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www.BramBles.com
BramBles limited
Level 40, Gateway
1 Macquarie Place
Sydney NSW 2000, Australia
Tel: 61 (0) 2 9256 5222
Fax: 61 (0) 2 9256 5299
General enquiries
Email: info@brambles.com
investor and analyst enquiries
MichAEL RobERTS
Vice President investor Relations and corporate Affairs
Tel: 61 (0) 2 9256 5222
Fax: 61 (0) 2 9256 5299
Email: michael.roberts@brambles.com
retail shareholders
For Share Registrars’ details go to page 54 of this Annual Report.
b
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9
09:00 | CHEP SALES REP ON THE WAY
TO MEET WITH A CUSTOMER
brambles is committed to achieving Zero harm, which
means zero injuries and zero environmental damage,
and has used a PEFc, chain of custody accredited
printer to produce this Annual Report.
PEFC/01-00-01
business
NEVER sLeePs
bRAMbLES ANNUAL REPORT 2009
09:00 | TRUCkLOAd Of PALLETS HEAdINg
TO CHEP SERvICE CENTRE fOR
INSPECTION ANd REPAIR
08:30 | MANUfACTURER dESPATCHEd
gOOdS ON CHEP PALLETS TO
A RETAILER dISTRIbUTION
CENTRE
09:00 | RECALL COURIER EN ROUTE
TO PICk-UP CUSTOMER
dOCUMENT CARTONS fOR
ARCHIvINg
EVERY SECOND
eVeRY DAY
EVERY TRADING
Continent
Through our global businesses
of CHEP and Recall, we meet
the demands of our customers
efficiently, safely and sustainably
using sophisticated operating
models tailored to the demands
of diverse trading environments
around the world.
Despite the challenging
economic environment, the
world doesn’t stop – and neither
do we. Our businesses help
keep the world moving. From
fresh produce and groceries to
the most sensitive paper and
digital documents, our 12,000
employees are committed to
the optimal movement of goods
and information.
Contents
001 _ Chairman and CEO’s Report
002 _ Performance Summary
004 _ Our Global Reach
006 _ Strategy Matrix
010 _ Operational and Financial Review
018 _ Board of Directors
020 _ Executive Leadership Team
022 _ Corporate Governance Statement
035 _ Directors’ Report – Remuneration Report
049 _ Directors’ Report – Other Information
054 _ Shareholder Information
057 _ Financial Report – Financial Statements
126 _ Financial Report – Directors’ Declaration
127 _ Financial Report – Independent Auditors’ Report
129 _ Auditors’ Independence Declaration
130 _ Five Year Financial Performance Summary
131 _ Glossary
IBC _ Investor Information
note: All growth percentages in this Annual Report are in constant currency, unless stated otherwise.
brambles Limited
AbN 89 118 896 021
inVestoR inFoRMAtion
BramBles limited
Level 40, Gateway
1 Macquarie Place
Sydney NSW 2000
Australia
Telephone: 61 (0) 2 9256 5222
Facsimile: 61 (0) 2 9256 5299
Website: www.brambles.com
brambles Limited has a primary listing on
the Australian Securities Exchange and a
secondary listing on the London Stock
Exchange. The global headquarters of
brambles is in Sydney, Australia.
All currency amounts in this report are
in US dollars unless otherwise specified.
annual General meetinG
The 2009 Annual General Meeting of
brambles Limited will be held on Thursday,
19 November 2009 at 2.00pm (AEDT) at:
The Savoy ballroom
Grand hyatt Melbourne
123 collins Street
Melbourne Vic 3000
A live webcast of the meeting will be
broadcast on www.brambles.com.
dividend
The final dividend of 12.5 Australian cents
per share is 20% franked for all shareholders
in brambles Limited and will be paid on
8 october 2009.
brambles Limited offers a dividend
reinvestment plan for shareholders resident
in Australia and New Zealand. Further details
are available from Link Market Services,
whose contact details shown on page 54.
cDi holders will receive their dividend
payments as soon as possible after ordinary
shareholders, once fx transactions have
been completed.
cDis holders who are also cREST
participants can expect to receive their
dividend payments via cREST electronic
Unmatched Stock Event (USE) messages,
once the cash has been received and
reconciled by Euroclear UK & ireland, taking
note of their election (if any) of a default
payment currency option as detailed in the
Euroclear UK and ireland international
service description.
For cDi holders who use the Equiniti
corporate nominee service, additional
processing time is required to print and mail
cheques, or, for holders who have completed
dividend mandate forms, to set up cash
transfers into their bank accounts. All cDi
holders who use the Equiniti corporate
nominee service will receive their dividends
in pounds sterling.
BramBles Business units
cheP americas
8517 South Park circle
orlando FL 32819-9040
United States of America
Telephone: 1 407 370 2437
Facsimile: 1 407 363 5354
Email: chep@brambles.com
Website: www.chep.com
cheP emea
Rotherwick house
3 Thomas More Street
London
E1W 1YZ
United Kingdom
Telephone: 44 (0) 1932 833 089
Facsimile: 44 (0) 207 702 1612
cheP asia-Pacific
Level 6, building c
11 Talavera Road,
North Ryde NSW 2113
Australia
Telephone: 61 (0) 2 9856 2437
Facsimile: 61 (0) 2 9856 2404
recall
one Recall center
180 Technology Parkway
Norcross GA 30092
United States of America
Telephone: 1 770 776 1000
Facsimile: 1 770 776 1001
Email: recall@brambles.com
Website: www.recall.com
1
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Chairman and CEO’s rEpOrt
this year the Sustainability Report will be published on Brambles’
website prior to the 2009 Annual General Meeting. It will provide
more information on our journey in creating a sustainable company
and sustainable shareholder value.
safety
During the year there were, sadly, two work-related fatalities in the
Group. In october a Recall vehicle in Canada struck and killed a
pedestrian and in november, Mr Suresh Kumar, an employee of Recall in
India was fatally injured from the collapse of file shelving. these tragic
events are unacceptable and our sincere condolences are extended to
the families, friends and colleagues of those affected. Brambles has a
very strong commitment to Zero Harm and we constantly review our
procedures and processes to reinforce our Zero Harm safety culture
throughout all workplaces.
CHep usa review
Brambles has been undertaking a major review of CHep uSA to best
position the business for the medium and long term. the review is on
track for completion by the end of September, with the outcomes to be
announced in early october. Further information can be found on pages 12
and 13.
well plaCed to aCCelerate finanCial performanCe as
eConomies reCover
Brambles’ initiatives to deal with the economic downturn, address
customer requirements, improve cost structures and realise efficiencies
will provide a solid foundation to drive future operating performance. We
will also continue our investments in China, India, Germany and Central
and eastern europe to drive additional medium to long term growth.
Recent early signs of improving macro-economic stability are
encouraging. In particular, the destocking by CHep’s customers
appears to be coming to an end. Improving economic conditions will,
in due course, positively impact our major customers as they return
to growth, which in turn will benefit Brambles due to its strong
underlying business models and robust new business pipeline.
even in a severe economic downturn, Brambles has delivered sales
revenue growth. As global economies improve we plan a return to our
traditional stronger rate of sales revenue growth and we would expect:
—
organic volumes that declined last year to return to positive growth;
—
growth on recently won business;
—
to continue to win significant new business;
—
additional revenue from our investment in new growth
opportunities;
CHep to benefit from operating leverage through an improved cost
structure as pallets are moved back to the market to generate
revenue; and
improvements in the automotive sector and Recall’s SDS business
as activity levels improve and recycled paper prices increase.
—
—
Consequently, combined with an ongoing focus on cash generation and
a strong balance sheet, Brambles is well placed to accelerate financial
performance as economies recover.
Graham Kraehe ao | CHAIRMAn
miKe ihlein | CHIeF exeCutIve oFFICeR
BramBles limited Annu Al RepoRt 2009
1
Mike Ihlein, Ceo (left) and Graham Kraehe Ao, Chairman (right)
Your Company achieved sales revenue growth and a very strong cash
flow performance for the year ended 30 June 2009 despite the
weakest global economy in decades.
this resilient performance demonstrates the strength of our business
models. new business wins (net of any losses) were approximately
uS$100 million and, together with some price and mix gains, offset
weak organic volumes.
our investment in growth initiatives in China, India, Germany and
poland, a focus on cash generation, disciplined capital management and
implementation of initiatives to deal with the economic downturn have
positioned Brambles well to accelerate its financial performance as the
world’s economies recover.
A summary of the results can be found on pages 2 and 3, while a full
review of operations for the year begins on page 10.
dividend
the Board declared a final dividend of 12.5 Australian cents per share,
franked to 20%, taking the full year dividend total to 30.0 Australian
cents per share, compared with 34.5 Australian cents the previous year.
this reflects the Board’s focus on prudent conservation of cash in the
current environment. During 2009, the Board also introduced a dividend
reinvestment plan.
Board and Corporate GovernanCe
In March, Mr Brian Schwartz joined the Brambles Board as a
non-executive Director and in early September 2009 the Company
announced that Mr John Mullen would join the Board as a non-executive
Director from 1 november 2009. Both new directors bring a wealth of
international business experience to the Board.
During the year, the Board continued to review best practice corporate
governance and consequently implemented a number of changes.
the Corporate Governance Statement on pages 22 to 34 outlines
the key components of Brambles’ governance framework.
sustainaBility
Sustainability is fundamental to the way Brambles does business and
both CHep and Recall make a positive contribution to sustainable
business practices, especially for our customers. As you can see on pages
6 and 7, Sustainability is a core part of both CHep and Recall’s strategy.
performanCe summary
rEsiLiEnt pErFOrmanCE
+
Revenue growth and strong cash flow
+
Net new business wins across all regions
+
+
Focus on cash generation and disciplined capital management
reinforces strong balance sheet
Initiatives to improve cost structures and underpin future operating
performance on track
+
New Walmart arrangements successfully implemented
us$ millions
Continuing operations
Sales revenue
Underlying profit
Underlying profit after finance costs and tax
Significant items after tax
Profit after tax
Profit after tax – discontinued operations
Profit for the year
earnings per share (us cents)
EPS on Underlying profit after finance costs and tax
Basic EPS
Cash flow
Cash flow from operations
Free cash flow after dividends
Net debt
Net debt / EBITDA (times)
EBITDA / net finance costs (times)
Gearing (net debt/net debt + equity)
Brambles Value Added (BVA) at fixed exchange rates
2009
2008
% CHanGe
% CHanGe
at Constant
CurrenCy
(8)
(16)
(17)
(33)
(30)
(15)
(29)
1
(8)
(9)
(7)
4,018.6
900.6
534.3
(100.3)
434.0
18.6
452.6
38.5
32.6
722.4
141.9
4,358.6
1,071.9
640.0
6.9
646.9
1.8
648.7
45.4
46.0
810.0
(32.2)
2,143.4
2,426.2
1.8
10.0
60.0%
334
1.6
10.0
61.1%
532
Total dividend (Australian cents per share)
30.0
34.5
note
Constant currency results are presented by translating both 2009 and 2008 foreign currency results into US dollars at the actual
monthly exchange rates applicable in 2008, so as to show relative performance between the two years before the translation impact
of currency fluctuations.
30.0C
ToTal dividend
ausTralian cenTs
$722.4m
cash flow from
operaTions us$
$1.9B
debT refinanced
durinG year us$
2
BramBles limited Annu Al RepoRt 2009
rEsiLiEnt pErFOrmanCE
sales revenue us$
$4,018.6m
$900.6m
$534.3m
underlyinG profiT us$
underlyinG profiT afTer
finance cosTs and Tax us$
38.5C
earninGs per share us cenTs
SALES FROM CONTINUING OPERATIONS1
(US$ MILLIONS)
UNDERLYING PROFIT1
(US$ MILLIONS)
4,359
3,869
4,019
9%
3,522
8%
3,275
8%
40%
8%
38%
36%
38%
38%
37%
8%
36%
38%
36%
39%
By business:
16%
16%
17%
17%
17%
CHEP Asia-Pacific
CHEP EMEA
CHEP Americas
Recall
1,099
953
9%
35%
9%
927
36%
7%
35%
798
10%
617
12%
37%
41%
34%
13%
44%
44%
By business:
47%
CHEP Asia-Pacific
41%
12%
12%
11%
11%
CHEP EMEA
CHEP Americas
Recall
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
CASH FLOW FROM CONTINUING OPERATIONS1
(US$ MILLIONS)
EARNINGS PER SHARE2
(US CENTS)
867
847
752
11%
7%
756
8%
41%
35%
42%
2%
49%
40%
37%
35%
CHEP Asia-Pacific
43%
By business:
25.3
18.2
698
10%
43%
34%
45.4
37.3
38.5
13%
11%
10%
15%
14%
CHEP EMEA
CHEP Americas
Recall
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
note
1 Excludes unallocated Brambles Headquarters costs.
2 EPS on Underlying profit after finance costs and tax.
BramBles limited Annu Al RepoRt 2009
3
our GloBal rea CH
+
45counTries around
The world
ARGENTINA
AUSTRALIA
AUSTRIA
BELGIUM
BOTSWANA
BRAZIL
CANADA
CHILE
CHINA
CZECH REPUBLIC
DENMARK
FINLAND
FRANCE
GERMANY
GREECE
HONG KONG
HUNGARY
INDIA
INDONESIA
IRELAND
ITALY
LUXEMBOURG
MALAYSIA
MEXICO
NAMIBIA
NETHERLANDS
NEW ZEALAND
NORWAY
POLAND
PORTUGAL
SAUDI ARABIA
SINGAPORE
SLOVAKIA
SLOVENIA
SOUTH AFRICA
SPAIN
SWAZILAND
SWEDEN
SWITZERLAND
TAIWAN
THAILAND
TURKEY
UAE
UK
URUGUAY
USA
ZIMBABWE
$35m
US$ sales revenue
impact of net new
business wins in
CHEP USA
6%
Recall Europe's sales
revenue growth for
the year
12%
CHEP Latin America's
sales revenue growth
for the year
ToTal asseTs us$
$5.1B
21%
$334m
reTurn on capiTal invesTed
brambles value added (bva) us$
4
BramBles limited Annu Al RepoRt 2009
palleTs & conTainers
1B
+
300m
88m $4.0B
eQuipmenT movemenTs
manaGed every year
sales revenue us$
carTons of
informaTion sTored
$40m
US$ sales revenue
impact of net new
business wins in
CHEP Europe
16%
CHEP Middle East and
Africa's sales revenue
growth for the year
250+
Customers CHEP now
has in its emerging
China business
4%
Sales revenue growth
of CHEP Asia-Pacific's
RPC business
BramBles limited Annu Al RepoRt 2009
5
strateGy matrix
thE jOurnEy ahEad
tHeme
wHat
How
CHep StRAteGY
CUSTOMER SATISFACTION
AND QUALITY
OPERATIONAL EXCELLENCE
AND SUSTAINABILITY
+
Deliver superior customer
value by understanding future
customer needs, effectively
target and innovate service
offerings and achieve
the highest quality
customer experience
+
Leverage know-how, scale
and network coverage to
optimise service delivery
costs and achieve maximum
environmental benefit for
CHEP and its customers
and partners
GROWTH
+
Drive significant sustainable,
profitable growth over
medium to long term
supported By
wHat
PEOPLE
SYSTEMS
+
Attract, retain and motivate
the best people to deliver
CHEP’s strategy
+
Deliver cost-effective systems
solutions to enable growth for
CHEP and enhanced ease of
doing business for customers
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Partner with customers
Develop deep insights into future customer needs
Create innovative services and products (including new
platforms) to meet and exceed customer current and
future needs
Continue to deliver quality platforms to achieve the
best overall supply chain solution
Enhance ease of doing business through simpler,
improved systems and processes
Minimise supply chain costs through network
optimisation
Drive process and service delivery efficiency through
application of Lean, Six Sigma and other tools
Maximise asset efficiency and minimise asset leakage
Realise scale efficiencies
Develop solutions with customers to reduce the
environmental impact of their supply chain activity
Control emissions and waste
Continue to embed Zero Harm principles
Expand in existing geographies and segments
Enter new geographies and segments
Develop new pallet pooling solutions and platforms
Create new service offerings
Leverage CHEP’s information and customer
relationships to optimise supply chain costs
How
Attract the best
Develop, motivate, educate and train people to
achieve potential
Organise to deliver
Leverage global information systems investments in
SAP and other applications to achieve maximum value
to CHEP and its customers
Leverage business intelligence capabilities and
techniques to extract value for customers
Provide easy-to-use tools to simplify doing business
with CHEP and enhance customer experience
6
BramBles limited Annu Al RepoRt 2009
Our objective is to deliver the world’s best supply
chain solutions and information management
services to customers. We know what to do and
how to do it.
