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Five PointFOCUSED ON PROTECTION
Annual Report
2018
Contents
About Ansell
About Ansell – Ansell the Safety Company
Our Purpose
Our Values
Financial Summary
Ansell’s Global Footprint
Chairman’s Review
Chief Executive Officer’s Review
Operating & Financial Review
Strategy
Outlook
Our Performance
Industrial Global Business Unit
Healthcare Global Business Unit
Corporate Social Responsibility & Sustainability
Governance
Board of Directors
Executive Leadership Team
Associate Executive Leadership Team
Report by the Directors
Remuneration Report
Financial Report
Consolidated Income Statement
02
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08
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28
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30
39
64
64
Consolidated Statement of Comprehensive Income 65
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Five-Year Summary
Shareholders
Shareholder Information
66
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70
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Ansell Limited Annual Report 2018
Ansell Limited Annual Report 2018
Ansell Limited Annual Report 2018
01
01
About Ansell –
Ansell the Safety Company
For 125 years, Ansell has delivered the most advanced protection solutions to millions
of people at work, at home and wherever hazards arise – because the Company’s market
expertise, innovative products and advanced technology give them a confidence and
peace of mind that no other brand can deliver.
02
Ansell Limited Annual Report 2018
Our Purpose
Ansell’s mission is to provide innovative safety solutions in a trustworthy and reliable manner
– creating an ‘Ansell protected’ world.
#AnsellProtects
Around the globe, Ansell stands for
safety. The Company has evolved from
an Australian rubber latex products
manufacturer to one of the world’s most
advanced safety solutions providers. With
a comprehensive global presence, Ansell
is a market leader that continues to grow
through new-product development,
acquisitions and the expansion of the
Company’s footprint in emerging markets.
Ansell products and services enable
customers to perform better and be more
productive, earning Ansell a leadership
position as well as a track record of
impressive growth for its shareholders.
As the Company continues to evolve
with first-to-market innovations across
a wide range of protection solutions,
Ansell remains committed to enabling
the safety, well-being and peace of
mind of customers around the world.
Our Values
Integrity – We value doing what is right and ethical.
Trustworthiness – We value acting with respect, fairness and dependability.
Agility – We value responsiveness to customers and each other, openness to
change and flexibility.
Creativity – We value inventiveness, innovation and new and divergent
ways of thinking.
Passion – We value energy and excitement, commitment, drive and dedication.
Involvement – We value our team members’ input, influence and initiative.
Teamwork – We value collaboration and a sense of partnership, sharing
and caring.
Excellence – We value a tenacious focus on results, accountability and
goal achievement.
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03
Ansell Limited Annual Report 2018
Financial Summary
Statutory Results
Ansell Group
Statutory Results
Continuing Operations
Adjusted Results
in Constant Currency
-3%
Sales down
+156%
EBIT up
+8%
Sales up
-11%
EBIT down
+5%
Sales up
+5%
EBIT up
+237%
EPS up
+19%
EPS up
+9%
Adjusted EBIT
+18%
EPS up
+5%
Organic constant currency
sales up
+4%
+3%
Organic constant currency
sales up
+6%
Adjusted constant currency
EBIT up
Adjusted constant currency
EBIT up
Results Commentary
We have provided our results on both
a Statutory and Adjusted basis for
Continuing Operations. The Adjusted
results have excluded the substantial
one-off gain from the Sexual Wellness
divestiture, the ensuing transformation
costs, one-off costs of the change in
accounting treatment for development
costs and the accounting gains from the
US tax reform. As in prior years, we have
also normalised the prior period for
constant currency and foreign currency
impacts. The adjusted results show solid
revenue and profitability growth, in what
was another successful year.
Statutory Results
US$m
Sales
EBIT1
Profit Attributable
Operating Cash Flow2
Earnings per Share – US cents
Group
FY17
1,599.7
217.8
147.7
146.0
100.1
FY18
1,547.5
557.0
484.3
93.6
336.8
Dividends per Share – US cents
44.0
45.5
Continuing Operations Adjusted
FY18
FY17
FY18
1,374.5
177.8
119.5
115.2
81.0
1,489.8
157.8
138.8
85.5
96.5
1,489.8
193.1
146.7
104.5
102.0
1. EBIT defined as Earnings Before Interest and Tax.
2. Net cash provided by operating activities per the Consolidated Statement of Cash Flows adjusted
for Net Capex, interest received and paid (net interest). Adjusted Operating Cash Flow is the continuing
Operations Cash Flow excluding Transformation costs of $19m.
Currency Reporting – United States dollar (US$)
The US$ is the predominant global currency of Ansell’s business transactions and the currency in which the global operations are managed
and reported. Non-US$ values are included in this report where appropriate.
Constant Currency
The presentation of constant currency information is designed to facilitate comparability of reported earnings by restating the prior period’s
results at the exchange rates applied in determining the results for the current period. This is achieved by analysing and estimating, where
necessary, revenue and cost transactions by underlying currencies of our controlled entities. These transactions are converted to US dollars
at the average exchange rates applicable to the current period on a month by month basis.
In addition, the following adjustments are made to the current and prior year’s results: the profit and loss impact of net foreign exchange
gains/losses is excluded; and the foreign exchange impact on unrealised profit in stock is excluded.
The principles of constant currency reporting and its implementation are subject to oversight by the Audit and Compliance Committee
of the Board. It is considered as supplemental non-IFRS financial information.
Adjusted Results
Adjusted results are continuing operations results after excluding the impact of the Transformation Program costs, the change in accounting
estimate for development costs and the deferred tax revaluation following corporate tax rate changes (primary impact in the US).
Organic constant currency
Organic constant currency is Constant Currency information (as described above) after excluding the impact of acquisitions, divestments
and exited products.
04
Healthcare GBU ResultsIndustrial GBU ResultsAnsell Limited Annual Report 2018
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Ansell Limited Annual Report 2018
05
Ansell’s Global Footprint
Ansell is a global leader in protection solutions. For 125 years, we have delivered the most advanced
protection solutions to people all around the world. With operations in four regions, offices and plants
located across 55 countries and a team of more than 12,000 employees, our strong global presence
has allowed us to better meet the needs of customers and end-users. As a global company, all our sites
share the same mission: To provide innovative solutions in a trustworthy and reliable manner – creating
an ‘Ansell protected’ world.
Some key activities and achievements for
FY18 are highlighted on the map below:
North
America
United States
New distribution centre
opened in Reno,
consolidating our
presence on the
West Coast of the
United States
Europe,
Middle East
and Africa
Latin America
and Caribbean
Asia Pacific
Map Key
Corporate hubs
Offices
Manufacturing and distribution facilities
Research and development facilities
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Latin America & CaribbeanImpressive growthColombiaNew warehouse opened to support LAC growthNorth America & EuropeDistributor partnerships contributing to improved growthAnsell Limited Annual Report 2018
North
America
Europe,
Middle East
and Africa
Latin America
and Caribbean
India
New commercial entity
set up following the
sale of the Sexual
Wellness business
Asia Pacific
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Vietnam$20m investment in plant expansionChinaFirst multi-national to be appointed into China’s eCommerce initiative for PPE supply to government-owned enterprises (epec.com)DubaiNew warehouse opened to support growth in the Middle East & AfricaMalaysia &United KingdomAnsell’s new Life Sciences business based in Malaysia and the UK recording double digit growth since the integration of the Nitritex businessAnsell Limited Annual Report 2018
Chairman’s Review
‘ We aim to make Ansell the world’s best at providing safety solutions
to customers globally, by helping customers use our leading products
and services to achieve better results while operating safely.’
Glenn L L Barnes, Chairman
We have commenced a $60m+ investment
program in manufacturing enhancements
and capacity expansion – ensuring the
Transformation Program will continue
to build on Ansell’s process innovation
and manufacturing efficiency. In addition,
we are addressing opportunities in the
global supply chain to reduce production
lead time and inventory with concurrent
improvements in delivery time to
customers.
Meeting our Corporate Social
Responsibility
Ansell continues to work on identification
and management of the issues that will
impact on our ability to grow the business
in a sustainable manner over the medium
to longer term.
In recognition of the growing and
strategic importance of sustainability
issues, effective FY19, the Board has
widened the brief for the Board’s Risk
Committee, which was renamed the
Corporate Social Responsibility (CSR)
and Risk Committee. It has also led
to the decision to annually release a
detailed stand-alone Corporate Social
Responsibility & Sustainability Report
for our stakeholders, with key focus
issues being carried forward in an
integrated manner into our Annual
Report to shareholders. This year’s
CSR & Sustainability Report will be
released by the end of September.
In 2018, Ansell made further progress in
improving its sustainability, by reducing
its carbon footprint with the rollout of
the fourth bio-mass boiler to replace
old oil-based furnaces. The Company
also completed the rollout of a more
space-efficient packaging system for
surgical gloves, reducing packaging
material and container volume.
Further exemplifying our ongoing
commitment to a sustainable
environment and the communities
that support our business, Ansell has
partnered with the Carbon Consulting
Company and the Sustainable Future
Group in Sri Lanka to create the Ansell
Bio-Link, an agroforestry project creating
a biodiversity corridor connecting two
protected rainforests – Haycock and
Dunawala. In March, as part of the
Bio-Link project, 100 Sri Lankan school
children planted the first group of trees
around the perimeter of their school.
Looking ahead, it is clear that our major
sustainability challenge is to reduce the
quantity of water and energy consumed
in our production processes. Innovation
remains at the heart of everything we
do, and we intend to address these
issues through our strengths in material
science and process development.
Dividend Increase and
Capital Deployment
The continued momentum of the Ansell
business, combined with a strong balance
sheet and cash flow has enabled the Board
to increase the dividend for the 15th
consecutive year– a rare and admirable
achievement in these often volatile times.
Ansell’s Capital Deployment &
Management Program is geared to
drive investments for growth, long-term
sustainability and shareholder value
creation. We look to identify capital
investments offering a strong strategic
fit, organic growth and productivity
improvements to enhance Ansell’s
competitiveness, with expectations
of significant after-tax returns relative
to the capital deployed.
Dear Fellow Shareholders,
Following the divestment of our Sexual
Wellness business and the successful
implementation of the initial stages of
our Transformation Program, Ansell is
being reshaped with a tighter purpose,
a greater focus on its markets and
an improved ability to pursue cost
efficiencies and accelerated growth.
Consistency of focus on the
implementation of our strategy is
yielding sustained organic growth, and
the Company is in a strong position to
capitalise on marketplace consolidation
and expansion opportunities as they
present themselves.
Divestment Opens the Door
for Change
The sale of the Sexual Wellness business
was at an attractive valuation and
rewarded a long but well-executed
process. The business was transferred
to the new owners with minimum
disruption to all parties and this
is a credit to everyone involved.
The sale removed a key source of
complexity in the business, providing
Ansell with the opportunity to sharpen its
focus on its core strengths and move to
enhance its leadership and engagement
in workplace safety markets. While some
of the sale proceeds were returned to
shareholders through dividends and
share buy-backs, our focus remains on
acquisitions and investing in our core
business through continued investment
in the Transformation Program, R&D and
manufacturing innovation and upgrade.
08
Ansell Limited Annual Report 2018 We are proud of our strong track
record on dividends and will continue
to selectively execute share buyback
programs to optimise financial
efficiency in the absence of higher
return investment opportunities.
Succession Planning
The Board and CEO succession plans
announced last year have been initiated.
While our CEO Magnus Nicolin will
remain in his role until the end of the
2021 financial year, the Board has begun
the process of challenging and assessing
the pool of internal CEO contenders
to allow the identification of the best
candidate.
Last year we were delighted to welcome
Mrs Christina Stercken and Mr William
Reilly as non-executive directors.
They both bring considerable skill
and experience to the Board, adding
to its balance and diversity. Both have
become contributing members of the Risk
Committee. Christina is also a member
of our Audit & Compliance Committee.
At this year’s Annual General Meeting
(AGM), Mr Ronald (Ronnie) Bell retires
after 13 years of service on the Ansell
Board. Ronnie joined the Board in 2005,
at a time when the Company was in the
final stages of recovery from the traumas
of the prior decade. Ronnie has leveraged
his deep knowledge and experience
of management in a transnational
environment, in addition to his keen
sense of strategic focus, to help the
business chart its path back to one of
innovation and disciplined growth. On
behalf of all stakeholders, I would like
to thank Ronnie for his commitment
to, and role in, Ansell’s growth and
development over his tenure.
Upon the retirement of Ronnie Bell
at this year’s AGM, the Board will
return to a total of eight directors, a
number the Board considers optimal.
Over the past six months the Governance
Committee has considered the forward
skill and experience requirements
of the Board within the context of
our succession timetable, and an
international search has commenced for
a new non-executive director to fill the
vacancy on the Board that will result
from my retirement at the 2019 AGM.
In conclusion, I would like to acknowledge
the continued efforts of everyone at Ansell
– especially the hard-working employees
and management who, in the face of
challenging times, have kept the business
on track to deliver the objectives of our
strategy. They have helped us transform
this Company into the newly focused
organisation it is today, providing us with
both satisfaction in seeing a job well done
and increased confidence in the future.
Glenn L L Barnes
Chairman
Ansell Limited Annual Report 2018
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Chief Executive Officer’s Review
‘ Ansell’s global leadership is based on eight points of differentiation in how we
drive our business and support our customers. We continuously invest in these
areas to drive competitive advantage and value creation for shareholders.’
Magnus Nicolin, Managing Director and Chief Executive Officer
We look back on fiscal year 2018 as a
successful year, evidenced by the success
of our organic growth strategy and
delivery of Transformation objectives.
Total sales revenue was up 8%, with good
organic revenue growth of 4% driven by
Industrial (up 5%, including Mechanical
up 6%) and the Healthcare Life Sciences
business (up 8%).
Reported EPS of 336.8¢ was exceptionally
strong, assisted by the gain on the sale
of the Sexual Wellness business. Even
on an adjusted basis (after excluding
the gain on sale and other unusual items
as detailed on page 16), we saw strong
FY18 EPS growth of 26% in our continuing
operations – at the upper end of our
expectations. Our Industrial GBU
performed well, benefiting from a
favourable economic environment and
supported by strong execution against
our organic growth strategy. Our
Healthcare GBU achieved a satisfactory
result in a more difficult market
environment. Lower interest costs
following the Sexual Wellness sale,
and a low effective tax rate, offset the
impact of a temporary period of unusually
high raw material costs that limited
EBIT growth primarily in the first half
of the year.
Strategy
Ansell’s focus on organic growth, efficient
manufacturing, innovation, smart use of
capital and strategic acquisitions has
positioned us to outperform, outgrow
and outlast our competitors. We believe
we are uniquely well positioned to
succeed long term and add sustainable
value to our customers through our
Eight Dimensions of Differentiation.
Ansell’s 8 Dimensions of Differentiation
8. Strong
balance
sheet & cash
conversion
1. Customer
intimacy &
safety focus
7. World class
manufacturing
& engineering
capability
6. Material
science
E m p loyee
Safety
Passi o n
2. Product
range &
innovation
3. Ansell brand
equity
5. Regulatory
& compliance
4. Geographic
& vertical
coverage
By leveraging the unique and well-defined strengths
of Ansell, we deliver better solutions to customers.
10
Ansell has established itself as the global
leader at providing hand and body safety
solutions, delivering end-users with
the best, most innovative products and
helping them achieve better outcomes
while operating safely. The combination
of advising end-user customers on the
best safe-work practices with our core
capabilities in unrivalled hand and body
protection products, we think, gives us
unmatched ability to help customers
improve safety outcomes and increase
productivity and worker satisfaction.
Our strategy is to leverage this market
leadership position and our Eight
Dimensions of Differentiation and build
on our competitive strengths. These
strengths stem from, among other things,
Ansell’s intimate knowledge of what
individual users value, the workplace
risks employers must mitigate, the needs
of leading distributors and the nature and
impact of regulatory change. This in turn
underpins the breadth and quality of our
product and service ranges and delivers
the customer focus underpinning our
innovation in material science and
service technology.
The execution of our strategy this year
has been focused on:
• Completing the successful divestment
of the Sexual Wellness business;
• Implementing our ‘sharper-focus’
Transformation Program to reduce
cost and improve efficiency and
capacity for growth;
• Continued active M&A process
evaluating several opportunities;
Ansell Limited Annual Report 2018
• Strengthening key distributor-customer
relationships through our channel
partnership program;
• Continued expansion of our footprint
and sales in emerging markets; and
• Continuing to build on successful
innovation and strengthening our
leading global brands.
The delivery of these strategic
components has been critical in driving
our achievements in fiscal year 2018
and is testament to the quality of our
people and the passion they have for
our Company and our customers.
Innovation
A core part of the Ansell strategy
and culture is our focus on innovation.
On average, Ansell introduces 40 new
products in a given year and with rapid
deployment to the market. Over the last
four years, we have seen new product
sales grow from 10% to 15% of sales in
the Industrial business and from 12% to
14% in the Healthcare business. Recent
examples include the GAMMEX® PI
Glove-in-Glove™ System launched in
February – a first-to-market, pre-donned,
double-gloving system that promotes
greater infection protection in the
operating theatre. This platform reduces
packaging and hospital storage space and
reduces the time the surgical team takes
to don gloves and get ready. We have also
launched a new range of triple-layer
single-use products which increase the
chemical resistance of single-use gloves
to an unprecedented level.
Illustration of the triple layers
of MICROFLEX® 93-260.
GAMMEX ® PI Glove-in-Glove™ System
A core part of the Ansell strategy
and culture is our focus on innovation.
On average, Ansell introduces
40 new products in a given year
and with rapid deployment to
the market.
Ansell Limited Annual Report 2018
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Chief Executive Officer’s Review continued
Finally, I would like to highlight the
new HyFlex® 11-540 series which offers
flexibility and thinness whilst retaining
high levels of cut and abrasion resistance
as evidenced by its certification under
the new, more demanding EU legislative
requirements.
Ansell’s innovation springs from
identifying unmet user needs, collecting
and filtering ideas and then transforming
those concepts into projects in our
technology centres with a view to move
quickly to market. With strong patent
protection behind our new technology
platforms, each innovation helps build
and underpin the strength and reputation
of our key brands.
Emerging Markets
The economies of emerging markets are
seeing high growth rates for protective
products as an increasing percentage of
workers live and work in these markets.
Less than a third of workers in emerging
markets use gloves – compared to 80%
in mature markets – and increasing
safety awareness and stricter regulation
is rapidly driving up demand.
Our focus on emerging markets continued
this year and our percentage of sales
achieved in those markets increased
to 21%.
Distributor Partnership
The development of a stronger channel
partnership program is an essential
pillar of Ansell’s strategic plans for the
delivery and sustainability of organic
growth. The strategic alignment with
our distributor partners has led to
successful engagements resulting
in accelerated growth delivery and
profitable market share expansion.
These partnerships have led to the
alignment of defined growth plans and
mutually agreed objectives with two-way
accountability. During FY18 we leveraged
this success by expanding and replicating
the channel partnership program across
global markets. At June 30, Ansell
distributor partnerships accounted for
39% of Ansell’s sales to industrial end
markets. Increasingly, this way of
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engaging with key channel partners
is becoming the norm as we formalise
relationships with key distributors.
Transforming our Company
Following the Sexual Wellness divestiture,
Ansell has focused on improving the
efficiency of the core business by
launching an ambitious Transformation
Program. This program is focused
on reducing the cost of production,
marketing and corporate overhead,
adding new capacity in the lowest-cost
production locations and strengthening
our global supply chain to achieve more
efficient movement of product from plant
to customer.
So far, our Transformation journey is
well on target, delivering $10m in savings
this year, $2m better than forecast and
we remain on target to meet or exceed
our $30m savings target by FY20.
An important part of this Transformation
is the dramatic expansion of our Ho Chi
Minh, Vietnam, facility, more than
doubling output through the inclusion
of eight more production lines,
accommodating compounding, knitting,
printing, covering, warehousing and
social areas. We expect that through
this $20m expansion, this efficient and
effective facility will support Ansell’s
growth for many years to come.
Collectively, the implementation of
the Transformation Program along with
execution of our strategy will further
enhance Ansell’s Eight Dimensions
of Differentiation and reinforce the
Company’s competitive position.
Corporate Social Responsibility
Ansell is committed to leading by example
in responsible practices in human rights,
community, environment and governance.
We have been actively working in these
areas for a number of years to consume
less energy, water and space per unit of
output, support the communities we live
and work in and ensure ethical behaviour
and a safety culture are top of mind for
our diverse workforce. Ansell is also
pleased to release its first standalone
Corporate Social Responsibility (CSR) &
Sustainability Report in September 2018,
which further highlights the importance
of sustainability to Ansell. You can find
the full CSR & Sustainability Report online
at www.ansell.com.
Financial Strength Driving
Growth
We have taken a progressive approach
to the deployment of our free cash flow,
and the redeployment of the cash from
the Sexual Wellness sale. Our first priority
is to identify investments in Ansell’s
existing business. These typically offer
us by far the highest returns with lower
risk to implement. We are spending
approximately $100m over 3 years on
our Transformation Program of which
$50m is on cost reduction initiatives,
and the balance on capacity expansion
including the $20m investment in our
Vietnam facility, and we are close to
finalising plans for a multi-year $30m
investment in our single-use glove
range for industrial applications. We
continue to give priority to cash returns
to shareholders as evidenced by a 15th
year of dividend increases and our
ongoing share buyback program. Finally,
we continue to put a significant focus on
our disciplined acquisition strategy with
a number of potential targets under
active evaluation.
Ansell Limited Annual Report 2018 Lost Time Injuries (LTIs)
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Ansell
Leading Healthcare Company
Leading Healthcare Company
Leading Packaging Company
Leading Life Science, Healthcare & Agricultural Company
Leading Science Company
Leading Healthcare Company
Leading Personal Care Company
Leading Food & Beverage Company
Leading Wind Turbine Company
A comparison of Ansell safety performance against lost time injury performance of comparable market-leading global manufacturers drawn from publicly-available
website data through 2017 illustrates Ansell’s best-in-class safety level. The Company’s safety track record reflects the strong emphasis on safety products, culture
and expertise at Ansell. Frequency equals number of incidents/per 100 employees/per year.
Our Safety Story
Ansell prides itself on being an industry
leader in the provision of workplace
safety solutions. The approaches and
dedication extended to our global
customers are rooted in Ansell’s own
operations. Workplace accidents, injuries
and near-miss incidents are actively
tracked and reported, and FY18 results
show that the Company’s performance
remains at world-class levels.
We are working to further reduce
workplace risks by strengthening
Ansell’s Corporate Incident Reporting
& Investigation Guidelines, deploying
the Ansell Guardian® safety assessment
program within our own manufacturing
plants, and running detailed risk
assessments of all worker-machine
interfaces. In FY18, Ansell also largely
completed a three-year program to
expand and upgrade its fire detection
and protection systems to world-class
standards.
The Ansell Team
During the year, Ansell made great
progress on the development of a
stronger and more diverse global
workforce and management team,
with greater representation coming from
local staff in emerging markets. There
is still work to be done in the field of
gender diversity, with a need for us to
see more female representation in senior
management (currently 22%, and up from
19%, but with a target of 30%), and this
is something we will continue to pursue.
geographies. LAC sales for FY18
came in at over $100m – up from
$76m in 2016 – reflecting consistently
strong annual sales growth since FY16
combined with improved margins. These
figures are underpinned by Mexico’s
strong performance and Brazil’s return
to growth after two years – particularly
in the Hercules business.
One of the achievements I was
particularly pleased with this year
was the success of the operations
management team in improving an
important metric of manufacturing
quality and efficiency: first pass yield.
Overall waste is constantly being reduced
– down 20 basis points over the last
12 months. The success of this team
has been instrumental in driving
important improvements in labour
and overhead productivity.
I would also like to point out the
excellent achievements of the Latin
American & Caribbean (LAC) team,
which has developed many areas of
best practice in sales enablement,
customer insights and innovative
end-user engagement initiatives
that we are now rolling out in other
Finally, I would like to thank the hard-
working Ansell employees who continue
to show great resilience, commitment
and passion for what we do and a
determination to make ours the best
Company in its field. To every one of
you located all over the world I say
a heartfelt thank you.
Magnus Nicolin
Managing Director and
Chief Executive Officer
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Ansell Limited Annual Report 2018
Strategy
Ansell has global market-leading positions in single and multi-use hand protection products for industrial
and healthcare applications. We also have fast-growing positions in industrial body protection products,
safety solutions for surgical operating theatres and clean room laboratory environments.
Our markets provide attractive long-term
sources of growth driven by regulatory
and societal pressures to improve safety
outcomes for workers around the globe.
Whether in healthcare or industrial
environments, demand driven by
regulatory requirements continues to
help drive demand for safety solutions.
Ansell’s continued ability to build and
maintain its leading positions in these
attractive markets arises from our
differentiated offering, which is summarised
under Ansell’s Eight Dimensions of
Differentiation. Our employees bring their
knowledge and passion to leverage the
Eight Dimensions to deliver improved
safety solutions to our customers.
Refer to page 10 for the Eight Dimensions
of Differentiation diagram.
Eight Dimensions of
Differentiation
Customer Intimacy and Safety Focus
• We are uniquely positioned to provide
global solutions as the only industry
participant with leading market positions
in all our product ranges in all regions.
• We have invested over many years in
our patented Ansell Guardian®
technology. These are tools that provide
comprehensive advice to end users on
the right products to use for optimal
safety, productivity and injury avoidance
and as such they help build strong
relationships with end users.
Product Range and Innovation
• Ansell has unrivalled breadth and
performance capability within our
product range, which is evident in
each industry sector vertical. Our
ongoing investment in R&D has
created or complemented product
categories in each of our verticals
and we continue to lead the industry
in product performance.
Ansell Brand Equity
• Our brands are some of the most
recognisable in the industry. Our global
market research confirms that HyFlex®
is the Number 1 most recognised hand
protection brand in the world.
14
Geographic and Vertical Coverage
• Ansell has an extensive geographic
network of factories and warehouses
to manufacture and distribute its
products across the globe. We have been
prominent in growing our footprint in
emerging markets with new warehouses
in the Middle East and Latin America and
expanded factories in South East Asia.
Business Priorities
Our business priorities for advancing our
strategic goals in FY18 were oriented
around the following main objectives:
• Transformation into a sharper focused
safety solutions business, particularly
following the divestment of the Sexual
Wellness business early in the year;
Regulatory and Compliance
• We operate in industries and verticals
that require market-leading knowledge
of the regulatory and compliance
environments of each region. Helping
customers navigate this regulatory
complexity is a significant part of the
Ansell value proposition and helps
secure the status of brands that are
trusted for quality and compliance
to industry standards.
Materials Science
• Our material science capability allows
us to provide products that are both
comfortable to use and improve worker
productivity. Many of these capabilities
are patent protected. Our commitment
to maintaining optimum comfort and
dexterity means that many products are
unique with ergonomic certification. We
also lead our industry in providing high
cut protection from light weight yarns.
World Class Manufacturing and
Engineering capability
• Ansell’s world-class manufacturing
capabilities have benefitted from the
technological experience of our
engineering teams. Their industry
leading expertise and safety know-how
has driven significant improvements not
only in employee productivity but also
environmental and OH&S metrics across
our extensive manufacturing footprint.
Strong Balance Sheet and Cash Conversion
• Ansell has consistently generated strong
operating cash flows over many years,
which have been used to fund growth in
existing and new businesses. The sale
of the Sexual Wellness business has
resulted in a substantial cash inflow
of $523m (after taxes) which has further
strengthened an already robust balance
sheet. Our substantial cash reserves
coupled with our existing debt facilities
provide us with significant capacity to
explore further growth opportunities.
• New product development;
• Grow our emerging market footprint;
• Stronger brand performance by
expanding existing Growth Brands such
as HyFlex®, as well as recently acquired
product ranges such as MICROFLEX®,
MICROGARD® and BioCleanTM globally;
• Build stronger and deeper partnerships
with our key distributor partners;
• Work to resume growth of our leading
synthetic surgical range and reduce
waste levels in our key manufacturing
plants;
• Continue improvement in service and
quality metrics to ensure Ansell is the
leading company globally on these
criteria as well as in product performance;
• Ongoing productivity savings stemming
from our capital investments and our
sharper focus Transformation Program;
and
• Strategic and disciplined acquisition
evaluation.
M&A initiatives
Through a disciplined acquisition strategy
we have:
• Strengthened our core market positions,
• Increased our ability to differentiate
in material science; and
• Added near adjacent product portfolios
which we are demonstrating we can
grow rapidly on a global basis.
With a strong balance sheet and
significant cash and borrowing capacity,
we continue to explore and evaluate
growth opportunities.
Ansell Limited Annual Report 2018 Outlook
Shareholder Value Creation
Model
At Ansell, we strive to be focused, efficient
and agile in delivering our differentiated
business proposition. Through building
and maintaining a leadership position in
innovation, manufacturing capability and
supply chain excellence we aim to grow
at above market rates, gaining market
share and achieving good profit and cash
flow growth.
Priorities for Shareholder
Value Creation
Ansell organises its strategic priorities
under the most important drivers for
long-term shareholder value, being
organic revenue growth, profit and
cash flow generation and successful
deployment of capital.
Organic Growth
Economic conditions currently remain
largely favourable in most of our key
geographies. We seek to continue building
on our success with new products,
particularly through increased traction
in our new glove and clothing products,
providing superior chemical protection
and supplementing the continued success
of the INTERCEPT™ Cut Resistance
Technology and FORTIX™ Abrasion
Resistance Technology platforms.
We are also targeting improved growth
rates in surgical by building on the success
of recent new product launches as well
as capitalising on the growth potential
of our position in emerging markets.
We aim to continue increasing our
competitive differentiation with a
particular focus on three of our
Eight Dimensions of Differentiation:
• Strengthening our manufacturing
and supply chain capability through
our Transformation Program;
• Working closely with customers to
guide them through an increasingly
demanding regulatory environment; and
• Building our customer intimacy through
channel partnerships and a continued
focus on the services we provide under
the Ansell Guardian® technology.
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By Being
Ansell will
Targeting
Differentiated
(8 dimensions)
Focused
Efficient
Agile
Gain Share
• Organically through
customer focus
• By acquisition
Demonstrate industry
leadership in
• Innovation
• Manufacturing capability
• Supply chain excellence
3 – 5% Organic Growth p.a.
5 – 10% EPS Growth p.a.
ROCE improving to
14 – 15% range by FY20
Strong Cash flow
Generation
Achieving High Return by Reinvesting in the Base Business
Disciplined Synergistic Acquisitions, Returning Above WACC
Continued Dividend Growth
Opportunistic Buybacks
Our Foundation : Engaged Employees, Sustainable Business Practices and Strong Values
Profitability and Cash Flow
We will continue to drive our
Transformation agenda to deliver SG&A
savings, but our emphasis during FY19
will be on the delivery of manufacturing
and supply chain productivity initiatives
which are currently underway. We look
forward to significant improvements in
our inventory turns via continued process
improvements and an ongoing drive to
eliminate excess inventories. Whilst we
anticipate higher margins as a result of
these initiatives, there are further raw
material price inflation pressures on the
horizon, particularly on synthetic rubber
exam products that have recorded solid
FY18 growth. Price increases are planned
to offset these increases but the success
of these will depend on the industry
dynamics in place. In addition there is
likely to be an increase in the cost of
products Ansell imports to the US from
China of $5–$10m per annum arising from
recent proposals to increase import tariffs.
