,555 | |||||||
| Provisions | 56 | 70 | ||||||||
| Other financial liabilities | 13,14 | 842 | 640 | |||||||
| Income tax payable | 32 | 168 | ||||||||
| Other current liabilities | 3 | 4 | ||||||||
| 5,879 | 7,867 | |||||||||
| Total equity and liabilities | 18,317 | 19,489 | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 5
Condensed consolidated statement of cash flows
For the six months ended 30 June (unaudited)
| US$ million | Notes | 2024 | 2023 | |||||||
| Operating activities | ||||||||||
| (Loss)/income before income taxes | (1 | ) | 202 | |||||||
| Adjustments for: | ||||||||||
| Depreciation and amortisation | 455 | 424 | ||||||||
| Share of income from associates and joint ventures | (24 | ) | (27 | ) | ||||||
| (Decrease)/increase in other long-term liabilities and provisions | (19 | ) | 10 | |||||||
| Gain on disposals and investments | (1 | ) | — | |||||||
| Impairment (reversal)/charge - net | (7 | ) | 1 | |||||||
| Loss on remeasurement of disposal group held for sale | 3 | — | 163 | |||||||
| Gain in mark-to-market valuations on investments held for trading | — | (1 | ) | |||||||
| Net foreign exchange (gains)/losses | (2 | ) | 19 | |||||||
| Loss/(gain) on sale of property, plant and equipment | 2 | (1 | ) | |||||||
| Other non-cash items - net | (1 | ) | — | |||||||
| Interest income | (22 | ) | (21 | ) | ||||||
| Interest expense | 4 | 257 | 299 | |||||||
| Cash generated by operating activities before working capital changes, interest and tax | 637 | 1,068 | ||||||||
| Working capital changes | ||||||||||
| Decrease in inventories1 | 570 | 1,749 | ||||||||
| Decrease in accounts receivable2 | 278 | 374 | ||||||||
| Increase in other financial assets | (13 | ) | (2 | ) | ||||||
| Decrease in accounts payable3,4 | (904 | ) | (1,059 | ) | ||||||
| Increase/(decrease) in other financial liabilities | 231 | (21 | ) | |||||||
| Total working capital changes | 162 | 1,041 | ||||||||
| Cash generated from operating activities | 799 | 2,109 | ||||||||
| Income taxes paid - net | (166 | ) | (341 | ) | ||||||
| Interest received | 21 | 21 | ||||||||
| Interest paid | (239 | ) | (300 | ) | ||||||
| Net cash generated by operating activities | 415 | 1,489 | ||||||||
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 6
Condensed consolidated statement of cash flows
For the six months ended 30 June (unaudited)
| US$ million | Notes | 2024 | 2023 | |||||||
| Investing activities | ||||||||||
| Net cash disposed in acquisition of subsidiaries | (7 | ) | — | |||||||
| Proceeds from sale of investments in associates and joint ventures | 2 | — | ||||||||
| Proceeds from sale of subsidiaries | 14 | — | ||||||||
| Purchase of other investments | (3 | ) | (1 | ) | ||||||
| Proceeds from sale of other investments | 90 | 9 | ||||||||
| Purchase of property, plant and equipment, and intangibles | (120 | ) | (115 | ) | ||||||
| Proceeds from sale of property, plant and equipment, and intangibles | 2 | 3 | ||||||||
| Dividends received | 11 | 29 | ||||||||
| Net cash used in investing activities | (11 | ) | (75 | ) | ||||||
| Financing activities | ||||||||||
| Proceeds of other non-current bank facilities other than revolving credit facilities | 12 | 6 | ||||||||
| Repayment of other non-current bank facilities other than revolving credit facilities | (74 | ) | (60 | ) | ||||||
| Net (repayment)/proceeds of revolving credit facilities | 1,146 | (169 | ) | |||||||
| Net repayment of current borrowings | (1,083 | ) | (367 | ) | ||||||
| Repayments of lease liabilities | (242 | ) | (243 | ) | ||||||
| Return of capital | 10 | (117 | ) | (335 | ) | |||||
| Distribution to non-controlling interest | (1 | ) | (2 | ) | ||||||
| Net cash used in financing activities | (359 | ) | (1,170 | ) | ||||||
| Increase in cash and cash equivalents | 44 | 244 | ||||||||
| Foreign exchange movement in cash | (7 | ) | — | |||||||
| Cash and cash equivalents, beginning of period | 530 | 637 | ||||||||
| Cash and cash equivalents, end of period | 567 | 881 | ||||||||
| Cash and cash equivalents reported in the statement of financial position | 9 | 567 | 685 | |||||||
| Cash and cash equivalents attributable to assets held for sale | 3 | — | 196 | |||||||
1 Includes movements in biological assets.
2 Includes movements in advances and loans.
3 Includes movements in advances, loans and provisions.
4 Included within accounts payable as at 30 June 2024 are amounts of $2 million (30 June 2023: $3 million) relating to purchases of property, plant and equipment which are unpaid.
The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 7
Condensed consolidated statement of changes of equity
For the six months ended 30 June (unaudited)
| US$ million | Retained earnings | Share premium | Other reserves | Total reserves and retained earnings | Share capital | Total equity attributable to equity holders | Non- controlling interests | Total equity | ||||||||||||||||||||||||
| At 1 January 2024 | 4,213 | 1,945 | (978 | ) | 5,180 | 1 | 5,181 | 163 | 5,344 | |||||||||||||||||||||||
| Income for the period | 71 | — | — | 71 | — | 71 | (1 | ) | 70 | |||||||||||||||||||||||
| Other comprehensive income/(loss) | 1 | — | (108 | ) | (107 | ) | — | (107 | ) | (1 | ) | (108 | ) | |||||||||||||||||||
| Total comprehensive income/(loss) | 72 | — | (108 | ) | (36 | ) | — | (36 | ) | (2 | ) | (38 | ) | |||||||||||||||||||
| Return of capital | — | (117 | ) | — | (117 | ) | — | (117 | ) | — | (117 | ) | ||||||||||||||||||||
| Distributions paid | — | — | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||||
| At 30 June 2024 | 4,286 | 1,828 | (1,086 | ) | 5,028 | 1 | 5,029 | 160 | 5,189 | |||||||||||||||||||||||
| Retained earnings | Share premium | Other reserves | Total reserves and retained earnings | Share capital | Total equity attributable to equity holders | Non- controlling interests | Total equity | |||||||||||||||||||||||||
| At 1 January 2023 | 3,756 | 2,396 | (1,050 | ) | 5,102 | 1 | 5,103 | 156 | 5,259 | |||||||||||||||||||||||
| Income for the period | 130 | — | — | 130 | — | 130 | 11 | 141 | ||||||||||||||||||||||||
| Other comprehensive income | 3 | — | 21 | 24 | — | 24 | 1 | 25 | ||||||||||||||||||||||||
| Total comprehensive income | 133 | — | 21 | 154 | — | 154 | 12 | 166 | ||||||||||||||||||||||||
| Change in ownership interest in subsidiaries | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||
| Return of capital | — | (335 | ) | — | (335 | ) | — | (335 | ) | — | (335 | ) | ||||||||||||||||||||
| Distributions paid | — | — | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||||||||
| At 30 June 2023 | 3,889 | 2,061 | (1,029 | ) | 4,921 | 1 | 4,922 | 169 | 5,091 | |||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 8
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
1. ACCOUNTING POLICIES
Corporate information
Viterra Limited (the “Company” or “Parent”) together with its subsidiaries (the “Group” or “Viterra”), is a leading integrated originator and marketer of agricultural products, with worldwide activities in the production, refining, processing, storage, transport and marketing of agricultural products. Viterra operates on a global scale, marketing and distributing physical commodities mainly sourced from third party producers to industrial consumers, such as those in the oil and food processing industries. Viterra also provides financing, logistics and other services to producers and consumers of commodities. In this regard, Viterra seeks to capture value throughout the commodity supply chain. Viterra’s long experience in origination, processing, storage and handling, and marketing of commodities has allowed it to develop and build upon its expertise in the commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across diverse industries and in multiple geographic regions.
Viterra Limited is a privately held company incorporated and domiciled in Jersey.
On 13 June 2023, the Company entered into a definitive business combination agreement with Bunge Global SA (formerly known as Bunge Limited), a company incorporated in Switzerland, and based in the United States and listed on the New York Stock Exchange (“Bunge”). The closure of the merger is contingent on the fulfillment of customary closing conditions, including receipt of regulatory approvals.
These unaudited condensed consolidated interim financial statements for the six months ended 30 June 2024 were authorised for issuance by the Board of Directors on 23 August 2024.
Basis of preparation
These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board ("IASB") effective for the Company’s reporting for the six months ended 30 June 2024.
These unaudited condensed consolidated interim financial statements should be read in conjunction with the Group’s consolidated financial statements as at 31 December 2023. The Group’s consolidated financial statements as at 31 December 2023 were prepared in accordance with International Financial Reporting Standards as issued by the IASB.
The accounting policies, critical accounting judgements and key accounting estimates applied in the unaudited condensed consolidated interim financial statements are consistent with those applied in the Group’s consolidated financial statements as at 31 December 2023, except as described further below.
The income tax expense for the six months ended 30 June 2024 is determined by applying the actual effective tax rate to the year-to-date adjusted profit before tax, as this represents the best estimate of the annual effective tax rate.
The unaudited condensed consolidated interim financial statements for the six months ended 30 June 2024 have been prepared on a going concern basis. The Directors have assessed that they have, at the date of this report, a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months after the date that these financial statements were authorised for issue.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 9
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
1. ACCOUNTING POLICIES (continued)
All amounts are presented in millions of United States Dollars (“USD”, “US Dollar” or “$”), unless otherwise stated, consistent with the predominant functional currency of Viterra’s operations.
Adoption of new and revised standards
The following amendments to existing accounting pronouncements became effective as of 1 January 2024 and have been adopted by the Group:
| · | Classification of Liabilities as Current or Non-current (Amendments to IAS 1) |
| · | Non-current Liabilities with Covenants (Amendments to IAS 1) |
| · | Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) |
| · | Amendments to IAS 7 and IFRS 7 on Supplier Finance Arrangements |
The amendments did not have a material impact on the Group’s unaudited condensed consolidated financial statements. There are no standards issued but not yet effective that the Group expects to have a material impact on its financial statements.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 10
Notes
to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
2. REVENUE
Revenue for the period comprises the following:
| US$ million | Six
months ended 30 June 2024 | Six
months ended 30 June 2023 | ||||||
| Grain | 11,084 | 15,456 | ||||||
| Oilseeds | 10,205 | 12,003 | ||||||
| Sugar | 444 | 570 | ||||||
| Cotton | 620 | 435 | ||||||
| Freight1 | 219 | 298 | ||||||
| Total | 22,572 | 28,762 | ||||||
1 Freight revenue is recognised over time as the related performance obligation is satisfied over time.
3. REMEASUREMENT LOSS OF ASSETS HELD FOR SALE
In March 2023, Viterra announced that it would exit the Russian market and divest entirely its Russian businesses. The Russian businesses classify as a disposal group held for sale as at 30 June 2023. In determining the fair value less cost to sell an impairment loss of $163 million was recognised in the period in relation to the remeasurement of the disposal group classified as held for sale based on the expected proceeds arising from the transactions. As at 30 June 2023, the Russian businesses held an amount of cash and cash equivalents of $196 million.
The sale of the Russia disposal group became effective on 20 October 2023.
4. INTEREST EXPENSE
Interest expense for the period comprises the following:
| US$ million | Six
months ended 30 June 2024 | Six
months ended 30 June 2023 | ||||||
| Revolving credit facilities1 | (102 | ) | (117 | ) | ||||
| Other bank loans1 | (55 | ) | (91 | ) | ||||
| Capital market notes1 | (64 | ) | (61 | ) | ||||
| Lease obligations1 | (31 | ) | (24 | ) | ||||
| Other | (5 | ) | (6 | ) | ||||
| Total | (257 | ) | (299 | ) | ||||
1 Refer to note 11: Borrowings.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 11
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
5. INCOME TAX
The major components of income tax expense in the condensed consolidated statement of income are:
| US$ million | Six
months ended 30 June 2024 | Six
months ended 30 June 2023 | ||||||
| Current income tax expense | (64 | ) | (183 | ) | ||||
| Deferred income tax recovery relating to origination and reversal of temporary differences | 135 | 122 | ||||||
| Total income tax recovery/(expense) reported in the condensed consolidated statement of income | 71 | (61 | ) | |||||
The effective Group tax rate for the period ended 30 June 2024 and 30 June 2023 is different from the weighted average income tax rate of 20% (2023: 38%).
The weighted average income tax rate is highly dependent on the geographic distribution of the Group’s worldwide profits and losses.
The effective tax rate is sensitive to specific circumstances, transactions and tax regulations in individual jurisdictions which can result in unusual or non-recurring tax adjustments.
The principal reasons for the difference between the effective Group tax rate and the weighted average income tax rate for the period ended 30 June 2024 was primarily driven by significant inflation and foreign exchange adjustments in Argentina and Brazil. Furthermore, additional non-deductible transaction costs relating to the Bunge Transaction as well as tax exempt income relating to the release of previously recognised provisions impacted the effective tax rate.
