Namoi Cotton : NAM Corporate Governance Statement 2022 and 4G

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NAMOI COTTON LIMITED

CORPORATE GOVERNANCE STATEMENT

2022

NAMOI COTTON LIMITED

ABN 76 010 485 588

For personal use only

2022 Namoi Cotton Limited Corporate Governance Statement

Namoi Cotton Limited ('Namoi Cotton' or the 'Company') has adopted a program to review and improve its charters, policies and procedures periodically as required to ensure its corporate governance framework remains current and compliant with best corporate practice.

Namoi Cotton's corporate governance practices are outlined in this Corporate Governance Statement and addresses the ASX Corporate Governance Council's 'Corporate Governance Principles and Recommendations' - 4th Edition released in 2019 (referred to as 'ASX Principles or Recommendations'). Namoi Cotton has lodged with ASX the Appendix 4G (Key to Disclosures - Corporate Governance Council Principles and Recommendations) together with this Corporate Governance Statement and the Company's 2022 Annual Report.

The Namoi Cotton Charters and Policies for the Board and its current Board sub-committees referred to in this Corporate Governance Statement are available in the Corporate Governance section of Namoi Cotton's website at https://www.namoicotton.com.au/investors/governance/(collectively such policies are known as the "Corporate Governance Documents"). A copy of the 2022 Annual Report is also available on the Namoi Cotton website at https://www.namoicotton.com.au/investors/.

The 2022 Corporate Governance Statement is dated 8 July 2022 and covers the corporate governance practices and policies in place during the financial year ending 28 February 2022 and up to the date of this report. The 2022 Corporate Governance Statement was approved by the Board on 11 July 2022.

During the financial year ended 28 February 2022 and to the date of this report, the Board has undertaken a thorough review of its governance charters and policies to strengthen and enhance the company's governance platform. Namoi Cotton has monitored and updated the Company's risk management framework, including a review and identification of requisite Board skills, to ensure that the Company is in a strong and sustainable financial and operating position to achieve its strategic goals.

The Board Charter, Audit, Risk and Compliance Committee Charter, People Culture and Nomination Committee Charter, and Safety Committee Charter were all reviewed during calendar year 2022 to improve Board and committee governance standards to achieve a higher standard of accountability, transparency and reporting in the company, and also to address the 4th edition ASX Corporate Governance Principles and Recommendations. The various Board sub-committees are governed by their respective Charters which sets out the Committee's purpose, responsibilities, role, membership, meeting process, Board reporting obligations and assessment of performance.

The Board has taken a proactive approach to revising its governance policies and procedures to address the 4th edition ASX Corporate Governance Principles by initiating a review of its Code of Conduct, Risk Management Policy, Anti-bribery and Corruption Policy, Disclosure and Communication Policy, Diversity Policy, and a company-wide review of internal policies and procedures. The Company's Whistleblower Policy addresses and complies with the amendments to the Corporations Act 2001 (Cth) and the Taxation Administration Act 1953 (Cth) that are effective from 1 July 2019.

The Board sub-committees review matters designated within their respective Charters and make recommendations to the Board. The Board and sub-committee composition and attendance are set out in the Directors' Report within the 2022 Annual Report. The qualifications of Board and committee members and attendance at meetings is included in the Directors Report of the 2022 Annual Report.

Structure and Composition of the Board

The Namoi Cotton Constitution ("Constitution") provides that the Board must comprise an even number of Directors that is not more than a maximum of 8. Article 11.3 of the Constitution requires

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that at all times one-half of the total number of Directors must be Grower Directors (the "Grower Director Representation Rule" or "Rule") for so long as the Grower Directors Representation applies.

In accordance with the Constitution, the continuation of this Rule will be considered by shareholders at the 2022 Annual General Meeting ("AGM"). If shareholders approve the continuation of this Rule at the 2022 AGM, the Constitution requires shareholders to consider the Rule again at the 2027 AGM. If shareholders do not approve the continuation of this Rule at the 2022 AGM, the provisions of the Constitution relating to the Rule and any requirements imposed on Grower Directors will cease to apply at the conclusion of the 2022 AGM.

The Company has vacant Grower Director positions since the retirement of Glen Price in July 2021 and the recent change in classification of Tim Watson from Non-Executive Grower Director to Non- Executive Director.

If shareholders do not approve the continuation of this Rule at the 2022 AGM, shareholders will consider removing the requirement to have an even number of directors at the 2022 AGM.

Article 12 of the Constitution sets out the requirements to be eligible for a Grower Director.

A copy of the Constitution is available on the Namoi Cotton website at https://www.namoicotton.com.au/investors/governance/.

As at the publication of this governance statement the Non-Executive Director on the Board who is classified as being a Grower Director is Mrs Juanita Hamparsum. Tim Watson who is a Non-Executive Director, ceased to be classified as a Grower Director in 2022.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT Recommendation 1.1 - Roles and Responsibilities

The Board's responsibilities and reserved decision-making parameters are set out in the Board Charter. The roles and responsibilities of the Board are defined in the Board Charter, and the respective Board sub-committee Charters (all of which are available on the Namoi Cotton website).

During the 2022 financial year the Board delegated day to day management, operation and administration of Namoi Cotton to the Chief Executive Officer ("CEO"), who has the authority to sub- delegate his duties to various members of the executive management team. The Board is responsible for reviewing the performance of the CEO.