tHeme
wHat
How
ReCAll StRAteGY
BUSINESS EXCELLENCE
+
Deliver best in class service,
security and efficiency
+
+
+
Leverage global reach through benchmarking and best
practice sharing
Continuously drive efficiency improvements and ease
of doing business through Lean, Six Sigma, Perfect
Order and continuous improvement techniques
Add value to customer relationships through global
information management tools and world class
standard operating procedures
PROFITABLE GROWTH
EXPAND THE OFFERING
+
Develop profitable
partnerships with current and
new customers
+
+
+
Expand in existing geographies and segments
Enter new segments
Increase cross-selling and value-added services
+
Increase value to customers
through new services,
products and geographies
+
+
+
+
Partner with customers to develop deeper insights into
future needs and target customer specific solutions
Add complementary service offerings
Enter new geographies
Utilise technology such as radio frequency
identification (RFID) to increase value to customers
SUSTAINABILITY
+
Provide value to stakeholders
through financial stability and
low environmental impact
+
+
+
Reduce customers’ environmental impact
Control emissions and waste
Continue to embed Zero Harm principles
supported By
wHat
How
PEOPLE
SYSTEMS
+
Attract, retain and motivate
the best people to deliver
Recall’s strategy
+
Develop industry-leading
standards to deliver solutions
that allow customers to work
effectively and efficiently
+
+
+
+
+
Attract the best
Develop, motivate, educate and train people to
achieve potential
Organise to deliver
Implement multi-year Business Technology
Transformation Program to develop new solutions
and drive growth
Implement industry-leading systems that:
-
Enable customers to operate more efficiently
and to focus on their own core business activities
Enhance ease of doing business with Recall
-
BramBles limited Annu Al RepoRt 2009
7
stratEgy matrix – CONTINUED
CHep Case studies*
1. transport optimisation
Customer and opportunity
A leading manufacturer of welded steel pipe wanted to centralise
command and control of its transport management. the company had
grown by acquisition and transport operations had been assimilated
without centralisation or process standardisation and it wanted to protect
itself from significant increases in freight costs.
Solution
leanlogistics and the customer designed and implemented
a transport management solution that:
—
rationalised the carrier base and implemented transport contracts
using a network-wide rate;
centralised command and control of transportation through
leanlogistics on-Demand tMS® solution – from managing
contracts through to payment of freight bills; and
employed leanlogistics to manage the day-to-day
transport operations.
—
—
the entire project was accomplished in less than 100 days.
Customer benefits
lower transport costs and higher than expected savings on freight bills.
A reduction of the carrier base from 230 to 80 (and further reductions
expected) assures the supply of transport from a more manageable
carrier base.
A change in freight quotation processes has allowed the customer
to benefit from standardised rates and carrier contracts and through
leanlogistics’ on-Demand tMS® solution, provides visibility of its
transportation and management information in terms of metrics,
service levels and costs.
2. on-site total pallet management solution
Customer and opportunity
A multi-national consumer goods manufacturing company wanted a high
quality shipping platform with improved customer service at a lower
overall cost to serve.
Solution
CHep established a total pallet Management (tpM) program on the
manufacturer’s site. By using a limited amount of space within the
customer’s operation, CHep can sort pallets on-site. pallets that meet
the customer’s criteria are sent directly to its operational area.
the program eliminates legs of transportation in the supply chain
network and provides the customer an on-site CHep representative
who can handle all of its pallet-related needs including inventory
management, quality assurance, invoicing and site level account
management.
the site’s success can be gauged by the customer’s willingness to
establish tpMs at additional manufacturing sites. the customer has
also agreed to award additional business to CHep.
Customer benefits
the program has achieved immediate annual savings of approximately
uS$250,000 for the customer by lowering the cost of goods sold. the
customer is now receiving high quality pallets at a lower overall cost.
CHep representatives located on site are consistently delivering pallets
that meet the customer’s needs.
the establishment of a second program on another site is expected
to deliver additional annual cost savings of uS$200,000. A further
uS$100,000 in savings is anticipated for additional volume that was
awarded as a result of the program.
8
BramBles limited Annu Al RepoRt 2009
3. network optimisation
Opportunity
CHep collects more than 400 million pieces of equipment from its
european customer base each year and while this process is successful,
improvements to the process were identified.
Solution
through the alignment of collection processes and making best use of
internal data, CHep has developed an intelligent system that predicts pallet
flows through any one of its 300,000 customer locations across europe.
CHep reviewed core flow volumes through customer locations and found
that, for most customers, 80% of their volumes were stable. this allows
CHep to work with customers and transporters to put in place agreements
that facilitate stable transport flows with a clear, consistent cost base.
the system streamlines transport flows from CHep service centre to
manufacturer locations then back to the service centre, reducing CHep’s
costs and making customer collections more reliable.
the process is currently being implemented in europe, with around 70% of
the volume expected to be covered by the end of the 2009 calendar year.
Customer benefits
this new system allows CHep to more effectively organise transport for
customers and provides greater assurance that locations will be visited at
the right time. A predictable process means lower costs and fewer pallet
losses at each location.
In the uK and Italy, preliminary feedback via customer surveys has been
encouraging with around 12% increase in satisfaction among retailers.
4. one-touch solution
Customer and opportunity
Woolworths, one of Australia’s largest retailers, turned to CHep to deliver
a durable, high quality reusable plastic container that could be shipped
from fresh fruit and vegetable suppliers through the supply chain to end
retail display with minimal handling.
Solution
In February 2009 CHep and Woolworths launched a specially designed
range of foldable reusable plastic crates (FRpCs) to streamline the
delivery of selected fresh produce from suppliers to Woolworths
supermarkets around Australia.
Developed specifically for the Woolworths supply chain by CHep and the
FRpC designers, the crates allow fresh produce suppliers to pack and
transport produce from farms direct to supermarket shelves. the
one-touch solution means that the Woolworths customer who places the
produce into their shopping basket is the first person to touch the produce
since it left the farm.
Customer benefits
this precision packaging reduces product damage and minimises waste.
Fully recyclable, the crates are designed to reduce manual handling
oH&S risks and, by significantly reducing the incremental folding height
of the crates, achieves up to 40% savings on reverse logistics costs.
the crates also eliminate the requirement for waxed cardboard cartons,
string nets and styrofoam plastic boxes in the supply chain and reduce
waste going to landfill. It is estimated that over 50 million single use
cardboard cartons will be eliminated from Woolworths’ supply chain
each year.
* CHEP will not disclose a customer’s name unless it receives permission from
the customer.
reCall Case studies*
1. account payables solution
Customer and opportunity
A global leader in industrial automation and power technologies wanted
to standardise its accounts payable process in 30 countries. the customer
also requested that the new process solution be compliant with all local
laws and regulations. under its current operational framework not only
was the accounts payable function managed differently in each of the
targeted 30 countries but internal invoices generated between them were
also processed in a non-standard manner, adding to the complexity and
inefficiency of the execution of a critical function within the organisation.
Solution
Recall implemented a process in which the customer’s suppliers
send their invoices locally to Recall’s operations. upon receipt of the
documents, Recall scans, enhances and forwards the information to
Recall’s Global Centre of excellence in ostersund, Sweden where the
images are processed by optical character recognition (oCR) technology
and data files are created to the client’s specifications. the invoice
images and data files are then transmitted to the customer within
24 hours of receipt.
Customer benefits
the solution provides the customer a standardised global framework with
the flexibility to meet specific invoice compliance needs of each country.
this process solution has reduced both payment processing time and
administration costs and increased compliance with regulations. this
process solution has also removed the need to transport several tonnes
of paper annually, hence benefiting the environment in a variety of ways.
2. document workflow services
Customer and opportunity
A major insurance company operating in South America had an outdated
document imaging system. With changes in regulation on the horizon
that would require all applications from 80 separate locations to be
processed within 15 days, it was unlikely that the customer was going
to be successful in implementing changes to its legacy systems in order
to meet the pending legislative change.
Solution
Recall developed a comprehensive document workflow management
process that included scanning, indexing, workflow storage, processing
and retrieval technologies. Recall’s Review and onBase systems were
used to import the applications, which were then successfully integrated
with the customer’s legacy systems.
Customer benefits
the time taken to issue insurance policies has been reduced by 50%,
with the time required to conduct pre-analysis of applications reduced
by 2,000 hours per month, thus resulting in significant cost savings
for the customer. the solution implemented by Recall has enabled
the customer’s service offering to be significantly improved and has
helped the customer achieve compliance at all locations before the
regulatory deadline.
3. rfid for information management
Customer and opportunity
A leader in the global pharmaceutical industry required an information
management solution that could guarantee the traceability of critical
records throughout their lifecycle and, at the same time, execute audits
for regulatory compliance both quickly and efficiently.
Given the sensitive nature of their business and highly regulated
environment in which the company operates, adherence to global
standards, process transparency and security were of critical
importance in selecting a partner.
After a lengthy audit process, the company selected Recall to implement
and manage its critical physical records.
Solution
Recall implemented a physical document management solution that
tracks information holdings at all stages throughout the chain of
custody. All company cartons are tagged with a Recall RFID tag
containing an electronic barcode. once scanned, a carton is
automatically entered into Recall’s online tracking system.
through adherence to consistent operating procedures in all locations,
Recall can accurately audit tens of thousands of highly confidential
records in a fraction of the time and without the risk of human error
inherent in traditional manual audits.
Customer benefits
the handling of information is more efficient and secure and the customer
can confidently deliver important information to regulatory agencies in a
timely and accurate manner.
Saving time means saving money. Increasing accuracy means reducing
risk. through its partnership with Recall, the customer has the peace of
mind of both.
4. Credit application management
Customer and opportunity
one of the top five financial institutions in Australia wanted to improve
the processing time for credit card approvals; specifically from the time
a customer submits a completed application to receipt of the credit card.
Solution
processing of credit card applications was removed from the bank’s back
office and all applications are now sent directly to Recall for processing.
on a daily basis, Recall receives the applications via mail and fax. once
the data is scanned and captured by oCR technology, quality assurance
checks are performed to verify specific information required by the bank.
the data is then transmitted to the bank for processing by its credit card
approval system. Finally, images are loaded onto Review and can be
viewed by the bank’s employees within 24 hours of Recall receiving
the application.
In the bank’s service provider surveys, Recall has been consistently
scoring 100% each quarter, exceeding Six Sigma standards.
Customer benefits
the time taken to process an application has been reduced from seven
days to one day. this process solution has reduced operational costs,
allowing the bank to focus upon its core business and has improved the
experience for the bank’s customers by significantly improving processing
turnaround times.
* For confidentiality and security reasons, Recall does not name individual
customers.
BramBles limited Annu Al RepoRt 2009
9
OpEratiOnaL and FinanCiaL rEviEw
overview – ContinuinG operations
In 2009, Brambles drove sales revenue and cash flow growth across
the business, with net new business wins and price/mix gains
offsetting a decline in organic volumes that reflected worsening global
economic conditions in the last nine months of the financial year.
Group sales revenue: uS$4.019 billion, up 1%1 (down 8% in actual
currency), an encouraging result reflecting continuing success in
winning net new business and price/mix gains which, as the economic
slowdown deepened in the second half, offset a decline in organic
volume. the automotive sector and recycled paper revenue (affecting
Secure Destruction Services (SDS) in Recall) were especially weak.
excluding automotive and SDS, Group sales revenue grew 3%, well
ahead of the declines in retail sales in many parts of the world.
underlying profit: uS$900.6 million, down 8% (down 16% in actual
currency) primarily due to:
—
factors which were largely economic in nature:
>
the impact of the global downturn including significantly
lower revenue from the automotive sector2 in CHep and SDS3
in Recall
the impact of higher numbers of pallets being returned from
the field driving increased handling and storage costs and, in
some cases, greater pallet relocations
>
—
continued investment in growth initiatives such as the developing
CHep businesses in China, India, Germany and poland, and RpCs
in Australia
earnings per share on underlying profit after finance costs and tax
(epS) of 38.5 uS cents was down 7% (down 15% in actual currency).
Australian dollar epS was 51.7 Australian cents (2008: 50.0
Australian cents).
free cash flow after dividends for the 2009 year improved strongly
to uS$141.9 million reflecting continuing strong cash flow from
operations which was uS$722.4 million, up uS$8.1 million in constant
currency. lower underlying profit was more than offset by significantly
reduced capital expenditure, demonstrating the cash generation
capability of the Brambles business models.
strong balance sheet with a prudent level of debt and uS$1.2 billion
of undrawn committed bank facilities at 30 June 2009. uS$1.9 billion
of debt facilities were renewed during the year.
significant items totalled uS$182.4 million before tax.
After Significant items, statutory operating profit was down 30%
to uS$718.2 million. profit after tax from continuing operations
was down 33% to uS$434.0 million and statutory epS was down 29%
to 32.6 uS cents.