Mitigation plans are being developed to
offset this and the impact on Ansell in
FY19 is currently uncertain. We anticipate
capital expenditure to be moderately
higher year on year to fund the significant
expansion plans in Vietnam and other
locations, creating new cost competitive
capacity in support of our most innovative
and high growth product ranges.
Capital Management – ROCE
improvements
Our priority for capital deployment
continues to be:
• Investment in core business to drive
growth and productivity; and
• Acquisitions that meet our strategic
and financial criteria.
The Transformation Program is a clear
example of investments in our core
business. We are also investing in other
areas of our business, which include the
ongoing and future ERP roll-outs, now also
planned for our operations sites and Asia
Pacific sales and marketing centres. We
are planning further investments in
e-commerce and CRM planning tools to
augment our customer intimacy initiatives.
On the acquisition front, we continue to
assess businesses with a strong strategic
fit and we hope to announce further
acquisitions in the near future.
Ansell also expects to be able to continue
its balanced capital deployment approach
through continuing to buy back shares,
as previously announced, and retaining
a focus on dividends as an important part
of the cash return to shareholders.
The Board, management and staff are
genuinely excited by Ansell’s future
prospects and we look forward to
delivering on our strategic goals.
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Ansell Limited Annual Report 2018
Our Performance
Financial Reporting Presentation
At Ansell, we believe in providing the
necessary information to our investors
to ensure that our financial statement
commentary is meaningful and at all
times provides relevant year-over-year
comparatives.
FY18 saw the successful completion of the
divestiture of the Sexual Wellness business.
Consequently the Sexual Wellness business
is reported under discontinued operations.
Within Discontinued Operations in FY18
we provide the combined effect of results
of the Sexual Wellness business prior to
completion of divestment and profit on
sale of the business.
Continuing Operations includes:
• The costs related to the Transformation
Program, the benefits of which are partly
seen in FY18, but the majority are to
come in future years;
• The one-time accounting impact
of US Tax reform; and
• Change in accounting estimate
for development costs.
The performance of the Continuing
Operations, excluding these items, has
been shown below as FY18 Adjusted.
We believe this provides a more
meaningful measure of the Group’s
performance for the year.
Group Sales Commentary
Sales revenue for Continuing Operations
of $1,489m was 8% higher as reported,
and 5.1% up on a Constant Currency basis.
The strongest contributors to that growth
were the Mechanical portfolio within
the Industrial GBU and the Life Sciences
business within the Healthcare GBU. There
was also continued solid momentum with
our channel strategy through a number
of new agreements being concluded with
key distributors. Our emerging markets
revenues grew a further 10% and
benefitted from the significant resources
deployed in emerging markets throughout
the globe. We are particularly excited
with the establishment of our new
India operations to further capitalise
on the growth in that country.
We continue to focus on innovation
as a core driver of growth with new
products delivering strong results in
our established brands. For instance,
sales in our HyFlex® products with
INTERCEPT™ Cut Resistance Technology
were up 45% and are approaching $50m
in sales globally. Our global expansion
of the MICROFLEX® product lines and the
release of our new multi-layer chemical
resistant product offering has provided
further strong momentum into next year.
Our most recent acquisitions in life
sciences, BioCleanTM and gammaSUPPLIES
are also creating significant global
growth capability in highly differentiated
end markets.
At the business unit level, the following
notable sales results were achieved:
• Industrial continued to see strong results
in Growth Brands (up 10%) including
HyFlex® (up 9%), AlphaTec® (up 17%) and
EDGE® (up 46%).
• Healthcare Growth Brands were up
5%, including TouchNTuff® (up 9%),
GAMMEX® (up 6%), MICROFLEX® (up 4%)
and strong growth in Life Sciences
with BioCleanTM up almost 20%.
Group EBIT Commentary
Adjusted earnings before interest and
tax (EBIT) of $193.1m was up 8.6% against
the comparable prior period ($177.8m),
reflecting the strong sales growth. Gross
Profit after Distribution Expenses (GPADE)
was 34.7%, which was lower by 20 bps due
to higher raw material costs in the first
half of the year. The higher sales coupled
with Transformation cost reduction
benefits containing SG&A growth,
drove EBIT higher.
Corporate Costs
Unallocated corporate costs in FY18
of $13.9m include a $3.7m provision for
expected demolition and site clearance
costs of a legacy Pacific Dunlop site in
Louisiana, US. Corporate costs in FY17
of $12.1m include $2.1m of portfolio
review costs in preparation for the sale
of Sexual Wellness and development
of the Transformation Program.
Financial Summary
Profit and Loss (US$M)
Sales
GPADE
SG&A
EBIT
Net Interest
Taxes
Minority interests
Profit attributable
EPS (US¢)
Dividend
Total
Group
FY17
1,599.7
599.3
(381.5)
217.8
(22.7)
(44.9)
(2.5)
147.7
100.1¢
44.0¢
Discontinued
SW Results
FY17
Continuing
225.2
118.8
(78.8)
40.0
–
(11.0)
(0.8)
28.2
19.1¢
1,374.5
480.5
(302.7)
177.8
(22.7)
(33.9)
(1.7)
119.5
81.0¢
Discontinued
SW Results
and Gain on
Sale
57.7
27.7
371.5
399.2
–
(53.6)
(0.1)
345.5
240.3¢
FY18
Continuing
1,489.8
517.7
(359.9)
157.8
(12.5)
(4.7)
(1.8)
138.8
96.5¢
Total
Group
FY18
1,547.5
545.4
11.6
557.0
(12.5)
(58.3)
(1.9)
484.3
336.8¢
45.5¢
Transformation
and Major Non
Cash Items
–
–
(35.3)
35.3
–
(27.4)
–
7.9
5.5¢
FY18
Adjusted
1,489.8
517.7
(324.6)
193.1
(12.5)
(32.1)
(1.8)
146.7
102.0¢
16
Ansell Limited Annual Report 2018 Transformation Initiative
In July 2017, the group announced the
Transformation initiative to sharpen focus
on its continuing core business activities
following the Sexual Wellness divestment.
SG&A cost reductions were successfully
delivered in FY18 with the focus now
shifting to manufacturing efficiencies
anticipated to flow through to our earnings
during FY19 and beyond. The initiative
has resulted in $24.1m of one-time costs
being incurred during FY18 with further
costs anticipated in FY19 relating to
manufacturing cost reduction and
supply chain efficiency initiatives. When
completed, the business aims to realise
savings in excess of $30m, with $10m
of savings being achieved in FY18.
Borrowing Costs & Taxes
Net interest costs were down 45%
to $12.5m and reflected higher cash
on hand flowing from the sale of the
Sexual Wellness business, which settled
in September 2017.
Taxation expense of $58.3m included
a number of significant items, such as:
• Tax expense relating to discontinued
operations of $53.6m; and
• Tax benefit on Transformation costs
and other non-cash and non-recurring
tax credit items.
The tax expense after adjusting for the
above was $32.1m, which was an effective
tax rate of 17.8%. This was below the prior
year continuing operations tax rate of 21.9%.
Cash Flow Commentary
Net cash provided by operating activities
fell $62.6m from $216.2m to $153.6m
mainly due to:
• $27.4m lower cash from the discontinued
Sexual Wellness operation as a result
of its divestiture during FY18 – (Refer to
Note 18b) of the Notes to the Financial
Statements);
• $19m of Transformation costs incurred
during FY18; and
• Higher working capital requirements
from the sales growth in the continuing
operations.
Net cash generated by investing activities
was $476.8m, up $584.7m on the prior year
and due to:
• Net cash realised from the sale of the
discontinued Sexual Wellness operation
$523m; and
• Cash outlay during FY17 for the Nitritex
acquisition of $56.1m.
Cash used in financing activities was
$340.6m, up $274.2m driven mainly by:
• Repayment of borrowings of $170.9m
(against $24.3m drawn last year); and
• Payments for share buyback of
$92.3m (compared to $8.7m in FY17).
As a result of the combined effect of the
above factors and the effect of FX rates on
cash held, cash at the end of the financial
year increased by $273.2m to $589.8m.
Discontinued Operations –
Sexual Wellness
The Sexual Wellness business
manufactured and sold a range of
branded condoms, lubricants, devices
and fragrances globally. As discussed
previously, Ansell divested this business
for $600m on 30 September 2017, with
the exception of JK Ansell – our joint
venture (JV) in India.
Whilst the majority of the business
was divested in September 2017 for
a significant profit, the demerger of
the Indian JV has taken longer than
anticipated to conclude. A moderate
loss is now anticipated on the sale of
the JV, and this and additional charges
incurred in the second half relating to
the divestment process are included in
calculating the substantial gain on sale
of this business. We anticipate closing
on the divestment of our interest in
JK Ansell in the first quarter of FY19.
The net profit from the sale of the
Sexual Wellness business was $344.8m
and comprised the following:
Net Sales Proceeds
Disposal Costs
Net disposal consideration
US$m
$600.2
($40.7)
$559.5
Carrying amount of net assets sold ($161.3)
Gain on Sale before tax
Income tax expense on gain
Gain on sale after income tax
$398.2
($53.4)
$344.8
The business contributed $57.7m of sales
and a profit after tax of $0.7m prior to
being divested.
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Ansell Limited Annual Report 2018
Industrial Global Business Unit
The Industrial GBU manufactures and
markets high-performance hand and
body protection solutions for a wide-
range of industrial applications. Ansell
protects workers in almost every industry
including automotive, chemical, metal
fabrication, machinery & equipment,
food, construction and mining.
Sales Performance
Sales grew strongly and were up 5%
on a constant currency basis with key
drivers being:
• Growth Brands up 10% on the
back of strong gains in HyFlex® (9%),
AlphaTec® (17%) and EDGE® (46%);
• Emerging markets (up 12%) once again
grew strongly with Latin America
continuing to lead the way from an
already solid foundation;
• Mechanical products up 6% with HyFlex®
(up 9%) leading the way in achieving
$275m in sales globally. The cut
protection category was also
up 9% for both gloves and sleeves,
whilst expansion in INTERCEPTTM Cut
Resistance Technology and FORTIXTM.
• Abrasion Resistance Technology
platforms continued to gain momentum.
• Chemical products grew a more
modest 1.4%.
• Strong growth was achieved in clothing
from the AlphaTec® expansion (up 10%)
and MICROGARD® products (up 9%).
• Lower margin and non-differentiated
private label and household gloves
declined.
EBIT Performance
EBIT of $86.9m grew in line with higher
sales, with EBIT margins steady year over
year despite our gross profit margins
being impacted by higher raw material
costs in the first quarter of the year.
Whilst gross profit margins recovered
to historical levels during the year,
EBIT performance also benefitted
from the following:
• Lower operations costs stemming
from early gains in the Transformation
Program; and
• SG&A was again well controlled
and benefitted from Transformation
cost savings.
US$m
Sales
EBIT2
% EBIT/sales
FY17
$655.9
$79.8
12.2%
FY18
$715.5
$86.9
12.1%
% change
+9.1%
+8.9%
CC%1
+5.0%
+4.3%
1. CC refers to adjusted Constant Currency as described on page 4 of this Report.
2. FY18 EBIT excludes the impact of restructuring costs ($11.6m) and the change in accounting treatment
for development costs ($7.3m) – all of which were announced earlier in FY18.
AlphaTec® 58-735
HyFlex® 11-542
EDGE® 48-205
+17% Growth
Poised to become the
next +$100m brand.
+9% Growth
+45% growth
INTERCEPTTM Cut Resistance Technology.
+13% growth
FORTIXTM Abrasion Resistance
Technology.
+46% Growth
Emerging market success
continues to include strong
results from EDGE® branded
products targeted to middle
range market segment.
Brands
18
Ansell Limited Annual Report 2018 +5%
Organic constant
currency sales up
+9%
Statutory results
sales % change
+4%
Adjusted constant
currency EBIT
+9%
Adjusted EBIT
% change
Ansell Limited Annual Report 2018
19
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Healthcare Global Business Unit
The Healthcare GBU was formed following
the merger of the medical and single use
GBUs. It manufactures and markets
surgical and exam gloves for healthcare
and industrial applications.
Its customer base in the medical vertical
includes acute care hospitals, emergency
services, alternate care, dentistry and
veterinary clinics.
The Healthcare GBU also distributes
a range of high performance single use
gloves used in industrial applications,
including chemical, food services, life
sciences, electronics and automotive
after market.
Sales Performance
Sales growth in constant currency terms
of 3% was recorded during the year:
• Surgical & Safety Solutions were up 1%.
The prior year figures benefitted from a
one-time gain during FY17 following the
ban on powdered gloves in the USA and
was a factor in the modest headline
growth in this category;
• Exam and Single Use products grew
3.2% with strong growth coming from
industrial and non-acute applications.
Our acute medical exams declined
in the face of stiff price competition
however our TouchNTuff® and
MICROFLEX® branded products
grew strongly; and
• Our Life Sciences products grew by
8.4% with solid growth coming from
our newly acquired Nitritex business
and its range of clean-room focused
BioCleanTM products.
EBIT Performance
EBIT margins were slightly above the prior
year, but were adversely affected by the
following:
• Product mix – Sales of lower margin
exam gloves grew faster than the
higher margin surgical products;
• Work is underway to return the surgical
glove sector to stronger growth with
significant growth expectations in
emerging markets and an expectation
of increasing traction from recent
new product launches;
• Trading margins were also affected
in the first half by higher raw material
pricing, some of which was able to
be passed on to the end users.
The business responded to the above
pressures by exerting a disciplined
approach to SG&A spending.
Furthermore, the EBIT results also
benefited from the reversal of a $4m
provision raised in a prior period for
indirect taxes.
US$m
Sales
EBIT2
% EBIT/sales
FY17
$718.6
$110.1
15.3%
FY18
$774.3
$120.1
15.5%
% change
+7.8%
+9.1%
CC%1
+5.2%
+5.6%
1. CC refers to Adjusted Constant Currency as described on page 4 of this Report.
2. FY18 EBIT excludes the impact of restructuring costs ($5.4m) and the change in accounting estimate
for development costs ($3.9m) – all of which were announced earlier in FY18.
GAMMEX® Glove-In-Glove SystemTM
MICROFLEX® LifeStar™ EC
TouchNTuff® 92-600
+6% Growth
Supported by strength of the synthetic
latex portfolio, including newly
launched hybrid polyisoprene
formulations and our latest
‘glove in glove’ product
facilitating the trend to
double donning.
+4% Growth
Strong performance as a
result of innovative new product
launches and continued expansion
to new markets.
+9% Growth
Continued strong growth
as the world leader in
chemical splash protection
for industrial workers.
Brands
20
Ansell Limited Annual Report 2018 +3%
Organic constant
currency sales up
+8%
Statutory results
sales % change
+6%
Adjusted constant
currency EBIT up
+9%
Adjusted EBIT
% change
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21
Ansell Limited Annual Report 2018
Corporate Social Responsibility & Sustainability
Protect
Engage
Sustain
Grow
Focused On Protection
Ansell is committed to leading the Personal Protective Equipment (PPE) industry in responsible human rights,
environment and governance practices.
This year, Ansell made the decision to begin issuing annually a stand-alone Corporate Social Responsibility
(CSR) & Sustainability Report, to give these important issues the attention and transparency they deserve.
Below are some highlights from the 2018 CSR & Sustainability Report. The full report will be published later
in the year and made available on the Ansell website at www.ansell.com.
Human Rights
Our People and Human Rights
In keeping with a fundamental respect for workers and professionals, Ansell is committed to operating in accordance with all applicable
laws and in accordance with the Universal Declaration of Human Rights (UDHR). The Company also follows the United Nations Guiding
Principles on Business and Human Rights (the Guiding Principles) and applicable International Labour Organisation (ILO) labour standards.
Workplace Safety
Gender Diversity
Employee Engagement
Suppliers
Goals:
Sustain the lowest accident
rates in the industry, with
continued year-over-year
reduction in lost time injuries
(LTIs) and medical treatment
injuries (MTIs).
Achieve 30% women at
Director level and above;
40% at Manager through
Associate Director; and 50%
women at Board level
by the end of FY20.
Ensure that Ansell
employee engagement
scores approach best-in-class
levels globally by the end
of FY25.
Partner with top ten global
suppliers to become 100%
compliant in the completion
of standardised CSR audits.
Health & Safety
At Ansell the focus continuously turns to workers at its own manufacturing sites, warehouses and offices. Mitigating risk, enhancing
well-being, and ensuring consistently safe operations for people – the Company’s most important resource – form the foundation of
the Company’s commitment to worker protection in an ‘Ansell protected’ world.
During Safety Week, shippers and receivers at Ansell’s Cowansville, Canada, warehouse completed forklift
safety training.
‘ Safely – that’s just how we do things around here.’
Safety is top of mind at all Ansell locations, like the
Company’s newest, state-of-the-art warehouse in
Reno, Nevada.
22
Ansell Limited Annual Report 2018 Community
Ansell is committed to helping people in need around the globe achieve safety, well-being and peace of mind. By partnering with
non-profit organisations, the Company is working with people to develop a sustainable future, and when disaster or disease strike,
Ansell steps in to lend a hand.
Volunteerism
Philanthropy
Goals:
Engage employees to help others by having
100% of locations participate in community
service activities by end of FY21.
Global donations and community investments
aligned to Ansell’s strategy and values.
Environment
Ansell is working to improve its environmental performance even as the business continues to grow, and has set clear commitments
and environmental targets to advance its sustainability vision. As a leader in its industry, Ansell recognises the obligation to operate
more efficiently, protecting resources and communities through strategic environmental management.
GHG Emissions
Energy
Water
Waste
Goals:
25% of Scope 1 (direct) and Scope 2
(indirect) emissions, in tonnes of
CO2– equivalent/$M production value,
below FY16 baseline by end
of FY25.
Continuous improvement
and reduction of
energy usage.
15% reduction in water usage,
measured in m3/$M production
value, below the FY16 baseline by
the end of FY25.
Baseline to be
established
in FY19.
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23
Ansell Limited Annual Report 2018
Governance
We will continue to proactively engage with key stakeholders to understand and respond to issues that are
important to our employees, customers, investors, distributors, suppliers, regulators, CSR rating agencies and
advocacy groups.
Ansell is committed to effective corporate governance. By putting in place the right governance framework, the Board and management
have set a culture of integrity, transparency and accountability that permeates throughout the Company.
Ansell works to embrace the spirit of the ASX Corporate Governance Council’s Corporate Governance Principles & Recommendations
(ASX Principles). Ansell currently complies with each of the recommendations and is also actively reviewing the implications and
application of the latest draft 4th edition of the ASX Principles recently released by the ASX – a number of which cause us concern as to
their appropriateness. Further details are set out in Ansell’s Corporate Governance Statement, which is available on the Ansell website
at www.ansell.com.
Our Governance Framework
Shareholders
Ansell Board of Directors
Audit & Compliance
Committee
CSR & Risk
Committee*
Human Resources
Committee
Governance
Committee
CEO & Managing Director
Ansell People
An experienced and
diverse Board of
Directors and
Management Team
Transparent
and timely
communications
with our
shareholders
Clear delegation,
decision making
and accountability
frameworks
Robust systems
of risk management
and assurance
Ansell Core Values,
Leadership
Competencies,
Code of Conduct
and related policies
constitute the platform
for all activities
Role of the Board
The Board’s role is to represent the
Company’s shareholders, taking into
consideration the interests and wants of
the broad range of Ansell’s stakeholders.
The Board leads and oversees the
management of the Company and is
accountable to shareholders for creating
and delivering shareholder value.
The Board is responsible for ensuring
that management’s objectives and
activities are aligned with the expectations
and risks identified by the Board.
The Board has adopted a formal Board
Charter that details the Board’s role,
authority, responsibilities, membership
and operations. The Board also has four
standing committees that assist it in
discharging its responsibilities:
• Audit & Compliance Committee
• CSR & Risk Committee*
• Human Resources Committee
• Governance Committee
Each Committee operates under a
specific charter and provides advice
to the Board on specific matters within
the Committee’s remit. The Board also
delegates specific functions to ad hoc
committees of Directors on an ‘as needs’
basis. Ansell’s Board and Committee
Charters can be found on the Ansell
website at www.ansell.com.
Specific responsibilities for the day-to-day
management and administration of the
Company are delegated by the Board to
the Managing Director and Chief Executive
Officer (CEO), assisted by the Executive
Leadership Team (ELT). Ansell’s Delegation
of Authority Policy sets out the powers that
are reserved to the Board and those that
are delegated to the CEO.
* In August 2018, the Board resolved to widen the brief of the Risk Committee and renamed it the CSR & Risk Committee.
24
Ansell Limited Annual Report 2018 Board Composition
and Processes
Ansell is committed to ensuring an
appropriate mix of skills, expertise,
experience and diversity (including gender
diversity) on the Board and its committees
so that the Board can effectively discharge
its corporate governance and oversight
responsibilities.
The Board annually reviews the
performance of the Board and each
committee, as well as individual directors
and the Chairman, and requires all directors
(except the CEO) to submit themselves for
re-election at least once every three years.
The Board will endorse a retiring director
for re-election only where his or her
performance over the preceding year meets
or exceeds the Board’s expectations. It is a
general policy that non-executive directors
should not serve for a consecutive period
exceeding 15 years, and the Chairman
should not serve in that role for more than
10 years.
An external review of the Board is also
completed every three years.
To support the Board’s succession plan
announced in FY17, the Board obtained
shareholder approval at the 2017 Annual
General Meeting (AGM) to increase the
number of directors to nine, allowing for
the appointment in 2017 of both Mrs
Christina Stercken and Mr William Reilly
to the Board. With the retirement of
Mr Ronald Bell at this year’s AGM, the
Board will return to eight directors, a
number that the Board considers optimal.
There will therefore be capacity for one
additional director following the 2018
Annual General Meeting.
As also announced, the Chairman,
Mr Glenn Barnes, intends to retire
from the Board at the 2019 AGM, with
Deputy Chairman, Mr John Bevan, his
successor. The Board has commenced
an international search for a new non-
executive director to replace Mr Barnes.
With the commitment of Ansell’s CEO to
remain in his role until the end of the 2021
financial year, the Board continues the
process of challenging and assessing the
pool of internal CEO contenders to allow
the identification of the best candidate.
The Board sets clear targets for gender
representation as part of Ansell’s broader
commitment to diversity and inclusion.
Ansell has committed to have women
constituting circa 50% of its Board by 2020
and beyond, acknowledging that this may
fluctuate from time to time due to the
effect of changes on a small group size.
With the appointment of Mrs Christina
Stercken, women currently make up 38%
of the Board (non-executive directors).
Upon Mr Ronald Bell’s retirement at the
2018 AGM, this will increase to 43%.
Refer to the Ansell CSR & Sustainability
Report for further information on diversity
within the Company, which will be
released in September 2018 and made
available on www.ansell.com.
Risk Management
Ansell has a comprehensive risk
management framework. The Board is
responsible for the oversight of the
Company’s risk management system, risk
appetite and risk tolerance levels of the
Company by monitoring and advising on
the management of all material business
risks, including but not limited to strategic,
operational, reputational, ethical,
environmental, legislative and regulatory
and market-related risks.
Shareholder Engagement
Ansell is committed to positive and
meaningful stakeholder engagement.
Ansell knows that it builds greater trust
with stakeholders when the Company
is transparent and accountable.
Ansell’s engagement occurs through
a number of channels, including ASX
disclosures, Annual General Meeting,
Annual Report, the Ansell website and
social media and interactions with large
investor groups, proxy analysts and
regulators.
The Chairman and Deputy Chairman meet
proxy advisors and shareholders twice per
year to discuss proposed developments
and results. In October 2017, Ansell hosted
its first Capital Markets Day (CMD) in
Sydney, Australia. The forum provided
attendees with greater appreciation of
Ansell’s business fundamentals, strategic
direction and growth plans. Ansell was
recognised by the Australian Investor
Relations Association (AIRA) for holding
one of the best Investor Days by an
Australiasian company in 2017.
To connect with key stakeholders in
Europe and the Americas, a smaller Ansell
team subsequently presented a condensed
Capital Markets Day event in London
and Toronto during November 2017.
Corporate Responsibility
Ansell’s Core Values, the Code of
Conduct and related policies constitute
the platform for all activities, serving
as a guide to ethical principles and
business conduct at Ansell.
• Code of Conduct
The Code of Conduct is Ansell’s core
policy, serving as a guide to ethical
behavior and business conduct for all
employees. It sets out what it means
to work at Ansell and the standards
expected of all employees.
• Human Rights Statement
As a responsible corporate citizen,
Ansell operates in accordance with
the Universal Declaration of Human
Rights and the United Nations Guiding
Principles on Business and Human
Rights. This statement has been
published to reflect Ansell’s commitment
to compliance with human rights
requirements and expectations.
• Modern Slavery Act Statement
This statement has been published to
demonstrate compliance with the UK
legislation known as the Modern Slavery
Act 2015 (Act) in FY18.
Modern Slavery laws are soon to
come into effect in Australia. Ansell
is actively reviewing the progress
of the legislation to ensure and
demonstrate compliance with
the requirements of those laws
once they are in force in Australia.
Ansell provides focus-specific compliance
training each year. In FY18, Ansell
launched global online anti-trust training
for all email-enabled employees, as well
as providing targeted internet security
training and sexual harassment training.
Magnus Nicolin presenting at Ansell’s 2017 Capital Markets day in Sydney.
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Ansell Limited Annual Report 2018
Board of Directors
Magnus R Nicolin
Managing Director
And Chief Executive
Officer
BA (Stockholm), MBA
(Wharton)
Appointed Managing
Director and Chief Executive
Officer in March 2010.
Current Directorships:
Non-Executive Director
of FAM AB.
Prior to joining Ansell,
Mr Nicolin, a Swedish citizen,
spent three years with
Newell Rubbermaid Inc.,
most recently as President,
Europe, Middle East, Africa
and Asia Pacific. Prior to that
he spent seven years with
Esselte Business Systems Inc.
where in 2002 he led the
leveraged buy-out of Esselte
from the Stockholm and
London Stock Exchanges.
Following the buy-out he
became the Chief Executive
Officer of Esselte. Mr Nicolin
has also held senior
management positions with
Bayer AG, Pitney Bowes and
McKinsey & Company.
As an Executive Director,
Magnus Nicolin is not an
independent Director.
Glenn L L Barnes
Chairman
B Ag Sc (Melb), CPM, FAMI,
FAICD, SF Fin, FRSA
Appointed Non-Executive
Director in September 2005
and Chairman in October
2012.
Chair of the Governance
Committee and member
of the Human Resources
Committee and the M&A
Sub-Committee.
Current Directorships:
Non-Executive Director of
Sydney Children’s Hospital
Foundation, Stronghold Pty
Ltd, and Barnes Investments
Pty Ltd.
Former Directorships:
Chairman of Australian Unity
Limited (2012 – 2016).
Mr Barnes has over 20 years
of governance experience
in banking and financial
services, business
information, healthcare,
consumer goods and the
not-for-profit sector. He was
involved in the packaged
goods, banking and financial
services sectors for over
thirty years, as an executive,
business leader and Director
in Australia, New Zealand,
the United Kingdom, United
States of America, Republic
of Ireland, Japan and China.
The Board considers
Glenn Barnes to be an
independent Director.
26
John A Bevan
Deputy Chairman
BCom (UNSW)
Marissa T Peterson
Non-Executive
Director
BSc (MECH), MBA (Harvard),
Hon Doctorate (MGMT)
W Peter Day
Non-Executive
Director
LLB (Hons), MBA (Monash),
FCPA, FCA, FAICD
Appointed Non-Executive
Director in August 2012 and
Deputy Chairman in February
2017.
Member of the Human
Resources Committee,
Governance Committee,
Audit and Compliance
Committee and Chair of
the M&A Sub-Committee.
Current Directorships:
Chairman of BlueScope Steel
Limited (2014 to present),
Non-Executive Director of
Humpty Dumpty Foundation
(2017 to present) and
Alumina Limited (2018 to
present).
Former Directorships:
Non-Executive Director of
Nuplex Industries Limited
(2015 – 2016), Executive
Director of Alumina Limited
(2008 – 2014).
Mr Bevan was formerly
the Chief Executive Officer
and Executive Director of
Alumina Limited and brings
to the Board extensive
international business
experience. Prior to joining
Alumina Limited, he had a
long career with the BOC
Group Plc where he was a
member of the Board of
Directors and held a variety
of senior management
positions in Australia,
Korea, Thailand, Singapore
and the United Kingdom.
The Board considers
John Bevan to be an
independent Director.
Appointed Non-Executive
Director in August 2006.
Appointed Non-Executive
Director in August 2007.
Chair of the Audit and
Compliance Committee
and member of the Risk
Committee.
Current Directorships:
Chairman of Alumina Limited
(2018 to present, Director
since 2014), and Chairman of
Australian Unity Investment
Real Estate Limited (2015 to
present).
Former Directorships: Boart
Longyear Limited (2014 to
2017), SAI Global Limited
(2008 – 2016), Orbital
Corporation Limited (2007
– 2014), Centro Retail and
Federation Centres (2009 –
2014).
Mr Day was formerly Chief
Financial Officer of Amcor
Limited for seven years, and
Chief Financial Officer and
Executive Director Finance
of Bonlac Foods Limited. He
also has held senior office
and executive positions in
the Australian Securities
and Investments Commission
(Deputy Chair), Rio Tinto,
CRA and Comalco. He is
also involved with disability
services and education
initiatives. He has a
background in finance
and general management
across diverse and
international industries.
The Board considers
Peter Day to be an
independent Director.
Chair of the Human
Resources Committee
and member of the Risk
Committee.
Current Directorships:
Chair of Oclaro Inc. (2011
to present) and Director
of Humana Inc. (2008 to
present).
Mrs Peterson currently
runs Mission Peak Executive
Consulting, an executive
coaching and consulting
firm specialising in helping
develop, grow and scale
leaders in the high
technology space.
Mrs Peterson retired from
full-time executive roles in
2006, having spent 18 years
with Sun Microsystems with
an unprecedented legacy
of concurrently leading some
of Sun’s largest and most
effective organisations: as
Executive Vice President of
Services, EVP of Worldwide
Operations, and as Chief
Customer Advocate.
She has extensive experience
in supply chain management,
manufacturing and quality,
logistics, information
technologies, customer
advocacy and leadership
development. Among her
awards are Women Inc’s
Most Influential Corporate
Director, Silicon Valley
Tribute to Women in
Industry, National
Association of Corporate
Directors Leadership Fellow,
Filipinas Magazine Corporate
Leader of the Year, National
Co-op Hall of Fame, and the
Excellence in Science and
Engineering Award from the
Philippine Development
Forum.
The Board considers
Marissa Peterson to be
an independent Director.
Ansell Limited Annual Report 2018 Ronald J S Bell
Non-Executive
Director
BA (Strathcylde)
Leslie A Desjardins
Non-Executive
Director
B. Industrial Admin,
Finance (Kettering), MS.
Management (MIT)
William G Reilly
Non-Executive
Director
BA (Fairfield), J.D (Seton Hall)
Christina M Stercken
Non-Executive
Director
BEcon & MEcon (Univ. of
Bonn), EMBA (Duke)
Appointed Non-Executive
Director in August 2005.
Appointed Non-Executive
Director in November 2015.
Appointed Non-Executive
Director in October 2017.
Appointed Non-Executive
Director in October 2017.
Chair of the Risk Committee
and member of the Audit and
Compliance Committee.