The effective tax rate for the interim period ended 30 June 2023 is primarily driven by higher taxable income in jurisdictions with relatively higher corporate income tax rates, while tax losses were incurred in jurisdictions with a relatively lower corporate income tax rate. Furthermore, significant non-deductible expenses relating to the impairment of Russian assets and expenses relating to the Bunge transaction drove up the effective tax rate.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 12
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
| US$ million | Six
months ended 30 June 2024 | Six
months ended 30 June 2023 | ||||||
| (Loss)/income before income taxes and attribution | (1 | ) | 202 | |||||
| Less: Share of income from associates and joint ventures | (24 | ) | (27 | ) | ||||
| Group (loss)/income before income tax | (25 | ) | 175 | |||||
| Income tax expense calculated at the weighted average income tax rate | 5 | (67 | ) | |||||
| Tax effects of: | ||||||||
| Tax exempt income | 8 | 5 | ||||||
| Items not tax deductible | (6 | ) | (57 | ) | ||||
| Foreign exchange fluctuations | (18 | ) | 2 | |||||
| Changes in tax rates and adjustments in respect of prior years | 9 | 48 | ||||||
| Utilisation and changes in recognition of tax losses and temporary differences | 9 | 4 | ||||||
| Inflation adjustments | 69 | 3 | ||||||
| Other | (5 | ) | 1 | |||||
| Income tax recovery/(expense) | 71 | (61 | ) | |||||
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 13
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
6. PROPERTY, PLANT AND EQUIPMENT
| US$ million | Freehold
land and buildings | Plant
and equipment | Right-of-use assets - Freehold land and buildings | Right-of-use assets - Plant and equipment | Bearer
plants | Total | |||||||||||||
| Gross carrying amount: | |||||||||||||||||||
| 1 January 2024 | 1,312 | 5,346 | 408 | 1,766 | 147 | 8,979 | |||||||||||||
| Additions | 3 | 99 | — | — | 18 | 120 | |||||||||||||
| Additions of right-of-use assets | — | — | 29 | 199 | — | 228 | |||||||||||||
| Business Combination | — | 4 | — | — | — | 4 | |||||||||||||
| Disposals | — | (32 | ) | (19 | ) | (53 | ) | — | (104 | ) | |||||||||
| Effect of foreign currency exchange movements | (23 | ) | (83 | ) | (33 | ) | (7 | ) | (20 | ) | (166 | ) | |||||||
| Reclassification to held for sale | (3 | ) | (1 | ) | — | — | — | (4 | ) | ||||||||||
| Other movements | (2 | ) | — | — | — | 2 | — | ||||||||||||
| 30 June 2024 | 1,287 | 5,333 | 385 | 1,905 | 147 | 9,057 | |||||||||||||
| Accumulated depreciation and impairment: | |||||||||||||||||||
| 1 January 2024 | 319 | 2,268 | 148 | 1,185 | 71 | 3,991 | |||||||||||||
| Depreciation | 25 | 158 | 26 | 230 | 10 | 449 | |||||||||||||
| Impairment | (1 | ) | (7 | ) | — | — | — | (8 | ) | ||||||||||
| Disposals | (6 | ) | (17 | ) | (20 | ) | (53 | ) | — | (96 | ) | ||||||||
| Effect of foreign currency exchange movements | (9 | ) | (41 | ) | (14 | ) | (3 | ) | (8 | ) | (75 | ) | |||||||
| Reclassification to held for sale | (1 | ) | (1 | ) | — | — | — | (2 | ) | ||||||||||
| 30 June 2024 | 327 | 2,360 | 140 | 1,359 | 73 | 4,259 | |||||||||||||
| Net book value 30 June 2024 | 960 | 2,973 | 245 | 546 | 74 | 4,798 | |||||||||||||
| Net book value 31 December 2023 | 993 | 3,078 | 260 | 581 | 76 | 4,988 | |||||||||||||
Plant and equipment includes capitalised expenditure for construction in progress of $211 million (2023: $198 million). Depreciation expenses included in cost of goods sold are $439 million (2023: $407 million) and in selling and administrative expenses $10 million (2023: $10 million).
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 14
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
Leases
The Group leases various assets including land and buildings and plant and equipment. The net book value of right-of-use assets amounts to $791 million (2023: $841 million).
Disclosure of amounts recognised as lease liabilities in the statement of financial position are included in note 11, and future commitments are disclosed in note 15.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 15
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
7. INVENTORIES
Total inventories of $6,487 million (2023: $7,117 million) comprise $5,910 million (2023: $6,922 million) of inventories carried at fair value less costs of disposal and $577 million (2023: $195 million) of inventories valued at the lower of cost or net realisable value.
Readily marketable inventories (RMI), comprising the core inventories which underpin and facilitate Viterra’s marketing activities, represent inventories that, in Viterra’s assessment, are readily convertible into cash in the short term due to their liquid nature, widely available markets, and the fact that price risk is covered either by a forward physical sale or a hedge transaction. Viterra regularly assesses the composition of these inventories and their applicability, relevance and availability to the marketing activities. As at 30 June 2024, $6,324 million (2023: $6,960 million) of inventories were considered readily marketable. This comprises $5,887 million (2023: $6,882 million) of inventories carried at fair value less costs of disposal and $437 million (2023: $78 million) carried at the lower of cost or net realisable value. Given the highly liquid nature of these inventories, which represent a significant share of current assets, the Group believes it is appropriate to consider them together with cash equivalents in analysing Group net debt levels and computing certain debt coverage ratios and credit trends.
Fair value of inventories is a Level 2 fair value measurement (refer to note 14) using observable market prices obtained from exchanges, traded reference indices, or market survey services adjusted for relevant location and quality differentials. There are no significant unobservable inputs in the fair value measurement of such inventories.
Viterra has a number of dedicated financing facilities, which finance a portion of its inventories. In each case, the inventory has not been derecognised as the Group retains control of the inventory. The proceeds received are recognised as current borrowings (refer to note 11). As at 30 June 2024, the total amount of inventory secured under such facilities was $129 million (2023: $393 million) and proceeds received and classified as current borrowings amounted to $56 million (2023: $340 million).
8. ACCOUNTS RECEIVABLE
| US$ million | as
at 30.06 2024 |
as
at 31.12 2023 |
||||||
| Financial assets at amortised cost | ||||||||
| Trade receivables1 | 1,774 | 1,993 | ||||||
| Margin calls paid | 256 | 256 | ||||||
| Associated companies1 | 32 | 33 | ||||||
| Other receivables2 | 50 | 60 | ||||||
| Non-financial instruments | ||||||||
| Advances repayable with product | 276 | 287 | ||||||
| Prepaid expenses | 58 | 44 | ||||||
| Other tax and related receivables | 364 | 519 | ||||||
| Total | 2,810 | 3,192 | ||||||
1 Collectively referred to as receivables presented net of allowance for doubtful debts.
2 Includes loans receivable in the amount of $10 million (2023: $11 million), presented net of loss allowance.
As at 30 June 2024, the total amount of trade receivables secured was $447 million (2023: $440 million) and proceeds received and classified as current borrowings amounted to $194 million (2023: $399 million).
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 16
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
8. ACCOUNTS RECEIVABLE (continued)
The movement in the loss allowance is detailed below:
| US$ million | as
at 30.06 2024 | as
at 31.12 2023 | ||||||
| 1 January | 101 | 128 | ||||||
| Released during the period | (23 | ) | (72 | ) | ||||
| Charged during the period | 28 | 49 | ||||||
| Utilised during the period | (6 | ) | (3 | ) | ||||
| Disposed | — | (1 | ) | |||||
| Total | 100 | 101 | ||||||
9. CASH AND CASH EQUIVALENTS
| US$ million | as
at 30.06 2024 |
as
at 31.12 2023 |
||||||
| Bank and cash on hand | 447 | 426 | ||||||
| Deposits and treasury bills | 120 | 104 | ||||||
| Total | 567 | 530 | ||||||
There was no restricted cash on hand as at 30 June 2024 or 31 December 2023.
10. SHARE CAPITAL AND RESERVES
For the six months ended 30 June 2024, an aggregate of $117 million of distributions, accounted for as a reduction of share premium, was returned to Viterra’s shareholders in proportion to their respective ownership interest in Viterra Limited (for the six months ended 30 June 2023: $335 million). The distributions and the reduction of share premium had no impact on shareholding.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 17
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
11. BORROWINGS
| US$ million | as at 30.06 2024 | as at 31.12 2023 | ||||||
| Non-current borrowings | ||||||||
| Capital market notes | 3,161 | 3,212 | ||||||
| Revolving credit facilities | 2,659 | 1,505 | ||||||
| Lease liabilities | 513 | 566 | ||||||
| Other bank loans1 | 157 | 197 | ||||||
| Total non-current borrowings | 6,490 | 5,480 | ||||||
| Current borrowings | ||||||||
| Secured inventory/receivables facilities | 250 | 739 | ||||||
| Lease liabilities | 334 | 324 | ||||||
| Other bank loans1 | 710 | 1,367 | ||||||
| Total current borrowings | 1,294 | 2,430 | ||||||
1 Comprises various uncommitted and unsecured bilateral bank credit facilities.
Other non-current bank loans mainly include a loan with an outstanding balance of $34 million (2023: $53 million) at an interest rate of SOFR (Secured Overnight Financing Rate) +503 basis points (bps), a facility in Hungary with an outstanding balance of $48 million (2023: $52 million) bearing a fixed interest rate, and various loans received by sugar, wheat milling and port assets in Brazil of $41 million (2023: $57 million) denominated in USD and Brazilian Real (BRL) and bearing various fixed interest rates.
11. BORROWINGS (continued)
Capital market notes
The capital market notes include bonds issued under Rule 144A of the Securities Act of 1933 ("US 144A Bonds") in April 2022, in the amounts of $450 million and $300 million respectively. Interest payments are due semi-annually in April and October of each year. Viterra applies fair value hedge accounting to account for the hedge of interest rate risks on these two bonds (refer to note 14).
Viterra issued US 144A Bonds during April 2021, and issued Eurobonds during September 2021. Interest on the US 144A Bonds is payable semi-annually in arrears. Interest on the Eurobonds is payable annually in arrears. Viterra applies cash flow hedge accounting to account for the hedge of foreign currency risk on its Euro denominated debt (refer to note 14).
The details of outstanding borrowings and the carrying amounts are outlined below:
| US $ million | Maturity | as at 30.06 2024 | as at 31.12 2023 | |||||||||
| USD 450 million 4.9% coupon bonds | April 2027 | 422 | 427 | |||||||||
| USD 300 million 5.25% coupon bonds | April 2032 | 265 | 273 | |||||||||
| USD 600 million 2.00% coupon bonds | April 2026 | 598 | 598 | |||||||||
| USD 600 million 3.20 % coupon bonds | April 2031 | 596 | 595 | |||||||||
| EUR 500 million 0.375% coupon bonds | September 2025 | 535 | 551 | |||||||||
| EUR 700 million 1.00% coupon bonds | September 2028 | 745 | 768 | |||||||||
| Total capital market notes | 3,161 | 3,212 | ||||||||||
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 18
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
Revolving credit facility
The revolving credit facilities available to Viterra as at 30 June 2024 are summarised below.
On 5 May 2023, Viterra signed a new $4.11 billion one-year revolving credit facility agreement with a one-year borrower’s term-out option (to May 2025), and a one-year extension option at lender’s discretion. Funds drawn under this facility bear interest at Daily Simple SOFR +65 bps per annum. On 6 May 2024, the $4.11 billion one-year revolving credit facility was extended for a year for an amount of $3.96 billion with a new maturity date of June 2025. The facility has a one-year term-out option at Viterra's discretion (until June 2026).
On 1 May 2023, Viterra extended the $1 billion three-year revolving credit facility agreement by executing one of the two extension options (at lender’s discretion). Funds drawn under the facility bear interest at compounded SOFR +60 bps per annum.
During April 2023, the interest margin charged on the $2.5 billion three-year revolving credit facility agreement signed in September 2022 decreased from SOFR +130 bps to SOFR +117.5 bps per annum.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 19
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
12. ACCOUNTS PAYABLE
| US$ million | as at 30.06 2024 | as at 31.12 2023 | ||||||
| Financial liabilities at amortised cost | ||||||||
| Trade payables | 3,111 | 3,689 | ||||||
| Margin calls received | 5 | 9 | ||||||
| Associated companies | 7 | 11 | ||||||
| Other payables and accrued liabilities | 160 | 213 | ||||||
| Non-financial instruments | ||||||||
| Advances settled in product | 212 | 376 | ||||||
| Payables to employees | 110 | 190 | ||||||
| Other tax and related payables | 47 | 67 | ||||||
| Total | 3,652 | 4,555 | ||||||
13. FINANCIAL INSTRUMENTS
Fair value of financial instruments
The following tables present the carrying values and fair values of Viterra’s financial instruments.
Financial assets and liabilities are presented by class in the table below at their carrying values, which approximate the fair values with the exception of $3,161 million (2023: $3,212 million) of capital market notes, the fair value of which at 30 June 2024 was $2,995 million (2023: $3,029 million) based on observable market prices applied to the borrowing portfolio (a Level 1 fair value measurement).
| US$ million As at 30 June 2024 | Notes | Amortised cost | FVtPL1 | FVtOCI2 | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Other investments3 | — | — | 15 | 15 | ||||||||||||||||
| Advances and loans | 45 | — | — | 45 | ||||||||||||||||
| Accounts receivable | 8 | 2,112 | — | — | 2,112 | |||||||||||||||
| Other financial assets | 14 | — | 1,085 | — | 1,085 | |||||||||||||||
| Cash and cash equivalents | 9 | 567 | — | — | 567 | |||||||||||||||
| Total financial assets4 | 2,724 | 1,085 | 15 | 3,824 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Borrowings | 11 | 7,784 | — | — | 7,784 | |||||||||||||||
| Accounts payable | 12 | 3,283 | — | — | 3,283 | |||||||||||||||
| Other financial liabilities | 14 | — | 1,026 | — | 1,026 | |||||||||||||||
| Total financial liabilities4 | 11,067 | 1,026 | — | 12,093 | ||||||||||||||||
1 FVtPL - Fair value through profit and loss.
2 FVtOCI - Fair value through other comprehensive income. Loss on equity instruments recognised in other comprehensive income in 2024 amounted to $1 million .
3 Other investments of $10 million are classified as Level 1 measured using quoted market prices with the remaining balance of $5 million being investments in private companies, classified as Level 2 measured using discounted cash flow models.
4 Amounts consist of both long-term and short-term financial assets/financial liabilities.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 20
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
13. FINANCIAL INSTRUMENTS (continued)
| US$ million As at 31 December 2023 | Notes | Amortised cost | FVtPL1 | FVtOCI2 | Total | |||||||||||||||
| Assets | ||||||||||||||||||||
| Other investments3 | — | 90 | 19 | 109 | ||||||||||||||||
| Advances and loans | 54 | — | — | 54 | ||||||||||||||||
| Accounts receivable | 8 | 2,342 | — | — | 2,342 | |||||||||||||||
| Other financial assets | 14 | — | 1,055 | — | 1,055 | |||||||||||||||
| Cash and cash equivalents | 9 | 530 | — | — | 530 | |||||||||||||||
| Total financial assets4 | 2,926 | 1,145 | 19 | 4,090 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Borrowings | 11 | 7,910 | — | — | 7,910 | |||||||||||||||
| Accounts payable | 12 | 3,922 | — | — | 3,922 | |||||||||||||||
| Other financial liabilities | 14 | — | 776 | — | 776 | |||||||||||||||
| Total financial liabilities4 | 11,832 | 776 | — | 12,608 | ||||||||||||||||
1 FVtPL - Fair value through profit and loss.
2 FVtOCI - Fair value through other comprehensive income. Gain on equity instruments recognised in other comprehensive income for the six months ended 30 June 2023 comprised $1 million.
3 Other investments of $100 million are classified as Level 1 measured using quoted market prices with the remaining balance of $9 million being investments in private companies, classified as Level 2 measured using discounted cash flow models.
4 Amounts consist of both long-term and short-term financial assets/financial liabilities.
14. FAIR VALUE MEASUREMENTS
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Viterra classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Viterra can assess at the measurement date; or
Level 2: Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3: Unobservable inputs for the assets or liabilities, requiring Viterra to make market-based assumptions.
Level 1 classifications include futures and options that are exchange traded, whereas Level 2 classifications primarily include swaps and physical forward transactions, which derive their fair value primarily from exchange quotes and readily observable broker quotes.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 21
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
14. FAIR VALUE MEASUREMENTS (continued)
The following tables show the fair values of the derivative financial instruments including trade related financial and physical forward purchase and sale commitments by type of contract and non-current other financial liabilities as at 30 June 2024 and 31 December 2023. Other assets and liabilities which are measured at fair value on a recurring basis are biological assets, marketing inventories, other investments, and cash and cash equivalents. Refer to notes 7, 9 and 13 for disclosure in connection with these fair value measurements. There are no non-recurring fair value measurements.