Brambles value added (Bva) for continuing operations was
uS$334 million, down uS$198 million (at comparable fixed exchange
rates) reflecting the impact of the economic downturn, Significant
items within ordinary activities and investments for future growth.
final dividend declared of 12.5 australian cents per share, franked
to 20%. Including the interim dividend of 17.5 Australian cents per
share, total dividends declared for the 2009 financial year were
30.0 Australian cents per share.
dividend reinvestment plan (DRp) introduced for the 2009 interim
dividend at a price discount of 2.5%. the DRp remains in place for the
final dividend.
1 All growth comparisons, except for statutory measures, are in constant currency terms unless otherwise indicated.
2 CHep’s automotive sales revenue comprises 3% of Brambles’ sales revenue.
3 Recall’s SDS sales revenue comprises 4% of Brambles’ sales revenue.
10
BramBles limited Annu Al RepoRt 2009
us$ million
sales revenue
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
total sales revenue
underlying profit
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
Brambles HQ
underlying profit
net finance costs
underlying profit before tax
tax expense on underlying profit
underlying profit after finance costs and tax
Significant items after tax
profit from continuing operations
profit from discontinued operations
profit for the year
2009
2008 % CHanGe
(aCtual
fx rates)
% CHanGe
(Constant
CurrenCy)
2
–
1
1
1
1
(6)
(7)
(19)
(8)
(3)
(20)
(8)
11
(7)
5
(9)
1,556.9
1,581.3
1,452.6
1,642.1
323.4
386.9
3,332.9
3,610.3
685.7
748.3
4,018.6
4,358.6
434.4
327.5
61.1
823.0
104.3
483.8
396.5
95.9
976.2
122.4
(2)
(12)
(16)
(8)
(8)
(8)
(10)
(17)
(36)
(16)
(15)
(26.7)
(26.7)
–
900.6
1,071.9
(16)
(120.9)
(149.5)
19
779.7
922.4
(15)
(245.4)
(282.4)
13
534.3
640.0
(17)
(100.3)
6.9
434.0
18.6
452.6
646.9
(33)
1.8
648.7
(30)
Brambles value added (Bva) at fixed exchange rates
334
532
BramBles limited Annu Al RepoRt 2009
11
OpEratiOnaL and FinanCiaL rEviEw – CONTINUED
Business unit operations review
CHep americas
us$ million
2009
2008
Sales revenue
1,556.9
1,581.3
underlying profit*
underlying profit margin
Statutory profit*
Cash flow from operations
434.4
28%
229.0
267.0
483.8
31%
452.3
365.2
% CHanGe
(aCtual fx
rates)
% CHanGe
(Constant
CurrenCy)
(2)
(10)
2
(6)
(3)pp
(3)pp
(49)
* the difference between underlying profit and statutory profit is due to
Significant items of uS$205.4 million (2008: uS$31.5 million): pallet quality
program: uS$77.4 million (2008: uS$20.6 million); Walmart net transition
impact: uS$29.0 million (2008: 10.9 million); Accelerated pallet scrapping:
uS$99.0 million (2008: nil)
AMeRICAS
CHep Americas reported increased sales revenue despite the
challenging economic environment across all countries in the region.
Sales revenue was uS$1,556.9 million, up 2% (down 2% in actual
currency), due to significant net new business wins and moderate
price/mix gains offsetting a decline in organic volumes.
—
Despite the growth in sales revenue, underlying profit was lower at
uS$434.4 million, down 6% (down 10% in actual currency), primarily
due to higher plant and indirect costs.
plant costs increased by uS$37 million (constant currency) primarily
due to:
—
the economic slowdown resulting in higher numbers of pallets
being returned from the field driving increased handling and
storage costs (approximately uS$10 million);
increased service centre costs (approximately uS$14 million)
including costs associated with plant network optimisation,
increased total pallet Management (tpM) activities and increased
repair costs related to reducing new pallet commitments; and
other costs (approximately uS$10 million), principally inflation
and general cost increases.
—
—
transport costs reduced by uS$6 million (constant currency)
reflecting the benefits of plant network optimisation.
Indirect costs increased by uS$30 million (constant currency)
primarily as a result of investment in growth (mainly leanlogistics
and latin America expansion) and lower levels of pallet
compensations in the uSA. CHep Americas’ Irrecoverable pooling
equipment provision (Ipep) expense was uS$11 million higher, mainly
due to timing factors (the completion of a significant number of pallet
audits during the latter part of the year).
CHep Americas cash flow from operations was uS$98.2 million lower
than the previous year primarily due to expenditure on the CHep uSA
pallet quality program, the Walmart transition arrangements and the
reduction in underlying profit. encouragingly, capital expenditure was
lower than prior year by uS$46.6 million, reflecting progress made on
converting customers off new pallets leading to 1.5 million fewer
pallet purchases in the uSA. Second half capital expenditure for CHep
Americas was uS$22.6 million lower than the first half.
uSA
In CHep uSA, overall volumes declined by 1%. net new business wins
contributed 3% volume growth but were offset by a 4% decline in
organic volume. Favourable price and mix resulted in sales revenue
in line with the prior year.
12
BramBles limited Annu Al RepoRt 2009
the 2009 sales revenue impact from net new business wins in the
uSA was approximately uS$35 million. Whilst trading was
competitive, CHep uSA won new business including Scott’s
(fertilisers / garden products), new World pasta, the prepared foods
division of nestlé, Reser’s and Bumble Bee Foods. Although some
business was lost during the year, the emphasis remains on winning
new business and winning back lost business with improved service
and pallet quality.
on an annualised basis, the sales revenue impact of new business
wins was sufficient to offset the losses during the year and
demonstrates the continuing strength of the uSA new business
sales pipeline.
In line with guidance issued at the interim result, Significant items
within ordinary activities included:
—
uS$29.0 million due to the Walmart transition arrangements
(now completed), slightly below the original uS$30 million
forecast spend. the future economic cost estimated at
uS$5 million per annum will be reflected within underlying profit
from FY10; and
uS$77.4 million operating expenditure on the two year CHep uSA
pallet quality program together with uS$5.0 million in capital
expenditure.
Significant items outside ordinary activities:
—
uS$99.0 million for a two year program to accelerate the
scrapping of seven million excess pallets in CHep uSA. these
excess pallets are a consequence of the rapid slowdown in the
uSA economy resulting in more pallets being returned from the
field, together with customer imports into the uSA and
contractual commitments to a limited number of customer
locations with new pallets. the program will recover good quality
lumber for use in future repairs and should contribute to an
improvement in the overall quality of the pool.
lAtIn AMeRICA AnD CAnADA
CHep latin America continued to grow strongly with 12% sales
revenue growth driven by a combination of volume growth from
new customers and existing business, and some inflationary price
increases. However, underlying profit declined due to investment
expenditure for growth and higher commodity costs arising from the
currency impact of uS dollar denominated costs.
CHep Canada achieved 4% sales revenue growth. the customer base
was expanded with the addition of nearly 300 new customers in 2009.
leAnloGIStICS
leanlogistics made excellent progress during its first full year of
ownership by CHep and contributed uS$13.2 million of sales revenue
in the year which represents over 20% growth on a like-for-like basis.
the business continued to expand the customer base for its on-Demand
tMS®4. Sales revenue from its Managed Services offering increased
significantly and Greenlanes (Freight optimization Services) grew
steadily throughout the year.
CHep uSA RevIeW
Brambles has been undertaking a major review of CHep uSA to
position the business for the medium to long term. the review
will determine the optimal range of service offerings, pallet platforms,
4 on-Demand tMS® provides customers complete daily planning, execution, and
settlement functions in addition to periodic strategic procurement of their
transportation requirements.
pallet quality, service centre network requirements and cost and
pricing structures to best meet future customer needs. the review
is on track to be completed by the end of September 2009, with the
outcomes to be announced in early october 2009.
As part of the review, further significant and positive customer
engagement has been undertaken to better understand their future
needs and market trends, and to determine how CHep uSA can best
create future growth opportunities and deliver customer requirements.
the review of the CHep uSA business, when finalised, will be a key
component of CHep’s broader strategy for the uSA market. Whilst the
review had not been completed at the time of this report’s publication,
it is clear to us that a wood pallet platform remains the best solution
for the broad supply chain in the uSA in terms of both economic and
environmental sustainability. We believe alternative platforms such
as plastic are currently not sustainable outside niche segments of the
uSA supply chain.
CHep emea
us$ million
2009
2008
Sales revenue
underlying profit*
underlying profit margin
Statutory profit*
Cash flow from operations
1,452.6
1,642.1
327.5
23%
286.5
372.7
396.5
24%
396.5
296.1
% CHanGe
(aCtual fx
rates)
% CHanGe
(Constant
CurrenCy)
(12)
(17)
–
(7)
(1)pp
(2)pp
(28)
* the difference between underlying profit and statutory profit is due to
Significant items comprising Restructuring – facilities and operations
rationalisation uS$41.0 million (2008: nil)
CHep eMeA has delivered a solid performance in a challenging
economic environment. Sales revenue was uS$1,452.6 million, in
line with the prior year (down 12% in actual currency), primarily due
to net new business wins and price/mix offsetting a 5% decline in
organic volumes.
A significant contributor to the lower organic volumes was the
automotive business (sales revenue down 22%), which declined
significantly from october 2008 until stabilising towards the end of the
year. excluding automotive, CHep eMeA sales revenue increased by 2%.
pallet volumes in europe were in line with 2008. Strong new business
wins offset a 3% decline in organic pallet volumes due to weak
economic conditions, which were particularly pronounced in the uK.
the 2009 sales revenue impact from net new business wins in CHep
europe was approximately uS$40 million. Wins in the year included
leche pascual in Spain (won back from a pooling competitor),
confectioner Haribo in Germany, DIY supplier tarmac in the uK,
pastacorp in France, leGo in the Czech Republic, Colgate palmolive
in Denmark and Inergy Automotive Systems.
the focus on Germany and poland has resulted in strong domestic
growth in B1208A pallets, with associated sales revenue up 20% and
60% respectively for the year.
Strong sales revenue growth in CHep Middle east and Africa (up 16%)
was driven by increases in both volume and price. A significant RpC
contract in South Africa has been signed with pick ‘n’ pay which is
expected to come fully on stream during FY10.
CHep europe’s plant costs increased in 2009. the weak economy
resulted in a higher number of pallets being returned from the field
leading to increased handling and storage costs. Material and labour
costs also increased resulting in plant costs as a percentage of sales
increasing by 1pp to 26%. transportation costs increased mainly due
to the decision to relocate higher numbers of B1210A pallets from the
uK to continental europe in order to reduce capital expenditure on new
pallets. the transportation cost ratio increased 1pp to 24%.
underlying profit in CHep eMeA of uS$327.5 million was 7% lower
(down 17% in actual currency). the main reasons for the profit
shortfall were economy driven due to the decline in the automotive
business and higher pallet relocations as outlined above. overheads
were in line with last year with investments in the growth markets
of Germany and poland offset by efficiency programs. the underlying
profit margin declined slightly to 23% as a result. excluding automotive,
underlying profit for CHep eMeA was down by 2%.
Cash flow from operations in constant currency increased by
uS$130.1 million (uS$76.6 million in actual currency) due to lower
capital expenditure, reflecting careful asset management (including
the higher pallet relocations) and improvements in working capital
management. Strong credit control led to europe’s average debtors
days reducing by 4 days to 54 days.
CHep asia-pacific
us$ million
2009
2008
Sales revenue
underlying profit*
underlying profit margin
Statutory profit*
Cash flow from operations
323.4
386.9
61.1
19%
57.9
9.8
95.9
25%
95.9
58.0
% CHanGe
(aCtual fx
rates)
% CHanGe
(Constant
CurrenCy)
(16)
(36)
1
(19)
(6)pp
(5)pp
(40)
* the difference between underlying profit and statutory profit is due to
Significant items comprising Restructuring – facilities and operations
rationalisation uS$3.2 million (2008: nil)
Sales revenue was up 1% to uS$323.4 million (down 16% in actual
currency). this result was achieved in spite of ongoing difficult
conditions in the Australian automotive sector, excluding which
CHep Asia-pacific sales revenue grew by 3%. the established
pallet businesses in Australia, new Zealand and South east Asia
demonstrated resilience in difficult trading conditions. Increased
sales revenue was achieved from the emerging businesses in China
and India.
RpC sales revenue grew by 4%, driven by the impact of the
commencement of the new Woolworths FRpC contracts in Australia
and new Zealand (see page 8). For 2009, the profit growth from
the part-year contribution from these contracts was exceeded by
set-up costs to expand the service centre network to serve these
opportunities.
CHep Asia-pacific’s underlying profit of uS$61.1 million was down
19% (down 36% in actual currency). this reduction was due to:
—
substantial production declines in the Australian automotive
sector;
supply chain destocking in Australia and new Zealand leading to
higher numbers of net pallet returns, reducing daily hire revenue
growth and increasing storage and handling costs;
costs incurred in developing new pallet service centres to drive
future efficiencies and support the commencement of the new
Woolworths FRpC contract in Australia; and
costs associated with the start up of the investments in China and
India and the full year impact of a regional management structure
to support growth.
—
—
—
BramBles limited Annu Al RepoRt 2009
13
OpEratiOnaL and FinanCiaL rEviEw – CONTINUED
China and India in aggregate delivered uS$7.8 million of sales
revenue in 2009 and incurred an underlying loss of uS$17.7 million
(2008: uS$13.1 million). the increased loss which was in line with
expectations was largely due to the first full year of operations
in India.
Cash flow from operations was uS$20.8 million lower, mainly due to
foreign currency translation. Major capital expenditure during the year
included racking and safety infrastructure to support growth
throughout all regions, along with investments in new state-of-the-art
Information Centres in the uK and thailand.
the China business has made strong progress in expanding its pallet
and automotive businesses and now has over 250 customers serviced
by four offices and over 100 staff. Recent customer wins include
Hewlett-packard and Chery Automotive, China’s largest independent
automotive manufacturer.
the India business commenced operations in June 2008 and provides
pallet and container services to customers across the country. CHep
India now has over 50 staff with key customers including pepsiCo,
Hindustan unilever, procter & Gamble, united Breweries and
Coca-Cola franchise bottler, Indo european Breweries limited.
Cash flow from operations was uS$48.2 million lower than the
previous year due to the initial capital investment required to support
the new Woolworths FRpC contract in Australia and the reduction in
the region’s underlying profit. Capital expenditure for China and India
combined was uS$19.0 million in the year (2008: uS$29.0 million).
recall
us$ million
2009
2008
Sales revenue
underlying profit*
underlying profit margin
Statutory profit*
685.7
104.3
15%
95.9
Cash flow from operations
106.9
748.3
122.4
16%
121.9
127.7
% CHanGe
(aCtual fx
rates)
% CHanGe
(Constant
CurrenCy)
(8)
(15)
1
(3)
(1)pp
(1)pp
(21)
* the difference between underlying profit and statutory profit is due to
Significant items comprising Restructuring – facilities and operations
rationalisation uS$8.4 million (2008: $0.5 million)
Recall sales revenue was up 1% to uS$685.7 million (down 8% in
actual currency). Growth was achieved in all regions except Americas
(sales revenue down 2%) where the impact of the global economic
slowdown on the SDS business was felt the most, with significantly
lower recycled paper revenues. excluding SDS, Recall’s sales revenue
grew 6%.