Former Directorships:
Director of Gallaher Group
(2004 - 2007), Director of
Northern Foods Ltd (2006 –
2010), Chairman of Premier
Foods plc (2010 – 2012),
Chairman of Milk Link (2005
– 2013) and Director of
Edrington Group (2005 –
2016).
Mr Bell is an experienced
international consumer
industry executive with a
background of over 30 years
in highly competitive
globally branded products.
He is a former President of
Kraft Foods, Europe, and
served as Executive Vice
President of Kraft Foods Inc.
and brings to the Board
broad general management
and marketing skills
particularly in the European
and North American markets,
as well as non-executive
governance experience.
The Board considers Ronald
Bell to be an independent
Director.
Member of the Audit and
Compliance Committee,
Human Resources
Committee, Governance
Committee and the M&A
Sub-Committee.
Current Directorships:
Director and Audit
Committee Chair of Terry
Fox Cancer Foundation
(2018).
Former Directorships:
Director of Aptar Group
(2012-2015).
Mrs Desjardins is a former
international finance
executive with experience
in business performance and
growth. Mrs Desjardins was
formerly the Chief Financial
Officer of Amcor Limited.
Prior to Amcor, she held
executive roles at General
Motors Corporation, in
Canada, the United States
and Australia, including
Chief Financial Officer
GM Holden, Controller for
GM North America, and
Finance Director for GM’s
manufacturing facilities
in North America. Mrs
Desjardins has extensive
experience in finance,
M&A, strategy, government
relations and global
operations.
The Board considers
Leslie Desjardins to be
an independent Director.
Member of the Risk
Committee.
Mr Reilly has over 35 years’
experience as an in-house
lawyer. Mr Reilly was
appointed as General
Counsel of Ansell Healthcare
in 2000 when it was a
division of Pacific Dunlop
Limited, subsequently
becoming General Counsel
of Ansell Limited in 2002.
Mr Reilly has served with
three Chief Executive
Officers and has played
pivotal roles leading many
of Ansell’s corporate
strategic and legal initiatives,
including mergers and
acquisitions, litigation and
the successful intellectual
property strategy. He has
also overseen the Global
Compliance and Risk
functions, acted as interim
head of Human Resources,
leader of the Regulatory
function and joint Company
Secretary. Prior to joining
Ansell, Mr Reilly held senior
legal positions at C. R. Bard,
Inc., The Hertz Corporation
and McKesson Corporation.
In 2016, Mr Reilly was named
to the Financial Times first
ever Global GC 30 List.
As a recently retired
executive, William Reilly is
not an independent Director.
Member of the Audit &
Compliance Committee and
the Risk Committee.
Current Directorships:
Ascom Holding AG, Landis
& Gyr Group AG, Myanmar
Foundation (Vice Chairman).
Mrs Stercken was a partner
at Euro Asia Consulting PartG
(EAC) until the end of 2017.
In this function, Mrs Stercken
helped customers in
Machinery, Automotive,
Chemical, Healthcare and
Infrastructure industries
in strategy, M&A and
operational excellence
in growth markets. Before
joining EAC, Mrs Stercken
served as Managing Director
Corporate Finance M&A of
Siemens AG. Among other
management positions
within Siemens AG, she was
responsible for the Siemens
Task Force China and Head
of Public Sector Business
Unit at Siemens Business
Services. Mrs Stercken
started her career in
Marketing at BMW Pty. Ltd,
South Africa. Mrs Stercken
brings a broad range of
competencies relevant to
Ansell’s strategies, including
mergers and acquisitions,
broad industry background
and business building in
developing markets.
In her function as Vice
Chairman of Myanmar
Foundation, Munich,
Mrs Stercken supports
social projects in Myanmar.
The Board considers
Christina Stercken to be
an independent Director.
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Ansell Limited Annual Report 2018
Executive Leadership Team
Magnus Nicolin
Managing Director and
Chief Executive Officer
BA, MBA
Neil Salmon
Chief Financial Officer
(Finance and IT)
BA, ACMA
Steve Genzer
President and General
Manager Industrial Global
Business Unit
BSc, MBA
Joe Kubicek
President HGBU
BA, MBA
Francois le Jeune
Senior Vice President
Business Development,
Transformation and
Corporate Marketing
BS, MS, MBA
Debbie Lynch
Chief Human Resources
Officer
BS, MS, PhD
Peter Dobbelsteijn
Senior Vice President
Global Supply Chain and
Ansell Global Guardian
BMkt
Darryl Nazareth
Senior Vice President
Global Operations and R&D
BS, MS, MBA
Mark Nicholls
Senior Vice President
and Chief Commercial
Officer-Americas
BA, LLB (Hons)
Giri Peddinti
Senior Vice President
and Global Chief
Information Officer
BE, MBA
Michael Gilleece
Senior Vice President,
Corporate General Counsel
BA, JD
Rikard Froberg
Chief Commercial Officer
EMEA & APAC Region
MS, MA
28
Ansell Limited Annual Report 2018 Associate Executive Leadership Team
Jocelyn Petersen
Vice President, Global FP&A,
Treasury & Investor Relations
BS, CPA
Frederic Guyonneau
SBU Vice President & GM, US
HGBU Life Sciences
MA Econ, MBA
Augusto Accorsi
SBU Vice President & GM, US
HGBU Exam and SU
MBA
Sean Sweeney
SBU Vice President & GM, US
IGBU Mechanical Solution
BA, MT
Angie Phillips
SBU Vice President & GM, US
HGBU SHSS
BA, MT
Paul Bryce
SBU Vice President & GM,
EMEA IGBU Chemical
Solutions
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Ansell Limited Annual Report 2018
29
Report by the Directors
This Report by the Directors of Ansell Limited (‘the Company’) is made for the year ended 30 June 2018. The information set out below
is to be read in conjunction with the:
• Operating Financial Review appearing on pages 14 to 21;
• Remuneration Report appearing on pages 39 to 63; and
• Notes 20 and 21 to the financial statements, accompanying this Report.
Directors and Secretary
The names and details of each person who has been a Director of the Company during or since the end of the financial year are:
• Glenn L L Barnes (Chairman)
• Magnus R Nicolin (Managing Director and Chief Executive Officer)
• John A Bevan (Deputy Chairman)
• Ronald J S Bell 1
• L Dale Crandall 2
• W Peter Day
• Leslie A Desjardins
• Marissa T Peterson
• William G Reilly 3
• Christina M Stercken 4
1. Will retire 18 October 2018.
2. Retired from the Board on 20 October 2017.
3. Appointed to the Board on 20 October 2017.
4. Appointed to the Board on 20 October 2017.
Particulars of the qualifications, experience and special responsibilities of each Director, as at the date of this Report, and of their other
directorships, are set out on pages 26 and 27.
Details of meetings of the Company’s Directors (including meetings of Board Committees) and each Director’s attendance are set out
on page 33.
The Company Secretary is Catherine Stribley, B.Com/LLB (Hons), FGIA, and she was appointed as Company Secretary in April 2017.
Ms Stribley first joined the Company in 2010, and has held legal positions in both Australia and the United States, including Senior
Counsel and Senior Counsel, IP.
30
Ansell Limited Annual Report 2018 Principal Activities
The activities of Ansell Limited and its subsidiaries (‘the Group’) principally involve the development, manufacturing and sourcing,
distribution and sale of gloves and protective personal equipment in the industrial and medical end markets. In FY18, after the
divestment of the Sexual Wellness business, Ansell operated in two main business segments, Industrial and Healthcare.
Operating and Financial Review
The Operating and Financial Review for the Group for the financial year is set out on pages 14 to 21, and forms part of this Report.
State of Affairs
During the year the Group continued to progress the strategies that have been identified to accelerate growth and create increased
shareholder value. The Operating and Financial Review provides additional information on the Group’s growth strategies. Other than set
out in the Operating and Financial Review, no significant changes occurred in the state of affairs of the Group during the financial year.
Likely Developments
Likely developments in the operations of the Group are referred to on page 15 of this Report. In the opinion of the Directors, the
disclosure of any further information about likely developments in the operations of the Group has not been included in the Report
because disclosure of this information would likely result in unreasonable prejudice to the Group.
Significant Events Since Balance Date
The Directors are not aware of any significant matters or circumstances that have arisen since the end of the financial year that have
affected or may affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial years.
Performance in Relation to Environmental Regulations
Group entities are subject to environmental regulation in the jurisdictions in which they operate. The Group has risk management
programs in place to address the requirements of the various regulations. From time to time, Group entities receive notices from
relevant authorities pursuant to local environmental legislation. Ansell works to evaluate each environment issue within a framework
of optimal management. On receiving such notices, the Group evaluates potential remediation or other options, associated costs
relating to the matters raised and, where appropriate, makes provision for such costs. The Directors are not aware of any material
breaches of Australian or international environmental regulations during the year.
The Board monitors compliance with the Group’s environmental policies and practices, and believes that any outstanding
environmental issues are well understood and are being actively managed. At the date of this Report, any costs associated with
remediation or changes to comply with regulations in the jurisdictions in which Group entities operate are not considered material.
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Ansell Limited Annual Report 2018
Report by the Directors continued
Dividends and Share Issue
The final dividend of US23.75 cents per share (unfranked) in respect of the year ended 30 June 2017 was paid to shareholders on
8 September 2017. An interim dividend of US20.50 cents per share (franked) in respect of the half-year ended 31 December 2017 was
paid to shareholders on 8 March 2018. A final dividend of US25.00 cents per share (unfranked) in respect of the year ended 30 June 2018
is payable on 13 September 2018 to shareholders registered on 27 August 2018. The financial affect of this dividend has not been
brought to account in the financial statements for the year ended 30 June 2018 and will be recognised in subsequent financial reports.
On 19 April 2018, the Company issued 1,200 shares; and on 21 May 2018 the Company issued 3,000 shares, each such issue being in
respect of the conversion of partly-paid shares to fully paid shares under the Executive Share Plan. On 8 September 2017, the Company
issued 99,665 shares under its Dividend Reinvestment Plan. On 8 March 2018, the Company issued 52,488 shares under its Dividend
Reinvestment Plan. There are no unissued shares under option at the date of this report.
Interests in the Shares of the Company
The relevant interests of each Director in the share capital of the Company, as at the date of this Report, as notified to ASX Limited
pursuant to the Listing Rules and Section 205G of the Corporations Act 2001, were:
G L L Barnes
J A Bevan
R J S Bell
L D Crandall 1
W P Day
L A Desjardins
M R Nicolin
M T Peterson
W G Reilly
C M Stercken
1. Retired from the Board on 20 October 2017.
^ Beneficially held in own name or in the name of a trust, nominee company or private company.
68,116^
26,017^
19,847
22,218
29,707^
6,711
266,239^
23,647
40,202
860
32
Ansell Limited Annual Report 2018 Directors’ Meetings
The following table sets out the number of Directors’ meetings (including meetings of Board committees) held during the financial year
and the number of meetings attended by each Director.
Board
Audit and Compliance
Committee
Risk
Committee
Human Resources
Committee
Governance
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
G L L Barnes
R J S Bell
J A Bevan
L D Crandall1
W P Day
L Desjardins
M T Peterson
W G Reilly2
C M Stercken3
M R Nicolin
6
6
6
2
6
6
6
4
4
6
6
6
6
2
6
6
6
4
4
6
4
4
1
4
4
2
4
4
1
4
4
2
4
2
4
4
2
2
4
2
4
4
2
2
4
4
4
4
4
4
4
4
3
3
3
2
3
3
Held – Indicates the number of meetings held while each Director was a member of the Board or Committee.
Attended – Indicates the number of meetings attended during the period that each Director was a member of the Board or Committee.
1. Retired from the Board on 20 October 2017.
2. Appointed to the Board on 20 October 2017.
3. Appointed to the Board on 20 October 2017.
The Audit & Compliance Committee, Risk Committee and Human Resources Committee meetings were attended by all Directors in FY18.
In June 2016, the Board resolved to form a sub-committee of the Board to review M&A and divestment opportunities – including
related business transformation. This sub-committee is currently led by Mr John Bevan and comprised of Mr Glenn Barnes, Mrs Leslie
Desjardins, Mrs Christina Stercken and Mr Magnus Nicolin. The sub-committee met five times during FY18. All M&A Sub-Committee
meetings are excluded from the number of meetings noted above.
In May 2017, the Board resolved to form a sub-committee of the Board to make recommendations on share buybacks and the
dividend policy. This sub-committee is currently led by Mr Glenn Barnes and comprised of Mr John Bevan and Mr Peter Day. The
sub-committee met 3 times during FY18. All Share Buyback Sub-Committee meetings are excluded from the number of meetings
noted above.
Indemnity
Upon their appointment to the Board, each Director enters into a Deed of Access, Indemnity and Insurance with the Ansell Group. These
Deeds provide for indemnification of the Directors to the maximum extent permitted under law. They do not indemnify for any liability
involving a lack of good faith. No Director or officer of the Group has received the benefit of an indemnity from the Group during or
since the end of the 2018 fiscal year. Rule 61 of Ansell’s Constitution also provides an indemnity in favour of officers (including the
Directors and Company Secretary) of the Group against liabilities incurred while acting as such officers to the extent permitted by
law. In accordance with the powers set out in the Constitution, the Group maintains a Directors’ and Officers’ insurance policy. Due to
confidentiality obligations and undertakings of the policy, no further details in respect of the premium or the policy can be disclosed.
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Ansell Limited Annual Report 2018
Report by the Directors continued
Material Business Risks
Ansell has established controls and procedures that are focused on safeguarding the Group’s assets and the integrity of its reporting.
The Group’s internal controls cover accounting, financial reporting, safety and sustainability, fraud, delegations of authority and other
control points. The risk management framework below summarises the Group’s approach to managing risk, including the identification
of risk appetite and monitoring of risks to that appetite.
Risk
Appetite
Organisational
Alignment
Resource and
Adherence
Communication
• Board and management
establish risk appetite,
including goals, metrics
and measurement
methods
• Cascades through
the organisation
• Stakeholders and
managers to identify
major risks
• Risk mitigation process
• Risk appetite updated
after feedback
• Adherence to risk
appetite
• Supports risk culture
to ensure they are
within acceptable
tolerances
• Organisational
communication
of strategies and
objectives
• Clear communication
of how much risk
organisation will
accept
Material Risks – Description and Mitigation Actions
Risk
Nature of Risk
Mitigation Actions
Global markets
instability
The Group’s presence in over 55 countries globally
and its growing presence in emerging markets
exposes the Company to geopolitical, regulatory
and other factors beyond the Group’s control.
These include changes in tariff barriers, taxation
policies globally and policies to implement or vary
sanctions by one country on another.
Systems and
technology
As a modern business Ansell relies on Information
Technology (IT) platforms. Interruption,
compromise to or failure of these platforms could
affect Ansell’s ability to service its customers
effectively. The Company is also exposed to the
risk of theft of confidential data, fraud committed
through cyber means, and has an obligation to
adequately protect the data it holds on employees
and all stakeholders in compliance with
increasingly complex global data protection
regulations.
• Continually monitor the Group’s exposure to these risks
through our local presence.
• Geographic diversification provides protection in itself.
• Insurance coverage in certain jurisdictions against
political violence in certain emerging markets.
• Careful monitoring and management of customer
credit risk.
• Using in-house and external local expertise to advise
on matters of country risk.
• Modern ERP systems are in place in the largest regions
of North America and EMEA whilst also managing our
supply chain. Disaster recovery plans are in place and
tested regularly.
• These systems are progressively being deployed through
the rest of the group.
• The Group has an active cyber risk management program,
including conducting tests on the vulnerability of key
systems and ongoing training to employees on their
responsibility for mitigating cyber fraud risk.
• Manufacturing materials and processes are subject to
continuous review and upgrade to enhance productivity
and maintain our competitive position.
• The Group has implemented new data protection
procedures and obtained external advice to ensure its
compliance with European GPDR and other global
regulations.
34
Ansell Limited Annual Report 2018 Risk
Nature of Risk
Mitigation Actions
Major incident
at a significant
manufacturing
site or warehouse
The Group has a number of materially sized
manufacturing sites and warehouses. These are
vital to the business and financial losses from
natural disasters, civil or labour unrest, terrorism,
major fire or other incidence are possible.
Transformation
change
management
The Group has announced a series of initiatives
designed to improve the performance of the
continuing business. With any change of this
nature there is a risk of business disruption.
Foreign exchange
risk
Product quality
Around half of the Group’s revenues and costs are
in currencies other than the US$. With volatile
foreign exchange markets, significant changes can
occur in foreign exchange rates and result in a
significant impact on US$ earnings.
As a manufacturer, quality is paramount to the
Group and failures in this area can have a
significant negative affect on results and customer
relationships.
• The Group has business continuity and disaster recovery
plans for all major sites.
• Insurance coverage including business interruption cover.
• The Group monitors its overall exposure to individual
sites and seeks to limit its dependence on any one site
through dual sourcing strategies.
• Regular risk and safety audits are conducted at each
of the major sites.
• Ongoing safety, fire preparedness and local country
economic reviews are conducted.
• Duplication of most production lines minimises business
interruption risk.
• The Group has a detailed change management plan.
• A dedicated project management office has been
established reporting to the CEO but with appropriate
Board oversight.
• Detailed communication plans are under way to ensure
affected staff are clear on new roles and responsibilities.
• Contingency and risk management plans have been
developed.
• The Group’s foreign exchange risks and management
strategies are detailed in Note 15 to the financial
statements.
• Investment in quality assurance and governance practices,
including systematic quality assurance testing during and
after the manufacturing and procurement process.
• Dedicated team of quality and regulatory staff monitor
this, led by a quality steering committee that reports to
the CEO.
• Implementation of quality metrics to monitor and correct
defective processes before the product is released to
the market.
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Ansell Limited Annual Report 2018
Report by the Directors continued
Risk
Nature of Risk
Mitigation Actions
Loss of a key
supplier
Raw materials purchased for manufacturing
purposes and finished goods purchased for resale,
expose the group to the risk of the failure of a
supplier to perform, leaving the Company short
of a vital ingredient or product.
Changes in
competitive
environment
Ansell is a leading global manufacturer and
branded supplier of hand and body protection,
with the number 1 market share position in most
of its focus markets and product categories.
However, Ansell’s ability to achieve adequate
profit margins and maintain that profitability in
periods of increasing input cost, such as from rising
raw materials and energy, depends in part on the
actions of competitors and the relative value of
competitor products.
Corporate Social
Responsibility (CSR)
Reputational risk can occur from poor CSR practices.
Failure to maintain a safe working environment or
to offer a working environment conducive to the
health and well-being of its employees could result
in significant cost to the Company and difficulty in
attracting and retaining talented employees.
• Utilise dual sourcing strategy wherever feasible.
• In recent years there has also been a strategy of vertical
integration which reduces dependency on third parties.
• Increased quality audits and inspections of third party
facilities for compliance with Ansell’s sustainability
standards.
• Ansell’s supplier arrangements are formalised into supply
contracts. Our business partners work with Ansell to
provide metrics on waste management and other KPIs.
Furthermore, Ansell regularly reviews the liquidity of its
suppliers to ensure ongoing solvency.
• Ansell’s focus on innovation and leadership in
manufacturing technology aims to maintain Ansell’s
competitive advantage in product technology while also
ensuring products are manufactured cost competitively.
• Diversity of products, markets and geographic position
limits Ansell’s risk to the actions of competitors who
mostly have a more narrow market or product focus.
• Through its channel partnership strategy Ansell aims to
increase its value to distributor partners and build or
maintain a leading market share.
• Cross-functional Management CSR Steering committee
in place for governance led by the Chief HR Officer
(CHRO) with updates to the CEO and full Executive team.
• Enforcement of supplier self-assessments through
Sedex for transparency and baseline on Human Rights,
Environment and Governance.
• Continued strong focus on Ansell’s Code of Conduct,
Values and Leadership Competencies.
• New Long-term goals established (see CSR/Sustainability
pages 22 to 23).
• Increased emphasis on CSR/Sustainability at the Board
level with the Risk Committee now also overseeing CSR
and having being renamed the CSR & Risk Committee
for FY19.
36
Ansell Limited Annual Report 2018 Auditor Independence
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Ansell Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Ansell Limited for the financial year ended 30 June 2018
there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Suzanne Bell
Partner
Melbourne
20 August 2018
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KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
37
Ansell Limited Annual Report 2018
Report by the Directors continued
Non-audit Services
During the year, the Group’s auditor, KPMG, was paid the following amounts in relation to non-audit services provided by KPMG:
Advisory services
Taxation and other services
Other audit and assurance services
$172,851
$9,010
$28,000
The Directors are satisfied that the provision of such non-audit services is compatible with the general standards of independence
for auditors, and do not compromise the auditor independence requirements of the Corporations Act 2001 in view of both the amount
and the nature of the services provided. All non-audit services were subject to the corporate governance procedures adopted by the
Group and have been reviewed by the Audit and Compliance Committee to ensure they do not impact the integrity and objectivity
of the Auditor.
Rounding
The Group is a company of the kind referred to in Australian Securities and Investments Commission Instrument 2016/191 dated
31 March 2016 and, in accordance with that Instrument, unless otherwise shown, amounts in this Report and the accompanying
financial statements have been rounded off to the nearest one hundred thousand dollars.
This Report is made in accordance with a resolution of the Board of Directors made pursuant to Section 298(2) of the Corporations
Act 2001 and is signed for and on behalf of the Directors.
G L L Barnes
Director
M R Nicolin
Director
Dated in Melbourne this 20th day of August 2018
38
Ansell Limited Annual Report 2018
Remuneration Report
Contents
1. At a Glance
2. Remuneration Governance
3. Remuneration Policy
Philosophy and Strategy
Remuneration Framework Components
4. How the Policy was Operated for FY18 –
What did the Executives take home in FY18?
Remuneration Framework Details
5. Statutory Information
Executive Service Agreements
Share Trading Policy
Shareholder alignment
Current Shareholding
Equity Instruments
Executive Statutory Remuneration
6. Non-Executive Directors
Policy and Approach
Base Fees for 2018
Non-Executive Directors’ Statutory Remuneration
7. Group Performance and Remuneration Outcomes
8. Governance
Role of the Human Resources Committee
9. Glossary
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Ansell Limited Annual Report 2018
3939
Ansell Limited Annual Report 2018
Remuneration Report continued
Chairman’s Letter
Dear Shareholders,
On behalf of the Board of Directors,
we are pleased to present Ansell’s
Remuneration Report for the financial
year ended 30 June 2018.
The remuneration of Ansell’s Key
Management Personnel (KMP) for FY18
is detailed on the following pages.
Key Points in the FY18
Remuneration Report
• We continue to evolve the report to
improve clarity and presentation of
key information while increasing
transparency of the data shared to
meet shareholder expectations;
• As a result of the Transformation
Program, we reviewed our management
KMPs and reduced these from 8 to 4
since several roles no longer met the
definition of KMP. This change was
a result of structural changes in the
Company and the divesture of the
Sexual Wellness business announced
at the end of FY17;
• The targets set for the FY18 Short
Term Incentive (STI) plan were for the
continuing operation with performance
measured against those targets on a
comparable basis without any impact
from the divestment of the Sexual
Wellness business or results under
discontinued operations;
• As communicated in last year’s
remuneration report, the targets for
the Long Term Incentive (LTI) plan
vesting in FY18 were adjusted to reflect
the divestment of Sexual Wellness. The
intent being to neutralise the impact
of the one-off divestment and require
operating performance consistent with
the original business portfolio targets, so
as to permit an appropriate achievement
opportunity for incentive outcomes.
Performance against the FY16 LTI plan
has has now been assessed against those
adjusted targets announced a year ago;
• The remuneration policy was operated
in line with the previous year and there
are no planned changes for FY19 but
there will be design changes for FY20
which will be discussed in the upcoming
months.
Summary of Performance and
Link to Incentive Outcomes
• Overall, the Board was pleased with
management’s accomplishments in
delivering improved sales and earnings
growth for continuing operations
while also executing very well on the
significant structural changes in the
Group associated with the sale of Sexual
Wellness and the Transformation
Program. The STI award for FY18 varied
between 27% to 32% of maximum for
the respective KMPs. This reflected a
good sales result but awards were lower
against the EBIT based targets, which
were impacted by higher raw material
costs in the early part of the year,
amongst other things.
• The LTI plan has demanding performance
targets and no payments were made for
the plan vesting in FY17 as these targets
were not met. In FY18 the strong EPS
performance achieved (even after
excluding the items noted below),
ensured the minimum performance
condition for the FY16 plan vesting this
year was exceeded, however the payout
earned remained below the midpoint
of this plan.
Exercise of Board Discretion in
Arriving At Incentive Outcomes
The financial results for FY18 are complex
and reflect the impact of the sale of the
Sexual Wellness business and the actions
taken to reposition the continuing
business for long-term success. If results
as reported had been used in determining
incentive outcomes, maximum incentive
awards under the LTI scheme would
have accrued to management. However,
the Board felt that this created a
disproportionate benefit to management.
As a result, a series of adjustments have
been applied in determining incentive
outcomes which have the effect of
substantially lowering realised
remuneration and linking outcomes more
closely to operational achievements versus
the one time impact of transformation
actions. These adjustments follow the
principles articulated last year as we
announced the adjusted targets for
LTI plans affected by the Sexual Wellness
divestment.
In summary excluded items fall into
three categories:
1. Excluding the impact of the divestment
(including the gain on sale), disposal
costs and a portion of costs incurred
under the Transformation Program
necessary to reposition the continuing
business with an appropriately sized
overhead structure;
2. The net gain from the two major non
cash accounting items disclosed in
arriving at adjusted EPS; and
3. Excluding the demolition and site
clearance costs of a legacy site dating
back to Pacific Dunlop times and with
no connection to the current Ansell
business.
Results after these exclusions were
then compared against the adjusted
performance targets for ongoing
incentive plans.
Consistent with its practice in prior
years, the Board has continued to apply
principles established around measuring
outcomes on a constant currency basis
and the treatment of restructuring
costs, as shown in Section 4 of the
Remuneration Report.
The Board also reviewed several other
favourable and unfavourable items,
which impacted reported results, and
determined – in accordance with the
principles used to decide on incentive
treatment, consistently applied now over
many years – that no further adjustments
should be made. These items include the
benefit to taxation expense of the US legal
entity restructuring, a benefit which arose
only as a result of management action and
40
Ansell Limited Annual Report 2018 which also created value for shareholders.
The Board of Directors has reviewed in
detail the results reported in FY18 and
the material items contributing to those
results. It has exercised its discretion in a
number of areas, as explained in detail in
this report, the overall effect of which has
been to substantially reduce incentives
accruing to management. In the Board’s
view the adjustments are necessary to
ensure incentive outcomes are aligned
to the operational contribution of
management to results achieved and are
consistent with the principles announced
last year immediately following the
divestment of Sexual Wellness.
Finally, it is important to highlight that
Ansell is an Australian-listed organisation
that is highly global in its structure and
operations and its executive remuneration
framework must take this into account.
Ansell’s Executive KMP are all based
outside of Australia and their remuneration
agreements reflect the international
market conditions in which we recruit and
retain our senior leadership. Attracting,
motivating and retaining a talented global
workforce requires our remuneration
practices to be globally competitive,
regionally appropriate and flexible.
We hope that you find this year’s
remuneration report informative and we
encourage you to open a dialogue with
us where you require further clarification
on information in the report.
On behalf of the Directors, we look forward
to welcoming you to the 2018 AGM.
Marissa Peterson
Chairman of the HR Committee
Ansell Limited
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41
Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Section 1 – At a Glance
FY18 Performance
This section is intended to provide a high level visual summary of the Remuneration Outcomes for FY18 for Realised Pay4. Further detail
is provided on each of these in the ensuing sections of the Remuneration Report.
Key Strategic Highlights – Continuing Operations
• Successful completion of the divestiture of the
Sexual Wellness business.
• Transformation Program progressing well with
savings in line with the target or better.
• Solid organic growth in Sales revenue.
• EBIT up 5% at constant currency overcoming higher
raw material pricing in H1.
• ROE was above the 1.5 x WACC gateway (FY16 grant).
• Cash flow was again strong but inventory turn metrics
were at the lower end of expectations.
STI Performance (Realised)
Maximum
Target
Minimum
Sales1
EBIT1
EPS2
$1,489.8
$193.1
$102.0
Profit Attributable to Shareholders
$146.7
Share price3
DPS
ROCE
Return on Average Equity
LTI Performance
(Realised)
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100
80
60
40
20
0
A$27.19
US45.5¢
12.9%
12.4%
FY18
Statutory
100
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Sales
EBIT
Inventory
Turnover
Operating
Cash Flow
Profit
Attributable
FY18
Realised LTI
FY18
Assume LTI
CEO Realised Pay
2,000,000
1,750,000
1,500,000
1,250,000
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1,000,000
750,000
500,000
250,000
0
Salary
Retirement &
Other Benefits
STI
Outcome
LTI
Outcome
1. Continuing Operations excluding Transformation costs and change in accounting estimate.
2. Continuing Operations excluding Transformation costs, change in accounting estimate and impact of US tax reform on deferred tax balances.
3. Represents share price at 29 June 2018.
4. Realised Pay is a non-IFRS measure and is defined in Section 9 – Glossary.
42
Ansell Limited Annual Report 2018
Other Executives Realised Pay
700,000
Neil Salmon
Joe Kubicek
Steve Genzer
Anthony Lopez
Jeyan Heper
600,000
500,000
D
S
U
400,000
300,000
200,000
100,000
0
Salary
Retire m ent & Other Benefits
STI O utco m e
LTI O utco m e
Salary
Retire m ent & Other Benefits
STI O utco m e
LTI O utco m e
Salary
Retire m ent & Other Benefits
STI O utco m e
LTI O utco m e
Salary
Retire m ent & Other Benefits
STI O utco m e
LTI O utco m e
Salary
Retire m ent & Other Benefits
STI O utco m e
LTI O utco m e
CEO & Other Executives Shareholding Requirements (expressed as a percentage of base pay)
Required
Actual
300%
CEO
100%
Other Executives
170%
Other Executives (Aggregate)
471%
CEO
0
100
200
300
400
500
600
Percentage of salary
Shareholding requirements are higher than market norm and Executives hold more than required, which aligns
executive and shareholder interest.
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Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Section 2 – Remuneration Governance
Introduction
The directors of Ansell Limited (Ansell) and its subsidiaries (the ‘Group’) present the Remuneration Report. This report has been prepared
in accordance with Section 300A of the Corporations Act for the financial year ending 30 June 2018. This Report, which has been audited
by KPMG, forms part of the Report of the Directors.
The Report outlines the remuneration arrangements in place for the Non-Executive Directors and Executive KMP of Ansell, being
those executives who have authority and responsibility for planning, directing and controlling the activities of the Group. In this
Report, ‘Executives’ refers to members of the Group Executive team identified as KMP.