Other financial assets 2024
| US$ million As at 30 June 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 117 | 1 | — | 118 | ||||||||||||
| Options | 9 | — | — | 9 | ||||||||||||
| Physical forwards | — | 879 | — | 879 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Foreign currency futures and forwards | — | 79 | — | 79 | ||||||||||||
| Total | 126 | 959 | — | 1,085 | ||||||||||||
| Current | 126 | 959 | — | 1,085 | ||||||||||||
| Non-current | — | — | — | — | ||||||||||||
Other financial liabilities 2024
| US$ million As at 30 June 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 96 | — | — | 96 | ||||||||||||
| Options | — | — | — | — | ||||||||||||
| Physical forwards | — | 622 | — | 622 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Cross currency swaps | — | 127 | — | 127 | ||||||||||||
| Interest rate swaps | — | 57 | — | 57 | ||||||||||||
| Foreign currency futures and forwards | — | 124 | — | 124 | ||||||||||||
| Total | 96 | 930 | — | 1,026 | ||||||||||||
| Current | 96 | 746 | — | 842 | ||||||||||||
| Non-current | — | 184 | — | 184 | ||||||||||||
Other financial assets 2023
| US$ million As at 31 December 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 127 | 2 | — | 129 | ||||||||||||
| Options | 5 | — | — | 5 | ||||||||||||
| Physical forwards | — | 787 | — | 787 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Foreign currency futures and forwards | 2 | 132 | — | 134 | ||||||||||||
| Total | 134 | 921 | — | 1,055 | ||||||||||||
| Current | 134 | 921 | — | 1,055 | ||||||||||||
| Non-current | — | — | — | — | ||||||||||||
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 22
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
14. FAIR VALUE MEASUREMENTS (continued)
Other financial liabilities 2023
| US$ million As at 31 December 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commodity related contracts | ||||||||||||||||
| Futures | 78 | — | — | 78 | ||||||||||||
| Options | 8 | — | — | 8 | ||||||||||||
| Physical forwards | — | 465 | — | 465 | ||||||||||||
| Financial contracts | ||||||||||||||||
| Cross currency swaps | — | 92 | — | 92 | ||||||||||||
| Interest rate swaps | — | 44 | — | 44 | ||||||||||||
| Foreign currency futures and forwards | — | 89 | — | 89 | ||||||||||||
| Total | 86 | 690 | — | 776 | ||||||||||||
| Current | 86 | 554 | — | 640 | ||||||||||||
| Non-current | — | 136 | — | 136 | ||||||||||||
During the period no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
15. FUTURE COMMITMENTS
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow generated by the respective industrial entities. As at 30 June 2024, $77 million (2023: $33 million), of which 94% (2023: 99%) relates to expenditure to be incurred over the next year, was contractually committed for the acquisition of property, plant and equipment.
Viterra procures seagoing vessels/chartering services to meet its overall marketing objectives and commitments. As at 30 June 2024, Viterra has committed to future vessel hire costs to meet future physical delivery and sale obligations and expectations of $163 million (2023: $115 million), of which $30 million (2023: $55 million), or 18% (2023: 48%), of the total charters are for services to be received over the next two years. Once the chartering date is reached, the vessels and related liabilities are accounted for as leases.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 23
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
Total future commitments relating to leases are aged as follows:
| US$ million | 2024 | 2023 | ||||||
| Within 1 year | 16 | 43 | ||||||
| Between 2 and 5 years | 71 | 78 | ||||||
| After 5 years | 81 | 1 | ||||||
| Total | 168 | 122 | ||||||
As part of Viterra’s ordinary sourcing and procurement of physical commodities and other ordinary marketing obligations, the selling party may request that a financial institution act as either (a) the paying party upon the delivery of product and qualifying documents through the issuance of a letter of credit or (b) the guarantor by way of issuing a bank guarantee accepting responsibility for Viterra’s contractual obligations. In addition, Viterra is required to post pension guarantees in respect of its future obligations. As at 30 June 2024, $173 million (2023: $180 million) of such commitments have been issued on behalf of Viterra, which will generally be settled simultaneously with the payment for such commodity or rehabilitation and pension obligation.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 24
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
16. CONTINGENT LIABILITIES
The amount of corporate guarantees in favour of third parties as at 30 June 2024 was $10 million (2023: $13 million).
The Group is subject to various claims which arise in the ordinary course of business as detailed below. These contingent liabilities are reviewed on a regular basis and where practical an estimate is made of the potential financial impact on the Group. As at 30 June 2024 and 31 December 2023, the Group identified no material contingent liabilities.
Litigation
Certain legal proceedings, claims and unresolved disputes are pending against Viterra in respect of which the timing of resolution and potential outcome (including any future financial obligations) are uncertain and no liabilities have been recognised in relation to these matters.
Environmental contingencies
Viterra’s operations are subject to various environmental laws and regulations. Viterra is in material compliance with those laws and regulations. Viterra accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Viterra is unaware of any material environmental incidents at its locations.
Tax audits
Viterra is inherently exposed to tax risks and uncertainty over tax treatments. Viterra assesses its tax treatments for all tax years open to audit based upon the latest available information. For those positions that are not expected to be accepted by tax authorities, the Group records its best estimate of these tax liabilities, including related interest charges. Viterra assesses the most likely amount or expected value of the tax treatment in line with International Financial Reporting Interpretation 23 ("IFRIC 23"). Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. Whilst Viterra believes it has adequately provided for the outcome of these matters, future results may include favourable or unfavourable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved.
In May 2018, the Australian Tax Office (ATO) commenced an audit of Glencore plc’s Australian financing arrangements covering the period 2012 to 2016. As part of these audits, notices were also issued to the current parent company of Viterra’s Australian tax group, namely Glencore Grain Holdings Australia Pty Ltd (GGHA, currently named Viterra Australia Holdings Pty Ltd). The transactions in GGHA during the period under review are material. To this date, the Group has not received any assessments following these notices. Based on the information available, management considers the tax position reflected in GGHA’s tax filings acceptable.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 25
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
16. CONTINGENT LIABILITIES (continued)
In July 2018, the Canada Revenue Agency (CRA) commenced an audit of Viterra Canada Inc.'s tax return for the fiscal year 2014. Following the completion of the audit, in December 2020 the CRA issued a material reassessment for which the Company has not recognised a provision. Although inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws, the Company is of the view that no significant changes are required to its tax position.
Viterra Canada has also received material final assessments from the CRA relating to the disallowance of non-capital loss balances so utilised by Viterra Canada during the 2016 to 2020 tax periods for which the Company has not recognised a provision. Although inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws, the Company is of the view that no significant changes are required to its tax position.
17. RELATED PARTIES
For the period ended 30 June 2024, there are no new significant related party relationships, as well as no significant related party transactions that are relevant for disclosure to get an understanding of the changes in the financial position and performance of the Company, since the end of the last annual reporting period.
18. ACQUISITION AND DISPOSAL OF SUBSIDIARIES
On 31 May 2024, Viterra concluded the acquisition of Penkivskyi GHC LLC (‘Penkivskyi’) for a cash consideration of $8 million, of which $1 million is contingent upon the fulfillment of certain criteria by the seller. Penkivskyi is located in Penkovka, Ukraine, and holds a grain elevator complex. The primary reason for the transaction is to expand Viterra’s business presence in Ukraine, fortifying the supply chain, optimising port operations, and fostering direct origination and relationships with farmers.
The purchase consideration of $8 million is allocated to property, plant and equipment for $4 million and to goodwill for $4 million.
19. WAR IN UKRAINE
On 24 February 2022, Russia invaded Ukraine, initiating a conflict that is still ongoing. As at 30 June 2024, Viterra had business operations and assets only in Ukraine, following the sale of the Group's Russian businesses in October 2023. Management is carefully following the situation on a continuous basis. Viterra has implemented a comprehensive risk management plan, which prioritises the safety of its employees in Ukraine.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 26
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June (unaudited)
Due to the adverse impact on Viterra’s operations in Ukraine, fair value adjustments and impairments were recognised during 2022 and 2023. As at 30 June 2024, Viterra had total assets of $262 million (approximately 1% of the total Group assets) and total liabilities of $27 million (less than 1% of the total Group liabilities) in Ukraine. As the conflict continues, it may have additional adverse effects.
The directors do not believe the uncertainty arising from the conflict impacts the Company’s ability to continue as a going concern.
20. SUBSEQUENT EVENTS
In August 2024, a resolution to distribute to shareholders an amount of $59 million was approved.
Subsequent to period end, the European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Viterra Limited (‘Viterra') by Bunge Global S.A. (‘Bunge'). The approval is conditional upon full compliance with the commitments offered by the parties. To address the Commission's competition concerns, it was agreed that Viterra’s business in Hungary as well as part of Viterra's business in Poland will be sold. The sale in Poland includes Viterra’s Boda processing facility including commercial activities relating to oilseeds origination to supply such facility, as well as the Trawniki, Kętrzyn, Szamotuły and Werbkowice storage facilities. The decision is conditional upon full compliance with the commitments. Under the supervision of the European Commission, an independent trustee will monitor their implementation.
No other material subsequent events have occurred.
Viterra 2024 Unaudited Condensed Consolidated Interim Financial Statements 27
Exhibit 99.3
| UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
Introduction
On June 13, 2023, Bunge Global SA (“Bunge”), previously referred to as Bunge Limited prior to the completion of the Bermuda Law Scheme of Arrangement on November 1, 2023 that effectively changed the place of incorporation and residence of Bunge from Bermuda to Switzerland (the "Redomestication"), entered into a Business Combination Agreement (the "Business Combination Agreement") with Viterra Limited ("Viterra"), Danelo Limited, a private company incorporated in Jersey, Channel Islands (“Glencore”), CPPIB Monroe Canada, Inc., a company incorporated in Canada (“CPP Investments”), Venus Investment Limited Partnership, a limited partnership formed under the laws of the Province of Manitoba, Canada (“BCI”) and Ocorian Limited (“Ocorian” or the “Trustee”), solely in its capacity as trustee of the Viterra Employee Benefit Trust (the “Trust”) (Glencore, CPP Investments, BCI and the Trust, collectively, the “Sellers”). The Business Combination Agreement provides for, among other things, the acquisition by Bunge of all the Viterra Shares from the Sellers (the "Acquisition") in exchange for (i) the Share Consideration (as defined below) and (ii) the Cash Consideration (as defined below). If the Acquisition is completed, Bunge will acquire Viterra and Viterra will become a wholly-owned subsidiary of Bunge. Bunge estimates that it will issue approximately 65.6 million registered shares, par value $0.01 per share (the “Bunge Shares”) of Bunge (the "Share Consideration"), with an aggregate value of approximately $6.8 billion (based on the closing share price of the Bunge Shares on the New York Stock Exchange (“NYSE”) as of August 1, 2024), and pay aggregate cash consideration of approximately $2 billion (“Cash Consideration”) (collectively, the "Transaction Consideration") to the Sellers in return for 100% of the outstanding equity of Viterra.
The Redomestication, as approved by Bunge shareholders, was affected pursuant to a scheme of arrangement under Bermuda law. Each common share of Bunge Limited, par value $0.01 per share, was cancelled in exchange for an equal number of Bunge Shares. The Bunge Shares began trading on NYSE under the symbol "BG" on November 1, 2023, which is the same symbol under which the Bunge Limited shares were previously traded. References to the term "shares" refer to Bunge Limited common shares prior to the Redomestication and to Bunge Global SA registered shares after the Redomestication, unless otherwise specified.
In connection with the execution of the Business Combination Agreement, Bunge entered into a debt commitment letter (the “Initial Debt Commitment Letter”) with Sumitomo Mitsui Banking Corporation (“SMBC”), pursuant to which SMBC committed to provide Bunge with $7.0 billion of unsecured term loans (the “Initial Debt Financing”). The Initial Debt Commitment Letter was amended and restated on June 16, 2023 and further amended and restated on July 7, 2023 (as amended and restated, the “Debt Commitment Letter”) by a consortium of lenders (the “Lenders”) to increase the Initial Debt Financing to $7.7 billion. The commitment is in the form of a three tranche term loan maturing 364-days, 2-years and 3-years from the closing of the Acquisition (the "Closing"). Additionally, a $300 million delayed draw term loan from CoBank and the U.S. farm credit system was arranged (the combination of the $7.7 billion commitment and $300 million delayed draw term loan, hereby referred to as the “Acquisition Financing”). Bunge intends to use a portion of the Debt Financing to fund the Cash Consideration, and the remainder for repayment of certain indebtedness of Viterra, which is expected to be repaid at the Closing. Bunge expects to obtain long-term unsecured debt financing in lieu of all or a portion of the commitments provided under the Acquisition Financing. However, there can be no assurance that Bunge will be able to obtain such permanent debt financing or that it will be on acceptable terms, in which case, Bunge’s debt portfolio may have a shorter maturity profile until such long-term unsecured debt financing is obtained. Further, Viterra’s existing notes totaling approximately $3.2 billion (par value) are expected to survive Closing and Bunge plans to take the necessary actions in order to have such notes be pari-passu with existing senior unsecured indebtedness of Bunge.
The unaudited pro forma condensed combined financial information has been prepared by Bunge in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission on May 20, 2020. The following unaudited pro forma condensed combined financial information of Bunge as of and for the six months ended June 30, 2024, and for the year ended December 31, 2023, is derived from Bunge’s historical consolidated financial statements as included in the respective filings on Form 10-Q and Form 10-K, which are incorporated by reference, and Viterra’s historical consolidated financial statements which are included in the respective Exhibits 99.2 and 99.1 and includes the unaudited historical condensed consolidated financial statements of Viterra as of and for the six months ended June 30, 2024, and the audited historical consolidated financial statements of Viterra as of and for the fiscal year ended December 31, 2023, respectively. Both Bunge and Viterra prepare historical consolidated financial statements based on a calendar year end basis. Viterra prepares its consolidated financial statements under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).
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The unaudited pro forma condensed combined financial information should be read in conjunction with the following information:
| · | Notes to the unaudited pro forma condensed combined financial information. |
| · | Bunge Limited’s Current Report on Form 8-K filed on June 15, 2023, including the exhibits thereto. |
| · | Unaudited historical condensed consolidated financial statements of Bunge as of and for the six months ended June 30, 2024, which are included in Bunge’s respective filing on Form 10-Q for the six months ended June 30, 2024. |
| · | Audited historical consolidated financial statements of Bunge as of and for the fiscal year ended December 31, 2023, which are included in respective filing on Form 10-K for the fiscal year ended December 31, 2023. |
| · | Unaudited historical condensed consolidated financial statements of Viterra as of and for the six months ended June 30, 2024, and the audited historical consolidated financial statements of Viterra as of and for the fiscal year ended December 31, 2023, which are included in Exhibits 99.2 and 99.1, respectively to this Current Report on Form 8-K. |
The historical consolidated financial statements of Bunge and Viterra have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma adjustments which are necessary to account for the Acquisition, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The unaudited pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. All adjustments are preliminary and subject to change.