A strong performance was achieved in DMS in all regions with carton
volumes increasing by 6%. Sales revenue of uS$470.8 million was up
6% (down 5% in actual currency). DMS gross margins increased to
39% driven by improvements in service delivery efficiencies in north
America and was achieved despite little growth in customer activity
levels in the current economic environment.
SDS sales revenue was down 13% (down 18% in actual currency)
to uS$145.6 million due to a significant reduction in paper prices and
lower activity, particularly in north America and europe. the reduction
in paper prices resulted in the SDS gross margin falling by 7pp to 33%.
underlying profit of uS$104.3 million was 3% lower than the previous
year (down 15% in actual currency). Recall’s gross profit in constant
currency was in line with the prior year with improvements in DMS
offsetting the fall in SDS margins. underlying profit was also impacted
by investment in information technology and marketing to support
future growth. Recall implemented cost cutting measures throughout
the year to respond to the global economic decline.
additional finanCial information
significant items
In response to the challenging economic environment, Brambles has
implemented a number of initiatives to improve its cost structure,
underpin future operating performance over the medium to long term
and meet customer requirements. During the 2009 financial year,
Brambles’ continuing operations had Significant items before tax of
uS$182.4 million (uS$100.3 million after tax). these are set out in
note 6 (page 74) to the financial statements.
Capital expenditure on property, plant & equipment
(accruals basis)
us$ million
2009
2008
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
Brambles HQ
290.8
234.4
92.7
337.4
353.2
103.7
617.9
794.3
52.4
2.1
54.5
0.4
CHanGe
(aCtual fx
rates)
46.6
118.8
11.0
176.4
2.1
(1.7)
total capital expenditure
672.4
849.2
176.8
Brambles capital expenditure was uS$176.8 million lower than the
previous year (including the benefit of uS$65.3 million from foreign
currency translation). Capital expenditure has been tightly managed as
sales growth slowed and customers reduced stock levels and returned
more pallets to CHep.
In CHep Americas, capital expenditure was down by uS$46.6 million
with the majority of the reduction taking place in the second half of
2009. the main contributor was CHep uSA which benefited from a
reduction in the number of new pallets required for contractual
commitments to certain customer locations. Further reductions in
these commitments and the level of imports into the uSA on CHep
pallets will continue to benefit capital expenditure in FY10.
CHep eMeA reduced capital expenditure by uS$118.8 million, mainly
due to lower pallet purchases in the slower economic environment.
CHep Asia-pacific capital expenditure also declined but mainly due to
foreign currency translation. During the year there was a substantial
initial investment in containers for a new Australian RpC contract
which was partially offset by reductions in pallet capital expenditure
in Australia and China. Capital expenditure in China was lower in 2009
following the establishment of the pallet pool in the previous year.
total pallet capital expenditure for the Group was uS$462.1 million,
a reduction of uS$157.0 million on the prior year. the majority of new
pallet capital purchases was for replacement. the total pallet pool
was 251 million pallets at the end of the period (inclusive of six million
excess pallets held for accelerated scrapping in CHep uSA).
Recall capital expenditure included investment in new information
centres in the uK and thailand as the business invests to improve
future efficiencies.
14
BramBles limited Annu Al RepoRt 2009
Brambles value added (Bva) and return on Capital
invested (roCi)
In 2009, Brambles continued to focus on the use of BvA which forms
the core component of short term incentive arrangements for all
senior executives, including executive Directors.
2009 at
fixed
June 08 fx
us$m
2008 at
fixed
June 08 fx
us$m
2009
roCi
2008
roCi
CHep Americas
CHep eMeA
CHep Asia-pacific
CHep
Recall
Continuing (pre HQ)
153
177
34
364
(5)
359
unallocated Brambles HQ costs
(25)
total continuing operations
334
275
207
62
544
5
549
(17)
532
26%
23%
19%
24%
12%
21%
32%
25%
31%
29%
13%
25%
21%
25%
total BvA for Brambles’ continuing operations was uS$334 million, a
decrease of uS$198 million on the previous year based on comparable
fixed exchange rates. the reduction reflects the impact of the
economic downturn, Significant items within ordinary activities and
investments for future growth. Brambles’ RoCI was 21%.
In CHep Americas, BvA fell uS$122 million due to higher plant costs,
higher indirect costs, and the adverse impact of uS$106.4 million
(2008: uS$31.5 million) of Significant items within ordinary activities
(costs associated with the CHep uSA pallet quality program and the
Walmart net transition impact). Average Capital Invested in CHep
Americas increased due to the acquisition of leanlogistics in the
second half of the previous year and the impact of excess pallet
holdings in the uSA. Increases in Average Capital Invested combined
with the fall in underlying profit led to a reduction in RoCI to 26%.
In CHep eMeA, BvA fell uS$30 million driven by the decline in the
automotive business and a decision to relocate a higher number of
pallets from the uK to continental europe in order to reduce capital
expenditure on new pallets. RoCI was 23%.
CHep Asia-pacific’s BvA fell by uS$28 million due to substantial
production declines in the Australian automotive sector, supply chain
destocking which increased storage and handling costs, costs incurred
in developing new service centres and the start up investments in
China and India, and the full year impact of a regional management
structure. Average Capital Invested in CHep Asia-pacific increased
due to the investment in pooling equipment to support growth in China
and a new RpC contract in Australia. RoCI was 19%.
Recall’s BvA fell by uS$10 million with improvements in DMS partially
offsetting a fall in SDS. BvA was also impacted by an investment in
information technology and marketing to support future growth.
RoCI was 12%.
finance costs
net finance costs were uS$120.9 million compared to uS$149.5 million
in 2008. the reduction in net finance costs reflected lower interest
rates on variable rate borrowings, the increase in euro-denominated
debt to fund capital repatriations with the equivalent pay-down of
higher cost Australian dollar denominated debt, and the impact of
foreign exchange translation due to the stronger uS dollar. these
benefits were partially offset by higher borrowing margins and fees
on debt refinanced during the year.
taxation
Brambles’ effective tax rate on underlying profit for the year was
31.5%, slightly higher than last year’s rate of 30.6% due to the effect
of higher tax rates in overseas jurisdictions.
the effective tax rate on statutory profit (from continuing operations)
for the year was 27.3%, broadly in line with last year’s rate of 26.6%,
and less than the Australian tax rate of 30% primarily due to the
non-tax effect of foreign exchange gains on the repatriation of capital
from europe to Australia.
Cash flow
us$ million
Continuing operations
underlying profit
Significant items within
ordinary activities
2009
2008
CHanGe
(aCtual fx
rates)
900.6
1,071.9
(171.3)
Depreciation & amortisation
418.4
458.6
(106.4)
(31.5)
(74.9)
(40.2)
eBitda
1,212.6
1,499.0
(286.4)
Capital expenditure
(683.8)
(869.4)
185.6
proceeds from disposals
Working capital movement
Irrecoverable pooling
equipment provision
provisions / other
104.6
25.8
133.8
41.4
(29.2)
(15.6)
97.8
91.2
(34.6)
(86.0)
6.6
51.4
Cash flow from continuing operations
722.4
810.0
(87.6)
Significant items outside
ordinary activities
(49.9)
(27.7)
(22.2)
Cash flow from operations
672.5
782.3
(109.8)
Financing costs and tax
(253.0)
(369.7)
116.7
free cash flow
Dividends paid
419.5
412.6
(277.6)
(444.8)
free cash flow after dividends
141.9
(32.2)
6.9
167.2
174.1
Free cash flow of uS$419.5 million was strong and sufficient to cover
uS$277.6 million of dividends paid, resulting in uS$141.9 million of free
cash flow after dividends.
Brambles continues to generate strong operating cash flows.
Cash flow from continuing operations was uS$722.4 million,
an increase of uS$8.1 million in constant currency terms. the
uS$87.6 million reduction in actual currency terms was primarily
due to the translation impact of exchange rate movements
(uS$95.7 million). lower underlying profit was more than offset
by significantly lower capital expenditure.
nearly 70% of cash flow from operations was generated in the second
half of the year following significant reductions in capital expenditure
and working capital. Working capital continues to be tightly controlled
across the business. Average debtors days improved from 48 to 46 days
partially offset by a reduction in creditor days.
Significant items outside ordinary activities related to the restructuring
activities during the year and included uS$22.2 million of expenditure on
the accelerated scrapping of excess pallets in CHep uSA.
BramBles limited Annu Al RepoRt 2009
15
OpEratiOnaL and FinanCiaL rEviEw – CONTINUED
dividends
the Board has declared a final dividend of 12.5 Australian cents per
share, franked to 20%. Including the interim dividend of 17.5 Australian
cents per share, total dividends declared for the 2009 financial year
were 30.0 Australian cents per share (2008: 34.5 Australian cents per
share). the dividends reflect the Board’s focus on prudent conservation
of cash in the current environment.
A dividend reinvestment plan was introduced with the interim dividend.
the Board set the price at which shares are allotted under the plan as
the arithmetic average of the daily volume weighted average sale price
of all Brambles shares sold on the Australian Securities exchange (ASx)
in the ordinary course of trading on the ASx during a nominated
10 trading days, less a discount of 2.5%.
funding and liquidity
Brambles funded its operations during the Year through existing equity,
retained cash flow and borrowings, and manages its capital structure
so as to be consistent with a solid investment grade credit. Borrowing
facilities are generally structured on a multi-currency, revolving basis
with maturities ranging to December 2013. Borrowings under the
facilities are floating-rate, unsecured obligations with covenants and
undertakings typical for these types of arrangements. to reduce
foreign exchange risks, borrowings are arranged in the currency of
the relevant operating asset to be funded.
net debt at 30 June 2009 was uS$2,143.4 million, down
uS$282.8 million from 30 June 2008, with positive cash generation
after dividends and favourable foreign exchange translation on non-uS
dollar denominated debt balances evenly contributing to the reduction.
Brambles made excellent progress during 2009 to refinance
committed bank facilities well ahead of their scheduled maturity
dates. At June 2008, committed bank facilities totalling uS$3.0 billion
were due to mature in november 2010 (equivalent to uS$2.7 billion at
June 2009 foreign exchange rates). During 2009, bank facilities of
uS$1.9 billion were renewed for terms between 3 and 5 years.
uS$0.7 billion is due to mature in november 2010.
At 30 June 2009, undrawn committed bank facilities totalled
uS$1.2 billion. expected improvements in cash generation, mainly due
to a focus on reducing capital expenditure, and these undrawn
committed facilities should provide additional scope to reduce the
amount of future refinancing requirements.
to further improve liquidity, Brambles accessed the uS private
placement debt market in May 2009 and raised uS$110 million for
tenors of 5, 7 and 10 years.
the average term to maturity of total credit facilities increased from
2.2 years at June 2008 to 3.3 years at June 2009.
the Dividend Reinvestment plan participation rate for the 2009 interim
dividend was 35% and provided uS$62 million of additional liquidity.
Key financial ratios continue to reflect the strong balance sheet
position and remain well within the financial covenants included
in Brambles’ major financing agreements, with net debt to eBItDA
at 1.8x and eBItDA interest cover at 10.0x.
16
BramBles limited Annu Al RepoRt 2009
risk management
Brambles is exposed to a variety of market based and financial risks
(refer to principle 7, page 28), including exposure to fluctuating
interest and exchange rates, liquidity risks, changing economic
conditions, technological and industry based risks, competitive
environment, counterparty credit risks and regulatory changes which,
either singularly or collectively, may affect revenue, cost structure
or value of assets within the business, all of which are difficult
to quantify.
Brambles’ policies with respect to interest and exchange rate risk and
appropriate hedging instruments are described below and further
information is contained in note 30 (page 105) to the Financial
Statements including a sensitivity analysis (page 107 and page 110)
with respect to these financial instruments. Brambles’ centralised
treasury function is responsible for the management of these risks
within Brambles.
Standard financial derivatives are used by Brambles to manage
financial exposures in the normal course of business. Dealings in
financial derivatives are restricted through a set of delegated
authorities approved by the Board. no derivatives are used for
speculative purposes. In addition, derivatives are transacted
predominantly with relationship banks which have a reasonable
understanding of Brambles’ business operations. Furthermore,
individual credit limits are assigned to those banks, thereby limiting
exposure to credit-related losses in the event of non-performance
by a counterparty.
interest rate risk
Brambles’ interest rate risk policy is designed to reduce volatility
in funding costs through prudent selection of hedging instruments.
this policy includes maintaining a mix of fixed and floating-rate
instruments within a target band, over a certain time horizon. In
some cases, interest rate derivatives are used to achieve this result
synthetically. the present policy is to require the level of fixed rate
debt to be within 40% to 70% of total forecast debt arising over a
12 month period, progressively decreasing to 0% to 50% for debt
maturities extending beyond three years.
As at 30 June 2009, 41% of Brambles’ weighted average interest-
bearing debt over the next 12 months was at fixed interest rates
(48% in 2008). the weighted average period was 3.6 years (3.2 years
in 2008). the fair value of all interest rate swap instruments was
uS$18.1 million net loss.
foreign exchange risk
Foreign exchange exposures are managed from a perspective of
protecting shareholder value. exposures generally arise in either
of two forms:
—
transaction exposures affecting the value of transactions
translated back to the functional currency of the subsidiary; and
translation exposures affecting the value of assets and liabilities
of overseas subsidiaries when translated into uS dollars.
—
under Brambles’ foreign exchange policy, foreign exchange hedging is
mainly confined to hedging transaction exposures where they exceed
a certain threshold, and as soon as a defined exposure arises. Within
Brambles, exposures may arise with external parties or, alternatively,
by way of cross-border intercompany transactions. Forward foreign
exchange contracts are primarily used for these purposes. In
Brambles’ context, these exposures are not significant given the
nature of its operations.
translation exposures are mitigated by matching the currency of debt
with that of the asset. except for a small amount of balance sheet
hedge borrowing in euro, Brambles does not hedge currency exposures
incurred on foreign currency profits and net investment balances.
At the end of the financial year, the fair value of foreign exchange
instruments was uS$0.5 million net gain.
relative strenGtH of maJor CurrenCies
aGainst tHe us dollar
AUSTRALIAN DOLLAR
EURO
STERLING
1.60
1.50
1.40
1.30
1.20
2.10
1.90
1.70
1.50
1.30
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
Average exchange rate
EURO
Average exchange rate
STERLING
Average exchange rate
2.10
1.90
1.70
1.50
1.30
1.00
0.90
0.80
0.70
0.60
1.60
1.50
1.40
1.30
1.20
AUSTRALIAN DOLLAR
Average exchange rate
EURO
Average exchange rate
STERLING
Average exchange rate
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
1.00
0.90
0.80
0.70
0.60
2.10
1.90
1.70
1.50
1.30
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
JUN 07
DEC 07
JUN 08
DEC 08
JUN 09
Average exchange rate
Average exchange rate
Average exchange rate
AUSTRALIAN DOLLAR
1.00
0.90
0.80
0.70
0.60
1.60
1.50
1.40
1.30
1.20
BramBles limited Annu Al RepoRt 2009
17
BOard OF dirECtOrs
1.