KMPs Comprising the Board of Directors and Executives
The following table details Ansell’s KMP during FY18:
Non-Executive Directors
Location of Board Member
Role
Australia
Australia
Chairman, Independent Non-Executive Director
Deputy Chairman, Independent Non-Executive Director
United Kingdom
Independent Non-Executive Director
United States
Australia
United States
United States
United States
Germany
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
Location of Executive
Role
Belgium
Managing Director (MD) and Chief Executive Officer (CEO)
Location of Other Executives
Role
Belgium
United States
United States
United States
Belgium
Chief Financial Officer (CFO) (Finance and IT)
President and General Manager Industrial (IGBU)
President and General Manager Healthcare (HGBU)
President and General Manager Medical GBU
President and General Manager Sexual Wellness GBU
Glenn L L Barnes
John A Bevan
Ronald J S Bell 1
L D Crandall2
W Peter Day
Leslie A Desjardins
Marissa T Peterson
William G Reilly3
Christina M Stercken4
Executive Director
Magnus R Nicolin
Other Executives
Neil Salmon
Steve Genzer
Joe Kubicek
Anthony Lopez 5
Jeyan Heper6
1. Will retire on 18 October 2018.
2. Retired on 20 October 2017.
3. Appointed as NED on 20 October 2017.
4. Appointed as NED on 20 October 2017.
5. Ceased to be a KMP on 15 July 2017.
6. Left the Company on 31 August 2017.
In the beginning of FY18, as a result of the sale of the Sexual Wellness business, Ansell transformed the organisation to focus on two Global
Business Units (GBU) comprising of Industrial and Healthcare. The Board resolved that following the organisational Transformation only
the CEO, CFO and the heads of the 2 GBUs satisfied the definition of a KMP.
44
Ansell Limited Annual Report 2018 Section 3 – Remuneration Policy
Philosophy and Strategy
Our remuneration philosophy links the achievement of our strategic objectives and corporate plans with appropriate
and measured rewards for our Executives.
Our governing principles are summarised below:
Ensure competitiveness in base
salary and total package
Support a performance
culture
Reflect the markets and
locations we recruit from
Balance of short and
long-term performance
Link rewards to business
results and strategy
Even though Ansell is listed on the Australian Stock Exchange, it has offices in approximately 55 worldwide locations,
with the core Executive Leadership Team (ELT) based in Belgium, Malaysia and the United States.
US
Revenue 44%
ELT 6 (of which
2 KMP)
North
America
Europe
Asia
EMEA
Revenue 37%
ELT 5 (of which
2 KMP)
Middle
East
Africa
Asia
Revenue 8%
ELT 1
Latin America
and Caribbean
LAC
Revenue 7%
ELT 0
Australasia
Australia
Revenue 4%
ELT 0
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Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Remuneration Framework Components
Our executive remuneration framework which was used for FY18 consists of the following components:
Component
Operation and
Performance Measure
Strategic Objective/
Performance Link
Fixed Annual Remuneration (FAR)
Base salary plus retirement provisions
plus benefits.
Pay Mix
FAR: 32% – 39%
Takes into account:
• Attract, retain and engage
talented executives.
• Responsibilities, qualifications,
>
experience; and
• Consider, but not constrained
to, relevant benchmarks.
>
• Performance, location and market
rate for a comparable role.
• Increases are linked to individual
performance, the organisation he/
she leads & indirectly the overall
business.
+
STI
Cash plus Deferral into equity for
part of the award above the target.
Pay Mix
STI: 21% – 25%
• Combination of financial and
• Aligned with the Group’s short-term
non-financial performance metrics.
objectives.
>
• Performance weighted more
towards financial KPIs (not less
than 80% of the award).
>
• Clear line of sight for participants.
• Deferral of part of the award
encourages longer-term
sustainable performance.
+
LTI
Rights to receive fully paid ordinary
shares subject to performance.
Pay Mix
LTI: 39% – 43%
=
Total Remuneration
• Three-year performance and
• Reflects key priorities of the
vesting period.
business at the time.
>
• Combination of key financial and
shareholder value measures.
>
• Relevant indicator of shareholder
value creation.
• Suitable line of sight for participants
to encourage and motivate
executive performance.
• Attract, retain and motivate highly capable executives.
• Reinforce short and long-term objectives.
• Alignment with shareholders.
• Deliver sustainable growth.
46
Ansell Limited Annual Report 2018 Section 4 – How the Policy was Operated for FY18 – What did the Executives take home in FY18?
This section uses non-IFRS financial information to detail realised pay earned by the CEO and Other Executives during FY18 together with
prior year comparatives. This is a voluntary disclosure and is supplemental information to the statutory remuneration disclosure contained
in Section 5 of this Remuneration Report. Realised Pay includes Base Salary, Retirement and other benefits paid/payable in relation to
FY18. It also includes the full value of incentive payments earned in relation to the FY18 performance period. This differs from the statutory
amount as it excludes accruals and estimations and is thus a closer measure of ‘take home pay’ received in respect of the current year.
Our reporting currency is US$ and the CEO and a number of members of the KMP are paid in US$. For other executives the reported
numbers in the statutory and realised pay tables are subject to translation differences from year to year.
Realised Pay Summary
US$ Name
Executive Director
Year
Base
Salary1
Retirement
Benefits2
Other3
Cash
Restricted
Shares
Cash
Equity
2018 Total
Earnings
2018 STI4
LTI5
Magnus R Nicolin
2018 1,066,000
508,088
155,065
910,830
–
2017 1,059,500
312,171
152,627
1,199,251
400,749
–
–
1,791,104
4,431,087
–
3,124,298
Other Executives
Neil Salmon
Steve Genzer
Joe Kubicek
Anthony Lopez6
Jeyan Heper7
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
585,450
497,277
424,064
414,732
426,842
391,000
15,259
378,420
46,954
293,222
54,460
29,609
346,114
– 195,888
312,710
1,524,231
48,597
149,191
373,188
111,210
–
–
1,179,463
48,383
–
157,296
– 172,398
183,473
985,614
44,115
2,000
207,366
13,064
–
–
681,277
42,501
–
152,782
– 144,160
153,427
919,712
37,645
21,113
195,500
8,407
–
–
653,665
2,045
114
–
– 106,967
113,842
238,227
42,712
765,712
189,210
4,352
–
–
1,380,406
5,192
12,925
–
–
79,213
78,069
222,353
28,444
52,256
148,467
15,292
–
–
537,681
1. Base salary includes the salary earned by the individual in FY18. The increases in Base salary for Executives are based on external benchmarking of similar
positions in the jurisdictions in which the executives are based. As a result, the CEO did not receive any pay increase in FY18, whilst the Other Executives’ pay
increases ranged from 3% to 10%. The year over year increase for Mr Nicolin reflects the timing of his FY17 pay increase.
2. Retirement Benefits includes all the retirement benefits earned by the individual in FY18. Mr Nicolin’s Retirement Benefits are based on his base salary plus prior
year STI achievement and will vary from year to year.
3. Other includes the cost to the Company of cash benefits such as motor vehicle, executive expatriation and relocation expenses, executive insurance and other amounts.
4. 2018 STI represents amounts payable under the 2018 STI plan.
5. LTI relates to the FY16 grant, which was approved by the HR Committee on 14 August 2018. The FY16 award was determined to be 42.4% of the Maximum award.
The equity figure represents the US$ value of the number of PSRs that have vested multiplied by the closing share price of Ansell Limited on the ASX on 14 August
2018 ($A27.86). This was the date on which the HRC approved the vesting of the shares. The translation to US$ used an FX rate of A$1:US$0.724.
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6. Ceased to be a KMP on 15 July 2017.
7. Ceased to be a KMP on 31 August 2017.
Breakdown of CEO Realised Pay
D
S
U
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1,791,104
4,431,087
910,830
508,088
1,066,000
155,065
Base
Salary
Other
Benefits
Retirement
Benefits
Cash
STI
LTI
Outcome
Total
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Remuneration Report (audited) continued
Remuneration Framework Details
Element of pay
How the policy was operated for FY18
No material changes were made to the policy in FY18.
Base salary
Normally review base salaries annually.
For FY18 the HRC considered a number of reference points including internal relativities, changes
in scope of responsibilities, local market inflation and the wider macro-economic environment.
External market data was sourced during the year but was used with caution.
The base salaries for the Executive KMPs, as a result of the increases, effective 1 October 2017 were:
Executive
Magnus R Nicolin
Neil Salmon
Steve Genzer
Joe Kubicek
Base Salary
$1,066,000
€502,700
$427,174
$430,100
Increase
0%
10%
3%
10%
Magnus Nicolin and Neil Salmon are based in Belgium; Steve Genzer and Joe Kubicek are based in the
United States. Joe Kubicek and Neil Salmon both expanded their roles with increased accountability which
is reflected in their base salary increase. In addition to Finance, Mr Salmon added Global Information
Technology and Portfolio management. Mr Kubicek runs the new Healthcare GBU which combined the
Single Use GBU and Medical GBU into one business.
The increase is based on a percentage of base pay not a percentage of fixed annual remuneration (FAR).
FY19 – No expected plan changes in FY19.
Retirement provisions
Includes contributions to US benefit or non-qualified pension plans and Belgian pension fund (as applicable).
Magnus Nicolin’s retirement benefit is based on his base salary plus prior year STI achievement which varies
year to year.
FY19 – No expected plan changes in FY19.
Other benefits
May vary between Executives, depending on their local market and their particular circumstances.
May include benefits such as motor vehicle, executive expatriation/repatriation and relocation
allowances, executive insurance, expat tax equalisation payments and other amounts.
Reflect the Company’s overall policy on international mobility.
FY19 – No expected plan changes in FY19.
STI – awards granted
during the year
Executives may participate.
Annual award payable part in cash and part in restricted shares. The deferral of equity only relates to
those awards earned for above mid-point performance.
Base
Salary
x
Maximum
Incentive
(% of Salary)
x
Business
Performance
Metrics
(90%)
+
Individual
Performance
(10%)
=
STI
Outcome
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Opportunity
Executive
Minimum STI (% of base salary) Maximum STI (% of base salary)
CEO
CFO
Other Executives
0%
0%
0%
225%
150%
130%
Methodology
Ansell Sales and EBIT target setting process methodically factors the following aspects:
(a) Current year fiscal performance as a baseline subject to limited adjustments (e.g. normalisation
of material items and projected FX rates).
(b) Targets are established for Sales and EBIT growth.
• Sales targets at 1.5X GDP growth in markets weighted for Ansell Industrial & Healthcare.
• EBIT growth assumes costs increase below the rate of sales growth to leverage a higher EBIT
growth target.
(c) Incremental growth returns on committed significant investments are also added to targeted Sales
and EBIT growth.
Performance measures
Requires the achievement of pre-set performance targets directly linked to Ansell’s business strategy:
Performance measures
Inventory
Turns
Operating
Cash Flow After
Capex Pre Tax
Profit
Attributable
Individual
Objectives
Executive
CEO
CFO
Sales
EBIT
35% 35%
35% 35%
–
–
Other Executives
35% 35%
20%
10%
10%
–
10%
10%
–
10%
10%
10%
Total
100%
100%
100%
STI Outcomes FY18
STI Achievement against the 5 metrics used in different KMP STI plans can be summarised as follows:
• Improving rates of organic constant currency sales growth were slightly below target levels of
performance against this metric.
• EBIT growth was also positive, but the lower achievement versus sales reflected the impact of higher
raw material costs seen particularly in the earlier part of the year.
• Inventory turns showed good improvement towards the end of the year, but that was insufficient
to deliver a significant improvement in the full year average turns metric used for STI purposes.
• A further year of strong operating cash flow delivery was held back only by higher working capital
levels at year end.
• Profit attributable achieved maximum STI achievement on EBIT growth and the impact of the
US legal entity restructuring and associated tax benefits.
Profit
Attributable
Maximum
Target
Sales
Minimum
Inventory
Turnover
EBIT
Operating
Cash Flow
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Remuneration Report (audited) continued
Outcomes continued
Executive
Performance against individual objectives
Magnus R Nicolin
Led the maintenance of business momentum through a period of major change.
Contributed to increased focus on ROCE across the business, supply chain
improvements and succession planning.
Neil Salmon
Steve Genzer
Drove completion of the Sexual Wellness divestiture, securing the
Transformation Program returns and helped secure an increased level
of performance across the board.
Led the IGBU to very strong growth worldwide ensuring continued delivery
of new innovative products, success with key distribution partners and further
penetration of emerging markets.
Joe Kubicek
Delivered for HGBU a very strong year in the Life Science and Exam products
and is now focused on bringing the Surgical business back to solid growth.
For the FY18 STI the Board approved the following payments to the Executives:
Executive
Magnus Nicolin
Neil Salmon
Steve Genzer
Joe Kubicek
Financial
Individual
754,927
283,143
123,976
124,825
155,903
62,971
33,320
27,957
Total STI
payable
910,830
346,114
157,296
152,782
Cash
payable
910,830
346,114
157,296
152,782
Restricted
shares 1
–
–
–
–
1. Any realised STI above target is paid in restricted shares. For FY18, no restricted shares have been granted for the STI.
FY19 – No changes to STI plan.
Exercise of Board discretion in arriving at incentive outcomes
The financial results for FY18 are complex and reflect the impact of the sale of the Sexual Wellness
business and the actions taken to reposition the continuing business for long-term success. If results as
reported had been used in determining incentive outcomes, maximum incentive awards under the LTI
scheme would have accrued to management. However, the Board felt that this created a disproportionate
benefit to management. A series of adjustments have been applied in determining incentive outcomes
which have the effect of substantially lowering realised remuneration and linking outcomes more closely
to operational achievements versus the one time impact of transformation actions. These adjustments
follow the principles articulated last year as we announced the adjusted targets for LTI plans affected
by the Sexual Wellness divestment.
FY16–18 Plan performance
The FY16-18 LTI plan (and beyond) was adjusted to factor in the divestiture of the Sexual Wellness (SW)
business. As we announced in the FY17 Remuneration report, the EPS Growth of the continuing business
in FY18 versus FY17 would be measured against ‘to-go’ EPS Growth targets adjusted to require equivalent
performance to the original LTI targets for the period post divestment of Sexual Wellness.
Actual
result
Vesting %
of maximum
Threshold
Stretch
Target
Original EPS Growth CAGR
Adjusted ‘To Go’ Targets (cents)*
7%
24.7
8%
28.8
12%
46.0
–
27.5
–
42.4%
* Adjustment takes account of achieved growth to end FY17 for total portfolio and projected growth in FY18 for SW to derive
required ‘to go’ growth for continuing operations in FY18.
Current year EPS for the purposes of LTI Award
The Board assessed the FY18 adjusted EPS relevant for incentive purposes as 109.7 with a reconciliation
to Statutory EPS shown below:
Exclude SW, including results in Discontinued Operations, and disposal costs.
Statutory EPS
1)
2a) Tax – revaluation of deferred tax assets and liabilities from US tax reform
2b) Change in Accounting estimate – development costs
3) Demolition and site clearance costs of legacy Pacific Dunlop site in Louisiana, US
Current year EPS for the purposes of LTI Award
336.8
(221.6)
(13.0)
5.5
2.0
109.7
LTI Awards vesting
in FY18
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A reconciliation from the EPS for LTI award purposes to the Adjusted EPS (as per Page 4) is shown below:
Reconciliation of EPS for LTI award to Adjusted EPS
EPS for LTI purposes (above)
FY18 Manufacturing and Supply Chain Transformation costs
Tax benefit from US legal entity restructure included in discontinued operations
Demolition and site clearance costs of legacy Pacific Dunlop site in Louisiana, US
Adjusted EPS
The primary adjustments were:
109.7
3.5
(9.2)
(2.0)
102.0
1. To exclude the one-time impact of the Sexual Wellness business divestment, encompassing the gain
on sale, disposal costs, and the portion of costs arising from the Transformation Program directly
associated with restructuring company overhead aligned to support the new ongoing GBUs and
eliminating stranded cost remaining behind after the Sexual Wellness business divestment;
2. To exclude the net gain arising on the two non-cash accounting items disclosed separately in this report;
and
3. To exclude the demolition and site clearance costs associated with a legacy site dating back to Pacific
Dunlop times and with no connection to the current Ansell business.
The Board elected to retain within results for incentive purposes a number of other items. The Board
considered, but elected to make no adjustment for the benefit to interest expense of the cash arising from
the divestment. It recognised that while it was appropriate to exclude the gain on sale as a disproportionate
benefit to management, appropriate stewardship of the cash arising is a responsibility of management and
the successful receipt of disposal proceeds was only possible through successful execution of a complex
divestment transaction. The Board also elected to retain the benefit of the US legal entity restructuring that
gave rise to a reduction in capital gains earned on the Sexual Wellness divestment and allowed the carry
back to offset prior capital gains taxes previously recorded in ordinary continuing earnings. It recognised
that this benefit was of value to shareholders, only came about through management action, and would
have accrued to the Company whether or not the Sexual Wellness business had been sold. A number of
other favourable and unfavourable items were assessed, with a decision made to make no adjustment in
accordance with the principles the Board has established and consistently applied to assess whether such
items should be included or excluded from results for incentive purposes.
LTI Performance
Measures
Calculating EPS Growth for Continuing Operations
Having determined the appropriate adjusted EPS for incentive purposes, the principles of constant
currency adjustment were then applied to the calculation of achieved EPS Growth. Consistent with
the application of the principles in prior years other LTI adjustments as described below were made.
Earnings per share
Prior year reported – continuing operations
Prior year EPS at Constant Currency (CC)
Current year EPS
Prior year EPS at CC plus Prior year LTI adjustments
Current year EPS plus Current year LTI adjustments
Achieved EPS Growth for LTI measurement
LTI adjustments
Restructuring FY15 – Note 1
Restructuring FY18 – Note 2
Other – Note 3
Deduct net FX Gain/(loss) reported in EPS – Note 4
Exclude portfolio review costs – Note 5
EPS impact total adjustments
81.0¢
88.5¢ a)
109.7¢ b)
86.2¢ e=(a+c)
113.7¢ f=(b+d)
27.5 = (f-e)
FY17
FY18
(3.0)
–
(1.6)
0.7
1.6
(2.3) c)
(2.9)
3.5
–
3.3
–
3.9 d)
Notes on LTI adjustments
1. Represents amortising the FY15 restructuring cost that was excluded from the year incurred then deducted from LTI
achievement over the next years beginning FY16.
2. Excludes the post-tax cost in FY18 of the manufacturing and Global Supply Chain Transformation Program announced in
July 2017. These costs will be amortised for LTI purposes over the next three years beginning in FY18.
3. Other includes in FY18 the final year of the agreed amortisation of the post-tax cost of the cash related elements of the FY14
restructuring program. With these costs fully amortised by end of FY17, there is no impact on FY18.
4. Consistent with the policy to measure performance for incentive plans on a constant currency basis, P&L gains or losses
arising from FX movements are also excluded from reported EPS.
5. Excludes the costs of the FY17 portfolio review to be consistent with exclusion of the gain on sale on divestment of the Sexual
Wellness business as disclosed in the FY18 remuneration report.
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Remuneration Report (audited) continued
LTI Outcomes for KMP
The outcome for each executive is shown in the table below:
Maximum
Value
of PSRs
Granted (US$)
Maximum
Cash
Opportunity
(US$)
Date
Award
Granted
Cash
Award
vested
(US$)
Number
of PSRs
vested
(Shares)
Amount
of Cash
Forfeited
(US$)
Number
of PSRs
Forfeited
(Shares)
Name
Executive Director
Magnus R Nicolin
Other Executives
Neil Salmon
Steve Genzer
Joe Kubicek
Tony Lopez
Jeyan Heper
13/8/2015
–
3,005,652
–
88,719
–
120,525
13/8/2015
13/8/2015
13/8/2015
13/8/2015
13/8/2015
462,000
406,600
340,000
371,000
268,425
524,758 195,888
307,885 172,398
257,466 144,160
280,938 106,967
79,213
188,230
15,490
9,088
7,600
5,639
3,867
266,112
234,202
195,840
264,033
189,212
21,042
12,346
10,324
13,919
9,237
LTI Design
FY19 – There will not be any change in FY19. We anticipate several changes in FY20 and will be
communicating more details during the second half of the 2019 fiscal year.
LTI – awards granted
during the year
Annual awards granted which will vest after three years subject to the achievement of the performance
conditions and continued service.
LTI awards are entirely in the form of Performance Share Rights (‘PSRs’).
Executives are eligible to participate in the LTI plan.
How awards will vest:
Base
Salary
x
Maximum
award
(% of salary)
÷
Share price
at grant
=
Number
of Awards
Granted
How awards will vest:
Number
of Awards
Granted
x
Business
Performance
x
Share price
on vesting
=
Value of
awards on
vesting
Opportunity
For FY18 the LTI awards were as follows:
Executive
CEO
CFO
Other Executives
Minimum LTI (% of base salary) Maximum LTI (% of base salary)
0%
0%
0%
360%
300%
200%
Performance measures
Performance measures for FY18 awards
Performance measure and weighting
Weighting
Minimum Hurdle
(0% vesting)
Maximum Hurdle
(100% vesting)
EPS Growth
(also subject to ROCE gateway in year 3)
33.3% 12.5% growth by year 3
(4% Compound Annual
Growth Rate – CAGR)
33.1% growth by year 3
(10% CAGR)
Organic Revenue Growth
33.3%
6.1% growth by year 3
(2% Compound Annual
Growth Rate – CAGR)
15.8% growth by year 3
(5% CAGR)
ROCE
33.4%
14% in year 3
15.5% in year 3
The LTI metrics reflect the business strategy of maximising sustainable growth organically and through
acquisitions aligned with leadership as a safety company. Growth will be measured against FY17
continuing operations at constant currency.
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Other policy issues
Board discretion
(a) HRC policy covers individual material items including restructuring charges, acquisitions,
Change of control
divestments, equity capital issuance and repurchase. Discretion may be exercised when events
or accounting rules create a favourable or unfavourable effect on earnings for a single year that
may cause a misalignment between incentive outcomes and shareholder value creation.
(b) As described on pages 50 and 51, the Board exercised its discretion to exclude a number of items
from statutory reported results for the purpose of determining incentive outcomes, the overall effect
of which was to substantially reduce incentive payments.
On a change of control, the Board has discretion to vest some or all of the LTI awards but, unless it uses
its discretion, awards will vest as if the applicable performance condition has met the mid-point level
of performance (and without time pro-rating). In exercising this discretion, the Board will consider all
relevant circumstances, including performance against the various measures and conditions for the part
period up to the change of control event and the portion of the performance period which has expired.
Any restricted shares under the STI will be converted to ordinary shares, unless the Board determines
otherwise.
Recovery and withholding
The recovering and withholding provisions are consistent across both STI and LTI. The Board can
clawback incentives to cover the following events:
a. Material misstatement of the financial statements
b. Misconduct
c. Error in calculation of the performance condition
d. Serious reputational damage to the Group
Leaver treatment
(a) If an Executive ceases his or her employment with Ansell at any time prior to the end of the
performance period, the Executive shall not be entitled to any STI payment. However, the HRC
may, in its sole discretion, pay a pro-rated award in certain circumstances, such as death,
disablement, retirement, or other approved situations.
(b) If an Executive ceases his or her employment with Ansell at any time prior to the end of the vesting
period, the Executive shall not be entitled to any LTI award. However, the Board may, in its sole
discretion, pay a pro-rated award in certain circumstances, such as death, disability, retirement or
any other reason approved by the Board.
Section 5 – Statutory Information
Executive Service Agreements
Chief Executive Officer
Magnus Nicolin was recruited as a US based executive and his contract reflects this. He has subsequently relocated to Belgium and there
has been no substantial change to the terms and conditions of his contract. He is engaged by the Group under an agreement which:
• does not specify a fixed term of engagement;
• provides that the Group may terminate the CEO’s engagement upon giving 12 months’ notice or payment in lieu and may terminate
immediately in the case of willful misconduct;
• provides that in certain circumstances, such as a material diminution of responsibility or the CEO ceasing to be the most Senior
Executive of Ansell, the CEO may be entitled to a payment equivalent to 12 months’ base salary;
• requires the CEO to give the Group at least six months’ notice of termination of services; and
• in order to protect the Group’s business interests, prohibits the CEO from engaging in any activity that would compete with the
Group for a period of 12 months following termination of his engagement for any reason.
The agreement entered into with the CEO has been drafted to comply with the Corporations Act regarding the payment of benefits.
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Remuneration Report (audited) continued
Other Executives
Neil Salmon was recruited as a US based executive and his contract reflects this. He has subsequently relocated to Belgium and there
has been no substantial change to the terms and conditions of his contract. His services are engaged by the Group for an unlimited
duration. He is entitled to a separation fee upon termination by the Group (other than for gross misconduct) equal to 12 months’ base
salary plus certain other contractual entitlements. He is required to give the Group six months’ prior notice of termination of services.
Steve Genzer is based in the United States and is employed ‘at will’ and as such, his service agreement does not specify a fixed term
of employment. He is entitled to a severance fee equal to 12 month’s base salary assuming a termination for any reason other than
resignation, performance issues or cause.
J Kubicek was employed under agreements entered into at the time of Ansell’s acquisition of the BarrierSafe Solutions International
business in January 2014. These employment agreements had a fixed two-year term through 2 January 2016. As this period has now
passed, employment continues on an ‘at-will’ basis. He is entitled to a severance fee equal to 12 month’s base salary assuming a
termination for any reason other than resignation, performance issues or cause.
Steve Genzer and Joe Kubicek are both based in the United States and there have been no substantial changes to their terms
and conditions of employment.
Anthony Lopez, who was based in the United States, was employed ‘at will’ and as such, his service agreement did not specify a fixed
term of employment. The agreement specified Anthony Lopez was entitled to a severance fee equal to 12 month’s base salary assuming
a termination for any reason other than resignation, performance issues or cause. Anthony Lopez’s contract has now ended and he has
left the Company.
Jeyan Heper was based in Belgium and was employed for an unlimited duration. The agreement specified 10 week severance benefits
upon termination in accordance with applicable Belgian laws and regulations, and a 5 week notice period applied if he wished to resign.
Jeyan Heper’s contract has now ended and he has left the Company.
Share Trading Policy
Ansell’s Share Trading Policy outlines the law relating to insider trading and details the Company’s requirements with regards to dealings
in Ansell securities. The policy applies to all directors and employees, and aims to prevent the misuse (or perceived misuse) of sensitive
information and ensure compliance with insider trading laws. The Policy can be found on the Ansell website at www.ansell.com.
Shareholder Alignment
Mandatory Shareholding Requirements
To encourage alignment with shareholder interests, the Company adopted mandatory shareholding requirements, known as the
Share Purchasing Policy. This policy requires Directors and Executives to purchase a multiple of their fee/base salary in Ansell shares
over a 10-year period. The current requirement is:
• CEO: 3 x base salary
• Executives: 1x base salary
• Non-Executive Directors: 2 x annual Director fees,
to be achieved by 2023 or within 10 years of becoming a Director or Executive if appointed after 2013.
Vested but unexercised awards are included in the target assessment. Unvested equity rights held pursuant to the incentive plans
are not included in the target assessment.
Voluntary Share Purchase Plan
Ansell has developed a mechanism to enable Directors and Executives to regularly purchase Ansell shares, known as the Voluntary
Share Purchase Plan (VSPP). While optional, the VSPP facilitates compliance with the Share Purchasing Policy, while complying with
the Share Trading Policy and ASX Listing Rules.
Under the VSPP, a pre-agreed amount of Ansell shares (by value) are acquired monthly on the ASX through a trustee company at
the prevailing market price and are transferred into the name of the applicable Executive/Director, but are subject to a restriction
on dealing until the Executive/Director ceases to hold office.
Shares were purchased on market (at no discount) on behalf of the Directors throughout FY18 pursuant to the VSPP (as shown in the
Current Shareholding table on page 55).
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The table below details the movement of shares held by each KMP and the progress of each KMP during FY18 in achieving their
respective share ownership goals in accordance with the mandatory shareholder requirements set out in the Share Purchasing Policy
detailed on page 54.
Held at
Granted
Under
1 July Purchases6 Purchases Awards
Other
VSPP
Non-Executive Directors
G L L Barnes
FY18
FY17
R J Bell
FY18
FY17
J A Bevan
FY18
FY17
L Dale Crandall1
FY18
FY17
W P Day
FY18
FY17
L Desjardins
FY18
FY17
M T Peterson
FY18
FY17
W G Reilly 2
FY18
FY17
C M Stercken 3
FY18
FY17
Executive Director
M R Nicolin
FY18
FY17
Other Executives
N Salmon
FY18
FY17
S Genzer
FY18
FY17
J Heper4
FY18
FY17
J Kubicek
FY18
FY17
A Lopez 5
FY18
FY17
63,478
61,748
18,740
15,429
18,728
17,402
22,077
20,680
28,838
27,540
4,230
1,961
23,647
20,133
39,464
n/a
0
n/a
251,783
229,030
35,689
30,130
20,185
15,648
1,500
-
70,546
66,981
16,513
12,373
2,138
1,730
1,107
3,311
559
1,326
141
1,397
869
1,298
2,481
2,269
0
3,514
0
n/a
860
n/a
0
0
0
0
0
0
0
0
0
0
0
0
2,500
0
0
0
6,730
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
738
n/a
n/a
n/a
0
0
0
0
0
0
14,456
22,753
3,867
5,559
734
4,537
0
1,500
410
0
0
0
0
0
282
3,565
146
4,140
Net Movement
Due to Other Held at
Changes 30 June
% of Share
Ownership
Goal Met7
Target
Year to
Comply
Target Year
Projected to
Comply
0
0
0
0
0
0
0
0
0
0
0
0
0
0
68,116
63,478
19,847
18,740
26,017
18,728
22,218
22,077
29,707
28,838
6,711
4,230
23,647
23,647
0
n/a
40,202
n/a
0
n/a
860
n/a
192%
162%
108%
99%
140%
98%
n/a
113%
162%
142%
41%
23%
129%
119%
264%
n/a
5%
n/a
2023
2023
2023
2023
2023
2023
n/a
2023
2023
2023
2025
2025
2023
2023
2027
n/a
2027
n/a
COMPLY
COMPLY
COMPLY
2018
COMPLY
2018
n/a
COMPLY
COMPLY
COMPLY
2023
2023
COMPLY
COMPLY
COMPLY
n/a
2028
n/a
0 266,239
0 251,783
157%
135%
2023
2023
COMPLY
COMPLY
0
0
0
0
0
0
0
0
0
0
39,556
35,689
20,919
20,185
1,910
1,500
70,828
70,546
16,659
16,513
124%
123%
92%
83%
n/a
9%
311%
308%
n/a
75%
2023
2023
2023
2023
n/a
2024
2024
2024
n/a
2023
COMPLY
COMPLY
2019
2018
n/a
2028
COMPLY
COMPLY
n/a
2019
1. Dale Crandall retired from the Ansell Board of Directors, effective 20 October 2017. Mr Crandall’s closing balance disclosed is at his retirement date of 20 October 2017.
2. William Reilly was appointed as a Non-Executive Director on 20 October 2017. The shares awarded in FY18 relate to the FY17 STIP award in respect to his prior
employment as an executive of Ansell.
3. Christina Stercken was appointed as a Non-Executive Director on 20 October 2017.
4. Jeyan Heper left the Company on 31 August 2017.
5. Anthony Lopez ceased to be a KMP on 15 July 2017.
6. Purchases made under the Voluntary Share Purchase Plan (see page 54).
7. The percentage of ownership goals met are based upon a multiple of an individual’s base pay or directors fees (as applicable).
55
Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Equity Instruments
The table below details the movement in the number of Performance Share Rights (PSRs) over ordinary shares of Ansell Limited by the
CEO and Other Executive KMPs during the 2018 financial year.