The Acquisition will be accounted for as a business combination using the acquisition method with Bunge as the accounting acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under this method of accounting, the total consideration as defined in ASC 805 will be allocated to Viterra’s assets acquired and liabilities assumed based upon the estimated fair values at the Acquisition date. The process of valuing the net assets of Viterra at the expected Acquisition date, as well as evaluating accounting policies for conformity, is preliminary. Any differences between the fair value of the consideration transferred and the fair value of the assets acquired, and liabilities assumed will be recorded as goodwill. Accordingly, the Transaction Consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value.
The unaudited pro forma condensed combined financial information is based on the preliminary information available and management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The actual purchase accounting assessment may vary based on final analyses of the valuation of assets acquired and liabilities assumed, particularly in regard to definite-lived tangible assets and deferred tax assets and liabilities, which could be material. Bunge will finalize the accounting for the Acquisition as soon as practicable within the measurement period in accordance with ASC 805, but in no event later than one (1) year from the Acquisition date.
The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings, or integration costs that may result from the Acquisition. No assurance can be given that synergies, operating efficiency or cost savings will be realized. Income taxes do not reflect the amounts that would have resulted had Bunge and Viterra filed consolidated income tax returns during the periods presented.
The following unaudited pro forma condensed combined financial information gives effect to the Acquisition and financing, which includes adjustments for the following:
| a. | Certain reclassifications to conform Viterra’s historical financial statement presentation to Bunge’s presentation, including accounting policy conformity adjustments; |
| b. | Conversion adjustments to convert Viterra’s historical consolidated financial statements from IFRS to U.S. GAAP; |
| c. | Adjustments to exclude results of Viterra’s Russian operations, sold as of October 2023, including the disposition of a 50% ownership interest in Taman Grain Terminal Holdings Ltd (“Taman”), an investment in affiliate (collectively, the “Russian Disposition”) and disposition of a 50% ownership interest in Advanced Organic Materials S.A. ("AOM Sale"), an investment in affiliate, sold as of October 2023, which are discontinued operations for Bunge under ASC 205, Presentation of Financial Statements (“ASC 205”) as of January 1, 2023 for the purposes of the unaudited pro forma condensed combined statement of income; |
| d. | The European Commission (the "Commission") has approved, under the EU Merger Regulation, the proposed acquisition of Viterra by Bunge. The approval is conditional upon full compliance with the commitments offered by the parties. To address the Commission's competition concerns, it was agreed that Viterra’s business in Hungary as well as part of Viterra's business in Poland will be sold ("EU Oilseeds Divestment"). The sale in Poland includes Viterra’s Boda processing facility including commercial activities relating to oilseeds origination to supply such facility, as well as the Trawniki, Kętrzyn, Szamotuły and Werbkowice storage facilities. The decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation. Adjustments were made to exclude results of the EU Oilseeds Divestment which are discontinued operations for Bunge under ASC 205, Presentation of Financial Statements (“ASC 205”) as of January 1, 2023 for the purposes of the unaudited pro forma condensed combined statement of income and discontinued operations held for sale for Bunge as of June 30, 2024 for the purposes of the unaudited pro forma condensed combined Balance Sheet; |
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| e. | Adjustments to reflect purchase accounting under ASC 805; |
| f. | Proceeds and uses of the financing entered into in connection with the Acquisition; |
| g. | Non-recurring transaction costs in connection with the Acquisition; and |
| h. | Elimination of transactions and positions between Bunge and Viterra. |
The unaudited pro forma condensed combined financial information and related notes are provided for illustrative purposes only and do not purport to represent what the combined company’s actual results of operations or financial position would have been had the Acquisition been completed on the dates indicated, nor are they necessarily indicative of the combined company’s future results of operations or financial position for any future period.
On June 12, 2023, Bunge's Board of Directors approved the expansion of an existing $500 million program for the repurchase of Bunge’s issued and outstanding shares. At the time, approximately $300 million of capacity for the repurchase of shares remained available under the existing program and Bunge’s Board of Directors approved the expansion of the program by an additional $1.7 billion, for an aggregate unutilized capacity of $2.0 billion at June 12, 2023. The program continues to have an indefinite term. Since June 13, 2023, Bunge repurchased 9,784,835 shares for $1.0 billion. Therefore, as of June 30, 2024, $1.0 billion remains outstanding for repurchases under the program. In 2024, Bunge did not repurchase any shares other than through the share repurchase program. The repurchases may be made from time to time through a variety of means, including in the open market, in privately negotiated transactions or through other means as determined by Bunge, and in compliance with applicable legal requirements. The timing and number of shares repurchased will depend on a variety of factors, including share price and market conditions, and the program may be suspended or discontinued at any time. As such, the unaudited pro forma condensed combined financial information does not reflect the effects of any planned share repurchase that Bunge may execute in the future, as Bunge considers this to be independent of the Acquisition and is under no obligation to repurchase Bunge shares in contemplation with this Acquisition.
Bunge has determined that the following dispositions are not significant. As such, the unaudited pro forma condensed combined financial information does not reflect the effects of Bunge's planned BP Bunge Bioenergia disposition and the 40% divestment of Bunge's Spanish operating subsidiary, as defined below.
On June 19, 2024, Bunge entered into a definitive share purchase agreement with BP Biofuels Brazil Investment Limited ("BP") to sell its 50% ownership share in BP Bunge Bioenergia, a joint venture formed to cultivate sugar cane, produce and sell sugar and sugar ethanol, and create power cogeneration activities, for an approximate total net amount of $800 million, depending on timing of closing and customary closing adjustments. The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions. Further, upon transaction close, Bunge will indemnify BP against certain legal claims as defined in the share purchase agreement. In June 2024, Bunge received a refundable deposit towards the closing purchase price of $103 million, which is recorded within Other current liabilities on the unaudited pro forma condensed combined balance sheet. As of June 30, 2024, the carrying value of Bunge's investment in BP Bunge Bioenergia is $432 million. The investment is reported within Investments in affiliates on the unaudited pro forma condensed combined balance sheet. Additionally, $(79) million of Bunge's Accumulated other comprehensive income (loss) as of June 30, 2024 is related to the investment in BP Bunge Bioenergia.
On March 26, 2024, Bunge entered into a definitive stock purchase agreement with Repsol Industrial Transformation, SLU, a wholly owned subsidiary of Repsol SA, whereby Bunge will divest 40% of its Spanish operating subsidiary, Bunge Iberica SA ("BISA"), in exchange for $300 million plus up to $40 million in contingent payments, as well as certain adjustments in consideration, including net working capital and net debt, among other items. BISA operates three industrial facilities in the Iberian Peninsula. The transaction is expected to close in late 2024, subject to customary closing conditions.
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BUNGE GLOBAL SA AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 2024
(U.S. dollars in millions, except share data)
| Bunge Historical | Viterra Historical (After Reclassifications, GAAP and Discontinued Operations Adjustments (Notes 2 and 3) | Viterra Acquisition Transaction Accounting Adjustments (Note 4) | Notes | Other Transaction Accounting Adjustments (Note 5) | Notes | Pro Forma Combined | ||||||||||||||||
| Net sales | $ | 26,658 | $ | 21,616 | $ | (628 | ) | 4(a) | $ | — | $ | 47,646 | ||||||||||
| Cost of goods sold | (25,118 | ) | (21,299 | ) | 604 | 4(a); 4(b); 4(c) | — | (45,813 | ) | |||||||||||||
| Gross profit | 1,540 | 317 | (24 | ) | — | 1,833 | ||||||||||||||||
| Selling, general and administrative expenses | (888 | ) | (336 | ) | 49 | 4(d); 4(e); 4(h) | — | (1,175 | ) | |||||||||||||
| Interest income | 79 | 19 | — | — | 98 | |||||||||||||||||
| Interest expense | (231 | ) | (221 | ) | 129 | 4(f); 4(i) | (153 | ) | 5(a) | (476 | ) | |||||||||||
| Foreign exchange (losses) gains – net | (115 | ) | — | — | — | (115 | ) | |||||||||||||||
| Other income (expense) – net | 125 | 149 | — | — | 274 | |||||||||||||||||
| Income (loss) from affiliates | (38 | ) | 26 | — | — | (12 | ) | |||||||||||||||
| Income (loss) before income tax | 472 | (46 | ) | 154 | (153 | ) | 427 | |||||||||||||||
| Income tax (expense) benefit | (147 | ) | 75 | (23 | ) | 4(g) | 36 | 5(b) | (59 | ) | ||||||||||||
| Net income (loss) | 325 | 29 | 131 | (117 | ) | 368 | ||||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (11 | ) | 1 | — | — | (10 | ) | |||||||||||||||
| Net income (loss) attributable to Bunge | $ | 314 | $ | 30 | $ | 131 | $ | (117 | ) | $ | 358 | |||||||||||
| Earnings per share—basic | ||||||||||||||||||||||
| Net income (loss) attributable to Bunge shareholders - basic | $ | 2.20 | 6 | $ | 1.72 | |||||||||||||||||
| Earnings per share—diluted | ||||||||||||||||||||||
| Net income (loss) attributable to Bunge shareholders - diluted | $ | 2.17 | 6 | $ | 1.71 | |||||||||||||||||
| Weighted-average number of shares outstanding | ||||||||||||||||||||||
| Basic | 142,560,804 | 208,172,635 | ||||||||||||||||||||
| Diluted | 144,291,340 | 209,903,171 | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial information.
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BUNGE GLOBAL SA AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 2023
(U.S. dollars in millions, except share data)
| Bunge Historical | Viterra Historical (After Reclassifications, GAAP and Discontinued Operations Adjustments (Notes 2 and 3) | Viterra Acquisition Transaction Accounting Adjustments (Note 4) | Notes | Other Transaction Accounting Adjustments (Note 5) | Notes | Pro Forma Combined | |||||||||||||||||
| Net sales | $ | 59,540 | $ | 51,960 | $ | (1,222 | ) | 4(a) | $ | — | $ | 110,278 | |||||||||||
| Cost of goods sold | (54,695 | ) | (50,404 | ) | 1,159 | 4(a); 4(b); 4(c) | — | (103,940 | ) | ||||||||||||||
| Gross profit | 4,845 | 1,556 | (63 | ) | — | 6,338 | |||||||||||||||||
| Selling, general and administrative expenses | (1,715 | ) | (571 | ) | (98 | ) | 4(d); 4(e); 4(h) | — | (2,384 | ) | |||||||||||||
| Interest income | 148 | 41 | — | — | 189 | ||||||||||||||||||
| Interest expense | (516 | ) | (500 | ) | 306 | 4(f); 4(i) | (319 | ) | 5(a) | (1,029 | ) | ||||||||||||
| Foreign exchange (losses) gains – net | 20 | (69 | ) | — | — | (49 | ) | ||||||||||||||||
| Other income (expense) – net | 129 | 106 | — | — | 235 | ||||||||||||||||||
| Income (loss) from affiliates | 140 | (47 | ) | — | — | 93 | |||||||||||||||||
| Income (loss) before income tax | 3,051 | 516 | 145 | (319 | ) | 3,393 | |||||||||||||||||
| Income tax (expense) benefit | (714 | ) | (178 | ) | (55 | ) | 4(g) | 94 | 5(b) | (853 | ) | ||||||||||||
| Net income (loss) | 2,337 | 338 | 90 | (225 | ) | 2,540 | |||||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (94 | ) | (7 | ) | — | — | (101 | ) | |||||||||||||||
| Net income (loss) attributable to Bunge | $ | 2,243 | $ | 331 | $ | 90 | $ | (225 | ) | $ | 2,439 | ||||||||||||
| Earnings per share—basic | |||||||||||||||||||||||
| Net income (loss) attributable to Bunge shareholders - basic | $ | 15.07 | 6 | $ | 11.38 | ||||||||||||||||||
| Earnings per share—diluted | |||||||||||||||||||||||
| Net income (loss) attributable to Bunge shareholders - diluted | $ | 14.87 | 6 | $ | 11.27 | ||||||||||||||||||
| Weighted-average number of shares outstanding | |||||||||||||||||||||||
| Basic | 148,804,387 | 214,416,218 | |||||||||||||||||||||
| Diluted | 150,787,917 | 216,399,748 | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial information.
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BUNGE GLOBAL SA AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 2024
(U.S. dollars in millions)
| Bunge Historical | Viterra Historical (Notes 2 and 3) | Viterra Acquisition Transaction Accounting Adjustments (Note 4) | Notes | Other Transaction Accounting Adjustments (Note 5) | Notes | Pro Forma Combined | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,161 | $ | 554 | $ | (5,941 | ) | 4 (k) | $ | 5,460 | 5(c) | $ | 1,234 | |||||||||||
| Trade accounts receivable | 2,277 | 1,826 | (55 | ) | 4 (t) | — | 4,048 | |||||||||||||||||
| Inventories | 8,057 | 6,322 | — | — | 14,379 | |||||||||||||||||||
| Assets held for sale | — | 467 | 629 | 4 (w) | — | 1,096 | ||||||||||||||||||
| Other current assets | 3,957 | 2,345 | — | — | 6,302 | |||||||||||||||||||
| Total current assets | 15,452 | 11,514 | (5,367 | ) | 5,460 | 27,059 | ||||||||||||||||||
| Property, plant and equipment, net | 4,751 | 3,800 | 1,903 | 4 (l) | — | 10,454 | ||||||||||||||||||
| Operating lease assets | 927 | 789 | 37 | 4 (q) | — | 1,753 | ||||||||||||||||||
| Goodwill | 466 | 1,388 | 1,837 | 4 (k) | — | 3,691 | ||||||||||||||||||
| Other intangible assets, net | 355 | 25 | 23 | 4 (m) | — | 403 | ||||||||||||||||||
| Investments in affiliates | 1,193 | 402 | 4 | 4 (n) | — | 1,599 | ||||||||||||||||||
| Deferred income taxes | 698 | 366 | — | — | 1,064 | |||||||||||||||||||
| Other non-current assets | 586 | 220 | — | (4 | ) | 5(d) | 802 | |||||||||||||||||
| Total assets | $ | 24,428 | $ | 18,504 | $ | (1,563 | ) | $ | 5,456 | $ | 46,825 | |||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Short-term debt | $ | 949 | $ | 941 | $ | (941 | ) | 4 (k) | $ | — | $ | 949 | ||||||||||||
| Current portion of long-term debt | 5 | 73 | (73 | ) | 4 (k) | — | 5 | |||||||||||||||||
| Trade accounts payable | 3,429 | 1,961 | (55 | ) | 4 (t) | — | 5,335 | |||||||||||||||||
| Current operating lease obligations | 300 | 334 | — | — | 634 | |||||||||||||||||||
| Liabilities held for sale | — | 200 | 78 | 4 (w) | — | 278 | ||||||||||||||||||
| Other current liabilities | 2,923 | 2,547 | (91 | ) | 4(j); 4(k); 4(v) | — | 5,379 | |||||||||||||||||
| Total current liabilities | 7,606 | 6,056 | (1,082 | ) | — | 12,580 | ||||||||||||||||||
| Long-term debt | 4,086 | 5,895 | (2,851 | ) | 4(k); 4(r); 4(u) | 5,460 | 5(c) | 12,590 | ||||||||||||||||
| Deferred income taxes | 369 | 382 | 618 | 4 (s) | — | 1,369 | ||||||||||||||||||
| Non-current operating lease obligations | 577 | 513 | — | — | 1,090 | |||||||||||||||||||
| Other non-current liabilities | 805 | 365 | (15 | ) | 4 (k) | — | 1,155 | |||||||||||||||||
| Redeemable noncontrolling interest | 1 | — | — | — | 1 | |||||||||||||||||||
| Equity: | ||||||||||||||||||||||||
| Registered shares, par value $.01 | 1 | 1 | — | 4 (o) | — | 2 | ||||||||||||||||||
| Additional paid-in capital | 5,869 | 1,780 | 4,995 | 4(k); 4(o) | — | 12,644 | ||||||||||||||||||
| Retained earnings | 12,005 | 4,301 | (4,359 | ) | 4(k); 4(o) | (4 | ) | 5(d) | 11,943 | |||||||||||||||
| Accumulated other comprehensive income (loss) | (6,446 | ) | (992 | ) | 992 | 4 (o) | — | (6,446 | ) | |||||||||||||||
| Treasury shares, at cost | (1,427 | ) | — | — | — | (1,427 | ) | |||||||||||||||||
| Total Bunge shareholders’ equity | 10,002 | 5,090 | 1,628 | (4 | ) | 16,716 | ||||||||||||||||||
| Noncontrolling interests | 982 | 203 | 139 | 4 (p) | — | 1,324 | ||||||||||||||||||
| Total equity | 10,984 | 5,293 | 1,767 | (4 | ) | 18,040 | ||||||||||||||||||
| Total liabilities, redeemable noncontrolling interest and equity | $ | 24,428 | $ | 18,504 | $ | (1,563 | ) | $ | 5,456 | $ | 46,825 | |||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial information.