Mr John Stevenson was appointed to the position of CEO of Namoi Cotton on 7 June 2021 and remains in that role as at the date of this Corporate Governance Statement. Mr Stevenson was appointed Chief Financial Officer ("CFO") on 30 March 2020 and was replaced by Ms Sonya Ryan who commenced in the CFO position on 10th January 2022.

Recommendation 1.2 - Director selection

The process of the appointment and removal of Directors is governed by the Constitution.

The Board has a People, Culture, and Nomination Committee ("PCNC") which has the responsibility for recommending to the Board candidates to be considered or nominated to act as a Director for the Board.

If a new Director is appointed by the Board as a casual vacancy or as an addition to the existing Directors during the year, then such appointee holds office until the conclusion of the next AGM of the Company and is eligible for election at that meeting.

In considering candidates for the selection, election and appointment to the Board, the PCNC and the Board assess a candidate's background, qualifications, industry experience and personal attributes. As

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part of this process and at regular intervals, the Board will conduct a skills assessment to ensure that Directors possess the appropriate skills, experience, and attributes to govern the Company.

The Board undertakes appropriate checks before appointing a new Director including reference checks, criminal and bankruptcy checks, academic qualifications checks and where applicable, Grower Director checks to ensure they meet the Grower Directors qualifications under the Constitution.

Recommendation 1.3 - Terms of Appointment

Namoi Cotton has written agreements with all Directors setting out the key terms and responsibilities of their appointment. Senior Executive employment contracts clearly state the terms of appointment and the expectations of the Company regarding performance including any performance-based incentives.

Recommendation 1.4 - Company Secretary

The Company Secretary has access to all Board members. The role of the Company Secretary is outlined in the Board Charter. The Company Secretary assists and advises the Board on governance and compliance matters.

Company Secretarial services are managed jointly by Ms Sonya Ryan and Mr John Stevenson, with Mr Andrew Metcalfe acting in an advisory capacity. Mr Metcalfe is an experienced independent Company secretary and governance consultant, having been a Company secretary and governance advisor to ASX listed companies for over 20 years.

Recommendation 1.5 - Diversity Policy

Diversity within Namoi Cotton is created by an inclusive working environment. Namoi Cotton has published its Diversity Policy on its website at https://www.namoicotton.com.au/investors/governance/, which promotes diversity of religion, race, ethnicity, gender, disabilities, age, cultural background, socio-economic background, sexual orientation, perspective, experience and other areas of difference.

In respect of the diversity strategy, the Board and Management:

• promote diversity in the Namoi Cotton workplace.
• support equal opportunity in the recruitment, selection and promotion of employees from different backgrounds, knowledge, gender and experience. The Namoi Cotton recruitment process is structured to provide equality in recruitment and unbiased selection and promotion decisions.

The Diversity Policy includes measurable diversity objectives that are reflected in the recruitment policy. The Board, in consultation with the PCNC, set measurable objectives for achieving diversity, in particular gender diversity. The intention is to achieve the objectives over time.

Measurable diversity metrics include:

• representation of roles by age and gender for Management, Team Leaders and Board levels.
• gender salary comparison in same role and same level positions.
• gender representation in talent and succession planning; and
• setting diversity targets.

As at the date of this Corporate Governance Statement, 20% of Namoi Cotton's employees (prior year 17.9%) is made up of women employed across all sites and locations. Namoi Cotton is committed to a diversity strategy aimed to promote the appointment of qualified, experienced, and diverse Directors,

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Management and Employees to achieve Namoi Cotton's objectives on diversity.

Namoi Cotton's Workplace Gender Equality Act public report for 2021 is available on its website at https://www.namoicotton.com.au/investors/governance/.

Recommendation 1.6 - Board and Committee Performance and Evaluation

The Board conducts annual evaluations of its performance and the performance of its Board sub- committees. The process of performance review enables the Board to identify areas for improvement. The Board performance evaluation, amongst other things, is based on Namoi Cotton's performance against long term objectives, the business plan and budgeted performance.

An external performance and evaluation of the Board and its Board sub-committees was undertaken in the reporting period. The report confirmed that the current Board have the appropriate mix of skill, experience and expertise to execute the Company's objectives and strategies.

Recommendation 1.7 - Senior Management Performance and Evaluation

Namoi Cotton's Corporate Governance Documents detail the procedures for performance review and evaluation. Senior Management are evaluated against individual performance and business measures on an ongoing basis. Namoi Cotton sets key performance indicators for its senior executives and performance is evaluated against these targets annually.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1 - People, Culture and Nomination Committee

Namoi Cotton has established a People, Culture and Nomination ('PCNC') Committee to assist the Board in reviewing succession planning, remuneration policies and practices. The PCNC Charter sets out the Committee's responsibilities, structure, access to resources and information, meeting processes and performance evaluation. In addition, the Board has adopted a Remuneration Policy which is available on the Namoi Cotton website.

The primary function of the PCNC is to assist the Board in fulfilling its corporate governance responsibilities to:

• ensure the Company has the appropriate ethical standards and corporate governance policies and practices in place in order to protect and enhance shareholder returns.
• ensure, so far as possible, that policies are properly embedded within the Company's operations and that all who work for and with the Company embrace these polices and standards as a normal and necessary element of managing the Company to maximise value for shareholders.
• establish appropriate remuneration levels and policies including incentive policies for senior executives; and
• identify and select appropriate individuals for nomination as members of the Board.

The Committee's Charter provides that the Committee meets at least twice per annum and its members comprise of at least three (3) non-executive directors including an independent chairperson.

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