Performance Share Rights
Held at 1 July or
Date Appointed
PSRs Granted
during the Year1
PSRs Vested
During the Year4
PSRs Lapsed/Forfeited
During the Year5
Held at
30 June
Magnus Nicolin
FY18
FY17
Neil Salmon
FY18
FY17
Steve Genzer
FY18
FY17
Joe Kubicek
FY18
FY17
Jeyan Heper2
FY18
FY17
Anthony Lopez3
FY18
FY17
732,064
435,230
195,308
76,400
108,538
44,388
98,942
38,462
76,508
31,528
99,234
40,700
233,602
296,834
93,206
118,908
50,484
64,150
47,596
60,480
0
44,980
0
58,534
–
–
–
–
–
–
–
–
–
–
–
–
(225,986)
–
(39,868)
–
(22,954)
–
(20,538)
–
(18,424)
–
(21,142)
–
739,680
732,064
248,646
195,308
136,068
108,538
126,000
98,942
58,084
76,508
78,092
99,234
1. PSRs were granted during FY18 pursuant to the FY18 LTI Plan. The Fair Values and factors and assumptions used in determining the fair values of the PSRs
applicable for FY18 are summarised in the table immediately below. For completeness FY17 and FY16 fair values are also included.
2. Jeyan Heper left the Company on 31 August 2017.
3. Anthony Lopez ceased to be a KMP on 15 July 2017.
4. The FY15 LTIP did not meet the threshold grant targets, resulting in no PSRs vesting in FY18. This table does not represent FY16 LTIP vesting occurring in August 2018.
5. The FY15 LTIP did not meet the threshold grant targets, resulting in the lapse of associated PSRs in FY18.
Grant Date
Vesting Date
Fair Value
Share Price
on Grant Date
Risk Free
Interest Rate
Dividend
Yield
FY16 LTIp PSRs
FY17 LTIp PSRs
FY18 LTIp PSRs
13/8/15
11/8/16
8/8/17
30/6/18
30/6/19
30/6/20
A$18.53
A$17.95
A$20.41
A$20.20
A$19.49
A$22.01
n/a
n/a
n/a
3.00%
2.90%
2.60%
Awards that do not vest at Vesting Date automatically lapse.
56
Ansell Limited Annual Report 2018 Executive Statutory Remuneration
Year
Base
Salary1
Retirement
Benefits4
Other3
Cash
Restricted
Shares
Cash
Equity
2018
Total
Earnings
STI2
LTI5
US$ Name
Executive Director
Magnus R Nicolin
2018 1,066,000
508,088
155,065
910,830
–
– 2,565,744 5,205,727
2017 1,059,500
312,171
152,627
1,199,251
400,749
–
669,705
3,794,002
Other Executives
Neil Salmon
Steve Genzer
Joe Kubicek
Anthony Lopez6
Jeyan Heper7
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
585,450
54,460
29,609
346,114
–
195,888
738,824 1,950,345
497,277
48,597
149,191
373,188
111,210
–
268,275
1,447,739
424,064
414,732
426,842
48,383
44,115
42,501
–
157,296
–
172,398
409,620 1,211,761
2,000
207,366
13,064
–
144,733
826,010
–
152,782
–
144,160
372,277 1,138,562
391,000
37,645
21,113
195,500
8,407
–
136,450
790,114
15,259
2,045
114
–
–
106,967
127,633
252,018
378,420
42,712
765,712
189,210
4,352
–
132,060
1,512,466
46,954
5,192
12,925
–
–
79,213
55,548
199,832
293,222
28,444
52,256
148,467
15,292
–
101,482
639,162
1. Base Salary includes the salary earned by the individual in FY18. The increases in Base salary for Executives are based on external benchmarking of similar
positions in the jurisdictions in which the Executives are based. As a result, the CEO did not receive any pay increase in FY18, whilst the Other Executives’ pay
increases ranged from 3% to 10%.
2. 2018 STI represents amounts payable under the 2018 Short Term Incentive Plan.
3. Other includes the cost to the Company of cash benefits such as motor vehicle, executive expatriation and relocation expenses, executive insurance and other amounts.
4. Retirement Benefits includes all the retirement benefits earned by the individual in FY18. Mr Nicolin’s Retirement Benefits are based on his base salary plus prior
year STI achievement and will vary from year to year.
5. 2018 LTI includes amounts provided in respect of the Group’s LTI Plans.
6. Ceased to be a KMP on 15 July 2017.
7. Left the Company on 31 August 2017.
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57
Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Section 6 – Non-Executive Directors
Policy and approach
Overview of policy
(a) Structured with a fixed fee component only.
(b) Fees are not linked to the performance of Ansell so that independence and impartiality is
maintained.
(c) Director fees are paid in US dollars, however Directors may elect to be paid in their local currencies
(subject to applicable currency exchange rates).
(d) Board and Committee fees are set by reference to a number of relevant considerations including:
• Accountabilities and responsibilities attaching to the role of Director;
• Time commitment expected of Directors;
• Fees paid by peer companies;
• Independent advice received from external advisors;
• The global nature of our businesses (to ensure that the Directors’ fee attracts and retains the best
international Directors); and
• The requirement to travel internationally to familiarise oneself with international operations and
for required meetings.
Aggregate fees approved
by shareholders
Current aggregate fee pool for Non-Executive Directors of US$1,600,000. Approved by shareholders at the
2014 AGM. The fee pool in US$ reflects the fact that business operations are run from outside Australia.
Base fees for 2018
Fees for Non-Executive Directors during FY18 were as follows:
Base fees (Board)
Non-Executive Chairman
US$320,000
Non-Executive Deputy Chairman US$160,000
Non-Executive Director
US$116,500
Committee fees
Committee chair
Committee member
Audit & Compliance Committee
US$30,000
HR Committee
Risk Committee
US$30,000
US$30,000
US$12,000
US$12,000
US$12,000
Directors are permitted to be paid additional fees for special duties, including fees paid for serving
on ad hoc projects or transaction-focused committees.
Directors are entitled to be reimbursed for all business-related expenses, including travel expense
incurred performing their duties.
A travel allowance of US$15,000 per annum is paid to each Non-Executive Director, which is in addition
to the above fees.
Superannuation contributions are made on behalf of the Non-Executive Directors at a rate of 9.5%
as required by Australian law. For non-Australian based Directors, these payments are pro-rated for
the period of time spent in Australia. The Directors fees above are inclusive of any Superannuation
payments payable by law.
FY19 – No fee change for FY19.
58
Ansell Limited Annual Report 2018
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Non-Executive Directors’ statutory remuneration
Details of Non-Executive Directors’ remuneration are set out in the following table:
Non-Executive Directors
G L L Barnes (Chairman)
J A Bevan (Deputy Chairman)3
R J S Bell
L D Crandall4
W P Day
L Desjardins
M T Peterson
W G Reilly 5,6,7
C M Stercken 8,9
Total Non-Executive Directors’ Remuneration
Year
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
FY18
FY17
Directors Fees1
$
Superannuation2
$
335,000
335,000
159,817
148,664
170,983
160,401
55,122
165,326
158,448
158,138
153,722
153,401
171,369
167,353
105,973
n/a
115,046
n/a
1,425,480
1,288,283
–
–
15,183
14,441
2,517
2,119
887
2,174
15,052
15,362
1,778
2,099
2,131
2,487
1,652
n/a
1,579
n/a
40,779
38,682
Total
$
335,000
335,000
175,000
163,105
173,500
162,520
56,009
167,500
173,500
173,500
155,500
155,500
173,500
169,840
107,625
n/a
116,625
n/a
1,466,259
1,326,965
1. Directors Fees include base and committee fees plus travel allowances less superannuation (see footnote (2) below). All fees are expressed in US$. Due to
changes to Committee Fees mid-way through FY17, the fees differ between FY17 and FY18. The methodology of converting the fees into the base currency
of the Directors has not changed.
2. Superannuation contributions are made on behalf of the Non-Executive Directors at a rate of 9.5% as required by Australian law. For non-Australian based
Directors, these payments are pro-rated for the period of time spent in Australia.
3. Following his appointment as Deputy Chairman on 10 February 2017, the Board resolved to pay Mr Bevan a fee equivalent to half the Chairman’s fee. This fee,
plus travel allowances, represents the entire Board and committee fees earned by Mr Bevan.
4. Mr Crandall retired from the Board on 20 October 2017 and his Directors fees and associated entitlements reflects a part year entitlement up to his retirement
date in FY18.
5. Mr Reilly was appointed on 20 October 2017 and his Directors fees and associated entitlements reflects a part year entitlement in FY18 from his appointment.
6. Prior to Mr Reilly’s appointment as a non-executive director, Mr Reilly was paid US$10,958 in consideration of various preparatory work in relation to his role
as a director (including attendance at various meetings with directors and management) before his commencement as a director. This payment was made in
October 2017.
7. As a recently retired executive, Mr Reilly held 42,819 Performance Share Rights (PSRs) as at 30 June 2018. These PSRs were granted under the FY16 and FY17 LTI
plans while Mr Reilly was an executive and employee of the Company, and prior to his appointment as a non-executive director. As a result of the FY16 LTI vesting
in August 2018, Mr Reilly will receive an award valued at US$378,937, made up of both equity and cash.
8. Mrs Stercken was appointed on 20 October 2017 and her Directors fees and associated entitlements reflects a part year entitlement in FY18 from
her appointment.
9. Prior to Mrs Stercken’s appointment as a non-executive director, Mrs Stercken was paid two payments of US$10,958 each in consideration of various preparatory
work in relation to her role as a director (including attendance at various meetings with directors and management) before her commencement as a director.
These payments were made in September and October 2017.
The composition of the committees is summarised in the Directors Report.
59
Ansell Limited Annual Report 2018
Remuneration Report (audited) continued
Section 7 – Group Performance and Remuneration Outcomes
Group performance
The five-year performance history of the Group is summarised below.
Income Statement
Sales
EBIT
Profit for the period attributable to Ansell shareholders
Total Group Statutory Results
20141
US$m
2015
US$m
2016
US$m
2017
US$m4
Continuing Operations
2018
Adjusted4
US$m
2017
2018
Continuing
US$m Operations
1,590.2
1,645.1
1,572.8
1,599.7
1,547.5
1,374.5
1,489.8
206.5
156.9
245.3
187.5
236.7
159.1
217.8
147.7
557.0
484.3
177.8
119.5
193.1
146.7
Share information
Basic earnings per share ($US cents)
110.0
122.5
105.1
100.1
336.8
Dividends per share2 ($US cents)
Ansell Share Price (A$)
Ratios
39.0
43.0
43.5
44.0
45.5
19.83
24.09
18.17
22.68
27.195
81.0
44.0
102.0
45.5
Return on average shareholders’ equity (%)
15.7
16.4
14.1
12.7
35.0
12.4
Table 4.1(b) – Cumulative Total Shareholder Return (TSR)3
Cumulative TSR – A$
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
160%
140%
120%
100%
80%
60%
40%
20%
0%
June 12
June 13
June 14
June 15
June 16
June 17
June 18
STI/LTI payouts as percentage of maximum
CEO incentive outcomes
STI (% of Maximum)
LTI grant (% of Maximum)
FY13
32%
100%
FY14
49%
82%
FY15
36%
50%
FY16
29%
0%
FY17
67%
0%
FY18
37%
42%
1. During FY14, the Group acquired BSSI and restructured its business, which involved significant non-cash write-downs as well as cash expenses totalling
$122m. The above results exclude this charge.
2. Dividends have been declared in US$ since Ansell adopted the US$ as reporting currency in FY14.
3. Cumulative Total Shareholder Return (TSR) is the cumulative financial return which an investor received from holding shares in Ansell, assuming dividends
paid are reinvested in Ansell shares. It is expressed as a cumulative percentage change from a starting value at 1 July 2012 and finishing on 30 June 2018.
4. 2018 Adjusted results are Continuing Operations adjusted for Transformation and other one-off costs.
5. Share Price is at 29 June 2018.
60
Ansell Limited Annual Report 2018
Section 8 – Governance
Role of the Human Resources Committee
Board
The Board is responsible for:
• defining Ansell’s remuneration strategy; and
• determining the structure and quantum of remuneration for the CEO and Other
Executives that support and drive the achievement of Ansell’s strategic objectives.
The Board has an overarching discretion with respect to the awards given under
Ansell’s incentive plans.
>
HRC
The HRC is delegated responsibility by the Board to review and make
recommendations on the remuneration policy, strategy and structure
for Ansell’s Board members, the CEO and Other Executives.
The HRC has in place a process of engaging and seeking independent advice from
external remuneration advisors and ensures remuneration recommendations in
relation to Other Executives are free from undue influence by management.
>
Management
Provides information relevant to remuneration decisions and makes
recommendations to the HRC.
Obtains remuneration information from external advisors to assist the
HRC (i.e. market data, legal advice, accounting advice, tax advice).
>
Consultation with shareholders
and other stakeholders
>
Remuneration consultants and
other external advisors
• Provide independent advice,
information and recommendations
relevant to remuneration decisions.
• In performing its duties and making
recommendations to the Board,
the Chairman of the HRC seeks
independent advice from external
advisors on various remuneration
related matters.
• Any advice or recommendations
provided by external advisers are
used to assist the Board – they do
not substitute for the Board and
HRC process.
Remuneration consultants and
other external advisors
• Management may seek its own
independent advice with respect to
information and recommendations
relevant to remuneration decisions.
>
>
External consultants
During the year, the HRC engaged KPMG-3dc to provide independent advice on the overall pay policy, advice on the drafting of the
Remuneration report and ad hoc advice on market practice and regulatory trends. During FY18 the HRC also engaged PwC to review
variable pay strategy. More will be forthcoming on this topic during FY19.
Shareholder engagement
The HRC maintains a regular dialogue with major shareholders and relevant institutional investor bodies. The views and opinions
expressed are considered when determining remuneration. The HRC monitors trends and developments in corporate governance
and market practice to ensure the structure of executive remuneration remains appropriate. The HRC would undertake a consultation
process in advance of any material changes to the remuneration policy.
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Ansell Limited Annual Report 2018
Remuneration Report continued
Section 9 – Glossary
Board means the Board of Directors of Ansell Limited.
Capex is an abbreviation for Capital Expenditure and means the payments for property, plant, equipment (PP&E) and intangibles less
the proceeds from sale of PP&E.
Constant Currency refer to page 4 of this Report.
CAGR means Compound Average Growth Rate which as used in this document measures the average year-over-year growth rate
of a financial metric over the specified time period.
Corporations Act means the Corporations Act 2001 (Cth).
EBIT means all profits of Ansell before taking into account interest payments and income taxes.
EBITDA means EBIT before Depreciation and Amortisation.
EMEA means Europe, Middle East and Africa.
EPS means Earnings Per Share which means the portion of Ansell’s profit which is allocated to each outstanding ordinary fully-paid share.
Executive or Group Executive in this report refers to the CEO and Other Executives.
FY16 means the 2016 financial year commencing on 1 July 2015 and ending on 30 June 2016.
FY17 means the 2017 financial year commencing on 1 July 2016 and ending on 30 June 2017.
FY18 means the 2018 financial year commencing on 1 July 2017 and ending on 30 June 2018.
FY19 means the 2019 financial year commencing on 1 July 2018 and ending on 30 June 2019.
HRC means the Human Resources Committee of the Board.
KMP means the Key Management Personnel of Ansell, which comprises all Directors (executive and non-executive) and those executives
who have authority and responsibility for planning, directing and controlling the activities of the Group.
Long Term Incentive (LTI) means the Ansell Long Term Incentive Plan which is subject to the rules of the Ansell Long Term Incentive
Plan as periodically approved by the Board.
62
Ansell Limited Annual Report 2018 Operating Cash Flow as referred to in the Remuneration Report, means net receipts from customers per the Consolidated Statement
of Cash Flows adjusted for Capex (see above), and interest received and paid (net interest).
Other Executives means the group of people who are KMP but are not Non-executive Directors or the CEO.
Organic Growth means the change in total revenue achieved by normal business activities such as customer base expansion or new
product development. It excludes the effects of corporate developments such as mergers, acquisitions, divestments and exiting lines
of business.
PSRs means Performance Share Rights.
Profit Attributable means those profits of the Company which are available to the shareholders for distribution.
Realised Pay means the pay actually received/receivable by the executive during the financial year, including salary, benefits, STI in
relation to the relevant financial year and any equity incentives which vested in relation to the completion of the relevant financial year.
Equity incentives were valued using the values of the shares determined as at the vesting date.
ROCE means Return on Capital Employed which is the amount of EBIT returned as a percentage of the average funds that are employed
(both equity and debt used in the business).
ROE Gateway means the return on equity required for the successful achievement of the relevant award.
Short Term Incentive Plan (STI) or (STIP) means the Ansell Short Term Incentive Plan which is subject to the rules of the Ansell Short
Term Incentive Plan as periodically approved by the Board.
TSR means Total Shareholder Return which means the total financial return which an investor receives from holding shares
in Ansell, assuming dividends paid are reinvested in Ansell shares.
TSR (A$) means Total Shareholder Return calculated in Australian dollars.
Working Capital is the balance as defined in Note 7 to the Financial Statements.
WACC means the Weighted Average Cost of Capital which is a calculation of the average cost to Ansell of the debt and equity
capital employed in the business.
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Ansell Limited Annual Report 2018
Consolidated Income Statement
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Note
2018
US$m
2017
US$m
Continuing operations
Revenue
Sales revenue
Expenses
Cost of goods sold
Distribution
Selling, general and administration including restructuring and change in accounting estimate
3(b)
3
4(a)
18(b)
1,489.8
1,374.5
(907.1)
(65.0)
(359.9)
(833.3)
(60.7)
(302.7)
(1,332.0)
(1,196.7)
(12.5)
145.3
(4.7)
140.6
345.6
486.2
484.3
1.9
486.2
(22.7)
155.1
(33.9)
121.2
29.0
150.2
147.7
2.5
150.2
2018
US cents
2017
US cents
5
5
5
5
96.5
95.1
240.3
236.8
81.0
80.0
19.1
18.9
Total expenses, excluding financing costs
Net financing costs
Profit before income tax
Income tax expense
Profit from continuing operations
Discontinued operations
Profit from discontinued operations, net of tax
Profit for the period
Profit for the period is attributable to:
Ansell Limited shareholders
Non-controlling interests
Profit for the period
Earnings per share from continuing operations:
Basic Earnings Per Share
Diluted Earnings Per Share
Earnings per share from discontinued operations:
Basic Earnings Per Share
Diluted Earnings Per Share
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
64
Ansell Limited Annual Report 2018 R
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Consolidated Statement of Comprehensive Income
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Profit for the period
Other comprehensive income
Items that will not be reclassified to the Income Statement:
Retained earnings
2018
US$m
486.2
2017
US$m
150.2
Remeasurement of defined benefit superannuation/post retirement health benefit plans
Tax expense on items that will not be reclassified to the Income Statement
Total items that will not be reclassified to the Income Statement
3.7
(2.2)
1.5
2.9
(1.5)
1.4
Items that may subsequently be reclassified to the Income Statement:
Foreign currency translation reserve
Net exchange differences on translation of financial statements of foreign subsidiaries
(26.4)
5.0
Hedging reserve
Movement in effective cash flow hedges for the year
Movement in time value of options for the year
Tax expense on items that may subsequently be reclassified to the Income Statement
Total items that may subsequently be reclassified to the Income Statement
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Attributable to:
Ansell Limited shareholders
Non-controlling interests
Total comprehensive income for the period
Attributable to Ansell Limited shareholders:
From continuing operations
From discontinued operations
Total comprehensive income for the period, attributable to Ansell Limited shareholders
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
9.3
1.4
(2.8)
(18.5)
(17.0)
469.2
466.8
2.4
469.2
116.3
350.5
466.8
1.8
(1.4)
(0.3)
5.1
6.5
156.7
154.1
2.6
156.7
124.6
29.5
154.1
65
Ansell Limited Annual Report 2018
Consolidated Balance Sheet
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Inventories
Other current assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Derivative financial instruments
Property, plant and equipment
Intangible assets
Deferred tax assets
Retirement benefit assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Interest bearing liabilities
Provisions
Current tax liabilities
Liabilities held for sale
Total current liabilities
Non-current liabilities
Trade and other payables
Derivative financial instruments
Interest bearing liabilities
Provisions
Retirement benefit obligations
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity attributable to Ansell Limited shareholders
Non-controlling interests
Total equity
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
66
Note
6(a)
7(a)
15(c)
7(b)
18(c)
15(c)
8
9
4(b)
12(a)
7(c)
15(d)
10
11
18(c)
15(d)
10
11
12(a)
4(c)
2018
US$m
582.8
201.0
9.8
329.8
17.6
12.3
2017
US$m
316.6
189.9
4.6
331.9
16.8
200.9
1,153.3
1,060.7
5.7
3.3
230.4
1,028.4
67.6
5.9
27.9
1,369.2
2,522.5
2.7
4.0
217.9
1,049.8
88.5
-
26.9
1,389.8
2,450.5
222.2
222.5
3.0
–
53.0
14.9
6.4
7.9
3.8
56.7
29.0
42.8
299.5
362.7
3.1
0.5
1.3
0.8
552.0
716.7
7.8
14.3
71.1
24.0
672.8
972.3
1,550.2
8.2
19.0
89.9
23.2
859.1
1,221.8
1,228.7
13(a)
1,052.6
1,142.2
(82.0)
564.0
(78.2)
146.9
1,534.6
1,210.9
15.6
17.8
1,550.2
1,228.7
Ansell Limited Annual Report 2018
Consolidated Statement of Changes in Equity
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Total equity
Balance at the beginning of the financial year
Total comprehensive income for the period attributable to:
Ansell Limited shareholders
Non-controlling interests
Transactions with owners attributable to Ansell Limited shareholders:
Shares issued under Dividend Reinvestment Plan
Share buy-back
Share-based payments reserve
Dividends
Transactions with owners attributable to non-controlling interests:
Non-controlling interests of entities disposed
Dividends
Total equity at the end of the financial year
Share capital
Balance at the beginning of the financial year
Transactions with owners as owners:
Shares issued under Dividend Reinvestment Plan
Share buy-back
Balance at the end of the financial year
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
2018
US$m
2017
US$m
1,228.7
1,136.7
466.8
2.4
154.1
2.6
2.7
(92.3)
10.4
(63.8)
(3.0)
(1.7)
4.0
(8.7)
4.7
(64.3)
–
(0.4)
1,550.2
1,228.7
1,142.2
1,146.9
2.7
(92.3)
4.0
(8.7)
1,052.6
1,142.2
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Ansell Limited Annual Report 2018
Consolidated Statement of Changes in Equity continued
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Reserves
Share-based payments reserve
Balance at the beginning of the financial year
Transactions with owners as owners:
Charge to the Income Statement
Balance at the end of the financial year
Hedging reserve
Balance at the beginning of the financial year
Comprehensive income for the period:
Movement in effective cash flow hedges net of tax
Movement in time value of options net of tax
Balance at the end of the financial year
General reserve
Balance at the beginning of the financial year
Transfer from retained profits
Balance at the end of the financial year
Foreign currency translation reserve
Balance at the beginning of the financial year
Comprehensive income for the period:
Net exchange differences on translation of financial statements of foreign subsidiaries
Balance at the end of the financial year
Transactions with non-controlling interests
Balance at the beginning of the financial year
Balance at the end of the financial year
Fair value reserve
Balance at the beginning of the financial year
Balance at the end of the financial year
2018
US$m
2017
US$m
47.7
43.0
10.4
58.1
4.7
47.7
(2.1)
6.9
1.0
5.8
12.0
4.9
16.9
(2.2)
1.1
(1.0)
(2.1)
11.7
0.3
12.0
(127.5)
(132.5)
(27.0)
(154.5)
5.0
(127.5)
(10.9)
(10.9)
2.6
2.6
(10.9)
(10.9)
2.6
2.6
Total reserves at the end of the financial year
(82.0)
(78.2)
Retained profits
Balance at the beginning of the financial year
Transfer to reserves
Comprehensive income for the period:
Net profit attributable to Ansell Limited shareholders
Remeasurement of defined benefit superannuation/post retirement health benefit plans net of tax
Dividends paid
Balance at the end of the financial year
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
146.9
(4.9)
484.3
1.5
(63.8)
564.0
62.4
(0.3)
147.7
1.4
(64.3)
146.9
68
Ansell Limited Annual Report 2018 Consolidated Statement of Cash Flows
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
Cash flows related to operating activities
Receipts from customers
Payments to suppliers and employees
Net receipts from operations
Income taxes paid
Net cash provided by operating activities
Cash flows related to investing activities
Payments for businesses, net of cash acquired
Payments for property, plant, equipment and intangible assets
Proceeds/(payments) from the disposal of discontinued operations, net of cash disposed
and disposal costs
Income tax paid on the net gain on the disposal of discontinued operations
Proceeds from the sale of property, plant and equipment
Net cash provided by/(used in) investing activities
Cash flows related to financing activities
Proceeds from borrowings
Repayments of borrowings
Net proceeds from/(repayments of) borrowings
Payments for share buyback
Dividends paid – Ansell Limited shareholders
Dividends paid – Non-controlling interests
Interest received
Interest and financing costs paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of movements in exchange rates on cash held
Cash and cash equivalents at the end of the financial year
Cash and cash equivalents at the end of the financial year comprises:
Continuing operations
Discontinued operations
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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Note
2018
US$m
2017
US$m
1,544.4
(1,355.2)
189.2
(35.6)
153.6
1,607.6
(1,355.6)
252.0
(35.8)
216.2
6(b)
(1.0)
(45.7)
567.2
(44.0)
0.3
476.8
–
(170.9)
(170.9)
(92.3)
(61.1)
(1.7)
7.6
(22.2)
(340.6)
289.8
316.6
(16.6)
589.8
582.8
7.0
589.8
3(a)
6(a)
6(a)
18(c)
(56.1)
(51.0)
(2.9)
–
2.1
(107.9)
74.2
(49.9)
24.3
(8.7)
(60.3)
(0.4)
3.6
(24.9)
(66.4)
41.9
272.7
2.0
316.6
316.6
–
316.6
69
Ansell Limited Annual Report 2018
Notes to the Financial Statements
1. Summary of Significant Accounting Policies
General
Ansell Limited (‘the Company’) is a Company domiciled in Australia. The Company and its subsidiaries (together referred to as the
‘Group’) is a global leader in protection solutions. The Group is a for-profit entity and designs, develops and manufactures a wide
range of hand and arm protection solutions and clothing.
Following the sale of the Sexual Wellness business the Group was reorganised into two Global Business Units (‘GBUs’) as detailed
in Note 2.
• Healthcare GBU (previously Medical GBU and Single Use GBU); and
• Industrial GBU.
Statement of compliance
The Financial Report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards
adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Financial Report of the Group also
complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board.
The consolidated financial statements were authorised for issue by the Board of Directors on 20 August 2018.
Basis of accounting
The Financial Report is presented in United States dollars and on the historical cost basis except that assets and liabilities in respect
of derivative financial instruments and available-for-sale financial assets are stated at their fair value.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated
31 March 2016 and in accordance with the Instrument, amounts in the Financial Report and Directors’ Report have been rounded
off to the nearest hundred thousand dollars, unless otherwise stated.
A summary of the significant accounting policies of the Group are disclosed below. The accounting policies have been applied
consistently by all entities in the Group.
There has been no change to the Group’s accounting policies during the financial year.
New accounting standards issued but not yet applied
On 1 June 2013, the Group elected to early adopt a previous version of IFRS 9/AASB 9 Financial Instruments (2013). Subsequent to the
early adoption, IFRS 9/AASB 9 Financial Instruments (2014) was issued which includes a new expected credit loss model (‘ECL’) for
calculating impairment on financial assets.
The Group will adopt the practical expedient for low credit risk financial assets, which will allow impairment of trade receivable
balances to be measured on a 12 month ECL model. The Group currently utilises a provision matrix using the ageing profiles of trade
receivable balances and applies an expected default rate based on its historical observed default rate, adjusted for forward looking
estimates. In addition, historically, default rates have been low, therefore management does not expect trade receivable balances
to be significantly impacted by adopting this standard.
The Group will adopt IFRS 9/AASB 9 Financial Instruments (2014) effective 1 July 2018.
IFRS 15/AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much,
and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 / AASB 118 Revenue, IAS 11 / AASB
111 Construction Contracts, and IFRIC 13/Australian Interpretations 13 Customer Loyalty Programmes. IFRS 15 / AASB 15 is effective for
annual reporting periods beginning on or after 1 January 2018 (financial year commencing 1 July 2018 for the Group). The Group will
adopt IFRS15/AASB 15 effective 1 July 2018.
The Group’s primary source of revenue stems from the supply of finished goods to its customers. Customers may be offered various
forms of rebates and allowances, the levels of which are regularly monitored and adjusted throughout the year. The majority of these
are treated as a reduction to reported sales revenue.
Management has concluded that the application of IFRS 15/AASB 15 will have no material impact on the Group’s consolidated financial
statements.
IFRS 16/AASB 16 Leases removes the classification of leases as either operating leases or finance leases. IFRS 16/AASB 16 introduces a
single lessee accounting model and requires a lessee to recognise a right-of-use asset representing its right to use the underlying leased
asset and a lease liability representing its obligation to make lease payments. The right-of-use asset is amortised over the expected term
of the lease and lease payments are allocated between repayment of the lease liability and interest expense. Short-term leases (less
than 12 months) and leases of low-value assets (such as personal computers) are exempt from the new lease accounting requirements.
Management anticipates that the adoption of IFRS 16/AASB 16 will have a material impact on various components of its financial
statements and performance indicators being:
70
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1. An increase in Total Assets resulting from the recognition of a right-of-use asset;
2. An increase in Interest Bearing Liabilities resulting from the recognition of a lease liability;
3. The reclassification of amounts currently reported within Cash Flow from Operating Activities (operating lease payments)
to Cash Flow from Financing Activities (principal repayments and interest);
4. An increase in Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) offset by higher depreciation charges
and interest expense; and
5. An increase in the Leverage Ratio (Net Debt:Net Debt plus Equity).
A project to enable compliance with IFRS 16/AASB 16 has commenced which includes:
1. The creation of a central database of all leases across the Group and assessing appropriate lease terms;
2. The selection of a software tool for use in the determination of the various accounting entries that are required as at the transition
date and going forward; and
3. The determination of which transition option will be adopted.
The financial impact of adopting the new standard has not as yet been determined and is dependant upon the completion of the above
activities. As at 30 June 2018, the Group has non-cancellable operating lease commitments of $61.7m – refer Note 16 (b).
IFRS 16/AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019 (financial year commencing 1 July 2019
for the Group), with early adoption permitted. The Group will not early adopt the new standard.
Principles of consolidation
The financial statements of the Group include the Company being the parent entity, and its subsidiaries.
The financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at balance date and the results
of all subsidiaries for the year then ended. Subsidiaries are entities controlled by the Company. Control exists when the Company
is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. Results of subsidiaries are included in the Income Statement from the date on which control commences
and continue to be included until the date control ceases to exist.
The effects of all transactions between entities in the Group are eliminated in full. Non-controlling interests in the results and equity
of subsidiaries are shown separately in the Income Statement and Balance Sheet respectively.
Foreign currency
Transactions
Transactions in foreign currencies are recorded at the rate of exchange ruling on the date of each transaction. At balance date, amounts
payable and receivable in foreign currencies are converted at the rates of exchange ruling at that date with any resultant gain or loss
recognised in the Income Statement except when deferred in equity as qualifying cash flow hedges or qualifying net investment hedges.
Translation
The financial statements of overseas subsidiaries are maintained in their functional currencies and are converted to the Group’s
presentation currency as follows:
• assets and liabilities are translated at the rate of exchange as at balance date;
• income statements are translated at average exchange rates for the reporting period which approximate the rates ruling
at the dates of the transactions; and
• all resultant exchange differences are recorded in the foreign currency translation reserve.