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined financial information and related notes are prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission on May 20, 2020.
Bunge’s historical consolidated financial statements were prepared in accordance with U.S. GAAP and presented in U.S. dollars. Viterra’s historical consolidated financial statements were prepared in accordance with IFRS and presented in U.S. dollars. As discussed in Note 2. Reclassification Adjustments, certain reclassifications adjustments were made to align Viterra’s financial statement presentation with that of Bunge. As discussed in Note 3. U.S. GAAP Conversion and Discontinued Operations Adjustments, certain U.S. GAAP conversion adjustments were made to align Viterra’s financial statements to be in accordance with U.S. GAAP. Adjustments were made to present Viterra’s Russian Disposition, the AOM Sale, and the EU Oilseeds Divestment as discontinued operations in accordance with ASC 205 under U.S. GAAP as of January 1, 2023 for the purposes of the unaudited pro forma condensed combined statement of income. Viterra’s Russian Disposition, the AOM Sale, and the EU Oilseeds Divestment would not be considered part of the combined company’s continuing operations following the Acquisition. Therefore, the results of Viterra's Russian Disposition, the AOM Sale, and the EU Oilseeds Divestment are excluded from the Unaudited Pro Forma Condensed Combined Statement of Income for the year ended December 31, 2023. The results of Viterra's EU Oilseeds Divestment are excluded from the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024.
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Bunge as the accounting acquirer, and based on the historical consolidated financial statements of Bunge and Viterra. Under ASC 805, assets acquired and liabilities assumed in a business combination are recognized and measured at the Acquisition date fair value. Transaction costs associated with a business combination are expensed as incurred. The excess of consideration under ASC 805 over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Accordingly, the Transaction Consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value.
The Unaudited Pro Forma Condensed Combined Balance Sheet is presented as if the Acquisition had occurred on June 30, 2024, and the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024 and for the year ended December 31, 2023 give effect to the Acquisition as if it occurred on January 1, 2023.
The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the Acquisition and integration costs that may be incurred. The pro forma adjustments represent Bunge’s best estimates and are based upon currently available information and certain assumptions that Bunge believes are reasonable under the circumstances.
Note 2. RECLASSIFICATION ADJUSTMENTS
During the preparation of this unaudited pro forma condensed combined financial information, certain reclassification adjustments have been made to conform Viterra’s financial statement presentation to that of Bunge’s as indicated in the tables below. IFRS to U.S. GAAP adjustments are not included in the total adjustments identified in Note 2. Reclassification Adjustments; Note 3. U.S. GAAP Conversion and Discontinued Operations Adjustments provides additional information with respect to IFRS to U.S. GAAP adjustments. At the time of preparing the unaudited pro forma condensed combined financial information, other than the adjustments described herein, Bunge is not aware of any other material differences.
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Unaudited Condensed Combined Statement of Income Adjustments
For the Six Months Ended June 30, 2024
(U.S. dollars in millions)
| Bunge Presentation | Viterra Historical Presentation | Viterra Historical | Reclassification Adjustments | Notes | Viterra Historical Adjusted for Reclassification | |||||||||||
| Net sales | Revenue | $ | 22,572 | $ | (380 | ) | 2(a); 2(b); 2(h) | $ | 22,192 | |||||||
| Cost of goods sold | Cost of goods sold | (22,099 | ) | 300 | 2(a); 2(c); 2(h); 2(j) | (21,799 | ) | |||||||||
| Gross profit | Gross margin | 473 | (80 | ) | 393 | |||||||||||
| Selling, general and administrative expenses | Selling and administrative expenses | (256 | ) | (85 | ) | 2(c); 2(f) | (341 | ) | ||||||||
| Interest income | Interest income | 22 | — | 22 | ||||||||||||
| Interest expense | Interest expense | (257 | ) | — | (257 | ) | ||||||||||
| Foreign exchange (losses) gains – net | — | 2 | 2(e) | 2 | ||||||||||||
| Other income (expense) – net | — | 154 | 2(b); 2(i); 2(j) | 154 | ||||||||||||
| Other expense | (12 | ) | 12 | 2(e); 2(i) | — | |||||||||||
| Other income | 9 | (9 | ) | 2(i) | — | |||||||||||
| Income (loss) from affiliates | Share of income from associates and joint ventures | 24 | 2 | 2(d) | 26 | |||||||||||
| Gain on disposals of investments | 1 | (1 | ) | 2(d) | — | |||||||||||
| Dividend income | 1 | (1 | ) | 2(d) | — | |||||||||||
| Impairment (expense)/release on trade receivables | (6 | ) | 6 | 2(f) | — | |||||||||||
| Income (loss) before income tax | Income before income taxes | (1 | ) | — | (1 | ) | ||||||||||
| Income tax (expense) benefit | — | 71 | 2(g) | 71 | ||||||||||||
| Current income tax expense | (64 | ) | 64 | 2(g) | — | |||||||||||
| Deferred income tax recovery | 135 | (135 | ) | 2(g) | — | |||||||||||
| Net income (loss) | Income for the period | 70 | — | 70 | ||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | Attributable to non-controlling interests | 1 | — | 1 | ||||||||||||
| Net income (loss) attributable to Bunge | Attributable to equity holders | $ | 71 | $ | — | $ | 71 | |||||||||
8
Unaudited Condensed Combined Statement of Income Adjustments
For the Year Ended December 31, 2023
(U.S. dollars in millions)
| Bunge Presentation | Viterra Historical Presentation | Viterra Historical | Reclassification Adjustments | Notes | Viterra Historical Adjusted for Reclassification | |||||||||||
| Net sales | Revenue | $ | 54,673 | $ | (511 | ) | 2(a); 2(b); 2(h) | $ | 54,162 | |||||||
| Cost of goods sold | Cost of goods sold | (52,971 | ) | 462 | 2(a); 2(c); 2(h); 2(j); 2(k) | (52,509 | ) | |||||||||
| Gross profit | Gross margin | 1,702 | (49 | ) | 1,653 | |||||||||||
| Selling, general and administrative expenses | Selling and administrative expenses | (467 | ) | (124 | ) | 2(c); 2(f) | (591 | ) | ||||||||
| Interest income | Interest income | 47 | — | 47 | ||||||||||||
| Interest expense | Interest expense | (573 | ) | — | (573 | ) | ||||||||||
| Foreign exchange (losses) gains – net | — | (62 | ) | 2(e) | (62 | ) | ||||||||||
| Other income (expense) – net | — | 189 | 2(b); 2(i); 2(j) | 189 | ||||||||||||
| Other expense | (99 | ) | 99 | 2(e); 2(i) | — | |||||||||||
| Other income | 124 | (124 | ) | 2(i) | — | |||||||||||
| Loss on remeasurement of disposal group held for sale | (162 | ) | 162 | 2(k) | — | |||||||||||
| Income (loss) from affiliates | Share of income from associates and joint ventures | 52 | (51 | ) | 2(d); 2(k) | 1 | ||||||||||
| Gain on disposals of investments | 31 | (31 | ) | 2(d) | — | |||||||||||
| Dividend income | 3 | (3 | ) | 2(d) | — | |||||||||||
| Impairment (expense)/release on trade receivables | 6 | (6 | ) | 2(f) | — | |||||||||||
| Income (loss) before income tax | Income before income taxes | 664 | — | 664 | ||||||||||||
| Income tax (expense) benefit | — | (211 | ) | 2(g) | (211 | ) | ||||||||||
| Current income tax expense | (305 | ) | 305 | 2(g) | — | |||||||||||
| Deferred income tax recovery | 94 | (94 | ) | 2(g) | — | |||||||||||
| Net income (loss) | Income for the year | 453 | — | 453 | ||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | Attributable to non-controlling interests | (7 | ) | — | (7 | ) | ||||||||||
| Net income (loss) attributable to Bunge | Attributable to equity holders | $ | 446 | $ | — | $ | 446 | |||||||||
9
| 2(a). | Adjustment to reclassify Viterra’s gains and losses on physical forward sales contracts within Revenue to Cost of goods sold. Viterra recognized revenue at the amount of cash received plus the fair value of the derivative on the settlement date in accordance with IFRS and as confirmed by the IFRS Interpretations Committee (“IFRIC”) in March 2019. U.S. GAAP is not prescriptive regarding income statement presentation of gains and losses of derivatives that are not designated in a hedging relationship. Bunge’s policy election is to present all gains and losses within Cost of goods sold as it minimizes distortion within Net sales and maintains the relationship between Net sales and reported volumes information. |
Reclassification of the net losses of $150 million for the six months ended June 30, 2024.
Reclassification of the net losses of $303 million for the year ended December 31, 2023.
| 2(b). | Adjustment to reclassify Viterra’s other revenue within Revenue to Other income (expense) — net. |
Reclassification of $17 million for the six months ended June 30, 2024.
Reclassification of $64 million for the year ended December 31, 2023.
| 2(c). | Adjustment to reclassify Viterra’s various costs to and from Cost of goods sold to and from Selling, general and administrative expenses. |
Reclassification of $11 million and $90 million, respectively for the six months ended June 30, 2024 net to $79 million.
Reclassification of $19 million and $149 million, respectively for the year ended December 31, 2023 net to $130 million.
| 2(d). | Adjustment to reclassify Viterra’s Gain on disposals of investments and Dividend income to Income (loss) from affiliates. |
Reclassification of Gain on disposals of investments of $1 million and Dividend income of $1 million for the six months ended June 30, 2024.
Reclassification of Gain on disposals of investments of $31 million and Dividend income of $3 million for the year ended December 31, 2023.
| 2(e). | Adjustment to reclassify Viterra’s foreign exchange (losses) gains recorded within Other expense to Foreign exchange (losses) gains — net. |
Reclassification of foreign exchange gains of $2 million for the six months ended June 30, 2024.
Reclassification of foreign exchange losses of $62 million for the year ended December 31, 2023.
| 2(f). | Adjustment to reclassify Viterra’s Impairment (expense)/release on trade receivables to Selling, general and administrative expenses. Neither IFRS nor U.S. GAAP prescribes presentation of impairment (expense)/releases within the statement of income. This adjustment reclassifies Viterra’s impairment (expense)/release to align to Bunge’s accounting policy election to present such charges in Selling, general and administrative expenses. |
Reclassification of $6 million of impairment expense for the six months ended June 30, 2024.
Reclassification of $6 million of impairment release for the year ended December 31, 2023.
| 2(g). | Adjustment to reclassify Viterra’s Current income tax expense and Deferred income tax recovery to Income tax (expense) benefit. |
Reclassification of $64 million in expense from Current income tax expense and $135 million benefit from Deferred income tax recovery for the six months ended June 30, 2024.
Reclassification of $305 million in expense from Current income tax expense and $94 million benefit from Deferred income tax recovery for the year ended December 31, 2023.
| 2(h). | Adjustment to reclassify Viterra’s excise taxes on sales recorded within Cost of goods sold to Net Sales. IFRS 15 requires entities to evaluate taxes on a jurisdiction-by-jurisdiction basis to determine amounts to exclude from revenue (as amounts collected on behalf of third parties). Bunge’s policy election (per ASC 606, Revenue from Contracts with Customers) is to present all sales taxes, and other similar taxes including excise taxes, in Net sales. |
Reclassification of $513 million for the six months ended June 30, 2024.
Reclassification of $750 million for the year ended December 31, 2023.
| 2(i). | Adjustment to reclassify Viterra’s remaining Other expense and Other income to Other income (expense) — net. |
Reclassification of $14 from Other expense and $9 million from Other income for the six months ended June 30, 2024.
10
Reclassification of $37 million from Other expense and $124 million from Other income for the year ended December 31, 2023.
| 2(j). | Adjustment to reclassify Viterra’s gains from the sale of securities related to Argentina foreign currency positioning from Cost of goods sold to Other income (expense) — net. These foreign positioning gains relate to new Argentinian programs related to blended currency swaps transaction results. |
Reclassification of $142 million for the six months ended June 30, 2024.
Reclassification of $38 million for the year ended December 31, 2023.
| 2(k). | Adjustment to reclassify Viterra’s impairment charges related to held for sale net assets from Loss on remeasurement of disposal group held for sale to Cost of goods sold and to Income from affiliates. Neither IFRS nor U.S. GAAP prescribes presentation of impairment losses within the statement of income. This adjustment reclassifies Viterra’s impairment charges to align to Bunge’s accounting policy election to present such charges in Cost of goods sold and Income from affiliates, depending on the nature of the impairment. |
Not applicable for the six months ended June 30, 2024.
Reclassification of $77 million to Cost of goods sold and $85 million to Income from affiliates for the year ended December 31, 2023.