4.
7.
2.
5.
8.
3.
6.
9.
1. GraHam KraeHe ao
non-executive Chairman
4. tony froGGatt
non-executive Director
7. Carolyn Kay
non-executive Director
2. miKe iHlein
Chief executive officer
5. david Gosnell
non-executive Director
8. luKe mayHew
non-executive Director
3. liZ doHerty
Chief Financial officer
6. stepHen JoHns
non-executive Director
9. Brian sCHwartZ am
non-executive Director
18
BramBles limited Annu Al RepoRt 2009
stepHen JoHns | non-exeCutIve DIReCtoR (InDepenDent)
Chairman of the Audit Committee and member of the Nominations
Committee
Joined Brambles as a non-executive Director in August 2004. He is
currently a non-executive director of the Westfield Group, Chairman
of Spark Infrastructure Group and a director of Sydney Symphony
limited. previously Stephen had a long executive career with
Westfield where he held a number of positions including that of
Finance Director from 1985 to 2002. He has a Bachelor of economics
degree from the university of Sydney and is a Fellow of the Institute
of Chartered Accountants in Australia. Age 62.
Carolyn Kay | non-exeCutIve DIReCtoR (InDepenDent)
Member of the Audit Committee
Joined Brambles as a non-executive Director in June 2006. She is a
director of Commonwealth Bank of Australia limited and the Sydney
Institute and an external Board Member of Allens Arthur Robinson.
Carolyn has had extensive experience in international finance at
Morgan Stanley in london and Melbourne, Jp Morgan in new York
and Melbourne and linklaters & paines in london. She holds Bachelor
Degrees in law and Arts from the university of Melbourne and a
Graduate Diploma in Management from the AGSM. Carolyn is a Fellow
of the Australian Institute of Company Directors, a member of Chief
executive Women and was awarded a Centenary Medal for services
to Australian society in business leadership. Age 48.
luKe mayHew | non-exeCutIve DIReCtoR (InDepenDent)
Chairman of the Remuneration Committee
Joined Brambles as a non-executive Director in August 2005. He is a
non-executive director of WH Smith plc and Chairman of pets at Home
Group limited. luke was Managing Director of John lewis, the uK’s
leading department store business, from 2000 to 2004 and Director
of Research and expansion at John lewis partnership plc, which also
includes the Waitrose supermarket operation, from 1992 to 2000. He
previously held senior positions at thomas Cook and British Airways
and was Chief executive of Shandwick’s european business. He has
a Bachelor of Arts (Honours) degree from oxford university and a
Master of economics degree from the university of london. luke is
the Chairman of the British Retail Consortium. Age 56.
Brian sCHwartZ am | non-exeCutIve DIReCtoR (InDepenDent)
Member of the Audit Committee
Joined Brambles as a non-executive Director in March 2009.
Currently a non-executive director of Insurance Australia Group
limited and the Westfield Group. He is also Deputy Chairman
of Football Federation Australia and a member of the Federal
Government’s Multicultural Advisory Council. In March 2009 he
retired as Ceo of Investec Bank (Australia) limited, although he
remains as a consultant to the bank. Having joined ernst & Young in
1979, Brian became a partner in 1985. From 1998 to 2004 he was
Ceo of ernst & Young Australia and a member of the ernst & Young
Global executive Board. Brian is a Fellow of the Institute of
Chartered Accountants in Australia. Age 56.
GraHam KraeHe ao | non-exeCutIve CHAIRMAn
(InDepenDent)
Chairman of the Nominations Committee and member of the
Remuneration Committee
Rejoined the Board in December 2005, was appointed Deputy
Chairman in october 2007 and Chairman in February 2008. He is
currently a member of the Board of the Reserve Bank of Australia,
Chairman of Bluescope Steel limited and a director of Djerriwarrh
Investments limited. Graham was a non-executive Director of
Brambles from December 2000 until March 2004, when he retired due
to commitments in his past role as Chairman of national Australia
Bank limited. He has also been the Managing Director and Chief
executive officer of Southcorp limited and a non-executive director of
news Corporation. Graham has a Bachelor of economics degree from
Adelaide university. He is an officer of the order of Australia. Age 66.
miKe iHlein | CHIeF exeCutIve oFFICeR
Chairman of the Executive Leadership Team
Joined Brambles as Chief Financial officer in March 2004 and became
Chief executive officer in July 2007. previously, he had a long career
with Coca-Cola Amatil limited (and related companies), where he was
Chief Financial officer (1997–2004), Managing Director of Coca-Cola
Amatil poland (1995–97) and had previously held a number of senior
business development and treasury roles within that company. Mike
holds a Bachelor of Business Studies (Accounting) from the university
of technology, Sydney. He is also an Associate Member of the Australian
Institute of Company Directors, a CpA Australia and a member of
Financial Services Institute of Australasia (Finsia). Age 54.
liZ doHerty | CHIeF FInAnCIAl oFFICeR
Member of the Executive Leadership Team
Joined Brambles as Chief Financial officer and executive Director in
December 2007. She is currently a non-executive director of SABMiller
plc. liz was Group International Finance Director at tesco plc from 2001
to 2007. She previously had a long career with unilever plc in increasingly
senior operating finance roles based in a number of locations, including
Asia and europe. She holds a First Class Bachelor of Science Degree from
university of Manchester, uK. liz is a Fellow of the Chartered Institute
of Management Accountants (FCMA) and a Fellow of the RSA. Age 51.
tony froGGatt | non-exeCutIve DIReCtoR (InDepenDent)
Member of the Nominations Committee and the Remuneration
Committee
Joined Brambles as a non-executive Director in June 2006. Currently
a non-executive director of AxA Asia pacific Holdings limited and
Billabong International limited. previously, he was Chief executive of
Scottish & newcastle plc from May 2003 to october 2007. tony began
his career with the Gillette Company and has held a wide range of
sales, marketing and general management positions in many countries
with major consumer goods companies including HJ Heinz, Diageo and
Seagram. He holds a Bachelor of law degree from Queen Mary College,
london and an MBA from Columbia Business School, new York. Age 61.
david Gosnell | non-exeCutIve DIReCtoR (InDepenDent)
Member of the Audit Committee
Joined Brambles as a non-executive Director in June 2006. He is
Managing Director of Global Supply and procurement for Diageo plc,
leading a global team of 9,000 people across manufacturing, logistics
and technical operations as well as managing Diageo’s multi-billion dollar
procurement budget. prior to joining Diageo, Mr Gosnell spent 20 years at
HJ Heinz where he served on the uK board and held various european
operational positions. He holds a Bachelor of Science degree in electrical
and electronic engineering from Middlesex university, england. Age 52.
BramBles limited Annu Al RepoRt 2009
19
ExECutivE LEadErship tEam
1.
4.
7.
2.
5.
8.
3.
6.
1. miKe iHlein
Chief executive officer
4. Jasper Judd
Senior vice-president
– Strategic Development
7. niCK smitH
Senior vice president
– Human Resources
2. liZ doHerty
Chief Financial officer
5. elton potts
Group president and Chief
operating officer, Recall
8. CraiG van der l aan
Group president, CHep Asia-pacific
Global Head of Mergers
& Acquisitions
3. tom Gorman
Group president, CHep eMeA
6. Kevin sHuBa
Group president, CHep Americas
20
BramBles limited Annu Al RepoRt 2009
miKe iHlein | CHIeF exeCutIve oFFICeR
Chairman of the Executive Leadership Team
Joined Brambles as Chief Financial officer in March 2004 and became
Chief executive officer in July 2007. previously, he had a long career
with Coca-Cola Amatil limited (and related companies), where he was
Chief Financial officer (1997–2004), Managing Director of Coca-Cola
Amatil poland (1995–97) and had previously held a number of senior
business development and treasury roles within that company. Mike
holds a Bachelor of Business Studies (Accounting) from the university
of technology, Sydney. He is also an Associate Member of the Australian
Institute of Company Directors, a CpA Australia and a member of
Financial Services Institute of Australasia (Finsia). Age 54.
elton potts | GROUP PRESIDENT AND CHIEF OPERATING
OFFICER, RECALL
elton joined Brambles in 2002 as vice president, Controller for
CHep uSA. that same year he was appointed vice president, Asset
Management for CHep uSA, and later became Senior vice president,
Asset Management for CHep uSA in 2003. In December 2006 he was
appointed Chief operating officer of Recall and then appointed president
and Chief operating officer of Recall in April 2007. Before joining
Brambles, elton held various operations and finance roles with owens-
Corning and newell Rubbermaid. He holds a degree in Financial
Management from Clemson university and an MBA from Capital
university. Age 45.
liZ doHerty | CHIeF FInAnCIAl oFFICeR
Joined Brambles as Chief Financial officer and executive Director in
December 2007. She is currently a non-executive director of SABMiller
plc. liz was Group International Finance Director at tesco plc from 2001
to 2007. She previously had a long career with unilever plc in increasingly
senior operating finance roles based in a number of locations, including
Asia and europe. She holds a First Class Bachelor of Science Degree from
university of Manchester, uK. liz is a Fellow of the Chartered Institute
of Management Accountants (FCMA) and a Fellow of the RSA. Age 51.
tom Gorman | GROUP PRESIDENT, CHEP EMEA
tom joined Brambles in March 2008. previously, he had a long career with
the Ford Motor Company, and served as president Ford Australia from
March 2004 until January 2008. His previous roles at Ford included
General Sales Manager; executive Director, north America Fleet, lease
and Remarketing operations; executive Director, Business Development;
and Finance Director, Ford France. Before joining Ford, he worked for the
Bank of Boston. tom graduated from tufts university in 1982 with a
Bachelor of Arts degree in economics and International Relations and
in 1987 he graduated from Harvard Business School with a Master of
Business Administration with distinction. Age 49.
Jasper Judd | SenIoR vICe-pReSIDent – StRAteGIC
DevelopMent
Jasper joined Brambles in 2002. He served as Acting Chief Financial
officer following Mike Ihlein’s appointment as Chief executive officer in
July 2007 and, before that, was Group Financial Controller for about four
years. His previous roles were Interim Senior vice president and Chief
Financial officer, CHep europe and General Manager, Finance &
Administration. Before joining Brambles, he was Chief Financial officer
of Brainspark plc and held senior financial positions at a number of other
companies including Booker plc. Jasper is a member of the Institute of
Chartered Accountants in england and Wales and graduated from
Cambridge university with a Master of Arts (Hons). Age 48.
Kevin sHuBa | GROUP PRESIDENT, CHEP AMERICAS
Kevin has worked with CHep since 1996, serving as president, CHep uSA
from november 2006 until his appointment to his current role in
February 2008. His previous roles at CHep include Senior vice president,
new Business Development and Senior vice president, Sales & Business
Development. Before CHep, he worked for insurance company Mason-
McBride Inc from 1994 to 1996 and Baxter Healthcare Corporation from
1987 to 1994. Kevin attended the united States Military Academy at
West point, graduating in 1981 with a Bachelor of Science degree in
engineering. He served in various command and staff positions in the
united States Army from 1981 to 1986. Age 50.
niCK smitH | SENIOR VICE PRESIDENT – HUMAN RESOURCES
nick joined Brambles in november 2007. previously, nick was the
Group Human Resources Director for Inchcape plc, the international
automotive retail group. prior to this nick spent a number of years in the
telecommunications industry, firstly with British telecom plc, and then
Cable & Wireless plc. During this period, nick spent three years working
for Cable & Wireless optus in Australia, where he was Human Resources
Director. He has also worked for KpMG and Macquarie Bank. nick is a
qualified management accountant, and has a BSc (econ) in International
politics and an MBA. Age 48.
CraiG van der laan | GROUP PRESIDENT, CHEP ASIA-PACIFIC
GLOBAL HEAD OF MERGERS & ACQUISITIONS
Craig joined Brambles in 2001 and, having served continuously as a
member of Brambles’ global executive leadership team, was appointed
to his current role in February 2008. His previous roles with Brambles
include Group General Counsel, Group Company Secretary and global
head of Human Resources. prior to joining Brambles, he was a General
Counsel to, and Company Secretary of, the Westfield Group. He holds
degrees in law (llB (Hons)) and Arts (BA) from the university of Sydney.
Age 44.
BramBles limited Annu Al RepoRt 2009
21
COrpOratE gOvErnanCE statEmEnt
introduCtion
Brambles is a global provider of support services and operates in over
45 countries, with a primary listing on the ASx and a secondary listing
on the lSe. It is therefore subject to an extensive range of legal,
regulatory and governance requirements. Brambles is committed to
observing the requirements applicable to publicly listed companies
in Australia and the requirements applicable to companies with a
secondary listing in the uK. the Board is conscious that best practice
in the area of corporate governance is continuously evolving, and will
therefore continue to anticipate and respond to further corporate
governance developments.
this Corporate Governance Statement outlines the key components
of Brambles’ governance framework as at 20 August 2009, by
reference to the ASx Corporate Governance Council Corporate
Governance principles and Recommendations (CGpR). During the year
ended 30 June 2009, the Board believes Brambles met or exceeded all
the requirements of the CGpR.
A checklist summarising Brambles’ compliance with the CGpR is
included at the end of this Statement. various documents referred
to in this Statement have been posted in the “Corporate Governance”
section of the Brambles website at www.brambles.com. the checklist
includes more detailed guidance on the location of all the governance-
related documents available at www.brambles.com.
the structure of the Board ensures that no individual or group
of individuals dominates the Board’s decision-making process.
the Brambles executive leadership team assists in implementing
Brambles’ strategic direction, and ensuring its resources are well
managed. the team has a range of responsibilities, which include:
—
—
reviewing business and corporate strategies;
formulating major policies in areas such as succession planning
and talent management, human and capital resources
management, information technology, risk management,
communications and post-investment project reviews;
leading initiatives which may from time to time vary but include:
>
>
>
leading the implementation of change processes.
Zero Harm;
development of strategy; and
innovation
—
—
Biographical details for the members of the executive leadership
team are shown on page 21.