On consolidation, exchange differences arising from borrowings and any other currency instruments designated as hedges of investments
in overseas subsidiaries, are transferred to the foreign currency translation reserve. When an overseas subsidiary is sold the cumulative
amount recognised in the foreign currency translation reserve relating to the subsidiary is recognised in the Income Statement as part
of the gain or loss on sale.
Recoverable amount of non-current assets valued on the cost basis
The carrying amounts of non-current assets valued on the cost basis are reviewed to determine whether they are in excess of their
recoverable amount at balance date. An impairment loss is recognised whenever the carrying amount of a non-current asset exceeds its
recoverable amount. The impairment loss is recognised as an expense in the Income Statement in the reporting period in which it occurs.
The recoverable amount of a non-current asset is the higher of an asset’s fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash flows, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
Impairment losses, other than those in respect of goodwill, are reversed through the Income Statement when there is an indication
that the impairment loss may no longer exist.
71
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
1. Summary of Significant Accounting Policies continued
Accounting estimates and judgements
The preparation of consolidated financial statements in conformity with Australian generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reported period. The estimates and associated assumptions are based on historical experience and various factors that are believed
to be reasonable under the circumstances and are reviewed on an ongoing basis. Actual results could differ from these estimates.
Recognising the increasing complexity and difficulty in reliably estimating the useful life of product and technology development costs,
the Company has determined that expensing development costs as incurred will generally be more appropriate. Consistent with this
determination, previously capitalised development costs have also now been expensed. Refer to Note 3 (b) for details of the financial impact.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
The key estimates and assumptions that may have a significant impact on the financial statements are as follows:
Business combinations
A business acquisition requires judgement with respect to the determination of the fair value of purchase consideration given and the
fair value of identifiable assets and liabilities acquired. Many of these assets and liabilities either given up or acquired are not normally
traded in active markets, and thus management judgement is required in determining their fair values. Management judgement is also
required in ascertaining the assets and liabilities, which should be recognised, in particular with respect to intangible assets such as
brand names, customer relationships, patents and trademarks and contingent liabilities.
Current asset provisions
In the course of normal trading activities, management uses its judgement in establishing the net realisable value of various elements
of working capital – principally inventory and accounts receivable. Provisions are established for obsolete or slow moving inventories
and bad or doubtful receivables. The actual level of obsolete or slow moving inventories and bad or doubtful receivables in future
periods may be different from the provisions established and any such differences would affect future earnings of the Group.
Property, plant and equipment and definite life intangible assets
The Group’s property, plant and equipment and intangible assets, other than indefinite life intangible assets, are depreciated/amortised
on a straight-line basis over their useful economic lives. Management reviews the appropriateness of useful economic lives of assets at
least annually and any changes to useful economic lives may affect prospective depreciation rates and asset carrying values.
Impairment of goodwill and brand names
The Group tests whether goodwill and brand names are impaired at least annually, or more frequently if events or changes in circumstances
indicate that their carrying values may be impaired, in accordance with the accounting policy on intangible assets. The policy requires the
use of assumptions in assessing the carrying values of CGUs. These assumptions are detailed in Note 9.
Income tax
The Group operates in a number of tax jurisdictions and needs to consider their varying complexities, differing tax rules and the
changing tax environments. The Group has processes to assess and manage these issues including the use of external tax advisors.
The reviews undertaken to determine whether a deferred tax asset should be recognised in jurisdictions where unbooked tax losses
exist and in assessing the recoverability of booked tax losses, involve the use of judgement and estimates in assessing the projected
future trading performances of relevant operations. These judgements and estimates are subject to risk and uncertainty hence there
is a possibility that changes in circumstances will alter expectations, which may impact on the amount of the deferred tax asset in
respect of tax losses recognised on the Balance Sheet. In such circumstances the carrying amount of this asset may require adjustment
resulting in a corresponding credit or charge to the Income Statement.
Defined benefit superannuation plans
Various actuarial assumptions are utilised in the determination of the Group’s defined benefit superannuation plan obligations.
These assumptions are detailed in Note 12.
Other accounting policies
Other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial
statements are provided throughout the notes to the financial statements.
72
Ansell Limited Annual Report 2018 2. Segment Information
The Group comprises the following operating segments:
Healthcare GBU: surgical and examination gloves, healthcare safety devices and active infection prevention products for healthcare
patients and single use industrial application gloves.
Industrial GBU: multi-use hand, foot and body protection solutions for industrial worker environments and specialty applications.
2018
Sales revenue
Operating Segments
Healthcare
US$m
Industrial
US$m
Unallocated
US$m
Continuing
Operations
US$m
Discontinued
Operations
US$m
Total
Group
US$m
774.3
715.5
–
1,489.8
57.7
1,547.5
Profit/(loss) before restructuring, change in accounting
estimate, gain on the sale of business, net financing
costs and income tax expense
Restructuring
Change in accounting estimate - development costs
Gain on the sale of business
Net financing costs
120.1
(5.4)
(3.9)
–
–
86.9
(11.6)
(7.3)
–
–
Profit before income tax expense
110.8
68.0
(13.9)
(7.1)
–
–
(12.5)
(33.5)
Income tax expense
Profit after income tax
Non-controlling interests
Net profit attributable to Ansell Limited shareholders
Segment assets
Segment liabilities
Segment depreciation and amortisation
Segment capital expenditure
2017
Sales revenue
Profit/(loss) before net financing costs
and income tax expense
Net financing costs
1,027.4
96.9
14.4
14.8
743.4
118.5
18.6
29.0
739.4
750.5
6.0
1.2
110.1
79.8
(12.1)
(22.7)
(34.8)
Profit before income tax expense
110.1
79.8
Income tax expense
Profit after income tax
Non-controlling interests
Net profit attributable to Ansell Limited shareholders
Segment assets
Segment liabilities
Segment depreciation and amortisation
Segment capital expenditure
1,033.0
114.4
14.9
15.9
735.2
119.8
19.5
29.6
481.4
944.8
6.4
0.8
718.6
655.9
–
1,374.5
225.2
1,599.7
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193.1
(24.1)
(11.2)
2.3
195.4
–
(1.3)
(24.1)
(12.5)
–
398.2
398.2
(12.5)
145.3
(4.7)
140.6
(1.8)
138.8
2,510.2
965.9
39.0
45.0
–
(12.5)
399.2
544.5
(53.6)
(58.3)
345.6
486.2
(0.1)
(1.9)
345.5
484.3
12.3
2,522.5
6.4
0.8
0.7
972.3
39.8
45.7
177.8
(22.7)
155.1
(33.9)
121.2
(1.7)
119.5
2,249.6
1,179.0
40.8
46.3
40.0
217.8
–
40.0
(11.0)
29.0
(0.8)
(22.7)
195.1
(44.9)
150.2
(2.5)
28.2
147.7
200.9
2,450.5
42.8
1,221.8
4.1
4.7
44.9
51.0
73
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
2. Segment Information continued
Regional information
Sales Revenue is disclosed in the four geographical regions based on where the products are sold to external customers.
Assets (excluding goodwill and brand names) are allocated to the geographical regions in which the assets are located.
Asia Pacific: manufacturing facilities in Malaysia, India, Thailand, Sri Lanka, South Korea, China and Vietnam.
Europe, Middle East and Africa: manufacturing facilities in Lithuania and Portugal.
Latin America and Caribbean: manufacturing facility in Brazil.
North America: manufacturing facilities in USA and Mexico.
The table set out below summarises:
(i) Regional sales revenue from continuing operations.
(ii) Regional assets related to continuing operations.
Regions
Asia Pacific
Europe, Middle East and Africa
Latin America and Caribbean
North America
Total Regions
Sales Revenue
Regional Assets
2018
US$m
2017
US$m
183.7
550.2
106.5
649.4
1,489.8
168.4
485.0
93.6
627.5
1,374.5
2018
US$m
325.8
172.4
51.5
224.4
774.1
2017
US$m
312.8
180.4
49.4
223.8
766.4
Country of domicile
The Company’s country of domicile is Australia. The Sales Revenue and Assets for the Australian trading operations (reported within
the Asia Pacific region) are as follows:
(i) Sales revenue from continuing operations.
(ii) Assets related to continuing operations.
Sales Revenue
Assets
3. Profit Before Income Tax
(a) Profit before income tax from continuing operations has been arrived at after charging/
(crediting) the following items:
This table summarises expenses by nature from continuing operations:
Interest expense
Other financing costs
Interest income
Net financing costs
Research and development costs expensed as incurred
Previously capitalised development costs written off
Research and development costs
Bad debts written off
Provision for impairment of trade receivables – recognised
Net bad debts expense and provision for impairment of trade debtors
2018
US$m
125.7
39.4
2017
US$m
116.6
47.4
2018
US$m
2017
US$m
20.1
4.1
(11.7)
12.5
15.8
–
15.8
0.1
3.7
3.8
23.3
3.0
(3.6)
22.7
11.0
0.2
11.2
–
–
–
74
Ansell Limited Annual Report 2018 Wages and salaries
Increase in provision for employee entitlements
Defined contribution superannuation plan expense
Defined benefit superannuation plan expense
Equity settled share-based payments expense
Employee benefits expense
Net foreign exchange loss
Loss on the sale of property, plant and equipment
Operating lease rentals
Write-down in value of inventories
3(b) Transformation and change in accounting estimate
The following table summarises the impact on the profit before income tax of:
(i) Transformation initiative announced on 20 July 2017; and
(ii) Change in accounting estimate as described in Note 1 Significant Accounting Policies
– Accounting Estimates and Judgements.
Continuing operations
Selling, general and administration
Restructuring – Transformation initiative
Change in accounting estimate – development costs
Discontinued operations
Selling, general and administration
Change in accounting estimate – development costs
3(c) Recognition and measurement
Sales revenue
Sales revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and allowances.
External sales are recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer and
can be measured reliably.
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2018
US$m
231.3
15.1
14.3
3.0
10.4
2017
US$m
222.7
11.3
13.7
0.3
4.7
274.1
252.7
6.3
–
28.1
3.0
1.2
0.1
24.7
4.9
2018
US$m
2017
US$m
24.1
11.2
1.3
–
–
–
75
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
4. Income Tax
(a) Income tax expense
2018
US$m
2017
US$m
Prima facie income tax calculated at 30% (2017: 30%) on profit before income tax
43.6
46.5
Reduced taxation arising from:
Investment and export incentive allowances
Impact of US tax reform on net deferred tax balances
Net lower overseas tax rates
Recognition/utilisation of previously unbooked tax losses
Other permanent differences
Income tax expense attributable to profit before income tax
Income tax expense attributable to profit before income tax is made up of:
Current year income tax
Deferred income tax attributable to:
(Decrease)/increase in deferred tax liability
Decrease/(increase) in deferred tax asset
Income tax expense recognised in other comprehensive income
Remeasurement of defined benefit superannuation/post retirement health benefit plans
Movement in effective hedges for year
(11.9)
(18.7)
(3.1)
(3.7)
(1.5)
4.7
(9.3)
–
(0.4)
(2.6)
(0.3)
33.9
13.0
35.4
(22.6)
14.3
4.7
0.4
(1.9)
33.9
2018
US$m
2017
US$m
2.2
2.8
5.0
1.5
0.3
1.8
76
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The following summarises deferred tax assets and liabilities related to continuing operations:
2018
US$m
2017
US$m
(b) Deferred tax assets
Deferred tax assets arising from:
Deductible temporary differences
Accumulated tax losses
Deferred tax assets are attributable to the following:
Trading stock tax adjustments
Provisions
Accruals
Amortisation of intangible assets
Assets/liabilities held for sale
Accumulated tax losses
Total deferred tax assets
Details of the movement in the balance of deferred tax assets are as follows:
Balance at the beginning of the financial year
(Over)/under provision of prior year balance
Amount (charged)/credited to the Income Statement
Amount charged to other comprehensive income
Reclassification to assets held for sale
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
(c) Deferred tax liabilities
Deferred tax liabilities are attributable to the following:
Depreciation on plant and equipment
Amortisation of intangible assets
Financial instruments
Other
Total deferred tax liabilities
Details of the movement in the balance of deferred tax liabilities are as follows:
Balance at the beginning of the financial year
Under provision of prior year balance
Amount charged to the Income Statement
Reclassification to liabilities held for sale
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
27.2
40.4
67.6
6.5
13.8
1.9
5.0
–
40.4
67.6
88.5
0.4
(14.3)
(5.0)
–
(2.0)
67.6
4.8
60.9
2.1
3.3
51.8
36.7
88.5
5.9
19.6
7.1
11.5
7.7
36.7
88.5
90.6
(0.1)
1.9
(1.8)
(4.1)
2.0
88.5
4.2
85.7
–
–
71.1
89.9
89.9
3.9
(22.6)
–
(0.1)
71.1
89.5
0.7
0.4
(0.6)
(0.1)
89.9
77
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
4. Income Tax continued
(d) Recognition and measurement
Current tax
Income tax on the profit or loss for the financial year comprises current and deferred tax and is recognised in the Income Statement.
Current tax is the expected tax payable or receivable on taxable income for the financial year, using tax rates enacted or substantively
enacted at reporting date, and any adjustments to tax payable or receivable in respect of previous years.
Deferred tax
Deferred tax balances are determined using the Balance Sheet method which calculates temporary differences based on the carrying
amounts of an entity’s assets and liabilities in the Balance Sheet and their associated tax bases. The amount of deferred tax provided
is based on the expected manner of realisation of the asset or settlement of the liability, using tax rates enacted or substantively
enacted at reporting date. In jurisdictions where unbooked tax losses exist, regular reviews are undertaken of the past trading history
and projected future trading performance of the operations in these jurisdictions as part of the determination of the value of any
deferred tax asset that should be reflected in the accounts in respect of such losses. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets
are reduced to the extent it is no longer probable that the related tax benefit will be realised.
The Group has not recognised the tax value of deferred tax assets in respect of trading tax losses of $8.0m (2017: $13.8m) and $63.5m
of capital losses (2017: $54.8m). Deferred tax assets in respect of these unbooked losses have not been recognised as it is not probable
that future taxable profits will be available against which these losses can be utilised.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income. In this case, the associated tax is also recognised in other comprehensive income.
5. Earnings Per Share
Earnings reconciliation
Profit for the period
Less profit for the period attributable to non-controlling interests
Basic earnings
From continuing operations
From discontinued operations
Diluted earnings
From continuing operations
From discontinued operations
Weighted average number of ordinary shares used as the denominator
Number of ordinary shares for basic Earnings Per Share
Effect of partly paid Executive Plan shares and Performance Share Rights (PSRs)
Number of ordinary shares for diluted Earnings Per Share
Earnings per share from continuing operations
Basic earnings per share
Diluted earnings per share
Earnings per share from discontinued operations
Basic earnings per share
Diluted earnings per share
78
2018
US$m
486.2
(1.9)
484.3
138.8
345.5
484.3
484.3
138.8
345.5
484.3
2017
US$m
150.2
(2.5)
147.7
119.5
28.2
147.7
147.7
119.5
28.2
147.7
Number of Shares (Millions)
143.8
2.1
145.9
147.5
1.8
149.3
US Cents
US Cents
96.5
95.1
240.3
236.8
81.0
80.0
19.1
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Recognition and measurement
Earnings per share (EPS) is the amount of profit attributable to each share. Basic EPS is calculated on the Group’s profit for the
year attributable to equity shareholders divided by the weighted average number of shares on issue during the year. Diluted EPS
reflects any commitments the Group has to issue shares in the future. Partly paid Executive Plan shares and PSRs have been
included in diluted earnings per share.
6. Cash and Cash Equivalents
(a) Cash and cash equivalents
Cash on hand
Cash at bank
Short-term deposits
Restricted deposits
Total cash and cash equivalents
2018
US$m
0.2
126.6
453.1
579.9
2.9
582.8
2017
US$m
0.2
144.7
168.7
313.6
3.0
316.6
(b) Reconciliation of net profit after tax to net cash provided by operating activities
Profit for the period
486.2
150.2
Add/(less) non-cash items:
Depreciation
Amortisation
Impairment/(impairment reversal) – trade receivables
Share-based payments expense
Change in accounting estimate – development costs
Write down of property, plant and equipment
Add/(less) items classified as investing/financing activities:
Interest received
Interest and financing costs paid
Gain on the sale of property, plant and equipment
Gain on the sale of business, net of tax
Net cash provided by operating activities before change in assets and liabilities
Change in assets and liabilities net of effect from acquisitions and disposals of businesses and subsidiaries:
Decrease in trade and other receivables
Increase in inventories
Increase in other assets
(Decrease)/Increase in trade and other payables
(Decrease)/Increase in provisions/other liabilities
(Decrease)/increase in retirement benefit obligations
(Decrease)/Increase in provision for deferred income tax
(Increase)/decrease in deferred tax asset
(Decrease)/Increase in provision for income tax
Other non-cash items (including foreign currency impact)
32.7
7.1
3.7
10.4
12.5
3.2
(11.7)
24.2
–
(344.8)
223.5
(6.9)
(0.7)
(2.8)
(20.2)
(3.5)
(5.9)
(22.0)
14.2
(22.9)
0.8
30.7
14.2
(0.6)
4.7
–
–
(3.6)
26.3
(0.5)
–
221.4
8.2
(38.0)
(2.1)
8.4
10.4
(1.1)
0.4
(1.3)
9.9
–
Net cash provided by operating activities
153.6
216.2
(c) Recognition and measurement
Cash at bank and on deposit
Cash and cash equivalents includes cash on hand and at banks and investments in money market instruments, net of outstanding
bank overdrafts.
Restricted deposits
Restricted deposits represent cash set aside (under Court orders) to cover the provisions established to address any remaining liability
of members of the Group for claims arising with respect to the Accufix Pacing Lead (refer Note 11 Provisions – Other Provisions).
79
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
7. Working Capital
This table summarises working capital related to continuing operations at:
Working capital comprises:
Net trade receivables
Inventories
Trade payables
Total working capital
(a) Current trade and other receivables
This table summarises current trade and other receivables related to continuing operations:
Trade receivables
Allowance for impairment
Provision for rebates and allowances
Net trade receivables
Other amounts receivable
Total current trade and other receivables
Movements in the allowance for impairment of trade receivables:
This table summarises the allowance for impairment of trade receivables related to continuing operations:
Balance at the beginning of the financial year
Amounts charged to the Income Statement
Amounts utilised for intended purposes
Reclassification to assets held for sale
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
2018
US$m
191.9
329.8
(182.1)
339.6
240.5
(8.0)
(40.6)
191.9
9.1
201.0
4.5
3.7
–
–
(0.2)
8.0
2017
US$m
174.6
331.9
(197.8)
308.7
218.5
(4.5)
(39.4)
174.6
15.3
189.9
8.2
–
(0.1)
(3.7)
0.1
4.5
Gross Trade Receivables
Allowance for Impairment
2018
US$m
201.6
29.4
1.5
8.0
2017
US$m
189.0
26.0
1.5
2.0
240.5
218.5
2018
US$m
2017
US$m
–
1.2
0.5
6.3
8.0
–
2.1
0.6
1.8
4.5
Ageing of trade receivables:
Within agreed terms
Past due 0 – 60 days
Past due 61 – 90 days
Past due 91 days or more
Total
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(b) Inventories
This table summarises inventories related to continuing operations:
Raw materials
Work in progress
Finished goods
Total inventories
Inventories recognised as an expense
(c) Current trade and other payables
This table summarises current trade and other payables related to continuing operations:
Current
Trade payables
Other payables
Total current trade and other payables
(d) Recognition and measurement
2018
US$m
42.7
17.2
269.9
329.8
2018
US$m
870.0
2018
US$m
182.1
40.1
222.2
2018
US$m
35.7
15.2
281.0
331.9
2017
US$m
794.9
2017
US$m
197.8
24.7
222.5
Trade receivables
Trade receivables are carried at amounts due. Receivables that are not past due and not impaired are considered recoverable. Trade
receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the amount considered recoverable.
Customer trading terms are generally between 30 – 60 days.
Allowance for impairment of trade receivables
The collectability of trade receivables is assessed continuously and at balance date specific allowances are made for any doubtful trade
receivables based on a review of all outstanding amounts at year end. Bad debts are written off during the year in which they are identified.
The following basis have been used to assess the allowance for doubtful trade receivables:
• individual account by account assessment based on past credit history;
• prior knowledge of debtor insolvency;
• high risk customers’ assessments based on continuous analysis of customers’ payment trends and monitoring of the political and
economic climates particularly for those customers who are located in emerging market countries; and
• customer accounts which have been referred to a collection agency.
Inventories
Inventories are valued at the lower of cost and net realisable value. The net realisable value of inventories is the estimated selling price
in the ordinary course of business less estimated costs to sell. The cost of inventories is based on the first-in, first-out principle. In the
case of manufactured inventories and work in progress, cost includes an appropriate share of the production overheads as applicable.
Allowances are established for obsolete or slow moving inventories taking into consideration the ageing or seasonal profile of
inventories, the nature of inventories, discontinued lines, sell through history and forecast sales.
Trade and other payables
Trade payables are normally settled within 30 to 60 days from invoice date or within the agreed payment terms with the supplier.
81
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
8. Property, Plant and Equipment
This table summarises property, plant and equipment related to continuing operations:
Year ended 30 June 2018
Cost
Accumulated depreciation
Movement
Freehold
Land
US$m
Freehold
Buildings
US$m
Leasehold
Land and
Buildings
US$m
Plant and
Equipment
US$m
Buildings and
Plant Under
Construction
US$m
Total
US$m
7.1
–
7.1
31.8
(14.9)
16.9
62.0
(22.1)
39.9
436.5
(289.3)
147.2
19.3
556.7
–
(326.3)
19.3
230.4
Balance at the beginning of the financial year
7.0
15.7
37.5
144.7
Additions
Disposals/scrappings
Transfer from buildings and plant under construction
Depreciation
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
–
–
–
–
0.1
7.1
1.8
(1.1)
1.0
(1.0)
0.5
–
(0.1)
3.9
(2.5)
1.1
6.6
(1.9)
24.3
(28.4)
1.9
16.9
39.9
147.2
19.3
230.4
13.0
217.9
35.2
43.6
(0.1)
(3.2)
(29.2)
–
–
(31.9)
0.4
4.0
Freehold
Land
US$m
Freehold
Buildings
US$m
Leasehold
Land and
Buildings
US$m
Plant and
Equipment
US$m
Buildings and
Plant Under
Construction
US$m
Total
US$m
7.0
–
7.0
32.5
(16.8)
15.7
57.0
(19.5)
37.5
46.1
0.1
–
(0.1)
(8.0)
2.7
(2.2)
(1.1)
436.8
(292.1)
144.7
140.2
3.9
1.0
(0.7)
(19.9)
45.2
(26.2)
1.2
13.0
546.3
–
(328.4)
13.0
217.9
28.2
245.0
36.0
41.3
–
(0.1)
(1.9)
1.5
(1.0)
(39.9)
(48.7)
–
–
(29.2)
(0.5)
0.2
1.3
0.5
(0.1)
(7.3)
0.5
(0.8)
0.4
15.7
37.5
144.7
13.0
217.9
Year ended 30 June 2017
Cost
Accumulated depreciation
Movement
Balance at the beginning of the financial year
9.3
21.2
Additions
Additions through entities/businesses acquired
Disposals/scrappings
Reclassification to assets held for sale
Transfer from buildings and plant under construction
Depreciation
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
–
–
–
(2.8)
0.3
–
0.2
7.0
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Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure
that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset’s carrying amount or recognised
as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and that the cost of the item can be measured reliably.
Depreciation
Depreciation is generally calculated on a straight-line basis so as to write off the net cost of each item of property, plant and
equipment, excluding land, over its estimated useful life.
The expected useful lives in the current and prior years are as follows:
Freehold buildings
20 – 40 years
Leasehold buildings The lesser of 50 years or life of lease
Plant and equipment 3 – 20 years
Depreciation and amortisation rates and methods are reviewed annually for appropriateness.
9. Intangible Assets
This table summarises intangible assets related to continuing operations:
Goodwill
US$m
Brand
Names
US$m
Development
Costs
US$m
Software
Costs
US$m
Other
Intangibles
US$m
Total
US$m
Year ended 30 June 2018
Cost
Balance at the beginning of the financial year
Additions
Additions through entities acquired/completion
of provisional accounting
Written off to the Income Statement
Net exchange differences on translation
of foreign subsidiaries
Balance at the end of the financial year
955.0
3.7
(12.7)
–
(4.0)
942.0
Provision for amortisation and impairment
Balance at the beginning of the financial year
137.6
Amortisation
Accumulated amortisation on amounts
written off to the Income Statement
Net exchange differences on translation of
foreign subsidiaries
Balance at the end of the financial year
Written down value at the end of the financial year
–
–
3.1
140.7
801.3
226.5
–
16.3
–
(5.1)
237.7
61.3
0.1
26.7
–
–
(27.9)
1.2
–
16.1
–
71.6
1.4
–
(1.4)
(2.2)
69.4
33.8
5.7
24.0
1,303.8
–
–
–
5.1
3.6
(29.3)
(0.3)
(10.4)
23.7
1,272.8
5.2
1.3
254.0
7.1
–
(16.7)
(0.2)
–
(16.9)
(1.8)
59.6
178.1
0.6
–
–
(1.5)
37.8
31.6
(0.2)
6.3
0.2
244.4
17.4
1,028.4
83
Ansell Limited Annual Report 2018
Goodwill
US$m
Brand
Names
US$m
Development
Costs
US$m
Software
Costs
US$m
Other
Intangibles
US$m
Total
US$m
Notes to the Financial Statements continued
9. Intangible Assets continued
Year ended 30 June 2017
Cost
Balance at the beginning of the financial year
Additions
Additions through entities acquired/completion
of provisional accounting
Reclassification to assets held for sale
Written off to the Income Statement
Net exchange differences on translation
of foreign subsidiaries
Balance at the end of the financial year
958.9
–
48.7
(50.7)
–
(1.9)
955.0
Provision for amortisation and impairment
Balance at the beginning of the financial year
139.5
Amortisation
Reclassification to assets held for sale
Net exchange differences on translation
of foreign subsidiaries
Balance at the end of the financial year
Written down value at the end of the financial year
–
–
(1.9)
137.6
817.4
243.3
–
–
(17.0)
–
0.2
226.5
60.8
0.4
–
0.1
61.3
165.2
25.0
3.0
–
(1.9)
(0.2)
0.8
26.7
12.3
4.4
(1.0)
0.4
16.1
10.6
69.9
2.0
–
–
–
(0.3)
71.6
27.4
5.4
–
1.0
33.8
37.8
Carrying amount of goodwill and brand names allocated to each of the CGUs related to continuing operations:
Healthcare
Industrial
24.0
1,321.1
–
–
–
–
–
5.0
48.7
(69.6)
(0.2)
(1.2)
24.0
1,303.8
3.8
1.4
–
–
243.8
11.6
(1.0)
(0.4)
5.2
254.0
18.8
1,049.8
2018
US$m
676.1
303.3
979.4
2017
US$m
671.3
311.3
982.6
Recognition and measurement
Goodwill and brand names
Goodwill on acquisition is measured at cost being the excess of the cost of the acquisition over the fair value of the Group’s share of the
net identifiable assets acquired. Goodwill is not amortised. Brand names are initially recorded at cost based on independent valuation at
acquisition date, which equates to fair value. Based on the nature of the major brand names acquired by the Group, which are international
brands that benefit from competitive advantages due to technology, innovation and product development, it is not possible to make an
arbitrary assessment that these brand names have a finite useful life, quantifiable in terms of years except where such brands are subject
to licensing agreements covering a finite period or where management intends to phase out the use of a brand. Brand names subject
to a licensing arrangement are amortised over the life of the arrangement. Brand names that are intended to be phased out are
amortised over the period management anticipates that this process will take. The amortisation of brand names, software costs and
other intangibles are recognised in selling, general and administration costs in the Income Statement. No amortisation is provided
against the carrying value of those brand names not subject to a licensing arrangement or phase out process as the Group believes
that the lives of such assets are indefinite at this point.
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Development costs
Development costs are expensed as incurred – refer to Note 1 Significant Accounting Policies - Accounting Estimates and Judgements.
Software costs
Capitalised software costs are amortised over a 3 to 10 year period.
Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are initially recorded at cost based on independent
valuation at acquisition date, which equates to fair value. These assets include patents which are amortised on a straight-line basis over
the legal life of the patent and customer and distributor relationships, which are amortised on a straight-line basis over their estimated
useful lives, which range from 6 to 20 years.
Impairment
Goodwill and indefinite life intangible assets are tested for impairment as part of the year end reporting process. These assets are also
reviewed as part of the interim reporting process to determine whether there are any indicators of impairment.
The carrying amount of other non-current assets, excluding any defined benefit fund assets, deferred tax assets and financial assets are
reviewed at each reporting date to determine whether there are any indicators of impairment.
If such indicators exist, the asset is tested for impairment by comparing its recoverable amount to its carrying amount. The recoverable
amount of an asset is determined as the higher of fair value less costs of disposal and value in use.
The recoverable amount of the CGUs has been determined based on a value in use calculation utilising five-year cash flow projections.
The base for each CGU is the budget for the 2019 financial year as approved by the Board. Specific growth and after tax WACC rates
have been used for each CGU in developing internal forecasts for financial years ending June 2020 to 2023 and for the terminal year.
Factors such as country risk, forecasting risk and country specific growth and tax rates have been taken into consideration in arriving
at these rates.
Cash flows used for value in use calculations are estimated for the asset in its present condition and therefore do not include cash
inflows or outflows that improve or enhance the asset’s performance or that may arise from future restructuring.
The post-tax discount rate used for a value in use calculation is derived based on an internal assessment of the Group’s post-tax
weighted average cost of capital in conjunction with risk specific factors to the countries in which the CGU operates.
The average annual sales revenue growth rates applied in the discounted cash flow models range between 2.5% and 6.1% (2017: 3%
and 5%) while the growth in the terminal year was 2% (2017: between 2% and 3%). The post tax discount rates applied range between
8% and 8.4% (2017: 8% and 9%).
An impairment loss is recognised whenever the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment
losses are recognised in the Income Statement as part of cost of goods sold and selling, general and administration expenses.
Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated
to CGUs and then to reduce the carrying amount of the other assets in the unit.
An impairment loss is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after
the impairment loss was recognised. An impairment loss in respect of goodwill or other indefinite life intangible assets is not reversed.
An impairment loss in other circumstances is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
85
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2018
US$m
2017
US$m
–
–
3.8
3.8
146.2
270.0
135.8
552.0
552.0
144.7
437.0
135.0
716.7
720.5
2018
US$m
720.5
–
(170.9)
2.4
552.0
Notes to the Financial Statements continued
10. Interest Bearing Liabilities
This table summarises interest bearing liabilities related to continuing operations:
Current
Loans repayable in:
Canadian dollars
Total current
Non-current
Loans repayable in:
Euros
United States dollars
United Kingdom pounds
Total non-current
Total interest bearing liabilities
This table summarises the movement in interest bearing liabilities related to continuing operations for the year ended 30 June 2018:
Balance at the beginning of the financial year
Movements from financing activities:
Proceeds from borrowings as per Consolidated Statement of Cash Flows
Repayments of borrowings as per Consolidated Statement of Cash Flows
Other movements:
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
The Group has a syndicated borrowing facility of US$300m (GBP 103.8m drawn down at 30 June 2018) maturing in June 2023, a Euro 25m
revolving credit facility (Euro 25.0m drawn down at 30 June 2018) maturing in January 2021 and Senior Notes to the equivalent of
US$387.4m. The Senior Notes of US$270m and Euro 101.5m mature between June 2020 and April 2026. These facilities can be accessed by
certain Australian, US, UK and European subsidiaries.