11
Unaudited Condensed Combined Balance Sheet Adjustments
As of June 30, 2024
(U.S. dollars in millions)
| Bunge Presentation | Viterra Historical Presentation | Viterra Historical | Reclassification Adjustments | Notes | Viterra Historical Adjusted for Reclassification | ||||||||||
| ASSETS | |||||||||||||||
| Cash and cash equivalents | Cash and cash equivalents | $ | 567 | $ | — | $ | 567 | ||||||||
| Trade accounts receivable | Accounts receivable | 2,810 | (1,003 | ) | 2(l) | 1,807 | |||||||||
| Inventories | Inventories | 6,487 | (60 | ) | 2(l); 2(m) | 6,427 | |||||||||
| Assets held for sale | Assets held for sale | 2 | — | 2 | |||||||||||
| Other current assets | — | 2,386 | 2(l) | 2,386 | |||||||||||
| Other financial assets | 1,085 | (1,085 | ) | 2(l) | — | ||||||||||
| Income tax receivable | 213 | (213 | ) | 2(l) | — | ||||||||||
| Biological assets | 25 | (25 | ) | 2(m) | — | ||||||||||
| Total current assets | 11,189 | — | 11,189 | ||||||||||||
| Property, plant and equipment, net | Property, plant and equipment | 4,798 | 24 | 2(n) | 4,822 | ||||||||||
| Goodwill | — | 1,345 | 2(o) | 1,345 | |||||||||||
| Other intangible assets, net | Intangible assets | 1,394 | (1,369 | ) | 2(o); 2(n) | 25 | |||||||||
| Investments in affiliates | Investments in associates and joint ventures | 402 | — | 402 | |||||||||||
| Deferred income taxes | Deferred tax assets | 375 | — | 375 | |||||||||||
| Other non-current assets | — | 159 | 2(p) | 159 | |||||||||||
| Advances and loans | 87 | (87 | ) | 2(p) | — | ||||||||||
| Pension surplus | 57 | (57 | ) | 2(p) | — | ||||||||||
| Other investments (Non-current) | 15 | (15 | ) | 2(p) | — | ||||||||||
| Total assets | $ | 18,317 | $ | — | $ | 18,317 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||
| Short-term debt | $ | — | $ | 878 | 2(q) | $ | 878 | ||||||||
| Borrowings (Current) | 1,294 | (1,294 | ) | 2(q) | — | ||||||||||
| Current portion of long-term debt | — | 416 | 2(q) | 416 | |||||||||||
| Trade accounts payable | Accounts payable | 3,652 | (1,667 | ) | 2(r) | 1,985 | |||||||||
| Other current liabilities | Other current liabilities | 3 | 2,597 | 2(r) | 2,600 | ||||||||||
| Provisions (Current) | 56 | (56 | ) | 2(r) | — | ||||||||||
| Income tax payable | 32 | (32 | ) | 2(r) | — | ||||||||||
| Other financial liabilities (Current) | 842 | (842 | ) | 2(r) | — | ||||||||||
| Total current liabilities | 5,879 | — | 5,879 | ||||||||||||
| Long-term debt | Borrowings (Non-current) | 6,490 | — | 6,490 | |||||||||||
| Deferred income taxes | Deferred tax liabilities | 387 | — | 387 | |||||||||||
| Other non-current liabilities | Other long-term liabilities | 21 | 351 | 2(s) | 372 | ||||||||||
| Post-employment benefits | 15 | (15 | ) | 2(s) | — | ||||||||||
| Provisions (Non-current) | 152 | (152 | ) | 2(s) | — | ||||||||||
| Other financial liabilities (Non-current) | 184 | (184 | ) | 2(s) | — | ||||||||||
| Equity | |||||||||||||||
| Registered shares, par value $.01 | Share capital | 1 | — | 1 | |||||||||||
| Additional paid-in capital | — | 1,780 | 2(t) | 1,780 | |||||||||||
| Retained earnings | Reserves and retained earnings | 5,028 | (1,780 | ) | 2(t) | 3,248 | |||||||||
| Total Bunge shareholders’ equity | 5,029 | — | 5,029 | ||||||||||||
| Noncontrolling interests | Non-controlling interests | 160 | — | 160 | |||||||||||
| Total equity | 5,189 | — | 5,189 | ||||||||||||
| Total liabilities, redeemable noncontrolling interest and equity | $ | 18,317 | $ | — | $ | 18,317 | |||||||||
12
| 2(l). | Adjustment to reclassify Viterra’s Other financial assets of $1,085 million, Income tax receivable of $213 million, and portions of Accounts receivable, primarily margin deposits, prepaid commodity purchase contracts, and miscellaneous tax receivable of $1,003 million to Other current assets. In addition, an adjustment was made to reclassify spare parts held within Inventories of $85 million to Other current assets. |
| 2(m). | Adjustment to reclassify Viterra’s standing sugar cane from Biological assets of $25 million to Inventories. |
| 2(n). | Adjustment to reclassify Viterra’s intangible assets related to development costs of $24 million from Intangible assets to Property, plant and equipment, net. |
| 2(o). | Adjustment to reclassify Viterra’s goodwill of $1,345 million from Intangible assets to Goodwill. |
| 2(p). | Adjustment to reclassify Viterra’s Other investments (Non-current) of $15 million, Pension surplus of $57 million, and Advances and loans of $87 million to Other non-current assets. |
| 2(q). | Adjustment to reclassify Viterra’s Borrowings (Current) of $878 million to Short-term debt and $416 million to Current portion of long-term debt. |
| 2(r). | Adjustment to reclassify Viterra’s accrued expenses and other payables located in Accounts payable of $1,667 million, Provisions (Current) of $56 million, Income tax payable of $32 million, and Other financial liabilities (Current) of $842 million to Other current liabilities. |
| 2(s). | Adjustment to reclassify Viterra’s Post-employment benefits of $15 million, Provisions (Non-current) of $152 million, and Other financial liabilities (Non-current) of $184 million to Other non-current liabilities. |
| 2(t). | Adjustment to reclassify Viterra’s Additional paid-in capital of $1,780 million from Reserves and retained earnings to Additional paid-in capital. |
Note 3. U.S. GAAP CONVERSION AND DISCONTINUED OPERATIONS ADJUSTMENTS
During the preparation of this unaudited pro forma condensed combined financial information, management performed a preliminary analysis of Viterra’s financial information to identify differences between IFRS and U.S. GAAP. These adjustments are based on the preliminary analysis performed by Bunge’s management. When Bunge’s management completes a final analysis, additional differences may be identified that, when conformed, could have an impact on the unaudited pro forma condensed combined financial information. At the time of preparing the unaudited pro forma condensed combined financial information, other than the IFRS to U.S. GAAP adjustments described herein, Bunge is not aware of any other material differences. The amounts reported herein as discontinued operations and held for sale are subject to change.
13
Unaudited Condensed Combined Statement of Income Adjustments
For the Six Months Ended June 30, 2024
(U.S. dollars in millions)
Viterra Historical (Reclassification Only, Note 2) | Viterra Historical (After Reclassification Only, Note 2) | IFRS to U.S. GAAP Conversion Adjustments | Notes | Adjustment for Discontinued Operations | Notes | Viterra Historical (After Reclassifications, GAAP, and Discontinued Operations Adjustments) | ||||||||||||||
| Net sales | $ | 22,192 | $ | — | $ | (576 | ) | 3(d) | $ | 21,616 | ||||||||||
| Cost of goods sold | (21,799 | ) | (31 | ) | 3(a) | 531 | 3(d) | (21,299 | ) | |||||||||||
| Gross profit | 393 | (31 | ) | (45 | ) | 317 | ||||||||||||||
| Selling, general and administrative expenses | (341 | ) | — | 5 | 3(d) | (336 | ) | |||||||||||||
| Interest income | 22 | — | (3 | ) | 3(d) | 19 | ||||||||||||||
| Interest expense | (257 | ) | 31 | 3(a) | 5 | 3(d) | (221 | ) | ||||||||||||
| Foreign exchange (losses) gains – net | 2 | — | (2 | ) | 3(d) | — | ||||||||||||||
| Other income (expense) – net | 154 | (7 | ) | 3(b) | 2 | 3(d) | 149 | |||||||||||||
| Income (loss) from affiliates | 26 | — | — | 26 | ||||||||||||||||
| Income (loss) before income tax | (1 | ) | (7 | ) | (38 | ) | (46 | ) | ||||||||||||
| Income tax (expense) benefit | 71 | 2 | 3(c) | 2 | 3(d) | 75 | ||||||||||||||
| Net income (loss) | 70 | (5 | ) | (36 | ) | 29 | ||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | 1 | — | — | 1 | ||||||||||||||||
| Net income (loss) attributable to Bunge | $ | 71 | $ | (5 | ) | $ | (36 | ) | $ | 30 | ||||||||||
14
Unaudited Condensed Combined Statement of Income Adjustments
For the Year Ended December 31, 2023
(U.S. dollars in millions)
Viterra
Historical | Viterra Historical (After Reclassification Only, Note 2) | IFRS to U.S. GAAP Conversion Adjustments | Notes | Adjustment for Discontinued Operations | Notes | Viterra Historical (After Reclassifications, GAAP, and Discontinued Operations Adjustments) | ||||||||||||||
| Net sales | $ | 54,162 | $ | — | $ | (2,202 | ) | 3(d) | $ | 51,960 | ||||||||||
| Cost of goods sold | (52,509 | ) | (53 | ) | 3(a) | 2,158 | 3(d) | (50,404 | ) | |||||||||||
| Gross profit | 1,653 | (53 | ) | (44 | ) | 1,556 | ||||||||||||||
| Selling, general and administrative expenses | (591 | ) | — | 20 | 3(d) | (571 | ) | |||||||||||||
| Interest income | 47 | — | (6 | ) | 3(d) | 41 | ||||||||||||||
| Interest expense | (573 | ) | 53 | 3(a) | 20 | 3(d) | (500 | ) | ||||||||||||
| Foreign exchange (losses) gains – net | (62 | ) | — | (7 | ) | 3(d) | (69 | ) | ||||||||||||
| Other income (expense) – net | 189 | (82 | ) | 3(b) | (1 | ) | 3(d) | 106 | ||||||||||||
| Income (loss) from affiliates | 1 | — | (48 | ) | 3(d) | (47 | ) | |||||||||||||
| Income (loss) before income tax | 664 | (82 | ) | (66 | ) | 516 | ||||||||||||||
| Income tax (expense) benefit | (211 | ) | 24 | 3(c) | 9 | 3(d) | (178 | ) | ||||||||||||
| Net income (loss) | 453 | (58 | ) | (57 | ) | 338 | ||||||||||||||
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (7 | ) | — | — | (7 | ) | ||||||||||||||
| Net income (loss) attributable to Bunge | $ | 446 | $ | (58 | ) | $ | (57 | ) | $ | 331 | ||||||||||
| 3(a). | Under IFRS, Viterra recognized right of use assets and lease liabilities for leases. However, as required by IFRS, Viterra did not distinguish between operating leases and finance leases and accounted for all leases similarly to finance leases under U.S. GAAP. Viterra recorded depreciation expense on all right-of-use assets and interest expense on all lease liabilities, while a straight-line operating lease expense that includes both interest and depreciation is presented for operating leases under U.S. GAAP. |
Adjustment of $31 million for the six months ended June 30, 2024.
Adjustment of $53 million for the year ended December 31, 2023.
| 3(b). | Under IFRS, Viterra recorded an impairment reversal associated with Property, plant and equipment. However, under U.S. GAAP, the reversal of prior impairment losses is not allowed. Once an asset has been impaired, its value cannot be written up or reversed in later periods, even if the fair value subsequently increases. The adjustment reflects the impairment reversal previously recognized under IFRS. |
Adjustment of $7 million for the six months ended June 30, 2024.
Adjustment of $82 million for the year ended December 31, 2023.
| 3(c). | Reflects estimated income tax impact related to certain IFRS to U.S. GAAP adjustments. Tax-related adjustments are based upon an estimated tax rate of 34.8% or 29.5% for June 30, 2024 and December 31, 2023, respectively. These rates do not reflect Bunge’s effective tax rate, which includes other tax charges or benefits. |
Adjustment of $2 million for the six months ended June 30, 2024.
Adjustment of $24 million for the year ended December 31, 2023.