ReSponSIBIlItIeS oF tHe BoARD
1.1.2
the Board is responsible for setting the Group’s overall strategic
objectives, facilitating the provision of appropriate financial and
human resources to meet these objectives and reviewing executive
management’s performance.
lay solid foundations for manaGement
role of the Board and executive management
Role oF tHe BoARD AnD exeCutIve MAnAGeMent
prinCiple 1:
and oversiGHt
1.1
1.1.1
the Board has overall responsibility for overseeing the effective
management and control of the Group on behalf of Brambles’
shareholders, and supervising executive management’s conduct of
the Group’s affairs within a control and authority framework which
is designed to enable risk to be prudently and effectively assessed
and monitored.
the Board has adopted a schedule of matters reserved to it for
decision, a copy of which can be found at www.brambles.com, and
further details of which are in section 1.1.2.
the roles of the Chairman and executive management, led by the
Chief executive officer, are separated and clearly defined:
—
the Chairman, Graham Kraehe, is responsible for leadership of the
Board, setting the Board’s agenda, conducting Board meetings,
facilitating effective communication with shareholders and the
conduct of shareholder meetings; and
executive management, led by the Chief executive officer,
Mike Ihlein, has been delegated responsibility for the management
of Brambles within the control and authority framework referred
to above. the levels of authority for management are periodically
reviewed by the Board and are documented. the Chief executive
officer is assisted by the executive leadership team.
—
the non-executive Directors constructively challenge the development
of strategy. they review the performance of management in meeting
agreed objectives and monitor the reporting of performance. they
have a prime role in appointing and where necessary, recommending
the removal of, executive Directors, and in their succession planning.
22
BramBles limited Annu Al RepoRt 2009
the schedule of matters reserved to the Board for decision includes,
among other matters:
—
the establishment of the Group’s overall strategic direction
and strategic plans for the major business units;
the approval of budgets, financial objectives and policies,
and significant capital expenditure;
the approval of Brambles’ financial statements and published
reports;
the establishment and annual review of the effectiveness of
Brambles’ systems of internal control and risk management
processes; and
the appointment of key senior executives.
—
—
—
—
the Board has delegated some of its responsibilities to the Audit,
nominations and Remuneration committees. the charters of the Board
committees also require certain matters to be approved by the Board
including, among other matters, the executive remuneration policy and
the appointment of the external auditors. the Board is also supported
by the executive leadership team and the Group Risk Committee,
which are management committees. Details of these Board and
executive management committees are set out in sections 1.1.1, 2.4,
4.1, 7.2.3 and 8.1 and the committee charters can be found at
www.brambles.com.
AlloCAtIon oF InDIvIDuAl ReSponSIBIlItIeS
1.1.3
Formal letters of appointment, which are contracts for service but not
contracts of employment, have been put in place for all non-executive
Directors. the letters set out the key terms and conditions of their
engagement, including time commitments, corporate expectations
and, if appropriate, any special duties or assignments. A template
letter of appointment for a non-executive Director is available at
www.brambles.com.
Senior executives have employment contracts setting out their term
of office, rights and responsibilities and entitlements on termination,
and job descriptions setting out their duties.
performance evaluation of senior executives
1.2
Brambles has a well established performance management and
development planning process, which is used throughout the Group.
the process involves objective setting consistent with Brambles'
remuneration policy and targets, for cash and equity-based incentive
plans set by the Remuneration Committee. personal development
planning, half year reviews and full year appraisals feed into a
performance rating, leading to the assessment of annual bonuses.
Senior executives (including executive Directors and the executive
leadership team) all participate in this process, which is overseen
by the Remuneration Committee.
performance evaluations for senior executives, including executive
Directors and the executive leadership team, were carried out during
the Year in accordance with this process.
InDuCtIon oF SenIoR exeCutIveS
1.2.1
Business units have procedures for the induction of senior executives,
to assist them in participating fully and actively in management
decision-making at the earliest opportunity after commencing their
new roles.
struCture tHe Board to add value
prinCiple 2:
At the date of the Directors' Report, the Board consists of nine
members, with two executive Directors (the Chief executive officer
and the Chief Financial officer) and seven non-executive Directors.
the biographies for each of the current Directors, shown on page 19,
indicate the breadth of their business, financial and international
experience. this gives the Directors the range of skills, knowledge and
experience essential to govern Brambles, including an understanding
of the health, safety, environmental and community related issues
which it faces. the Board considers that its current composition
reflects an appropriate balance of executive and non-executive
Directors.
the table below sets out the names of the Directors in office at the
date of the Directors’ Report, the year of their most recent election
by shareholders, their status as executive or non-executive Directors,
whether the Board considers that they are independent Directors,
whether they will retire and seek re-election at the 2009 AGM, and
when they are next due for re-election.
independent directors
InDepenDent DeCISIon-MAKInG
2.1
2.1.1
the Board recognises the importance of independent judgement
and constructive debate on all issues under consideration. With
the approval of the Chairman, Directors may take independent
professional advice at Brambles’ expense in the furtherance of
discharging their duties and responsibilities. none of the Directors
availed themselves of this right during the Year.
the Chairman holds meetings with the non-executive Directors from
time to time, including meetings at scheduled sessions, without the
presence of the executive Directors or other executives. the non-
executive Directors meet without the Chairman present on such
occasions as may be considered appropriate.
InDepenDent DIReCtoRS
2.1.2
the Board has considered the independence of each of the Directors
in office as at the date of the Directors’ Report and concluded that
all non-executive Directors are independent. therefore the Board has
a majority of independent directors. In reaching this conclusion, the
Board had regard to the relationships set out in Box 2.1 of the CGpR
and noted that one of these relationships exists.
Carolyn Kay is a director of the Commonwealth Bank of Australia
(CBA), which is a substantial shareholder of Brambles. the Board
noted that the most recent substantial shareholder notice issued
by CBA provided that, except for 143,784 shares (being 0.01% of
Brambles' issued share capital at the date of this Statement), CBA’s
relevant interests in Brambles shares are exercised either as a
superannuation trustee; a life company holding statutory funds;
a responsible entity or manager of a managed investment scheme;
under an investment mandate; by external managers unrelated to the
CBA group; or subject to client direction. the Board does not consider
that Carolyn Kay’s relationship with CBA gives rise to any actual or
perceived loss of independence on her part because of the manner
in which CBA's relevant interests in Brambles shares are held. In
considering the matters in Box 2.1 of the CGpR, the Board considered
that a customer was material if it accounted for more than 2% of
Brambles’ consolidated gross revenue and that a supplier was
material if Brambles accounts for more than 2% of the supplier’s
consolidated gross revenue.
name
year appointed
year last
eleCted1
exeCutive or
non-exeCutive
independent
seeKinG eleCtion/
retirinG and seeKinG
re-eleCtion in 2009
next due for
re-eleCtion
G J Kraehe Ao
20052
M e Doherty
A G Froggatt
D p Gosnell
M F Ihlein
S p Johns
S C H Kay
C l Mayhew
B M Schwartz AM
2007
2006
2006
2004
2004
2006
2005
2009
2006
2008
2008
2008
2008
2007
2006
2007
–
non-executive
executive
non-executive
non-executive
executive
non-executive
non-executive
non-executive
non-executive
Yes
no
Yes
Yes
no
Yes
Yes
Yes
Yes
Yes
no
no
no
no
Yes
Yes
no
Yes
2009
2011
2011
2011
2011
2009
2009
2010
–
1 For the purposes of this table, the date of last election is the date the relevant Director was last elected to the Boards of Brambles or BIl and BIp.
2 Graham Kraehe also served as a director from 2000 to 2004, then re-joined the Board in 2005.
BramBles limited Annu Al RepoRt 2009
23
COrpOratE gOvErnanCE statEmEnt – CONTINUED
ReGulAR ASSeSSMentS
2.1.3
Directors are required to complete a declaration of interest form
prior to their appointment. this form is tabled at the Board meeting
to consider the appointment of the relevant Director. If their
circumstances change or they acquire any office, property or interest
which may conflict with their office as a Director of Brambles or the
interests of Brambles, Directors are required to disclose its character
and extent in writing at the next Board meeting. the Board also makes
an annual assessment of the independence of each non-executive
Director. If the Board concludes that a Director has lost their status
as an independent director, that conclusion will be advised to the
market in a timely manner.
Directors are generally not entitled to attend any part of a Board
meeting, or to vote on any matter, in which they have a material
personal interest unless the other Directors unanimously decide
otherwise. In appropriate cases, Directors may be required to absent
themselves from a meeting of the Board while such a matter is
being considered.
independent Chairman
2.2
the Board has concluded that the Chairman is independent and that
his other positions do not prevent him from devoting sufficient time
to perform the role effectively. As the Chairman is independent,
the Board does not consider it necessary to appoint a lead
independent director.
the Chairman is responsible for facilitating the effective contribution
of non-executive Directors, who are to receive accurate, timely and
clear information so that they may effectively discharge their duties
and responsibilities. the Chairman is also responsible for fostering
constructive relations between executive and non-executive
Directors.
roles of Chairman and Chief executive officer
2.3
the roles of Chairman and Chief executive officer are exercised by
two different individuals and are clearly documented, as discussed in
section 1.1.1 of this Statement. the Chairman does not have a history
of employment with Brambles.
nominations Committee
puRpoSe oF tHe noMInAtIonS CoMMIttee
2.4
2.4.1
the objective of the nominations Committee is to support and advise
the Board in fulfilling its responsibilities to shareholders in ensuring
that the Board is comprised of individuals who are best able to
discharge the responsibilities of Directors.
CHARteR
2.4.2
A copy of the nominations Committee’s Charter giving full details of
its duties and responsibilities can be found at www.brambles.com.
the nominations Committee’s Charter also sets out its composition,
structure, membership requirements and the procedures for inviting
non-members to attend meetings. the Committee is authorised to
seek any information it requires from any Group employee or from any
other source, including obtaining outside legal or other independent
professional advice.
2.4.3
CoMpoSItIon oF tHe noMInAtIonS CoMMIttee
the nominations Committee is comprised entirely of non-executive
Directors, all of whom the Board considers to be independent.
the members of the nominations Committee are Graham Kraehe
(Committee Chairman), Stephen Johns and tony Froggatt.
24
BramBles limited Annu Al RepoRt 2009
Details of nominations Committee meetings held during the Year and
attendance at those meetings, are set out in the Directors’ Report –
other Information on page 50.
ReSponSIBIlItIeS
2.4.4
the nominations Committee discharges its responsibilities by meeting
regularly throughout the year and, among other matters:
—
assessing periodically the skills required to discharge competently
the Board’s duties, having regard to the strategic direction of the
Group, and assessing the skills currently represented on the Board
to determine whether those current skills meet the required skills
identified;
reviewing the structure, size and composition (including the
balance of skills, knowledge and experience) of the Board and
the effectiveness of the Board as a whole, and keeping under
review the leadership needs of Brambles, both executive and
non-executive, with a view to ensuring the continued ability of
Brambles to compete effectively in the marketplace;
preparing a description of the role and capabilities required for any
Board appointment, identifying suitable candidates to fill Board
vacancies as and when they arise and nominating candidates for
the approval of the Board;
ensuring that, in determining the process for the identification
of suitable candidates for appointment:
>
a search is undertaken by an appropriately qualified
independent third party acting on a brief prepared by the
Committee which identifies the skills sought;
the search is international, extending to those countries in
which candidates with the necessary skills would ordinarily
be expected to be found; and
>
candidates are considered from a wide range of backgrounds;
ensuring that, on appointment, non-executive Directors receive
a formal letter of appointment, setting out the time commitment
and responsibilities envisaged in the appointment;
on any re-appointment of a non-executive Director on the
conclusion of their specified term of office, undertaking a process
of review of the retiring non-executive Director’s performance
during the period from their appointment or most recent
reappointment, as the case may be, to the Board;
reviewing annually the time commitment required of non-executive
Directors and carrying out performance evaluations to assess
whether the non-executive Directors are devoting enough time to
fulfilling their duties; and
giving full consideration to appropriate succession planning,
satisfying itself that processes and plans are in place in relation
to both Board (particularly for the key roles of Chairman and Chief
executive officer) and other senior executive appointments.
>
—
—
—
—
—
—
—
SeleCtIon AnD AppoIntMent pRoCeSS AnD Re-eleCtIon
2.4.5
oF DIReCtoRS
the Board is conscious of the need to ensure that proper processes
are in place to deal with succession issues at Board level. this requires
the Board to assess periodically the skills and expertise necessary to
meet Brambles’ demands. the nominations Committee assists the
Board in this process, which ordinarily involves the identification of the
need for a new appointee and suitable candidates, the preparation of a
brief including a description of the role and capabilities required and
the engagement of independent recruitment organisations.
Board renewal has been ongoing over the past several years. During
the second half of the 2008 year, the Board, with the assistance of the
nominations Committee, conducted a review of its skills set (including
its geographic experience) and appointed Brian Schwartz as a
non-executive Director in March 2009. In addition, the Board will
continue to seek to appoint new members in future years to succeed
existing Directors as they retire, ensuring an appropriate balance of
skills and experience is maintained.
A non-executive Director's formal letter of appointment (see section
1.1.3) sets out, among other things, the time commitment required
and specifies that the Director should consult with the Chairman
before accepting any additional commitments which may impact on
their role. each non-executive Director standing for election or
re-election at the 2009 Annual General Meeting has considered their
other significant commitments and specifically acknowledged to
Brambles that they will have sufficient time to meet what is expected
of them as Directors of Brambles. Details of the number of Board and
committee meetings held during the Year, and attendance at those
meetings by each of the Directors and committee members, are set
out in the Directors’ Report – other Information on page 50.
Directors are appointed for an unspecified term, but are subject to
election by shareholders at the first general meeting after their initial
appointment by the Board. no Director may serve for more than three
years without being re-elected by shareholders. Re-appointment is
not automatic. the Board reviews whether retiring Directors should
stand for re-election, having regard to their performance and the
contribution of their individual skills and experience to the desired
overall composition of the Board.
the non-executive Directors' formal letters of appointment confirm
that the non-executive Directors have no right to compensation on the
termination of their appointment for any reason, other than for unpaid
fees and expenses for the period actually served.
process for evaluating the performance of the Board, its
2.5
committees and directors
the Board and its committees carry out both internal and external
evaluations, with the form of evaluation being determined each year.
For the Year, the Board undertook an enhanced internal evaluation of
its performance as a whole and the performance of each of its
committees as well as an evaluation of the performance of individual
non-executive Directors. the evaluations involved the completion of a
questionnaire by each of the Directors and executive management on
matters relevant to the performance of the Board, its committees and
the non-executive Directors. the Board and committee reviews were
subsequently presented to, and reviewed by, the Board and each
committee respectively. the Chairman reviewed the results of each
individual Director's performance evaluation with that Director. the
Chairman’s performance evaluation was reviewed with him by the
Chairman of the Audit Committee.
InDuCtIon AnD eDuCAtIon
2.5.1
newly appointed Directors receive appropriate induction and training,
specifically tailored to their needs. Appointees are provided with
an information pack including governance policies and business
information, taken to visit operating sites, hold meetings with major
shareholders and receive presentations on Brambles’ businesses
and functions by its business unit leaders and functional heads.
on an ongoing basis, Directors participate in various seminars and
conferences held by industry and professional bodies. In addition,
Board meetings regularly include sessions on recent developments
in governance and corporate matters, operational site visits and
meetings with major customers.