There are a number of financial covenants attaching to the bank and note facilities including restrictions on the level of borrowings
of non-guarantor subsidiaries and ensuring certain financial ratios are maintained. If any breaches of these covenants occur all monies
outstanding under the facility become immediately due and payable. The Group is in compliance with all covenants. The interest rates
for these facilities are determined based on market rates at the time amounts are drawn down.
Net interest bearing debt
Current interest bearing liabilities
Non-current interest bearing liabilities
Cash at bank and short-term deposits
Net interest bearing debt
2018
US$m
–
552.0
(579.7)
(27.7)
2017
US$m
3.8
716.7
(313.4)
407.1
Recognition and measurement
Interest bearing liabilities are initially recognised at fair value less attributable transaction costs. Subsequent to initial recognition
interest bearing liabilities are stated at amortised cost. Any difference between the cost and redemption value is recognised in the
Income Statement over the period of the liability using the effective interest method.
86
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Nature and Currency of Borrowing
Bank loans
Euros
Other loans
Total interest bearing liabilities
Nature and Currency of Borrowing
Bank loans
Other loans
Total interest bearing liabilities
United Kingdom pounds
Euros
Euros
Euros
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
Canadian dollars
Euros
United Kingdom pounds
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
Euros
Euros
Euros
United States dollars
United States dollars
United States dollars
United States dollars
United States dollars
Effective
Interest Rate
% p.a.
Financial
Year of Debt
Maturity
1.00
2.06
3.37
3.52
1.60
3.75
3.91
4.70
4.05
4.68
2021
2023
2020
2022
2023
2020
2021
2024
2025
2026
Effective
Interest Rate
% p.a.
Financial
Year of Debt
Maturity
2.23
1.07
1.38
2.83
2.91
3.83
3.43
3.21
3.87
2.26
2.45
2.67
3.37
3.52
1.63
3.75
3.91
4.70
4.05
4.68
2018
2021
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2020
2022
2023
2020
2021
2024
2025
2026
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2018
US$m
28.9
135.8
34.7
41.3
41.3
20.0
50.0
100.0
50.0
50.0
552.0
2017
US$m
3.8
28.6
135.0
20.0
15.0
10.0
10.0
20.0
35.0
30.0
17.0
10.0
34.3
40.9
40.9
20.0
50.0
100.0
50.0
50.0
720.5
87
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
11. Provisions
This table summarises provisions related to continuing operations:
Current
Provision for employee entitlements
Provision for rationalisation and restructuring costs
Other provisions
Total current
Non-current
Provision for employee entitlements
Total non-current
Total provisions
Reconciliations of the carrying amount of each class of provision, except for employee entitlements,
are set out below:
Provision for rationalisation and restructuring costs
Balance at the beginning of the financial year
Amounts charged/(credited) to the Income Statement
Payments made
Balance at the end of the financial year
Other provisions
Balance at the beginning of the financial year
Amounts credited to the Income Statement
Payments made
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
2018
US$m
2017
US$m
43.8
5.7
3.5
53.0
7.8
7.8
60.8
3.5
3.4
(1.2)
5.7
3.9
(0.3)
–
(0.1)
3.5
49.3
3.5
3.9
56.7
8.2
8.2
64.9
6.9
(0.2)
(3.2)
3.5
3.9
–
(0.1)
0.1
3.9
Recognition and measurement
A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable
that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.
A provision is determined by discounting the expected future cash flows required to settle the obligation at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
Employee entitlements
Wages, salaries and annual leave
Liabilities for employee entitlements to wages, salaries and annual leave represent the amount which members of the Group have
a present obligation to pay resulting from employees’ services provided up to the balance date calculated at undiscounted amounts
based on expected wage and salary rates that will be paid when the obligation is settled and include related on-costs.
Long service leave and post-retirement health benefits
The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to
be made by the Group resulting from employees’ services provided in the current and prior periods. Post retirement health benefits
are subject to annual actuarial reviews.
The liability is calculated using estimated future increases in wage and salary rates including related on-costs, expected settlement
dates based on turnover history and medical cost trends and is discounted using corporate bond rates, which most closely match the
terms of maturity of the related liabilities.
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Provision for rationalisation and restructuring costs
Provisions for rationalisation and restructuring are only recognised when a detailed plan has been approved and the restructuring has
either commenced or been publicly announced, or firm contracts related to the restructuring have been entered into. Costs related to
ongoing activities are not provided for.
Other provisions
Other provisions are recognised to cover specifically identified or obligated costs relating to Accufix Pacing Lead and insurance
claims. The Accufix Pacing Lead related expenses include costs of patients associated with the monitoring and (where appropriate)
explantation of the leads and for legal costs in defence of claims made in respect of the Accufix Pacing Lead. This provision is
covered by cash required to be set aside by the Courts (refer to Note 6 – Cash and Cash Equivalents – Restricted deposits).
12. Retirement Benefit Obligations
Certain members of the Group contribute to defined benefit and defined contribution superannuation plans maintained to provide
superannuation benefits for employees. They are obliged to contribute to the various superannuation plans as a consequence of
legislation or Trust Deeds. Legal enforceability is dependent on the terms of the legislation or the Trust Deeds.
(a) Defined benefit superannuation plans
Funding for post-employment benefits is carried out in accordance with the requirements of the Trust Deed for the Fund and the advice
of the Fund’s actuarial adviser. Plan assets are held in trusts, which are subject to supervision by prudential regulators. Responsibility for
governance of the plan, including investment decisions and plan rules, rests solely with the Board of trustees of the plan.
The amounts recognised in the balance sheet related to continuing operations are determined as follows:
Retirement Benefit Asset
Fair value of defined benefit plan assets
Present value of accumulated defined benefit obligations
Defined benefit asset recognised in the balance sheet
The movements in the defined benefit asset during the year are outlined below:
Balance at the beginning of the financial year
Reclassification from defined benefit liability during the year
Actuarial gains (1)
Current service cost (2)
Net interest cost (2)
Employer contributions (3)
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
2018
US$m
33.7
(27.8)
5.9
2017
US$m
–
–
–
2018
US$m
2017
US$m
–
(3.5)
2.4
(0.6)
(0.1)
7.8
(0.1)
5.9
–
–
–
–
–
–
–
–
The principal actuarial assumptions used (expressed as a weighted average) to calculate the defined benefit asset were as follows:
Discount rate
Future salary increases
2018
3.7%
3.0%
2017
–
–
89
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
12. Retirement Benefit Obligations continued
Retirement Benefit Liability
Present value of accumulated defined benefit obligations
Fair value of defined benefit plan assets
Net defined benefit liability recognised in the Balance Sheet
The movements in the defined benefit liability during the year are outlined below:
Balance at the beginning of the financial year
Reclassification to defined benefit asset during the year
Actuarial gains1
Current service cost2
Net interest cost2
Settlement gains2
Employer contributions3
Reclassification to liabilities held for sale
Net exchange differences on translation of foreign subsidiaries
Balance at the end of the financial year
2018
US$m
27.9
(13.6)
14.3
2018
US$m
19.0
(3.5)
(1.3)
2.2
0.1
–
(1.6)
–
(0.6)
2017
US$m
58.4
(39.4)
19.0
2017
US$m
23.1
–
(2.9)
0.2
0.4
(0.3)
(1.8)
(0.1)
0.4
14.3
19.0
The principal actuarial assumptions used (expressed as a weighted average) to calculate the defined benefit liability were as follows:
Discount rate
Future salary increases
1. Actuarial gains are recorded in other comprehensive income.
2018
1.4%
1.5%
2017
2.5%
1.6%
2. Current service cost, interest cost and settlement gains are recorded in the Consolidated Income Statement as part of selling, general and administration expenses.
3. Employer contributions are a cash payment and are recorded as part of payments to suppliers and employees in the Consolidated Statement of Cash Flows.
The Group expects $1.2m in contributions to be paid to its defined benefit plans during the year ending 30 June 2019.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Equity securities
Fixed interest securities
Property
Other
(b) Defined contribution superannuation plans
Contributions to defined contribution plans during the year
2018
14%
66%
2%
18%
2017
29%
63%
2%
6%
2018
US$m
14.3
2017
US$m
13.7
90
Ansell Limited Annual Report 2018 13. Issued Capital and Reserves
(a) Issued capital
Issued capital
142,280,089 (2017: 147,328,462) ordinary shares, fully paid
49,700 (2017: 53,900) Executive Share Plan shares, paid to A$0.05
Total issued capital
Movement in shares on issue
Ordinary shares
Balance at the beginning of the financial year
Issue of new shares under Dividend Reinvestment Plan
Conversion of Executive Share Plan shares to fully paid
Buy-back/cancellation of shares
Balance at the end of the financial year
Executive Share Plan shares
Balance at the beginning of the financial year
Conversion of Executive Share Plan shares to fully paid
Balance at the end of the financial year
2018
US$m
2017
US$m
1,052.6
1,142.2
–
–
1,052.6
1,142.2
Number of Shares
2018
2017
147,328,462
147,660,815
152,153
237,069
4,200
5,000
(5,204,726)
(574,422)
142,280,089
147,328,462
53,900
(4,200)
49,700
58,900
(5,000)
53,900
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&
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Notes to the Financial Statements continued
13. Issued Capital and Reserves continued
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as
a deduction, net of tax where applicable, from the proceeds. When shares are repurchased, the amount of the consideration paid,
including directly attributable costs, is recognised as a deduction from equity.
Ordinary shares are fully paid and do not have authorised capital or par value. They carry one vote per share and the right to dividends
as declared from time to time. In the event of winding up of the Company ordinary shareholders rank after all other shareholders and
creditors and are fully entitled to any proceeds of liquidation.
Dividend Reinvestment Plan
The Company operates a dividend reinvestment plan which is open to all shareholders. Under this plan 152,153 shares were issued during
the year (2017: 237,069).
Executive Share Plan
During the financial year, 4,200 Executive Plan shares were paid (2017: 5,000). Shares allotted under the Pacific Dunlop Executive Share
Plan (which was discontinued in 1996) have been paid to A$0.05 per share. Refer to Note 21 Ownership-based Remuneration Schemes
for details of the price payable for shares issued under this plan.
Options
As at the date of this Report, there are nil (2017: nil) unissued shares in the Company under option.
Share-based payments
The fair value of PSRs granted to the Managing Director and Chief Executive Officer (CEO), Chief Financial Officer (CFO) and other
Senior Executives under the Long Term Incentive Plans is recognised as an employee benefit expense with a corresponding increase
in equity over the vesting period.
(b) Nature and purpose of reserves
Share-based payments reserve
This reserve is used to record the value of equity benefits provided to employees as part of their remuneration under various
Long Term Incentive Plans. Refer to Note 21 Ownership-based Remuneration Schemes for further details of these plans.
Hedging reserve
This reserve records the portion of the unrealised gains or losses on cash flow hedges, the cumulative net change in the intrinsic
and time value of options and interest rate swaps that are deemed to be effective.
General reserve
In certain jurisdictions regulatory requirements result in appropriations being made to a general reserve. The amount in the general
reserve is available for release to retained profits.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign currency differences arising from the translation of the financial statements
of foreign subsidiaries where their functional currency is different to the presentation currency of the Group, as well as the translation
of borrowings or any other currency instruments that hedge the Company’s net investment in foreign subsidiaries. Refer to Note 1
Summary of Significant Accounting Policies.
Transactions with non-controlling interests
Represents the excess paid over the fair value of assets acquired as a result of the purchase of additional equity in non-wholly-owned
subsidiaries.
Fair value reserve
This reserve records the cumulative net change in the fair value of financial assets.
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14. Dividends Paid or Declared
Dividends paid
2018
US$m
2017
US$m
A final dividend of US 23.75 cents per share unfranked for the year ended 30 June 2017
(June 2016: US 23.50 cents unfranked) was paid on 8 September 2017 (2016: 8 September 2016)
35.1
34.6
An interim dividend of US 20.50 cents per share unfranked for the year ended 30 June 2018
(June 2017: US 20.25 cents unfranked) was paid on 8 March 2018 (2017: 10 March 2017)
28.7
63.8
29.7
64.3
Dividends declared
Since the end of the financial year the Directors have declared a final dividend of US25.00 cents per share unfranked, to be paid
on 13 September 2018. The financial effect of this dividend has not been brought to account in the financial statements for the year
ended 30 June 2018 and will be recognised in subsequent financial reports.
Dividend franking account
The balance of the dividend franking account as at 30 June 2018 was nil (2017: nil).
15. Financial Risk Management
Ansell has a range of financial policies designed to mitigate any potential negative impact financial risks may have on the Group’s
results. The Group’s risk management is carried out by a central treasury department under policies approved by the Board of Directors.
Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s business units. The Board reviews
and approves the Group’s policies for managing each of these risks which are summarised below:
• Note 15(a) Foreign Exchange Risk;
• Note 15(b) Interest Rate Risk;
• Note 15(c) Credit Risk;
• Note 15(d) Liquidity Risk; and
• Note 15(e) Commodity Price Risk.
These risks affect the fair value measurements applied by the Group, which is discussed in Note 15(f).
(a) Foreign exchange risk
The Group is exposed to a number of foreign currencies, however, the predominant operating currency is the US dollar (US$). As such,
the Group has determined it appropriate to manage its foreign currency exposure against the US$. On this basis the Group manages its
transactional exposures as follows:
• Major revenue and cost currency net cash flow exposures are predominantly hedged back to US$ on a 12 to 18-month rolling basis so as
to reduce any significant adverse impact of exchange rate fluctuations on the Earnings Per Share guidance provided by the Company to
the market.
• The Group hedges up to 90% of its estimated foreign currency exposure in respect of forecast purchases and sales.
The Group enters into a range of derivative financial instruments, which can be defined in the following broad categories:
(i) Forward/future contracts
These transactions enable the Group to buy or sell specific amounts of foreign exchange or financial instruments at an agreed rate/price
at a specified future date. Maturities of these contracts are predominantly up to one year.
(ii) Foreign exchange options
This is a contract between two parties, which gives the buyer of the put or call option the right, but not the obligation, to transact at a
specified exchange rate. The Group typically uses a combination of bought and sold options, generally for zero cost, to hedge foreign
currency receivable and payable cash flows predominantly out to one year.
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Notes to the Financial Statements continued
15. Financial Risk Management continued
As at 30 June the exposure to foreign currency risk from the Group’s primary trading currency (US$) is:
Net receivable in non-US$ reporting entities
Net Receivable
2018
US$m
19.5
2017
US$m
21.5
The following table demonstrates the estimated sensitivity in the valuation of outstanding forward contracts and foreign exchange options
to a 10% increase/decrease in the US$ exchange rate, with all other variables held constant, on profit for the period and equity.
With all other variables held constant:
10% increase in US$ exchange rate
10% decrease in US$ exchange rate
Profit for the Period
Equity
2018
US$m
2017
US$m
2018
US$m
2017
US$m
–
–
–
–
7.9
(0.2)
4.6
(1.2)
(b) Interest rate risk
The Group has a broad aim of managing interest rate risk on its debt by setting a minimum level of interest rate risk days (the weighted
average term of all interest rates in the portfolio) and a minimum fixed/floating interest rate ratio. The Group enters into interest rate
swaps that enables parties to swap interest rates (from or to a fixed or floating basis) for a defined period of time. Maturities of the
contracts are principally between 1 and 10 years.
Prior to the beginning of each year, the Group calculates its financial budget for the upcoming year using an updated set of financial
assumptions and management’s view of the marketplace in the coming financial year. The Group forecasts interest rates for all debt
repricing and new financing.
In this context interest rate risk is the risk that the Group will, as a result of adverse movements in interest rates, experience:
• unacceptable variations to the cost of debt in the review period for which the financial budget has been finalised; and
• unacceptable variations in interest expense from year to year.
It is recognised that movements in interest rates may be beneficial to the Group. Within the context of the Group’s operations, interest
rate exposure occurs from the amount of debt repricing that occurs in any one year.
The exposure to interest rate risk and the effective weighted average interest rate for interest bearing financial liabilities are set out below:
2018
Bank and other loans
Effect of interest rate swaps1
2017
Bank and other loans
Effect of interest rate swaps1
Weighted
Average Effective
Interest Rate %
Floating
US$m
1 Year
or Less
US$m
3.4
(0.1)
3.2
0.1
164.7
(46.1)
118.6
334.4
(185.7)
148.7
–
–
–
–
28.6
28.6
Fixed Interest Repricing in
1 to 2
Years
US$m
54.6
(20.0)
34.6
–
15.0
15.0
2 to 5
Years
US$m
132.7
66.1
198.8
145.2
183.0
328.2
> 5
Years
US$m
Total
US$m
200.0
552.0
–
200.0
240.9
(40.9)
200.0
–
552.0
720.5
–
720.5
1. Represents notional amount of interest rate swaps.
A separate analysis of debt by currency can be found at Note 10 Interest Bearing Liabilities.
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The table below shows the effect on profit for the period and equity, if interest rates had been 10% higher or lower with all other
variables held constant, taking into account all underlying exposures and related hedges. A sensitivity of 10% has been selected
as this is considered reasonable given the current level of both short-term and long-term US$ interest rates.
With all other variables held constant:
If interest rates were 10% higher
If interest rates were 10% lower
Profit for the Period
Equity
2018
US$m
2017
US$m
2018
US$m
2017
US$m
–
–
–
–
0.3
(0.3)
1.1
(1.2)
(c) Credit risk
The credit risk on financial assets (excluding investments) of the Group, is the carrying amount, net of any provision for impairment,
which has been recognised on the Balance Sheet. The Group is exposed to credit risk from its operating activities, primarily from
customer receivables and from its financing activities, including deposits with financial institutions, foreign exchange transactions
and other financial instruments.
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group does not hold any collateral
over any of the receivables.
(i) Credit risk – cash and cash equivalents
The Group held cash and cash equivalents related to continuing operations of US$582.8m at 30 June 2018 (2017: $316.6m). The material
cash and cash equivalent balances are held with bank and financial institution counterparties which are rated A3 or above by Moody’s
Investor Service.
(ii) Credit risk – trade receivables
Customer credit risk is managed by each Region subject to established policies, procedures and controls relating to customer credit
risk management. The Group trades with recognised, creditworthy third parties, and also minimises concentrations of credit risk by
undertaking transactions with a large number of customers and counterparties in various countries. Customers who wish to trade
on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial
position, past experience and industry reputation. In addition receivable balances are monitored on an ongoing basis. The Group
is not materially exposed to any individual customer. An ageing of trade receivables past due is included in Note 7.
The Group’s maximum exposure to credit risk at the reporting date related to continuing operations:
Net trade receivables
Carrying Amount
2018
US$m
191.9
2017
US$m
174.6
Individual trade receivables which are known to be uncollectible are written off by reducing the carrying amount directly. Other trade
receivables are assessed where there is objective evidence that an impairment has been incurred but not yet recognised. For these
receivables, the estimated impairment losses are recognised as an allowance for impairment. Receivables for which an impairment
provision was recognised are written off against the provision where there is no expectation of recovering additional cash. Allowances
for impairment are recognised in the Income Statement. Subsequent recoveries of amounts previously written off are credited to the
Income Statement. Movements in the allowance for impairment and the ageing of trade receivables are included in Note 7.
95
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Notes to the Financial Statements continued
15. Financial Risk Management continued
(iii) Credit risk by maturity
Based on the policy of not having material overnight exposures to an entity rated lower than A3 by Moody’s Investors Service, the
risk to the Group of counterparty default loss is not considered material. The following table indicates the value of amounts owing
by counterparties by maturity.
Foreign Exchange
Related Contracts
Interest Rate
Contracts
Foreign Exchange
Options
Total
2018
US$m
2017
US$m
2018
US$m
2017
US$m
2018
US$m
2017
US$m
2018
US$m
2017
US$m
3.1
1.4
–
–
–
0.6
0.2
–
–
–
4.5
0.8
–
–
–
3.3
–
3.3
–
–
–
0.9
3.1
4.0
2.2
3.1
–
–
–
5.3
1.6
2.2
–
–
–
5.3
4.5
–
3.3
–
3.8
13.1
2.2
2.4
–
0.9
3.1
8.6
Term:
0–6 months
6– 12 months
1– 2 years
2– 5 years
> 5 years
Total
(d) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it
will have sufficient liquidity to meet its obligations when they are due.
The Group manages liquidity risk by:
(a) maintaining adequate levels of undrawn committed facilities that can be drawn down upon at short notice;
(b) retaining appropriate levels of cash and cash equivalents;
(c) spreading the maturity dates of long term debt facilities between financial years (to the extent practicable); and
(d) regular monitoring of cash balances and cash requirement forecasts.
The following table sets out the contractual maturities of the Group’s financial liabilities related to continuing operations into relevant
maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows comprising principal and interest repayments.
Carrying
Amount
Total
Contractual
Cash Flows
US$m
US$m
225.3
552.0
3.5
780.8
223.8
720.5
8.7
953.0
225.3
642.4
3.5
871.2
223.8
826.2
8.7
1,058.7
Contractual Maturity (Years)
0–1
US$m
222.2
18.1
3.0
243.3
222.5
26.1
7.9
256.5
1–2
US$m
3.1
72.7
0.4
76.2
1.3
324.2
0.2
325.7
2–5
US$m
–
337.8
0.1
337.9
–
212.0
0.6
212.6
> 5
US$m
–
213.8
–
213.8
–
263.9
–
263.9
2018
Trade and other payables
Bank and other loans
Derivative financial instruments
Total
2017
Trade and other payables
Bank and other loans
Derivative financial instruments
Total
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(e) Commodity price risk
Ansell is a significant buyer of natural rubber latex and a range of synthetic latex products. It purchases these products in a number of
countries in Asia, predominately Malaysia, Thailand and Sri Lanka. The Group is not active in hedging its purchases on rubber exchanges
but may, from time to time, buy from suppliers or brokers at a fixed price for up to several months into the future. To the extent that any
increases in these costs cannot be passed through to customers in a timely manner, the Group’s profit after income tax and shareholder’s
equity could be impacted adversely.
(f) Fair value
The Group considers that the carrying amount of recognised financial assets and financial liabilities approximates their net fair value.
Derivative financial instruments are carried at their fair value.
The following table displays:
(i) Nominal/face value
This is the contract’s value upon which a market rate is applied to produce a gain or loss which becomes the settlement value of the
derivative financial instrument.
(ii) Credit risk (derivative financial instruments)
This is the maximum exposure to the Group in the event that all counterparties who have amounts outstanding to the Group under
derivative financial instruments, fail to honour their side of the contracts. The Group’s exposure is almost entirely to banks. Amounts
owed by the Group under derivative financial instruments are not included.
(iii) Net fair value
This is the amount at which the instrument could be realised between willing parties in a normal market in other than a liquidation or
forced sale environment. The net amount owing (to)/by financial institutions under all derivative financial instruments would have been
$9.6m (2017: ($0.1)m) if all contracts were closed out on 30 June 2018.
Average
Average
Exchange Rates Maturity Days
Nominal/
Face Value
US$m
Credit
Risk
US$m
Net Fair
Value
US$m
2018
Foreign Exchange Contracts
Purchase/Sale Contracts:
– United States Dollars/Euros
– Australian dollars/Japanese Yen
– Malaysian ringgits/United States Dollars
– Thai baht/United States Dollars
– Sri Lankan rupees/United States Dollars
– United States dollars/Australian Dollars
– Other
1.21
81.96
4.08
32.33
164.70
0.75
–
Foreign Exchange Zero Cost Collar Options
Options Strike Rates
– Euros/United States Dollars
– Australian dollars/United States Dollars
– Canadian dollars/United States Dollars
– United Kingdom Pounds/United States Dollars
– United States Dollars/Mexican pesos
– United States Dollars/Thai baht
– Japanese yen/United States Dollars
1.18 – 1.20
0.77 – 0.79
0.78 – 0.81
1.34 – 1.39
19.00 – 21.00
32.00 – 33.00
103.00 – 108.00
153
43
152
54
213
89
–
179
53
92
161
169
70
171
Interest Rate Contracts
Interest Rate Swaps:
– GBP
– Euros
– Euros
Payable fixed
Payable floating
Payable fixed
– US Dollars Payable floating
Total
Interest Rate %
Years
0.96
Euribor
0.00
Libor
3.7
4.2
2.6
1.9
57.6
7.0
83.6
8.2
40.5
10.0
55.3
118.1
2.3
8.8
13.9
16.1
10.9
7.0
78.5
41.3
28.9
20.0
2.1
–
1.5
–
0.3
0.2
0.4
3.8
0.1
0.3
0.5
0.4
–
0.2
0.6
2.7
–
–
608.0
13.1
2.1
(0.1)
0.7
(0.2)
0.2
0.1
(0.1)
3.4
0.1
0.3
0.4
(0.1)
(0.1)
0.1
0.6
2.7
(0.1)
(0.4)
9.6
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Average
Average
Exchange Rates Maturity Days
Nominal/
Face Value
US$m
Credit Risk
US$m
Net Fair
Value
US$m
93
39
219
218
65
–
192
150
98
201
175
146
178
144
154
29.3
3.7
20.8
34.2
16.7
59.2
135.8
3.8
6.1
14.2
17.1
35.1
39.1
6.3
4.4
78.0
40.9
28.6
265.0
20.0
858.3
–
0.2
0.2
–
–
0.4
0.7
–
–
0.2
0.8
0.9
0.9
0.2
0.1
–
3.0
–
0.9
0.1
8.6
(0.7)
0.1
0.1
(0.2)
(0.3)
0.2
(3.8)
–
–
(0.1)
0.7
–
0.8
0.2
0.1
–
3.0
–
(0.3)
0.1
(0.1)
Notes to the Financial Statements continued
15. Financial Risk Management continued
15(f). Fair Value
2017
Foreign Exchange Contracts
Purchase/Sale Contracts:
– United States Dollars/Euros
– Australian Dollars/Japanese Yen
– Malaysian Ringgits/United States Dollars
– Sri Lankan Rupees/United States Dollars
– United States Dollars/Australian Dollars
– Other
1.12
83.80
4.36
159.00
0.75
–
Foreign Exchange Zero Cost Collar Options
Options Strike Rates
– Euros/United States Dollars
– Australian Dollars/United States Dollars
– Canadian Dollars/United States Dollars
– United Kingdom Pounds/United States Dollars
– United States Dollars/Mexican Pesos
– United States Dollars/Malaysian Ringgits
– United States Dollars/Thai baht
– Japanese yen/United States Dollars
– US dollars/India Rupees
1.09 – 1.14
0.75 – 0.77
0.75 – 0.78
1.26 – 1.32
19.00 – 22.00
4.25 – 4.41
35.00 – 36.00
103.00 – 108.00
67.00 – 75.00
Interest Rate Contracts
Interest Rate Swaps:
– GBP
– Euros
– Euros
Payable fixed
Payable floating
Payable fixed
– US dollars
Payable fixed
– US dollars
Payable floating
Total
Interest Rate %
Years
0.96
Euribor
(0.18)
1.82
Libor
4.7
5.0
1.0
2.3
3.0
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The effects of hedge accounting on the financial position and performance of the Group is as follows:
Carrying
Amount of
Hedging
Instruments1
Change in Value
of the Hedging
Instrument for
Calculating Hedge
Ineffectiveness
Change in Value of
the Hedged Item for
Calculating Hedge
Ineffectiveness
Change in Value
of the Hedging
Instrument
Recognised in OCI
Hedge
Ineffectiveness
Recognised
in P&L
Amount
Reclassified
from
Hedging
Reserve
to P&L
6.5
0.7
(0.1)
0.6
–
2.7
(0.4)
6.5
0.7
(0.1)
0.6
–
(0.3)
(0.4)
(6.5)
(0.7)
0.1
(0.6)
–
0.3
0.4
6.5
0.7
(0.1)
0.6
–
–
–
–
–
–
–
–
–
–
(4.4)
(1.6)
–
–
0.2
–
–
Carrying
Amount of
Hedging
Instruments1
Change in Value
of the Hedging
Instrument for
Calculating Hedge
Ineffectiveness
Change in Value of
the Hedged Item for
Calculating Hedge
Ineffectiveness
Change in Value
of the Hedging
Instrument
Recognised in OCI
Hedge
Ineffectiveness
Recognised
in P&L
Amount
Reclassified
from
Hedging
Reserve
to P&L
(4.4)
1.6
0.1
(0.2)
3.0
–
(4.4)
1.6
0.1
4.6
(1.2)
(0.7)
4.4
(1.6)
(0.1)
(4.6)
1.2
0.7
(4.4)
1.6
0.1
4.6
(1.2)
(0.7)
–
–
–
–
–
–
S
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(0.1)
(1.4)
–
–
–
–
2018
Cash flow hedges
Revenue (up to 1 year)
Costs (up to 2 years)
EUR interest
GBP interest
USD interest
Fair value hedges
EUR interest
USD interest
2017
Cash flow hedges
Revenue (up to 1 year)
Costs (up to 2 years)
GBP interest
USD interest
Fair value hedges
EUR interest
USD interest
1. Includes the time value of foreign exchange options.
(iv) Fair value hierarchy
The table below analyses financial assets and financial liabilities carried at fair value, including their levels in the fair value hierarchy
as well as the valuation method. It does not include information for financial assets and financial liabilities not measured at fair value
if the carrying amount is a reasonable approximation of fair value.
The different valuation methods have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group currently holds only Level 2 derivative financial instruments. In order to determine the fair value of the financial instruments,
management used valuation techniques in which all significant inputs were based on observable market data.
The fair values of forward exchange contracts, foreign exchange options and interest rate swaps are determined based on the unrealised
gains or losses at reporting date. This is done using the standard valuation technique based on the applicable market observable rates
including spot rate, forward points, volatilities and interest rate data sourced from brokers and third party market data vendors.
99
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
15. Financial Risk Management continued
Derivative financial assets
Derivative financial liabilities
(g) Recognition and measurement
Level 2
2018
US$m
13.1
3.5
2017
US$m
8.6
8.7
Derivatives
The Group uses derivative financial instruments, principally foreign exchange and interest rate related, to reduce the exposure
to foreign exchange rate and interest rate movements.
The Group has adopted certain principles in relation to derivative financial instruments:
• derivatives may be used to hedge underlying business exposures of the Group. Trading in derivatives is not undertaken;
• derivatives acquired must be able to be recorded in the Group’s treasury management systems, which contain extensive internal
controls; and
• the Group predominantly does not deal with counterparties rated lower than A3 by Moody’s Investors Service.
The Group follows the same credit policies, legal processes, monitoring of market and operational risks in the area of derivative
financial instruments, as it does in relation to other financial assets and liabilities on the Balance Sheet.
On a continuing basis, the Group monitors its future exposures and on some occasions hedges all or part of these exposures. The transactions
which may be covered are future net cash flows of overseas subsidiaries, future foreign exchange requirements and interest rate positions.
These exposures are then monitored and may be modified from time to time. The foreign exchange hedge instruments are predominantly
up to 12 months’ duration and are used to hedge operational transactions the Group expects to occur in this time frame. From time
to time minor mismatches occur in the forward book, however, these mismatches are managed under guidelines, limits and internal
controls. Interest rate derivative instruments can be for periods up to 10 years as the critical terms of the instruments are matched
to the underlying borrowings.