15
| 3(d). | Adjustments were made to present Viterra’s Russian Disposition, AOM Sale, and EU Oilseeds Divestment as discontinued operations in accordance with ASC 205 under U.S. GAAP, as these operations would not be considered part of the combined company’s continuing operations following the Acquisition. Therefore, the results of Viterra’s Russian Disposition, AOM Sale, and EU Oilseeds Divestment are excluded from the Unaudited Pro Forma Condensed Combined Statement of Income for the year ended December 31, 2023. The results of Viterra's EU Oilseeds Divestment are also excluded from the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024. |
| Viterra’s Russian operations include an impairment charge of $77 million in Cost of goods sold and $85 million in Income (loss) from affiliates from the sale of Taman for the year ended December 31, 2023 and is included in this discontinued operations adjustment. This discontinued operations adjustment also includes Viterra’s gain of $28 million from the AOM Sale and a gain of $3 million from the Russian Disposition in Income (loss) from affiliates. |
16
Unaudited Condensed Combined Balance Sheet Adjustments
As of June 30, 2024
(U.S. dollars in millions)
Viterra Historical (Reclassification Only, Note 2) | Viterra Historical (After Reclassification Only, Note 2) | IFRS to U.S. GAAP Conversion Adjustments | Notes | Adjustment for Discontinued Operations | Notes | Viterra Historical (After Reclassifications, GAAP, and Discontinued Operations Adjustments) | ||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 567 | $ | — | $ | (13 | ) | 3(j) | $ | 554 | ||||||||||
| Trade accounts receivable | 1,807 | 83 | 3(i) | (64 | ) | 3(j) | 1,826 | |||||||||||||
| Inventories | 6,427 | — | (105 | ) | 3(j) | 6,322 | ||||||||||||||
| Assets held for sale | 2 | — | 465 | 3(j) | 467 | |||||||||||||||
| Other current assets | 2,386 | — | (41 | ) | 3(j) | 2,345 | ||||||||||||||
| Total current assets | 11,189 | 83 | 242 | 11,514 | ||||||||||||||||
| Property, plant and equipment, net | 4,822 | (791 | ) | 3(e) | (231 | ) | 3(j) | 3,800 | ||||||||||||
| Operating lease assets | — | 791 | 3(e) | (2 | ) | 3(j) | 789 | |||||||||||||
| Goodwill | 1,345 | 43 | 3(g) | — | 1,388 | |||||||||||||||
| Other intangible assets, net | 25 | — | — | 25 | ||||||||||||||||
| Investments in affiliates | 402 | — | — | 402 | ||||||||||||||||
| Deferred income taxes | 375 | — | (9 | ) | 3(j) | 366 | ||||||||||||||
| Other non-current assets | 159 | 61 | 3(h) | — | 220 | |||||||||||||||
| Total assets | $ | 18,317 | $ | 187 | $ | — | $ | 18,504 | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Short-term debt | $ | 878 | $ | 83 | 3(i) | $ | (20 | ) | 3(j) | $ | 941 | |||||||||
| Current portion of long-term debt | 416 | (334 | ) | 3(e) | (9 | ) | 3(j) | 73 | ||||||||||||
| Trade accounts payable | 1,985 | — | (24 | ) | 3(j) | 1,961 | ||||||||||||||
| Current operating lease obligations | — | 334 | 3(e) | — | 334 | |||||||||||||||
| Liabilities held for sale | — | — | 200 | 3(j) | 200 | |||||||||||||||
| Other current liabilities | 2,600 | — | (53 | ) | 3(j) | 2,547 | ||||||||||||||
| Total current liabilities | 5,879 | 83 | 94 | 6,056 | ||||||||||||||||
| Long-term debt | 6,490 | (513 | ) | 3(e) | (82 | ) | 3(j) | 5,895 | ||||||||||||
| Deferred income taxes | 387 | — | (5 | ) | 3(j) | 382 | ||||||||||||||
| Non-current operating lease obligations | — | 513 | 3(e) | — | 513 | |||||||||||||||
| Other non-current liabilities | 372 | — | (7 | ) | 3(j) | 365 | ||||||||||||||
| Equity | ||||||||||||||||||||
| Registered shares, par value $0.01 | 1 | — | — | 1 | ||||||||||||||||
| Additional paid-in-capital | 1,780 | — | — | 1,780 | ||||||||||||||||
| Retained earnings | 3,248 | 1,053 | 3(f); 3(h) | — | 4,301 | |||||||||||||||
| Accumulated other comprehensive income (loss) | — | (992 | ) | 3(f) | — | (992 | ) | |||||||||||||
| Total shareholders’ equity | 5,029 | 61 | — | 5,090 | ||||||||||||||||
| Noncontrolling interests | 160 | 43 | 3(g) | — | 203 | |||||||||||||||
| Total equity | 5,189 | 104 | — | 5,293 | ||||||||||||||||
| Total liabilities, redeemable noncontrolling interest and equity | $ | 18,317 | $ | 187 | $ | — | $ | 18,504 | ||||||||||||
17
| 3(e). | Adjustment to reclassify Property, plant and equipment, net of $791 million to Operating lease assets for right of use assets recognized under IFRS that represent operating lease right of use assets under U.S. GAAP. Adjustment to reclassify Current portion of long-term debt of $334 million to Current operating lease obligations for lease liabilities recognized under IFRS that represent operating lease liabilities under U.S. GAAP. Adjustment to reclassify Long-term debt of $513 million to Non-current operating lease obligations for lease liabilities recognized under IFRS that represent operating lease liabilities under U.S. GAAP. |
| 3(f). | Adjustment to break out Accumulated other comprehensive income (loss) of $(992) million which is required to be displayed under U.S. GAAP but not specifically under IFRS. |
| 3(g). | Adjustment of historical Noncontrolling interests (“NCI”) to fair value for a previous acquisition. Viterra elected a policy to initially measure NCI at the NCI’s proportionate share of net assets of the acquiree, which is a permitted policy election under IFRS. This adjustment of $43 million is to bring the initial measurement of NCI to its fair value at the Acquisition date, which is required under U.S. GAAP. |
| 3(h). | IFRS limits the measurement of the net defined benefit asset (or “surplus”) to the present value of economic benefits available in the form of cash refunds from the plan or reductions in future contributions to the plan. As a result, Viterra’s historical balance sheet does not include a defined benefit asset of $61 million due to this asset ceiling on its Canadian employee benefit plans. The adjustment in Other non-current assets reflects the recognition of the defined benefit asset on the balance sheet, which is permitted under U.S. GAAP. |
| 3(i). | Viterra derecognized a portion of its receivables related to a financing facility in Canada. Under IFRS, financial assets can be derecognized when the entity has transferred substantially all of the risks and rewards from the financial asset. In accordance with ASC Topic 860, Transfers and Servicing (“ASC 860”), in order to derecognize financial assets under U.S. GAAP, the transferor must give up control over the transferred financial assets but does not have to transfer substantially all risks and rewards of ownership. On-transfer restrictions impact the transfer of control and precludes derecognition of the receivables under U.S. GAAP. The adjustment reflects the reversal of the IFRS derecognition of these receivables of $83 million in Trade accounts receivable and recognition of Short-term debt. The impact of derecognizing a portion of its receivables was not material to Viterra’s Condensed Consolidated Statements of Income for the six months ended June 30, 2024 and for the year ended December 31, 2023. |
| 3(j). | Assets and liabilities related to the EU Oilseeds Divestment are classified as held for sale in accordance with ASC 205. |
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Note 4. VITERRA ACQUISITION TRANSACTION ACCOUNTING ADJUSTMENTS
The Acquisition transaction accounting adjustments reflected in the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024 and for the year ended December 31, 2023 are detailed below:
| 4(a). | Reflects elimination of intercompany transactions, specifically in Net Sales and Cost of goods sold, between Bunge and Viterra. |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Elimination of intercompany transactions | $ | (628 | ) | $ | (1,222 | ) | ||
| Pro forma adjustment to Net sales | $ | (628 | ) | $ | (1,222 | ) | ||
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Elimination of intercompany transactions | $ | 628 | $ | 1,222 | ||||
| Pro forma adjustment to Cost of goods sold | $ | 628 | $ | 1,222 | ||||
| 4(b). | Reflects an adjustment for the removal of historical depreciation expense offset by new depreciation expense, on a straight-line basis based on the preliminary fair value of the Property, plant and equipment, net and the related assigned estimated useful life. |
| (US$ in millions, except useful lives) | Fair Value | Estimated Useful Life | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||||||
| Plant and equipment | $ | 3,816 | 2 - 40 | $ | 146 | $ | 291 | |||||||
| Buildings | 969 | 2 - 40 | 30 | 59 | ||||||||||
| Land | 293 | NA | — | — | ||||||||||
| Other assets (Construction in progress) | 207 | NA | — | — | ||||||||||
| Leasehold improvement | 248 | 2 - 29 | 6 | 11 | ||||||||||
| Moveable properties | 73 | 2 - 25 | 6 | 11 | ||||||||||
| Bearer plants | 75 | Unit of production | 10 | 28 | ||||||||||
| Software | 22 | 3 - 10 | 2 | 3 | ||||||||||
| Total fair value of Property, plant and equipment, net | $ | 5,703 | 200 | 403 | ||||||||||
| Less: Historical Viterra depreciation expense | (182 | ) | (361 | ) | ||||||||||
| Pro forma adjustment to depreciation expense in Cost of goods sold | $ | 18 | $ | 42 | ||||||||||
| 4(c). | Reflects an adjustment to lease expense as a result of the fair value adjustment to the right-of-use assets to reflect off-market lease terms compared to the current market rate for a similar lease. |
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| (US$ in millions) | Notes | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||
| Elimination of intercompany transactions | 4(a) | $ | 628 | $ | 1,222 | |||||
| Less: Increase in lease expense impact on step-up on acquisition | (6 | ) | (21 | ) | ||||||
| Less: Increase in depreciation expense impact on step-up on acquisition | 4(b) | (18 | ) | (42 | ) | |||||
| Pro forma adjustment to Cost of goods sold | $ | 604 | $ | 1,159 | ||||||
| 4(d). | Reflects an adjustment for the removal of historical amortization expense offset by new amortization expense, on a straight-line basis based on the preliminary fair value of Other intangible assets, net and the respective assigned estimated useful life. |
| (US$ in millions, except useful lives) | Fair Value | Estimated Useful Life | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||||||||
| Trademarks and trade names | $ | 23 | 1 | $ | — | $ | 23 | |||||||||
| Other intangibles, net | 25 | 3 - 54 | 2 | 4 | ||||||||||||
| Total fair value of Other intangible assets, net | $ | 48 | 2 | 27 | ||||||||||||
| Less: Historical Viterra amortization expense | (2 | ) | (4 | ) | ||||||||||||
| Pro forma adjustment to amortization expense in Selling, general and administrative expenses | $ | — | $ | 23 | ||||||||||||
| 4(e). | Reflects additional compensation expense related to retention of key Bunge and Viterra employees. |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Retention compensation expense | $ | 1 | $ | 39 | ||||
| Pro forma adjustment to incremental Selling, general and administrative expenses | $ | 1 | $ | 39 | ||||
| 4(f). | Reflects an adjustment to remove the interest expense on debt expected to be extinguished included in the Viterra historical Consolidated Statement of Income. |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Reverse Viterra interest expense | $ | 157 | $ | 364 | ||||
| Pro forma adjustment to Interest expense | $ | 157 | $ | 364 | ||||
| 4(g). | Reflects estimated income taxes related to the purchase price allocation and income tax impact related to certain pro forma adjustments. Tax-related adjustments are based upon an estimated tax rate of zero - 30.3%. Certain transaction accounting adjustments are based upon a tax rate of zero, resulting in no impact on the Unaudited Pro Forma Condensed Combined Statement of Income, since these adjustments would not be deductible or any tax benefit would be offset by a full valuation allowance. This rate does not reflect Bunge’s effective tax rate, which includes other tax charges or benefits. |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||
| Record tax impact | $ | (23 | ) | $ | (55 | ) | |||
| Pro forma adjustment to Income tax (expense) benefit | $ | (23 | ) | $ | (55 | ) | |||
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| 4(h). | Reflects estimated nonrecurring Acquisition-related expenses expected to be incurred by Bunge and a reduction to transaction costs that were recorded by Viterra in their Consolidated Statement of Income. |
| (US$ in millions) | Notes | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||||
| Bunge transaction costs | $ | 50 | $ | (36 | ) | |||||||
| Incremental amortization expense | 4(d) | — | (23 | ) | ||||||||
| Retention compensation expense | 4(e) | (1 | ) | (39 | ) | |||||||
| Pro forma adjustment to Selling, general and administrative expenses | $ | 49 | $ | (98 | ) | |||||||
| 4(i). | Reflects the adjustment to interest expense for accretion of the preliminary fair value of the outstanding debt assumed and not extinguished as of the Closing. |
| (US$ in millions) | Notes | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||||
| Accretion of fair value adjustment of assumed debt | $ | (28 | ) | $ | (58 | ) | ||||||
| Reverse Viterra interest expense | 4(f) | 157 | 364 | |||||||||
| Pro forma adjustment to Interest expense | $ | 129 | $ | 306 | ||||||||
The Acquisition transaction accounting adjustments reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2024 are detailed below:
| 4(j). | Reflects the estimated success fee not yet accrued associated with the sell-side advisors of Viterra to be assumed by Bunge at Closing. |
| (US$ in millions) | ||||
| Assumed liability for success fee | $ | 13 | ||
| Pro forma adjustment to Other current liabilities | $ | 13 | ||
| 4(k). | The Acquisition will be accounted for using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that the assets acquired, and liabilities assumed be recognized at the Acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. |
The accounting for the Acquisition is based on currently available information and is considered preliminary. The final accounting for the Acquisition may differ materially from that presented in the unaudited pro forma condensed combined financial information. The estimated fair value of consideration transferred is based on the closing price of the Bunge Shares on NYSE as of August 1, 2024.
The following table summarizes the total consideration transferred to complete the Acquisition with Viterra:
| (US$ in millions, except for share data) | ||||
| Bunge shares issued(1) | 65.61 | |||
| Bunge share price(2) | $ | 103.07 | ||
| Share Consideration | 6,763 | |||
| Add: Cash Consideration(3) | 1,982 | |||
| Total Transaction Consideration per Business Combination Agreement | 8,745 | |||
| Add: Repayment of Viterra's debt(4) | 3,748 | |||
| Add: Reimbursement of Viterra transaction costs(5) | 18 | |||
| Add: Accelerated incentive payments(6) | 57 | |||
| Add: Pre-existing relationships(7) | (22 | ) | ||
| Fair value of consideration transferred under ASC 805 | $ | 12,546 | ||
| (1) | Bunge Shares issued for Viterra’s shares outstanding as part of consideration, in actuals: 65,611,831 shares. |
| (2) | For purposes of this presentation only, the value of each Bunge Share is based on its closing share price on NYSE as of August 1, 2024. |
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| (3) | Represents the amount of Cash Consideration to be transferred to the Sellers as part of the transaction. |
| (4) | Represents amounts of outstanding indebtedness to be settled by Bunge immediately prior to or at Closing. The amount of outstanding indebtedness to be settled by Bunge prior to or at Closing is subject to change. Refer to table below: |
| (US$ in millions) | ||||
| Short-term debt | $ | 941 | ||
| Current portion of long-term debt | 73 | |||
| Long-term debt | 2,734 | |||
| Repayment of Viterra's debt | $ | 3,748 | ||
| (5) | Represents Viterra transaction expenses to be reimbursed to the Sellers and paid by Bunge at Closing. |
| (6) | Represents the 2022 long-term incentive awards that accelerate in vesting to be settled in cash by Bunge at Closing, and the 2023 and 2024 long-term incentive awards that accelerate in vesting to be converted to Restricted Stock Units ("RSU") by Bunge at Closing. Refer to table below: |
| (US$ in millions) | ||||
| Other current liabilities | $ | 42 | ||
| Other non-current liabilities | 15 | |||
| Accelerated incentive payments | $ | 57 | ||
| (7) | Represents elimination of pre-existing relationships (e.g., Accounts Receivable, Accounts Payable, and Other current liabilities) between Bunge and Viterra. Bunge Accounts Receivable is $36 million, Bunge Accounts Payable is $19 million, and Bunge Other current liabilities is $39 million. The net impact from pre-existing relationships is a reduction to purchase consideration of $22 million. |
The equity portion of the fair value of consideration transferred will depend on the market price of Bunge Shares when the Acquisition is consummated. A 10% increase or decrease in the price of Bunge Shares would result in the equity portion of the fair value of consideration transferred of $7,439 million and $6,086 million, respectively.
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The following table summarizes the preliminary purchase price accounting for the Acquisition under ASC 805:
| (US$ in millions) | Fair Value | |||
| Cash & cash equivalents | $ | 495 | ||
| Trade accounts receivable | 1,807 | |||
| Inventories | 6,322 | |||
| Assets held for sale | 1,096 | |||
| Other current assets | 2,345 | |||
| Property, plant and equipment, net | 5,703 | |||
| Operating lease assets | 826 | |||
| Other intangible assets, net | 48 | |||
| Investments in affiliates | 406 | |||
| Deferred income taxes | 366 | |||
| Other non-current assets | 220 | |||
| Total assets | 19,634 | |||
| Trade accounts payable | 1,925 | |||
| Current operating lease obligations | 334 | |||
| Liabilities held for sale | 278 | |||
| Other current liabilities | 2,527 | |||
| Long-term debt | 3,044 | |||
| Deferred income taxes | 1,000 | |||
| Non-current operating lease obligations | 513 | |||
| Other non-current liabilities | 350 | |||
| Net assets acquired | 9,663 | |||
| Less: Noncontrolling interest | (342 | ) | ||
| Goodwill | 3,225 | |||
| Fair value of consideration transferred | $ | 12,546 | ||
The following reflects the preliminary adjustment to goodwill in connection with the Acquisition, based on the preliminary purchase price accounting:
| (US$ in millions) | ||||
| Goodwill | $ | 3,225 | ||
| Less: Historical Viterra goodwill balance | (1,388 | ) | ||
| Pro forma adjustment to Goodwill | $ | 1,837 | ||
Fair values have also been determined based on internal information provided, specific to the assets/liabilities acquired. The preliminary purchase accounting was based on a benchmarking analysis of similar transactions in the industry and other assumptions to identify value allocations of Transaction Consideration to assets acquired and liabilities assumed. The fair value assigned to intangible assets has been estimated based on third-party preliminary valuation studies utilizing income-based methodologies and corroborated with benchmarks of similar transactions in the industry. The fair value assigned to real and personal property assets has been estimated based on third-party preliminary valuation studies utilizing a high level cost-based approach and corroborated with benchmarks of similar transactions in the industry.