ACCeSS to InFoRMAtIon
2.5.2
the Board receives accurate, timely and clear information so that it
may effectively discharge its duties and responsibilities.
Where necessary, Directors seek clarification or request the
provision of further information to assist with their decision-making
processes. the Board committee charters document the committees’
unrestricted rights to seek information from any Group employee or
from any other source. presentations to the Board are frequently
made by senior executives.
tHe BoARD AnD tHe CoMpAnY SeCRetARY
2.5.3
the Board is assisted by the Company Secretary who, under the
direction of the Chairman, is responsible for facilitating good
information flows within the Board and its committees and between
senior executives and non-executive Directors, as well as the
induction of new Directors and the ongoing professional development
of all Directors. the Company Secretary is responsible for monitoring
compliance with the Board’s procedures and for advising the Board,
through the Chairman, on all governance matters. All Directors have
access to the advice and services of the Company Secretary, whose
appointment and removal is a matter for the Board.
the Company Secretary is Robert Gerrard. His qualifications and
experience are set out on page 49.
establish a code of conduct
promote etHiCal and responsiBle
prinCiple 3:
deCision-maKinG
3.1
Brambles has a Code of Conduct, which provides an ethical and legal
framework for all employees in the conduct of Brambles’ business.
During the Year, Brambles amended its Code of Conduct, taking into
account the suggestions for the content of a code of conduct in
Box 3.1 of the CGpR. Brambles’ Code of Conduct includes the
following schedules:
—
—
—
—
—
—
—
—
—
—
Corporate Social Responsibility policy;
Speaking up policy;
Continuous Disclosure and Communications policy;
Group Guidelines for Serious Incident Reporting;
environmental policy;
Competition Compliance policy;
Health and Safety policy;
Securities trading policy;
Risk Management; and
Guidelines for Document Management.
the policies listed above set out the reporting responsibilities of
specified individuals, or in some cases, all employees. the Audit
Committee is responsible for monitoring compliance with the Speaking
up policy and at each meeting receives a report on investigations into
any matters raised under that policy. A copy of the Code of Conduct is
at www.brambles.com.
puRpoSe oF tHe CoDe oF ConDuCt
3.1.1
the Code of Conduct defines how Brambles relates to its
shareholders, employees, customers, suppliers and the community.
It includes Brambles’ general principles on business integrity. All
employees are expected to conduct business in accordance with the
laws and regulations of the countries in which the business is located,
and in a manner so as to enhance the reputation of Brambles.
BramBles limited Annu Al RepoRt 2009
25
COrpOratE gOvErnanCE statEmEnt – CONTINUED
ApplICAtIon oF tHe CoDe oF ConDuCt
3.1.2
the Code of Conduct has been translated into several languages,
so that it can be used to form part of employees' terms and conditions
of employment. non-executive Directors are required to agree to
comply with the Code of Conduct and to acknowledge that their
performance assessments will include an element on conformity with
the Code.
the Code of Conduct is not intended to be all-encompassing. there are
areas in which Brambles expects its businesses to develop detailed
policies in accordance with local requirements. the Code of Conduct
provides a set of guiding principles that may be supplemented with
additional local policies. It provides a common behavioural framework.
Brambles implements the Code of Conduct through a variety of
induction and training programs. During the Year, ongoing training took
place with the aim of enhancing employees’ compliance with certain
of the policies under the Code.
the Code of Conduct requires Brambles' contractors to adhere to
Brambles' health and safety, environmental and serious incident
reporting standards and requires consultants or professional advisers
who are engaged to undertake work for the Group to comply with the
Continuous Disclosure and Communications policy.
securities trading policy
3.2
Details of Brambles limited securities held by Directors are set out
on pages 42, 43 and 45. the Board has put in place a Securities trading
policy covering dealings in securities by:
—
—
—
—
Directors;
senior executives;
all individuals located in Brambles’ Headquarters;
any other person who is notified that they are subject to the policy
from time to time; and
their related persons.
—
(collectively Designated persons). the Securities trading policy
was updated at the beginning of the Year, taking into account the
suggestions for the content of a trading policy in Box 3.2 of the CGpR.
the policy is designed to ensure that shareholders, customers
and the international business community have confidence that
Brambles’ Directors and senior executives are expected to comply
with the law and best practice in corporate governance, and handle
confidential information lawfully and with integrity. It can be found
at www.brambles.com.
under the Securities trading policy, Designated persons are required
to obtain approval before dealing in Brambles limited’s securities,
and are prohibited from such dealing at certain times, other than in
exceptional circumstances, and then only where the Designated
person declares that he or she does not possess any price sensitive,
non-public information.
Any dealings in Brambles limited securities by a Director or a member
of the executive leadership team must be reported to Brambles
within two business days of effecting such dealings. the ASx and a
uK regulatory information service are notified of these transactions
within applicable time limits.
the Securities trading policy applies to Brambles’ equity-based
awards under the incentive plans described in the Remuneration
Report. the policy prohibits Designated persons from acquiring
financial products or entering into arrangements which have the
effect of limiting exposure to the risk of price movements
of Brambles securities.
26
BramBles limited Annu Al RepoRt 2009
the Securities trading policy also prohibits Designated persons
from using their securities in Brambles limited as security for a
margin loan.
Brambles takes compliance with the Securities trading policy
seriously. A breach of the policy by any employee will be regarded
as a breach of their conditions of employment and may result
in termination.
safeGuard inteGrity in finanCial
prinCiple 4:
reportinG
4.1
Brambles confirms that, in accordance with ASx listing Rule 12.7,
it has had an Audit Committee throughout the Year.
establish an audit Committee
puRpoSe oF tHe AuDIt CoMMIttee
4.1.1
the objective and purpose of the Audit Committee is to assist the
Board in fulfilling its corporate governance and oversight
responsibilities by:
—
monitoring and reviewing:
>
>
>
>
the integrity of financial statements;
internal financial controls;
the objectivity and effectiveness of the internal auditors; and
the independence, objectivity and effectiveness of the external
auditors;
—
—
—
—
making recommendations to the Board in relation to the
appointment or removal of the external auditors, the approval of
their remuneration and the terms of their engagement, including
the rotation of external audit engagement partners;
assessing whether the Committee is satisfied that the
independence of the external auditors has been maintained,
having regard to any non-audit related services;
reviewing and monitoring the policy on the engagement of the
external auditors to supply non-audit services (set out in the
Charter of Audit Independence, a copy of which can be found
at www.brambles.com), taking into account relevant legal and
ethical guidance regarding the provision of non-audit services by
the external auditors; and
reporting to the Board, identifying any matters in respect of which
it considers that action or improvement is needed and making
recommendations as to the steps to be taken.
structure of the audit Committee
CoMpoSItIon oF tHe AuDIt CoMMIttee
4.2
4.2.1
the Audit Committee has four members and is chaired by Stephen
Johns, an independent Director.
IMpoRtAnCe oF InDepenDenCe
4.2.2
the Audit Committee is comprised entirely of non-executive Directors,
all of whom the Board considers to be independent.
teCHnICAl expeRtISe
4.2.3
the Board considers that each of the members of the Audit
Committee has recent and relevant financial and accounting
experience and an understanding of accounting and financial issues
relevant to the industries in which Brambles operates.
the members of the Audit Committee, including details of their
relevant qualifications, are as follows:
—
Stephen Johns had a long career as a senior executive and director
of the Westfield Group, holding a number of positions including
that of Finance Director from 1985 until 2002. He holds a Bachelor
of economics degree from the university of Sydney and is a Fellow
of the Institute of Chartered Accountants in Australia.
—
—
—
David Gosnell is the Managing Director of Global Supply and
procurement for Diageo plc. He holds a Bachelor of Science
degree in electrical and electronic engineering from Middlesex
university, england.
Carolyn Kay is a director of CBA and an external Board Member of
Allens Arthur Robinson. She holds Bachelor Degrees in law and
Arts from the university of Melbourne and a Graduate Diploma in
Management from the AGSM. She is a Fellow of the Australian
Institute of Company Directors.
Brian Schwartz is a non-executive director of Insurance Australia
Group limited and the Westfield Group. He had a long career at
ernst & Young, holding a number of senior positions including that
of Ceo ernst & Young Australia from 1998 to 2004. He is a Fellow
of the Institute of Chartered Accountants in Australia.
Stephen Johns, David Gosnell and Carolyn Kay were members of the
Committee throughout the Year; Brian Schwartz became a member
on 23 June 2009, following his appointment to the Board.
CHARteR
audit Committee Charter
4.3
4.3.1
the Audit Committee has a Charter which includes its duties and
responsibilities, composition, structure, membership requirements,
authority, access rights and sets out a procedure for inviting
non-members to attend its meetings. the Charter requires the Audit
Committee to meet with internal and external auditors at least once
a year without executive management being present. A copy of the
Audit Committee’s Charter, which is reviewed annually, can be found
at www.brambles.com.
ReSponSIBIlItIeS
4.3.2
the Audit Committee discharges its responsibilities by meeting
regularly throughout the year and, among other matters:
—
—
—
—
reviewing, and challenging where necessary, the actions and
judgment of management in relation to full-year and half-year
financial reports and other announcements relating to those
reports prepared for release to the ASx, regulators and the public,
before making appropriate recommendations to the Board;
reviewing the audit plans of the internal auditors, including the
scope and materiality level of their audits; monitoring compliance
with, and the effectiveness of, the audit plans of the internal
auditors; reviewing reports from the internal auditors on their
audit findings, management responses and action plans in relation
to those findings, and reports from the internal auditors on the
implementation of those action plans; and facilitating an open
avenue of communication between the internal auditors, the
external auditors and the Board;
reviewing the audit plans of the external auditors, including the
nature, scope, materiality level and procedures of their audits;
monitoring compliance with, and the quality and effectiveness of,
the audit plans of the external auditors; and reviewing reports
from the external auditors in relation to their major audit findings,
management responses and action plans in relation to those
findings, and reports from the external auditors on the
implementation of those action plans; and
reviewing and recommending to the Board the fees payable to the
external auditors, monitoring compliance with the Charter of
Audit Independence and pre-approving the performance by the
external auditors of any non-audit related work and any proposed
fees to be paid to the external auditors for that work, as required
by the Charter of Audit Independence. the Charter divides
non-audit work into three categories: work which must be approved
by the Chief Financial officer (if fees will fall below specified
limits); work which must be approved by the Audit Committee;
and work which is prohibited. prior consultation with, and approval
of the Chief Financial officer or Audit Committee, as prescribed by
the Charter, is required whenever management recommends that
the external auditors undertake non-audit work. Internal
accounting, valuation services, actuarial services and internal
audit services must not be performed by the external auditors.
the Audit Committee is also responsible for monitoring the Brambles’
Speaking up policy, that it is communicated properly and complied
with throughout Brambles, and for monitoring that appropriate
protection against victimisation and dismissal is given to Brambles
employees who make certain disclosures in the public interest.
MeetInGS
4.3.3
Details of the number of Audit Committee meetings held during the
Year, and attendance at those meetings, are set out in the Directors’
Report – other Information on page 50. Minutes of meetings are
included in the papers for the next full Board meeting.
RepoRtInG
4.3.4
the Chairman of the Audit Committee reports to the Board on the
Committee’s proceedings and on all matters relevant to the
Committee’s duties and responsibilities.
establish a continuous disclosure policy
maKe timely and BalanCed disClosure
prinCiple 5:
5.1
Brambles is committed to the promotion of investor confidence by
taking steps within its power to ensure that trading in its securities
occurs in an efficient and informed market. Brambles recognises
the importance of effective communication as a key part of building
shareholder value and that, to prosper and achieve growth, it must,
among other matters, earn the trust of shareholders, employees,
customers, suppliers and communities, by being open in its
communications and consistently delivering on its commitments.
the Board has adopted a Continuous Disclosure and Communications
policy to:
—
reinforce Brambles’ commitment to the continuous disclosure
obligations imposed by law and to describe the processes
implemented by it to ensure compliance;
outline Brambles’ corporate governance standards and related
processes and ensure that timely and accurate information about
Brambles is provided equally to all shareholders and market
participants; and
outline Brambles’ commitment to communicating effectively
with shareholders and encouraging shareholder participation
in shareholder meetings.
—
—
the Continuous Disclosure and Communications policy takes into
account the matters listed in Box 5.1 of the CGpR. A copy can be found
at www.brambles.com.
to achieve the above objectives and satisfy regulatory requirements,
the Board provides information to shareholders and the market in
several ways:
—
significant announcements are released directly to the market via
the ASx and a uK regulatory information service. Copies of these
announcements are immediately placed on www.brambles.com.
Brambles conducts investor and analyst briefings as a part of its
investor relations programme. no new materials or price sensitive
information is provided at those briefings unless it has been
—
BramBles limited Annu Al RepoRt 2009
27
COrpOratE gOvErnanCE statEmEnt – CONTINUED
—
previously or is simultaneously released to the market.
presentation materials are placed on Brambles' website.
www.brambles.com contains further information about Brambles
and its activities, including copies of recent interim and annual
reports and recordings of the most recent presentations
to analysts.
CoMMentARY on FInAnCIAl ReSultS
5.1.1
the Audit Committee Charter requires the Committee to review the
clarity of financial reports. During the Year, a change was made to the
presentation of the Income Statement, with the aim of simplifying the
presentation of data and allowing greater transparency and
understanding of Brambles’ results.
A review of operations and activities for the Year is included on pages
10 to 17. presentations of the full and half year results are made to
the investment community immediately after they are released to the
market. live webcasts of these presentations are transmitted via, and
presentation materials are placed on, the Brambles website.
5.1.2
elIMInAtInG SuRpRISe on teRMInAtIon entItleMentS
Details of the termination entitlements of Brambles’ Chief executive
officer, Chief Financial officer and other Key Management personnel are
disclosed on page 39 of the Directors’ Report – Remuneration Report.
respeCt tHe riGHts of sHareHolders
prinCiple 6:
Shareholders play an important role in the governance of Brambles
by electing the Board, whose task it is to govern on their behalf.
the Chairman regularly meets major investors to understand their
issues and concerns and discuss particular matters relating to
Brambles’ governance and strategy. no new material or price sensitive
information is provided at such meetings. other non-executive
Directors may attend meetings with major investors and will attend
them if requested. the Chairman reports to the Board on the matters
discussed at meetings with major investors and copies of relevant
correspondence are included in the Board papers. Copies of analysts’
reports are also circulated to the Board.
establish a communications policy
6.1
As disclosed in section 5.1, the Board has adopted a Continuous
Disclosure and Communications policy, which outlines Brambles’
commitment to communicating effectively with shareholders and
encouraging shareholder participation in shareholder meetings.
A copy can be found at www.brambles.com.
eleCtRonIC CoMMunICAtIon
6.1.1
Brambles takes all of the measures to make effective use of
electronic communication that are outlined in Box 6.1 of the CGpR.