Derivative financial instruments are recognised initially at fair value and subsequently remeasured to their fair value at each reporting
date. The fair value of forward exchange contracts, foreign exchange options and interest rate swap contracts is determined by
reference to current market rates for these instruments.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and
continues to satisfy the conditions for hedge accounting, and if so, the nature of the item being hedged. The Group designates certain
derivatives as either; (1) hedges of the fair value of recognised assets or liabilities (fair value hedges); or (2) hedges of highly probable
forecast transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its
risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue
to be highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Income Statement,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Cash flow hedge
The effective portion of changes in the fair value of derivatives (including the intrinsic value of options) that are designated and qualify
as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the Income Statement. The time value of options is accounted for as a hedging cost with changes in fair value being
recognised in the hedging reserve through Other Comprehensive Income.
100
Ansell Limited Annual Report 2018 R
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Gains or losses that are recognised in the hedging reserve are transferred to the Income Statement in the periods when the hedged
item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset
or a non-financial liability, the gains or losses previously deferred in equity are transferred from equity and included in the measurement
of the initial cost or carrying amount of the asset or liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer meets the
conditions for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity
remains in equity until the forecasted transaction is ultimately recognised in the Income Statement. When a hedged transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Income Statement.
Derivatives that do not qualify for hedge accounting
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the
Income Statement.
Hedge effectiveness
The Group determines its economic exposure to unexpected movements in foreign currency rates and interest rates and ensures
the hedging instruments entered into satisfactorily mitigate these risks. The Group ensures the changes in the fair value of the
hedging instruments are highly correlated to the change in the fair value of the underlying hedged item and are therefore effective.
Potential sources of ineffectiveness include but are not limited to:
• the Group no longer having the economic exposure rendering the hedge instrument ineffective;
• hedging instrument expires or is sold, terminated or exercised; and
• changes in counterparty credit status.
16. Expenditure Commitments
(a) Capital expenditure commitments
Contracted but not provided for in the financial statements:
Plant and equipment
Payable within one year
(b) Operating lease commitments
Future operating lease commitments not provided for in the financial statements and payable:
Within one year
One year or later and no later than five years
Later than five years
2018
US$m
2017
US$m
6.6
6.6
6.6
16.4
31.8
13.5
61.7
5.7
5.7
5.7
9.7
23.1
4.0
36.8
The Group leases property, motor vehicles and other plant and equipment under operating leases with lease terms of between
one and 99 years. Some of the property leases include options to extend the term beyond the original end date.
Operating lease commitments refer to future undiscounted minimum rentals payable under non-cancellable operating leases not
included within this financial report. Operating lease payments are recognised as an expense in the Income Statement on a straight
line basis over the lease term.
101
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
Country of Incorporation
Beneficial Interest
2018
%
2017
%
Australia
Japan*
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore*
Australia
Singapore*
Australia
France*
Australia
Australia
China*
China*
Australia
Australia
Canada*
Canada*
Mexico*
Colombia*
Malaysia*
Sri Lanka*
UAE*
Mexico*
Singapore*
Malaysia*
Malaysia*
Malaysia*
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
75
17. Particulars Relating to Subsidiaries
Ansell Limited
Ansell Healthcare Japan Co. Ltd.
BNG Battery Technologies Pty. Ltd.
Corrvas Insurance Pty. Ltd.
Dunlop Olympic Manufacturing Pty. Ltd.
FGDP Pty. Ltd.
Nucleus Ltd.
Lifetec Project Pty. Ltd.
Medical TPLC Pty. Ltd.
N&T Pty. Ltd.
Nucleus Trading Pte. Ltd.
THLD Ltd.
TNC Holdings Pte. Ltd.
TPLC Pty. Ltd.
Societe de Management Financier S.A.
Olympic General Products Pty. Ltd.
Pacific Dunlop Finance Pty. Ltd.
Pacific Dunlop Holdings (China) Co. Ltd.
Ansell (Shanghai) Commercial and Trading Co. Ltd.
P.D. Holdings Pty. Ltd.
P.D. International Pty. Ltd.
Ansell Canada Inc.
Ansell Canadian Holdings Limited
Ansell Commercial Mexico S.A. de C.V.
Ansell Colombia SAS
Ansell Global Trading Center (Malaysia) Sdn. Bhd.
Ansell Lanka (Pvt.) Ltd.
Ansell (Middle East) DMCC
Ansell Perry de Mexico S.A. de C.V.
Ansell Protective Solutions Singapore Pte. Ltd.
Ansell Services (Asia) Sdn. Bhd.
Ansell (Kulim) Sdn. Bhd.
Ansell N.P. Sdn. Bhd.
102
Ansell Limited Annual Report 2018 R
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Country of Incorporation
Beneficial Interest
2018
%
2017
%
Ansell Malaysia Sdn. Bhd.
Ansell Shah Alam Sdn. Bhd.
Hercules Equipamentos de Protecao Ltda
Ansell Textiles Lanka (Pvt.) Ltd.
Ansell (Thailand) Ltd.
Ansell US Group Holdings Pty. Ltd.
Ansell US Group Holdings (USA) LLC
Ansell Liquid Asset Holdings LLC
Ansell (USA) Inc.
Ansell Brazil LTDA
Ansell Edmont Industrial de Mexico S.A. de C.V.
Pacific Dunlop Holdings (USA) LLC
Barriersafe Solutions International Inc.
Microflex Corporation
Ansell Healthcare Products LLC
Ansell Sandel Medical Solutions LLC
Ansell Hawkeye Inc.
Pacific Chloride Inc.
Pacific Dunlop Holdings Inc.
TPLC Holdings Inc.
Accufix Research Institute Inc.
Cotac Corporation
Pacific Dunlop Finance Company Inc.
Comercializadora Ansell Chile Limitada
Corrvas Insurance (Singapore) Pte. Ltd.
Medical Telectronics N.V.
Ansell UK Limited (formerly Pacific Dunlop Holdings (Europe) Ltd.)
Ansell Healthcare Europe N.V.
Ansell GmbH
Ansell Italy Srl
Ansell Medikal Urunler Ithalat Ihracat Uretim ve Ticaret A.S.
Ansell Norway AS
Ansell Protective Solutions AB
Ansell Protective Solutions Lithuania UAB
Malaysia*
Malaysia*
Brazil*
Sri Lanka*
Thailand*
Australia
United States*
United States*
United States*
Brazil*
Mexico*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
United States*
Chile*
Singapore*
Netherlands Ant.*
United Kingdom*
Belgium*
Germany*
Italy*
Turkey*
Norway*
Sweden*
Lithuania*
75
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
103
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
17. Particulars Relating to Subsidiaries continued
Ansell Rus LLC
Ansell S.A.
Ansell Services Poland Sp. z o.o.
Ansell Spain SL (Sociedad de Responsabilidad Limitada)
Comasec SAS
Ampelos International Malaysia
Ansell Industrial & Specialty Gloves Malaysia Sdn. Bhd.
Comasec Holdings Ltd.
Marigold Industrial Ltd.
Ansell Portugal – Industrial Gloves, Sociedade Unipessoal, Lda
Ansell Korea Co. Ltd.
Ansell Vina Corporation
Ansell Microgard Ltd.
Ansell Xiamen Limited
Ansell Microgard Xiamen Limited
Nitritex Limited
Nitritex (M) Sdn. Bhd.
Nitritex Canada Ltd.
Pacific Dunlop Holdings (Singapore) Pte. Ltd.
Ansell India Protective Products Pvt Ltd.
JK Ansell Ltd.
Ansell (Hong Kong) Limted.
PDOCB Pty. Ltd.
PD Licensing Pty. Ltd.
Siteprints Pty. Ltd.
S.T.P. (Hong Kong) Ltd.
Country of Incorporation
Beneficial Interest
2018
%
2017
%
Russia*
France*
Poland*
Spain*
France*
Malaysia*
Malaysia*
United Kingdom*
United Kingdom*
Portugal*
South Korea*
Vietnam*
United Kingdom*
China*
China*
United Kingdom*
Malaysia*
Canada*
Singapore*
India*
India*
Hong Kong*
Australia
Australia
Australia
Hong Kong*
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
104
Ansell Limited Annual Report 2018 Pacific Dunlop Holdings N.V.
Pacific Dunlop (Netherlands) B.V.
The Distribution Group Holdings Pty. Ltd.
The Distribution Group Pty. Ltd.
The Distribution Trust
Xelo Pty. Ltd.
Xelo Sacof Pty. Ltd.
Country of Incorporation
Netherlands Ant.*
Netherlands*
Australia
Australia
Australia
Australia
Australia
Beneficial Interest
2018
%
100
100
100
2017
%
100
100
100
100(a)
100(a)
100
100
100
100
100
100
* Subsidiaries incorporated outside Australia carry on business in those countries.
(a) The trustee of The Distribution Trust is The Distribution Group Pty. Ltd. The beneficiary of the trust is Ansell Limited.
The following subsidiary was liquidated during the year:
• Ansell Medical Products Pvt. Ltd.
The following entities were disposed of during the year:
• Ansell SW Europe SAS.
• Fabrica de Artefatos de Latex Blowtex Ltda.
• Guangzhou Kangwei Trading Co Ltd.
• Latex Investments Ltd.
• Shanghai Feidun Trading Company Ltd.
• Shenyang Yipeng Trading Company Ltd.
• Suretex Ltd.
• Suretex Prophylactics (India) Ltd.
• SXWELL Australia Pty. Ltd.
• SXWell UK Limited (formerly Ansell UK Limited)
• SXWell USA LLC
• Unimil SP. z.o.o.
• Wuhan Jissbon Sanitary Products Company Ltd
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105
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
18. Acquisitions and Disposal Group Held for Sale
(a) Acquisitions
Nitritex Limited
The acquisition accounting for Nitritex Limited, acquired 1 February 2017, was completed and resulted in a reduction of previously reported
goodwill of $12.7m due to the recognition of brand names totalling $16.3m and additional net liabilities of $3.6m.
gammaSupplies
Effective 28 November 2017, Ansell acquired the gammaSupplies business from gammaSupplies LLC. The business is a provider of isolator
and gauntlet gloves and prep mats for Life Science customers for use in clean room production environments. The acquisition will
provide an opportunity for the Group to be a full solution provider to many customers in the validated sterile needs segments.
The total acquisition cost is comprised of an upfront payment of $1m, a further $1.3m payable over a 4 year period and contingent
consideration of up to $1.5m payable after 4 years subject to the business meeting certain sales growth targets.
The identifiable net assets acquired at fair value were $0.1m resulting in goodwill of $3.7m.
Recognition and measurement
Business combinations
The Group accounts for business combinations using the acquisition method. Identifiable assets acquired and liabilities and contingent
liabilities assumed are measured at fair value. Any excess of the cost of acquisition over the fair values of the net identifiable assets
acquired is recognised as goodwill. Transaction costs are expensed as incurred unless related to the issue of debt or equity securities.
(b) Discontinued operations
On 25 May 2017 Ansell Limited announced that it had executed a binding agreement for the sale of its Sexual Wellness business for
US$600m to Humanwell Healthcare (Group) Co., Ltd and CITIC Capital China Partners III, L.L.P. The associated assets and liabilities were
consequently presented as held for sale in the year ended 30 June 2017 financial statements.
On 4 September 2017 Ansell Limited reported the closing of the sale of its Sexual Wellness business, followed by Ansell’s Brazillian
condom business, Fabrica de Artefatos de Latex Blowtex Ltda on 3 October 2017. The Company also announced that it had executed
an agreement with Raymond Limited, its joint venture partner in J.K. Ansell Limited in India where Raymond Limited will take full
ownership of the J.K. Ansell sexual wellness business. The transaction is expected to be completed in the first half of the 2019 financial
year. The associated assets and liabilities of J.K. Ansell Limted are presented as held for sale.
The comparative consolidated statement of financial performance has been restated to show the discontinued operations separately
from continuing operations.
106
Ansell Limited Annual Report 2018 Results from discontinued operations
Sales revenue
Cost of goods sold
Distribution
Selling, general and administration including change in accounting estimate
3(b)
Gain on sale of business
Profit before income tax
Income tax expense on trading operations
Income tax expense on gain on sale of business
Profit after income tax
Non-controlling interests
Profit from discontinued operations attributable to Ansell Limited Shareholders
Other comprehensive income from discontinued operations
Items that will not be reclassified to the Income Statement
Remeasurement of defined benefit superannuation plans (net of tax)
Items that may subsequently be reclassified to the Income Statement
Net exchange difference on translation of financial statements of foreign subsidiaries
Other comprehensive income from discontinued operations
Attributable to:
Ansell Limited shareholders
Non-controlling interests
Other comprehensive income from discontinued operations
Cash flows from discontinued operations
Net cash from operating activities
Net cash from/(used) in investing activities1
Net cash used in financing activities
Net cash flows from discontinued operations
1. The current period includes $523.2m being the cash received from the sale of the Sexual Wellness
business net of cash disposed, disposal costs paid and tax paid on the gain on sale.
Details of the sale of the discontinued operations
Net sale proceeds
Disposal costs
Net disposal consideration
Carrying amount of net assets sold
Gain on sale before income tax
Income tax expense on gain
Gain on sale after income tax
Note
2018
US$m
2017
US$m
57.7
225.2
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(27.6)
(2.4)
(26.7)
398.2
399.2
(0.2)
(53.4)
345.6
(0.1)
345.5
–
4.8
4.8
5.0
(0.2)
4.8
8.8
522.5
–
531.3
600.2
(40.7)
559.5
(161.3)
398.2
(53.4)
344.8
(96.6)
(9.8)
(78.8)
–
40.0
(11.0)
–
29.0
(0.8)
28.2
(0.1)
1.0
0.9
1.3
(0.4)
0.9
36.2
(5.4)
(1.2)
29.6
–
–
–
–
–
–
–
107
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
18. Acquisitions and Disposal Group Held for Sale continued
Assets and liabilities of discontinued operations
The carrying amounts of assets and liabilities disposed of as at the date of sale were as follows:
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total assets
Trade and other payables
Provisions
Current tax liabilities
Other Liabilities
Total liabilities
Net assets disposed
$USm
15.6
33.4
36.2
35.6
72.7
3.8
2.7
200.0
25.3
7.6
2.8
3.0
38.7
161.3
(c) Disposal group held for sale
As at 30 June 2018 the net assets of J.K. Ansell Limited are stated at their estimated net realisable value and comprised the following
assets and liabilities:
2018
$USm
7.0
1.7
2.2
1.4
12.3
6.0
0.4
6.4
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Assets held for sale
Trade and other payables
Provisions
Liabilities held for sale
108
Ansell Limited Annual Report 2018 Recognition and measurement
Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
• represents a separate major line of business or geographic area of operations;
• is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
• is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified
as held-for-sale.
In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations when an operation is classified as a discontinued
operation prior year comparatives in the Income Statement are restated as if the operation had been discontinued from the start of the
comparative year.
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they
will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured
at the lower of their carrying amount and fair value less costs of disposal. Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial
assets, deferred tax assets, or employee benefit assets which continue to be measured in accordance with the Group’s other accounting
policies. Impairment losses on initial classification as held-for-sale or held-for-distributions, and subsequent gains and losses on
re-measurement are recognised in profit or loss.
In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations assets and liabilities held for sale are disclosed
separately from other assets and liabilities in the Balance Sheet. Prior year comparatives in the Balance Sheet are not restated.
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109
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
19. Parent Entity Disclosures
As at the end of and throughout the financial year ending 30 June 2018, the parent company of the Group was Ansell Limited.
Result of the parent entity
Profit for the period
Other comprehensive income
Total comprehensive income for the period, from continuing operations, net of income tax
Financial position of the parent entity at year end
This table summarises information related to continuing operations:
Current assets
Assets held for sale
Total assets
Current liabilities
Liabilities held for sale
Total liabilities
Total equity of the parent entity comprising:
Issued capital
Reserves
Retained profits
Total equity
2018
US$m
425.5
8.9
434.4
2018
US$m
1,276.5
–
2017
US$m
16.1
(4.5)
11.6
2017
US$m
684.7
18.5
2,806.3
2,311.7
1,352.9
–
1,358.0
1,052.6
(283.0)
678.7
1,448.3
1,100.1
0.4
1,103.6
1,142.2
(249.3)
315.2
1,208.1
The Group has a net current asset position of $853.8m (2017: $698m) which the parent company controls. As at 30 June 2018, the parent
company has a net current liability position of $76.4m (2017: $415.4m). The Directors will ensure that the parent company has, at all times,
sufficient funds available from the Group to meet its commitments.
Parent entity guarantee
The parent entity guarantees the debts of certain subsidiaries that are guarantors under the Group’s revolving credit bank facility.
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Ansell Limited Annual Report 2018 R
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20. Related Party Disclosures
(a) Subsidiaries
Ansell Limited is the parent entity of all entities detailed in Note 17 Particulars Relating to Subsidiaries and from time to time has
dealings on normal commercial terms and conditions with those entities, the effects of which are eliminated in these consolidated
financial statements.
(b) Transactions with Key Management Personnel
(i) Key Management Personnel remuneration
Short-term benefits
Retirement benefits
Long term equity-based incentives
Long term cash-based incentives
Restricted share awards
2018
US$
2017
US$
5,754,784
9,283,091
701,448
629,885
4,269,646
1,712,985
698,626
–
–
568,864
11,424,504
12,194,825
(ii) Service agreements with Key Management Personnel
The Company has no service agreements with the Non-executive Directors. Refer to Section 5 of the Remuneration Report for details of
service agreements with the Managing Director and other Key Management Personnel.
21. Ownership-based Remuneration Schemes
Long Term Incentive Plans
The above plans involve the granting of Performance Share Rights (PSRs) to the Managing Director, other members of the Executive
Leadership Team and other members of senior management.
In accordance with the disclosure requirements of Australian Accounting Standards remuneration includes a proportion of the fair
value of PSRs granted or outstanding during the year. The fair value is determined as at grant date and is progressively allocated over
the vesting period for these securities.
The fair value of PSRs is calculated at grant date. The fair values and the factors and assumptions used in determining the fair values
of the PSRs applicable for the 2018 financial year are as follows:
Instrument
PSRs
PSRs
PSRs
Grant
Date
Vesting
Date
13/8/2015
30/6/2018
11/8/2016
30/6/2019
8/8/2017
30/6/2020
Fair
Value
A$18.53
A$17.95
A$20.41
Share Price
on Grant Date
Risk Free
Interest Rate
Dividend
Yield
A$20.20
A$19.49
A$22.01
N/A
N/A
N/A
3.00%
2.85%
2.60%
The PSRs are subject to a gateway condition and a performance condition as outlined in the Remuneration Report. As the hurdles within
these conditions are all non-market based performance hurdles the valuation excludes the impact of performance hurdles.
Options
As at the date of this Report, there is no unissued ordinary shares in the Company that remain under option.
Executive Share Plan
The number of Executive Plan Shares (ordinary plan shares paid to A$0.05) as at balance date are shown in Note 13 Issued Capital
and Reserves.
111
Ansell Limited Annual Report 2018
Notes to the Financial Statements continued
22. Auditors’ Remuneration
Audit and review of the financial reports:
Auditors of Ansell Limited and Australian entities – KPMG
Other member firms of KPMG (i)
Other services (ii):
Advisory services
Auditors of Ansell Limited and Australian entities – KPMG
Other member firms of KPMG
Other audit and assurance services
Other member firms of KPMG
Taxation and other services
Other member firms of KPMG
Total other services
Total auditors' remuneration
2018
US$
2017
US$
1,421,889
1,572,490
714,509
960,200
2,136,398
2,532,690
172,851
–
–
132,016
28,000
2,140
9,010
6,647
209,861
140,803
2,346,259
2,673,493
(i) Includes fees paid or payable for overseas subsidiaries’ local statutory lodgement purposes, group reporting, and other regulatory compliance requirements.
(ii) Other services primarily include assurance based engagements undertaken for compliance and internal governance purposes, tax and IT compliance.
Other services provided by KPMG to the Group are subject to appropriate corporate governance procedures encompassing the selection of service providers
and the setting of their remuneration.
112
Ansell Limited Annual Report 2018 Directors’ Declaration
1. In the opinion of the Directors of Ansell Limited (‘the Company’):
(a) The consolidated financial statements and notes, set out on pages 64 to 112, and the Remuneration Report contained
in the Report by the Directors, set out on pages 39 to 63, are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance, for the year
ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) The consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 1;
(c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and the Chief Financial Officer for the financial year ended 30 June 2018.
Signed in accordance with a resolution of the Directors:
G L L Barnes
Chairman
M R Nicolin
Director
Dated in Melbourne this 20th day of August 2018.
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113
Ansell Limited Annual Report 2018
Independent Audit Report
to the members of Ansell Limited
Independent Auditor’s Report
To the shareholders of Ansell Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Ansell Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group's financial position as at 30 June
2018 and of its financial performance for
the year ended on that date; and
The Financial Report comprises:
• Consolidated Balance Sheet as at 30 June 2018
• Consolidated Income Statement, Consolidated Statement
of Comprehensive Income, Consolidated Statement of
Changes in Equity, and Consolidated Statement of Cash
Flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
• complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of the Company and the entities it
controlled at the year end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
114
Ansell Limited Annual Report 2018
Key Audit Matters
The Key Audit Matters we identified
are:
• Valuation of goodwill and brand names
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
• Taxation
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Valuation of goodwill and brand names (USD$979.4m)
Refer to Note 9 to the Financial Report
The key audit matter
How the matter was addressed in our audit
At 30 June 2018, the Group has
$979.4m (39% of total assets) of
goodwill and brand names. The sectors
in which the Group operates
experienced economic and currency
volatility during the current period. In
addition, one of the Group’s key
strategic focuses is on organic growth
through new product development. The
inherent uncertainty in the performance
of new products and the market volatility
increase the risk of impairment and also
present challenges to the Group’s cash
flow forecasting.
Further, the Group’s cash generating
units (CGUs) operate in different
countries or regions which give rise to
complexity in determining a discount
rate specific to each CGU.
Valuation of goodwill and brand names is
a key audit matter due to:
• the inherent complexity in auditing the
forward-looking assumptions applied
to the Group’s value in use (VIU)
models for each CGU given the
significant judgement involved. The
key assumptions in the cash flow
models include the forecast revenue
growth rate, terminal growth rate, raw
material prices, and margin
percentages; and
Our procedures included:
• assessing the accuracy of prior period cash flow forecasts
of the Group by reference to actual performance to inform
our evaluation of current forecasts incorporated in VIU
models;
• using our knowledge of the Group and industry, and
involving our valuation specialists, to challenge the
significant judgements and assumptions incorporated in the
Group’s VIU models by;
•
•
•
•
assessing the relevant cash flow forecasts and
underlying assumptions against the latest Board
approved long range plan (‘LRP’) and the new product
strategy;
challenging the Group’s forecast revenue growth
rate, raw material prices and margin percentage
assumptions by comparing against the Group’s
current business performance and macroeconomic
environment;
considering the impact to future cash flows of
changes experienced during the year relating to the
varying market conditions and expected volatility in
the forecast period; and
considering the terminal growth rates used in
comparison to relevant Gross Domestic Product
growth rates and industry trends.
• involving our valuation specialists in assessing the discount
rate for each CGU by considering comparable market
information;
• assessing the Group’s determination of carrying values of
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115
Ansell Limited Annual Report 2018
Independent Audit Report continued
to the members of Ansell Limited
• The significant judgement associated
with discount rates including the
underlying risks of each CGU, the
regions they operate in and the
weighting applied to these risks.
In addition, the Group restructured its
Global Business Units (GBU’s) during the
year, necessitating our consideration of
the allocation of goodwill and brand
names to the CGU's.
CGUs against the requirements of the accounting
standards;
• evaluating the Group’s sensitivity analysis in respect of the
key assumptions, including the identification of areas of
estimation uncertainty and reasonably possible changes in
key assumptions;
• assessing the related financial statement disclosures
against accounting standard requirements; and
• we analysed the restructure of the GBU’s and the Group’s
internal reporting to assess the Group’s monitoring and
management of activities, and the consistency of the
allocation of goodwill and brand names to CGUs.
Taxation (Income Tax Expense USD$4.7m, Deferred Tax Assets $67.6m, Deferred Tax Liabilities
USD$71.1m, Current Tax Liabilities USD$14.9m)
Refer to Note 4 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group operates in a global tax
environment across a number of tax
jurisdictions. The corporate structure
reflects the nature of the global
operations and is driven by acquisitions,
transactions and the execution of the
Group’s continued global commercial
strategy. This strategy includes:
• manufacturing in countries with
access to raw materials (including Sri
Lanka, Thailand, India, Mexico, Korea
and Malaysia);
• managing sales and marketing on a
regional basis. The key regional
countries involved are the US, Belgium
and Australia for the North America,
EMEA and Asia Pacific regional
structures respectively; and
• external sales across many countries.
Our procedures included:
• identify key tax areas impacting the Group by:
•
•
•
•
considering the latest Board approved Group Tax Risk
Management policy;
attending regular meetings with Group management;
considering any judgmental positions; and
using our specialised knowledge of external
developments in local jurisdictions and global tax
environments;
• evaluating the treatment of key tax areas using our local tax
specialists’ knowledge by comparing against the local
jurisdiction tax rules, legislation and compliance
requirements;
• focusing on new transactions undertaken in the year and
where there had been significant developments with local
tax authorities;
• assessing the completeness of the tax provisions recorded
Taxation is a key audit matter due to:
by evaluating explanations using sources such:
• the number of jurisdictions and the
need to consider their varying tax
complexities and differing tax rules
within each key jurisdiction including
•
•
communications from local tax authorities, including
the status of recent and current tax authority audits
and enquiries;
the outcomes of previous tax audits/reviews by the
116
Ansell Limited Annual Report 2018
US, Belgium and Australia;
local tax authorities; and
• the nature of cross-border tax
•
transaction documentation.
arrangements and our need to involve
taxation specialists with significant
cross border transactions experience
and expertise in transfer pricing in key
operational locations including; US,
Belgium and Australia;
• considering tax advice obtained by the Group from external
tax advisors. We assessed the skills and competencies of
external advisors;
• evaluating the tax balances and disclosure in the financial
statements against accounting standard requirement;
• the changing tax environment where
• assessing the impact of the reduction in the US tax rate and
compliance with tax rules; and
• evaluating the taxation and tax accounting treatment of the
Sexual Wellness divestment.
there have been significant
developments to improve the
transparency of tax arrangements; and
• the heightened awareness of tax
disclosures given the global focus on
tax transparency.
• the level of judgement applied by the
Group in assessing the recoverability
of deferred tax assets.
In addition, the following one off events
required additional audit effort in FY18:
• the change in US tax rate; and
• the taxation implications of the Sexual
Wellness divestment.
Other Information
Other Information is financial and non-financial information in Ansell Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
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117
Ansell Limited Annual Report 2018
Independent Audit Report continued
to the members of Ansell Limited
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate the
Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
118
Ansell Limited Annual Report 2018
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Ansell Limited for the year
ended 30 June 2018, complies with
Section 300A of the Corporations Act
2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 42
to 61 of the Directors’ report for the year ended 30 June 2018.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with
Australian Auditing Standards.
KPMG
Suzanne Bell
Partner
Melbourne
20 August 2018
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119
Ansell Limited Annual Report 2018
Five-Year Summary
of Ansell Limited and Subsidiaries for the year ended 30 June 2018
2014
US$m
1,590
84
18
21
3
42
321
611
206
1,068
155
–
2,360
243
14
108
720
134
–
1,219
1,141
1,227
49
(151)
1,125
16
1,141
1,555
29.3
29.1
US39.0
7.5
221
53
33,886
12,607
5.3
4.6
5.4
85.9
4.6
78.7
153
2015
US$m
1,645
245
21
34
2
188
278
619
231
1,116
132
–
2,376
244
7
79
734
147
–
1,210
1,167
1,230
(49)
(29)
1,152
15
1,167
1,629
122.5
121.4
US43.0
7.6
200
84
36,014
14,500
14.9
16.4
15.1
81.4
11.4
79.8
153
2016
US$m
1,573
237
22
53
3
159
270
577
245
1,077
122
–
2,291
241
5
69
687
152
–
1,154
1,137
1,147
(88)
62
1,121
16
1,137
1,559
105.1
104.5
US43.5
7.7
232
67
39,884
15,890
15.0
14.1
14.9
85.6
10.7
77.8
148
2017 1
US$m
20181
US$m
1,600
218
23
45
2
148
314
546
218
1,050
122
201
2,451
230
4
86
717
142
43
1,222
1,229
1,142
(78)
147
1,211
18
1,229
1,636
100.1
98.9
US44.0
8.3
216
51
36,798
15,483
13.6
12.7
13.6
83.2
9.6
73.9
147
1,548
557
13
58
2
484
580
561
230
1,028
112
12
2,523
226
–
68
552
121
6
973
1,550
1,052
(82)
564
1,534
16
1,550
1,522
336.8
331.9
US45.5
10.9
154
46
34,307
12,482
36.0
35.0
35.3
82.1
44.6
25.3
142
Income Statement
Sales
EBIT
Net financing costs
Income tax expense
Non-controlling interests
Profit attributable to Ansell Limited shareholders
Balance Sheet
Cash – excluding restricted deposits
Other current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Assets held for sale
Total assets
Current payables
Current interest bearing liabilities
Other current liabilities
Non-current interest bearing liabilities
Other non-current liabilities
Liabilities held for sale
Total liabilities
Net assets
Issued capital
Reserves
Retained Profits/(Accumulated Losses)
Ansell Limited shareholders’ equity
Non-controlling interests
Total shareholders’ equity
Total funds employed
Share information
Basic earnings per share (cents)
Diluted earnings per share (cents)
Dividends per share (cents)
Net assets per share ($)
General
Net cash from operating activities
Capital expenditure
Shareholders (no.)
Employees (no.)
Ratios
EBIT margin (%)
Return on average shareholders’ equity (%)
EBIT return on funds employed (%) – ROCE
Average days working capital
Interest cover (times)
Net liabilities to shareholders’ equity (%) – gearing
Number of shares at 30 June (million)
1. Includes continuing and discontinued operations.
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Shareholders
Details of quoted shares held in Ansell Limited as at 31 July 2018.
Distribution of Ordinary Shareholders and Shareholdings
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Number of Shares
Percentage of Total
27,160
6,350
465
186
38
34,199
9,487,416
12,244,744
3,192,891
4,377,351
112,977,687
142,280,089
6.67%
8.61%
2.24%
3.08%
79.41%
100.00%
* Including 571 shareholders holding a parcel of shares of less than A$500 in value (1,911 shares), based on market price of $28.81 per unit.
Percentage of the total holdings of the 20 largest shareholders = 77.56%.
In addition to the foregoing, as at 30 June 2018, there were 19 members of the Executive Share Plan, holding a total of 49,700 plan
shares. Fourteen members have shares paid to 5 cents each, and 5 members have shares paid to $7.55 each.
Voting rights as governed by the Constitution of the Company provide that each ordinary share holder present in person or by proxy
at a meeting shall have:
(a) on a show of hands, one vote only;
(b) on a poll, one vote for every fully paid ordinary share held.
Twenty Largest Shareholders (as at 31 July 2018)
Rank Registered Holder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Bnp Paribas Noms Pty Ltd
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