Upon completion of the Acquisition and through the measurement period not to exceed 1 year from the Acquisition date, a final determination of fair value of Viterra’s assets and liabilities will be made. The final Transaction Consideration allocation may be materially different than that reflected in the preliminary Transaction Consideration allocation presented herein. Any increase or decrease in fair values of the net assets may change the amount of the total Transaction Consideration allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in the depreciation and amortization expense of the adjusted assets.
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The following table reflects the preliminary adjustment to cash in connection with the Acquisition related to transaction accounting adjustments as follows:
| (US$ in millions) | ||||
| Uses for Acquisition of Viterra: | ||||
| Repayment of Viterra's debt (1) | $ | (3,748 | ) | |
| Cash Consideration (2) | (1,982 | ) | ||
| Accelerated incentive payments (3) | (44 | ) | ||
| Payment of Bunge transaction costs (4) | (58 | ) | ||
| Reimbursement of Viterra transaction costs by Bunge (5) | (18 | ) | ||
| Payment of success fee by Bunge (6) | (13 | ) | ||
| Reimbursement of combined transaction costs paid by Viterra (7) | (19 | ) | ||
| Viterra distribution of permitted dividends (8) | (59 | ) | ||
| Pro forma adjustment to Cash and cash equivalents | $ | (5,941 | ) | |
| (1) | Represents amounts of outstanding indebtedness to be settled at Closing. The amount of outstanding indebtedness to be settled at Closing is subject to change. |
| (2) | Represents the amount of Cash Consideration to be transferred to Viterra’s shareholders as part of the transaction. |
| (3) | Represents the long-term incentive awards that accelerate in vesting, and to be settled in cash at Closing. |
| (4) | Represents Bunge’s estimated non-recurring transaction costs to be paid by Bunge at or near Closing. |
| (5) | Represents Viterra’s transaction expenses to be reimbursed by Bunge at Closing. |
| (6) | Represents payment for success fee associated with the sell-side advisors of Viterra to be paid at Closing. |
| (7) | Represents combined transaction expenses paid by Viterra to be reimbursed by Bunge at Closing. |
| (8) | Represents the distribution of $59 million of Viterra dividends, permitted under the Business Combination Agreement, declared in August 2024 and paid by Viterra in September 2024 to the Sellers prior to Closing. |
| 4(l). | Reflects the adjustment to Property, plant and equipment, net to reflect the estimated fair value of the acquired Property, plant and equipment, net excluding the fair value of the right of use operating leased assets equal to $826 million. The fair value of Property, plant and equipment, net is subject to change. |
The following table summarizes the estimated fair values for each asset class and the remaining estimated useful life, where applicable:
| (US$ in millions, except useful lives) | Fair Value | Estimated Useful Life | ||||
| Plant and equipment | $ | 3,816 | 2 - 40 | |||
| Buildings | 969 | 2 - 40 | ||||
| Land | 293 | NA | ||||
| Other assets (Construction in progress) | 207 | NA | ||||
| Leasehold improvement | 248 | 2 - 29 | ||||
| Moveable properties | 73 | 2 - 25 | ||||
| Bearer plants | 75 | Unit of production | ||||
| Software | 22 | 3 - 10 | ||||
| Total Fair Value | 5,703 | |||||
| Less: Viterra's historical Property, plant and equipment, net | (3,800 | ) | ||||
| Pro forma adjustment to Property, plant and equipment, net | $ | 1,903 | ||||
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| 4(m). | Reflects the adjustment to Other intangible assets, net to reflect the estimated fair value of the acquired Other intangible assets, net. The fair value of Other intangible assets, net is subject to change. |
| (US$ in millions, except useful lives) | Fair Value | Estimated Useful Life | ||||||
| Trademarks and trade names | $ | 23 | 1 | |||||
| Other intangibles, net | 25 | 3 - 54 | ||||||
| Total Fair Value | 48 | |||||||
| Less: Viterra’s historical intangible assets, net | (25 | ) | ||||||
| Pro forma adjustment to Other intangible assets, net | $ | 23 | ||||||
| 4(n). | Reflects the adjustment to Investments in affiliates to reflect the estimated fair value of acquired equity method investments. The fair value of Investments in affiliates is subject to change. |
| (US$ in millions) | Carrying Value | Fair Value | Fair Value Adjustment | |||||||||
| Investments in affiliates | $ | 402 | $ | 406 | $ | 4 | ||||||
| Pro forma adjustment to Investments in affiliates | $ | 4 | ||||||||||
| 4(o). | Reflects the elimination of Viterra’s historical Equity. |
| (US$ in millions) | ||||
| Elimination of Viterra historical common shares | $ | (1 | ) | |
| Add: Par value of Bunge registered shares issued to Sellers | 1 | |||
| Pro forma adjustment to Registered shares | $ | — | ||
| (US$ in millions) | ||||
| Elimination of historical Accumulated other comprehensive income (loss) | $ | 992 | ||
| Pro forma adjustment to Accumulated other comprehensive income (loss) | $ | 992 | ||
| (US$ in millions) | Notes | |||||
| Share Consideration | 4(k) | $ | 6,763 | |||
| Less: Par value of Bunge registered shares issued to Sellers | (1 | ) | ||||
| Accelerated incentive payments converted to Bunge RSUs (1) | 13 | |||||
| Elimination of historical additional paid-in-capital | (1,780 | ) | ||||
| Pro forma adjustment to Additional paid-in-capital | $ | 4,995 | ||||
| (1) | Represents the 2023 and 2024 long-term incentive awards that accelerate in vesting to be converted to RSUs by Bunge at Closing. |
| (US$ in millions) | Notes | |||||
| Payment of Bunge transaction costs | 4(k) | $ | (58 | ) | ||
| Elimination of historical retained earnings | (4,301 | ) | ||||
| Pro forma adjustment to Retained earnings | $ | (4,359 | ) | |||
| 4(p). | Reflects the adjustment to Noncontrolling interest to reflect the estimated fair value of acquired noncontrolling interests. |
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| (US$ in millions) | Carrying Value | Fair Value | Fair Value Adjustment | |||||||||
| Noncontrolling interests | $ | 203 | $ | 342 | $ | 139 | ||||||
| Pro forma adjustment to Noncontrolling interests | $ | 139 | ||||||||||
| 4(q). | Reflects the adjustment to Operating lease assets to reflect the estimated fair value of lease agreements to reflect off-market lease terms compared to the current market rate for similar leases. |
| (US$ in millions) | ||||
| Operating lease assets | $ | 37 | ||
| Pro forma adjustment to Operating lease assets | $ | 37 | ||
| 4(r). | Reflects the unamortized debt issuance costs related to the outstanding notes assumed by Bunge as of Closing. |
| (US$ in millions) | ||||
| Capitalized unamortized debt issuance costs | $ | 5 | ||
| Pro forma adjustment to Long-term debt | $ | 5 | ||
| 4(s). | Reflects the estimated taxes related to the purchase price allocation and income tax impact related to the pro forma adjustments. Tax-related adjustments are based upon an estimated tax rate of 0% - 29.7% based upon a blended statutory rate. This rate does not reflect Bunge’s effective tax rate, which includes other tax charges or benefits. |
| (US$ in millions) | ||||
| Record deferred tax | $ | 618 | ||
| Pro forma adjustment to Deferred income taxes | $ | 618 | ||
| 4(t). | Reflects eliminations in Trade accounts receivable and Trade accounts payable balances between Bunge and Viterra. |
| (US$ in millions) | ||||
| Eliminations for Bunge accounts receivable | $ | (36 | ) | |
| Eliminations for Viterra accounts receivable | (19 | ) | ||
| Pro forma adjustment to Trade accounts receivable | $ | (55 | ) | |
| (US$ in millions) | ||||
| Eliminations for Bunge accounts payable | $ | (19 | ) | |
| Eliminations for Viterra accounts payable | (36 | ) | ||
| Pro forma adjustment to Trade accounts payable | $ | (55 | ) | |
| 4(u). | Reflects the fair value adjustment of Long-term debt related to debt not being extinguished at Closing. |
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| (US$ in millions) | Notes | |||||
| Fair value adjustment to debt assumed | $ | (122 | ) | |||
| Repayment of Viterra Long-term debt | 4(k) | (2,734 | ) | |||
| Capitalized unamortized debt issuance costs | 4(r) | 5 | ||||
| Pro forma adjustment to Long-term debt | $ | (2,851 | ) | |||
| 4(v). | Reflects the elimination of integration costs and reimbursement of transaction costs paid by Viterra, payments for accelerated vesting, and the liability assumed for deferred bonuses at Closing. |
| (US$ in millions) | Notes | |||||
| Assumed liability for deferred bonuses | $ | 9 | ||||
| Elimination of integration costs paid by Viterra | (39 | ) | ||||
| Assumed liability for success fee | 4(j) | 13 | ||||
| Payment of success fee by Bunge | 4(k) | (13 | ) | |||
| Accelerated incentive payments | 4(k) | (42 | ) | |||
| Reimbursement of combined transaction costs paid by Viterra | 4(k) | (19 | ) | |||
| Pro forma adjustment to Other current liabilities | $ | (91 | ) | |||
| 4(w). | Reflects the adjustment to the EU Oilseeds Divestment in Assets held for sale of $629 million to reflect the estimated fair value less cost to sell. The adjustment results in a deferred tax liability of $78 million within Liabilities held for sale. The tax-related adjustment is based upon an estimated tax rate of 12.5% based upon a blended statutory rate. This rate does not reflect Bunge’s effective tax rate, which includes other tax charges or benefits. |
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| Note 5. | OTHER TRANSACTION ACCOUNTING ADJUSTMENTS |
The other transaction accounting adjustments, which represent financing adjustments reflected in the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024 and for the year ended December 31, 2023 are detailed below:
| 5(a). | Reflects the adjustment to the estimated interest expense to be incurred by Bunge as a result of additional financing as follows: |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Interest expense | $ | (152 | ) | $ | (305 | ) | ||
| Amortization of debt issuance costs related to additional financing | (1 | ) | (14 | ) | ||||
| Pro forma adjustment to Interest expense | $ | (153 | ) | $ | (319 | ) | ||
A 0.125% change in the variable interest rate of Bunge’s variable rate debt and debt expected to be swapped to variable rate would increase or decrease interest expense presented in the Unaudited Pro Forma Condensed Combined Statement of Income for the six months ended June 30, 2024 by $1.5 million and $(1.5) million and for the year ended December 31, 2023 by $2.9 million and $(2.9) million, respectively.
| 5(b). | Reflects estimated $36 million and $94 million tax benefit related to the financing adjustments for the six months ended June 30, 2024 and for the year ended December 31, 2023, respectively. Tax-related adjustments are based upon an estimated tax rate of 23.3% or 29.4% for June 30, 2024 and December 31, 2023, respectively. These rates do not reflect Bunge’s effective tax rate, which includes other tax charges or benefits. |
The other transaction accounting adjustments, which represent financing adjustments reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2024 are detailed below:
| 5(c). | Reflects the drawdown(s) on the financing transactions, resulting in the increase in cash balances as follows: |
| (US$ in millions) | ||||
| Proceeds received from additional financing (1) | $ | 5,500 | ||
| Less: Payment of financing costs (2) | (40 | ) | ||
| Pro forma adjustment to Cash and cash equivalents | $ | 5,460 | ||
| (1) | Bunge has secured a total of $8.0 billion in Acquisition Financing in the form of a $7.7 billion financing commitment from a consortium of lenders, arranged by SMBC and a $300 million delayed draw term loan (“DDTL”) from CoBank and the U.S. farm credit system, in addition to the Cash and cash equivalent, to repay in full all indebtedness of Viterra excluding Viterra's bonds, pay Cash Consideration and pay fees and expenses incurred in connection with the Acquisition. |
| (2) | Represents the payment of capitalized financing costs incurred related to the additional financing. The debt issuance costs are included as a reduction to Long-term debt. |
| 5(d). | Reflects an adjustment of $4 million to Retained Earnings for certain underwriting and upfront fees related to the $8.0 billion Acquisition Financing; these costs are expensed prior to or at Closing. |
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| Note 6. | EARNINGS PER SHARE |
The following tables set forth the computation of pro forma basic and diluted earnings per share for the six months ended June 30, 2024 and for the year ended December 31, 2023.
| (US$ in millions, except share count and per share data) | Notes | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||||
| Numerator: | ||||||||||||
| Net income (loss) attributable to Bunge shareholders | 6(a) | $ | 358 | $ | 2,439 | |||||||
| Denominator: | ||||||||||||
| Weighted-average number of shares outstanding–basic | 6(b) | 208,172,635 | 214,416,218 | |||||||||
| Weighted-average number of shares and potential shares outstanding–diluted | 6(b) | 209,903,171 | 216,399,748 | |||||||||
| Pro forma earnings per share: | ||||||||||||
| Net income (loss) attributable to Bunge shareholders–basic | $ | 1.72 | $ | 11.38 | ||||||||
| Net income (loss) attributable to Bunge shareholders–diluted | $ | 1.71 | $ | 11.27 | ||||||||
| 6(a). | Undistributed and distributed earnings available to shareholders is calculated as follows: |
| (US$ in millions) | For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | ||||||
| Numerator (basic and diluted): | ||||||||
| Net income (loss) attributable to Bunge shareholders | $ | 358 | $ | 2,439 | ||||
| 6(b). | Pro forma weighted-average shares outstanding is calculated as follows: |
| For the Six Months Ended June 30, 2024 | For the Year Ended December 31, 2023 | |||||||
| Denominator: | ||||||||
| Historical weighted-average number of shares outstanding–basic | 142,560,804 | 148,804,387 | ||||||
| Pro forma adjustment for shares issued | 65,611,831 | 65,611,831 | ||||||
| Weighted-average number of shares outstanding–basic | 208,172,635 | 214,416,218 | ||||||
| Historical weighted-average number of shares outstanding–diluted | 144,291,340 | 150,787,917 | ||||||
| Pro forma adjustment for shares issued | 65,611,831 | 65,611,831 | ||||||
| Weighted-average number of shares and potential shares outstanding–diluted | 209,903,171 | 216,399,748 | ||||||
29
Cover |
Sep. 09, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Sep. 09, 2024 |
| Entity File Number | 000-56607 |
| Entity Registrant Name | BUNGE GLOBAL SA |
| Entity Central Index Key | 0001996862 |
| Entity Tax Identification Number | 98-1743397 |
| Entity Incorporation, State or Country Code | V8 |
| Entity Address, Address Line One | Route de Florissant 13 |
| Entity Address, City or Town | Geneva |
| Entity Address, Country | CH |
| Entity Address, Postal Zip Code | 1206 |
| City Area Code | 314 |
| Local Phone Number | 292-2000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Registered Shares, par value $0.01 per share |
| Trading Symbol | BG |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
1 Year Bunge Global Chart |
1 Month Bunge Global Chart |
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