Brambles posts a copy of all announcements made to the ASx and
through a uK regulatory information service on www.brambles.com.
on release, significant announcements are highlighted in the “latest
news” area on the home page of the website.
presentations to investors, analysts or media during briefings
and copies of speeches and presentations made by the Chairman
and Chief executive officer at general meetings are released as
regulatory announcements and posted on www.brambles.com after
release. Briefings and general meetings are also webcast live, via
www.brambles.com.
All of the regulatory releases and notices of meeting that Brambles
limited has published since it was listed in December 2006 are
available on www.brambles.com, as are several years’ history of such
documents relating to BIl and BIp, prior to unification.
28
BramBles limited Annu Al RepoRt 2009
Shareholders are asked to elect whether they would like to receive
shareholder communications in printed form or provide an email address
and be sent an electronic notification when a communication is available
on www.brambles.com, instead of a hard copy. Shareholders who do not
respond are sent a printed notification of availability of the annual
report and hard copies of all other communications. Shareholders may
electronically appoint proxies and lodge proxy instructions for items of
business to be considered at general meetings. the 2009 AGM notice
describes how this can be done and explains how shareholders can
lodge direct votes for the first time at the 2009 AGM.
MeetInGS
6.1.2
AGMs provide an opportunity for the Board to communicate with
investors, through presentations on Brambles’ businesses and current
trading. Shareholders are encouraged to attend AGMs and to
participate and use the opportunity to ask questions on any matter.
to make better use of the limited time available, shareholders are
invited to register questions and issues of concern prior to AGMs.
this can be done either by completing the relevant form accompanying
the notices convening the meetings or by emailing Brambles at
shareholderquestions@brambles.com. Answers to frequently asked
questions are given during presentations to AGMs. Shareholders may
also ask questions at AGMs without having registered their questions
in this manner.
CoMMunICAtIon WItH BeneFICIAl oWneRS
6.1.3
Beneficial owners of shares, investors or members of the public
are encouraged to register for free email alerts, so that they may
stay up to date on major news announcements made by Brambles.
there is a link to the email Alerts registration area of the website
on the home page of www.brambles.com. users of the email Alerts
service may customise the types of announcements that they receive.
WeBSIte
6.1.4
Brambles encourages shareholders to make full use of
www.brambles.com and to provide an email address to the share
registry so that they may be sent email notifications when shareholder
communications are available. Brambles believes shareholders benefit
from electronic communication as they receive information promptly
and have the convenience and security of electronic delivery.
electronic communication is also environmentally friendly and
generates cost savings.
RISK MAnAGeMent polICIeS
reCoGnise and manaGe risK
establish policies for the oversight and management of
prinCiple 7:
7.1
material business risks
7.1.1
the Board is responsible for the establishment, and reviewing the
effectiveness of the Group’s system of internal control and risk
management. the Board is supported in this role by management,
in particular by the Group Risk Committee, the Audit Committee
(in relation to financial reporting risks) and the Group’s internal audit
function. the Group Risk Committee’s responsibilities are described
in section 7.2.3 of this Statement. the Audit Committee’s
responsibilities are described in section 4.3.2 of this Statement.
During 2008, Brambles commissioned an independent assessment
of its risk governance framework. Several actions to improve the
oversight and management of material business risks were taken
during the Year to implement the principal recommendations arising
from that assessment. new risk management training materials were
also developed and used to conduct training sessions to improve risk
awareness and skills across the Group.
Material business risks are categorised as follows:
—
strategic risks, which are largely derived from the external
environment in which Brambles operates (e.g. competitive threat,
business environment changes);
enablement risks, which are largely derived from Brambles’ own
competencies (e.g. innovation, people capability); and
operational risks, which are largely related to business operations
(e.g. safety, business continuity, fire protection).
—
—
During the Year, the Board conducted a review of Brambles’
Group-level risk profile having regard to its risk appetite and goals of
creating shareholder wealth and remaining a good corporate citizen.
the business units formalised their risk management practices by
establishing individual risk and control committees and conducting
an in-depth review of the business unit risk profiles that underpin
the Group-level risk profile. the outcomes of both reviews were
consolidated by Brambles’ risk management team. the updated risk
profiles and accompanying mitigation plans were re-evaluated by
business unit risk and control committees and Group presidents,
senior management at Brambles Headquarters, the Group Risk
Committee and the Board. In preparing and updating mitigation plans,
it was necessary to take into account Brambles’ legal obligations and
the reasonable expectations of stakeholders, such as shareholders,
customers, employees, subcontractors, suppliers and the community
in general.
reporting on effective management of material business risks
RISK MAnAGeMent AnD InteRnAl ContRol SYSteM
7.2
7.2.1
Management is responsible for the development, implementation
and management of systems that:
—
identify, assess and manage risks in an effective and efficient
manner;
enable decisions to be based on a comprehensive view of the
reward-to-risk balance;
provide greater certainty of the delivery of objectives; and
satisfy the Group’s corporate governance requirements.
—
—
—
these systems are designed to limit the risk of failure to achieve
business objectives. It must be recognised, however, that internal
control and risk management systems can provide only reasonable,
and not absolute, assurance against the risk of material loss.
Key elements of Brambles’ internal control systems include:
—
—
—
—
—
—
—
—
a Code of Conduct that sets out an ethical and legal framework
for all employees in the conduct of Brambles’ business;
financial systems to provide timely, relevant and reliable
information to management and to the Board;
appropriate formalised delegations and limits of authority
consistent with Brambles’ objectives;
biannual management declarations at country, regional and global
levels confirming, among other matters, the adequacy of internal
control procedures, the effectiveness of risk management
systems and compliance with the Code of Conduct and all
regulatory and statutory requirements;
an internal audit function, described in section 7.2.2 of
this Statement;
a risk management function;
a risk and control committee for each of its business units; and
other sources of independent assurance, such as environmental
audits, occupational health and safety audits and reports from
the external auditors.
the key elements of Brambles’ ongoing business risk management
systems are set out below:
Risk control – risks to the achievement of business objectives are
identified through a process of examination between the Group Risk
Committee, Brambles’ risk management team, the business unit
Group presidents, business unit risk and control committees and
functional process owners. Key business risks are also identified
and analysed during regular management reporting and discussions.
the identified risks are assessed in terms of their underlying causes,
business consequences, external variables, current internal control
effectiveness, likelihood of occurrence, overall risk priority and risk
mitigation status. the resulting net risk and control profiles are
presented to the Board, together with a risk improvement program
designed to increase the effectiveness of controls and manage the
overall level of risk. this process forms part of the Board’s annual
review of the effectiveness of the systems of internal control.
Risk monitoring – there is regular reporting of key risk events, such
as safety incidents, litigation and serious incidents (as defined in the
Code of Conduct). In addition to regular monitoring by the Group
Risk Committee and Brambles' risk management team, risks and
controls are reassessed by business unit risk and control committees
on at least a biannual basis. the outcome of those assessments
and details of progress in implementing risk improvement programs
are signed off by Group presidents and reported to the Group vice
president, Risk and Audit. In addition, a report on the effectiveness
of the management of business risks is provided to the Group Risk
Committee and the Board. the effectiveness of the specific risk
controls and risk improvement programs are also periodically
reviewed by internal audit, and the results reported to the Group
Risk Committee and the Board.
During the Year, the Board reviewed the effectiveness of the internal
control and risk management systems and will continue to do so on
an ongoing basis by:
—
—
—
—
—
—
—
—
considering and approving the budget and forward plan of each
business;
reviewing detailed monthly reports on business performance
and trends;
setting limits on delegated authority;
receiving regular reports on Brambles’ treasury activities,
and reviewing treasury guidelines, limits and controls;
conducting the review of Brambles’ risk profiles, as described
in section 7.1.1 of this Statement;
receiving twice-yearly reports from the Group Risk Committee
on the effectiveness of internal control and risk management
systems for Brambles' material business risks, being the report
required by Recommendation 7.2 of the CGpR;
receiving twice-yearly written assurances from the Chief
executive officer and Chief Financial officer, as described
in section 7.3 of this Statement; and
receiving reports from the Audit Committee, which has a
responsibility to assist the Board in reviewing internal financial
controls.
the principal risks and uncertainties facing Brambles are
described below.
—
economic Cycle – Brambles has operations spread across a
diverse range of countries and territories. It is subject to risks
related to global economic and business conditions. these may
BramBles limited Annu Al RepoRt 2009
29
COrpOratE gOvErnanCE statEmEnt – CONTINUED
—
—
—
—
—
—
—
—
—
—
affect, among other things, profitability, demand for Brambles’
services and solvency of counterparties.
Business environment Changes – Brambles has operations spread
across a diverse range of countries and territories. It is subject
to risks related to rapid and sustained changes in the business
environment, which may invalidate aspects of its current business
models. these changes could include fuel prices, lumber supply and
the structure of customers’ supply chains. these may affect, among
other things, profitability and demand for Brambles’ services.
Climate Change – Brambles is subject to the risk of unforeseen
impacts upon its businesses arising from climate and
environmental changes. examples include emissions trading or
carbon taxes and government regulation such as mandatory
eco-efficiency targets.
Competition and Retention of Major Customers – Brambles
operates in a competitive environment. Many of the markets in
which Brambles operates are served by numerous competitors
and are subject to the threat of new entrants. In addition, the
concentration of distributors in certain areas could lead to shifts
in bargaining position and intensity of competition. the above risks
could have an impact on market structure, penetration, revenue,
profitability, economies of scale and the value of existing assets.
Insufficient Growth – Brambles is subject to the risk of not
selecting the optimal corporate strategy, business model, financial
structure or capital allocation, including the pace of expansion
into emerging markets. As these are central to the value of
shareholders’ investment and protection of Brambles’ assets,
Brambles may be unable to capture the full value of its growth
opportunities.
obsolescence of pallet platform – new technologies in pallet
design or components could influence alternative supply chain
solutions. this would, over time, have an impact on revenue, cost
base, economies of scale and the value of CHep’s existing assets.
Innovation – Brambles is subject to the risk of not being able to
optimise innovations in its services, products, processes and
commercial solutions, including capturing the full value of any
innovations that support its growth opportunities. this could have
an impact on revenue, profitability, economies of scale and the
value of existing assets.
operational Improvement – Brambles is subject to the risk
that it may be unable to capture the full value of operational
improvement opportunities. this could result in a reduced
ability to control costs or a reduction in control of CHep’s
equipment pool.
equipment Quality – Satisfaction of CHep customers may
fluctuate with the customers’ perceived views of equipment
quality which, in turn, is influenced by the effectiveness of the
quality standards that CHep employs in its equipment pool.
Brambles is subject to the risk that it may not optimise these
standards, thereby adversely affecting customer satisfaction with
the CHep service offering and/or the operating and capital costs
of the equipment pool.
people Capability – Brambles is subject to the risk of not
attracting, developing and retaining high performing individuals
in the optimum organisational structure, which could result in it
not having sufficient quality and quantity of people to meet its
growth and business objectives.
Market Communication – Brambles is subject to risks relating
to market expectations, which may lead to a loss of investor
confidence in the business and its management.
30
BramBles limited Annu Al RepoRt 2009
—
—
Systems and technology – Brambles relies on the continuing
operation of its information technology and communications
systems, including those in CHep’s Global Data Centre. Failure
to optimise these systems, or an extended systems interruption
event, could impair Brambles’ ability to provide its services
effectively. this could damage its reputation and, in turn, have
an adverse effect on its ability to attract and retain customers.
Refinancing – the conditions in global credit markets may create
a risk that Brambles may be unable to renew its existing credit
facilities. this could have an impact on Brambles’ ability
to manage cost-effectively its capital structure whilst continuing
to fund its key growth opportunities.
InteRnAl AuDIt FunCtIon
7.2.2
Brambles’ internal audit function carries out risk-based audits under
an annual plan approved by the Audit Committee. the internal audit
team makes an independent appraisal of the adequacy and
effectiveness of Brambles’ risk management and internal control
system, to provide assurance to the Audit Committee and the Board.
the internal audit function is independent of the external auditor.
the head of internal audit has direct access to the Chairman of the
Audit Committee. Both the Audit Committee and the internal audit
team have unrestricted access to management and the right to seek
information and explanations.
GRoup RISK CoMMIttee
7.2.3
the Group Risk Committee is a management committee. It assists the
Board in fulfilling its responsibilities to review Brambles’ policies on
risk oversight and management and to satisfy itself that management
has developed and implemented a sound system of risk management
and internal control.
the Committee members are liz Doherty (Chief Financial officer
and Committee Chairman), senior executives from each business unit
and from Brambles’ accounting, risk and internal audit, legal and
secretarial functions. A copy of the Group Risk Committee’s Charter
can be found at www.brambles.com.
Chief executive officer and Chief financial officer declaration
7.3
the Board receives written assurances from the Chief executive
officer and Chief Financial officer that the declaration provided
under section 295A of the Act is founded on a sound system of risk
management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting
risks. the Board receives these assurances in advance of approving
both the annual and interim financial statements.
establish a remuneration committee
remunerate fairly and responsiBly
puRpoSe oF tHe ReMuneRAtIon CoMMIttee
prinCiple 8:
8.1
8.1.1
the objective and purpose of the Remuneration Committee is to assist
the Board in establishing remuneration policies and practices which:
enable Brambles to attract and retain executives and Directors
—
who will create value for shareholders;
fairly and responsibly reward executives having regard to the
performance of Brambles, the performance of the executive and
the general remuneration environment; and
comply with the provisions of the ASx listing Rules and the Act.
—
—
Comparison of remuneration structures
8.2
there is a clear distinction between the structure of non-executive
Directors’ remuneration and that of the executive Directors and
executive management. Brambles has taken account of the guidelines
for executive remuneration packages in Box 8.1 of the CGpR and
the guidelines for non-executive director remuneration in Box 8.2 of
the CGpR. Further details can be found in the Directors’ Report –
Remuneration Report on pages 35, 36 and 44.
CHARteR
8.1.2
the Remuneration Committee has a Charter which includes its
duties and responsibilities, composition, structure, membership
requirements, authority, access rights and sets out a procedure
for inviting non-members to attend its meetings. A copy of the
Remuneration Committee’s Charter can be found at
www.brambles.com.
CoMpoSItIon oF ReMuneRAtIon CoMMIttee
8.1.3
the Remuneration Committee is comprised entirely of non-executive
Directors, all of whom the Board considers to be independent. the
three members of the Remuneration Committee are luke Mayhew
(Committee Chairman), Graham Kraehe and tony Froggatt. the
Remuneration Committee meets at least three times a year. Details
of the number of Remuneration Committee meetings held during the
Year and attendance at those meetings, are set out in the Directors’
Report – other Information on page 50.
ReSponSIBIlItIeS oF tHe ReMuneRAtIon CoMMIttee
8.1.4
the Remuneration Committee discharges its responsibilities by
meeting regularly throughout the year and, among other matters:
—
determining and agreeing with the Board the broad policy for the
remuneration of the Chairman of the Board, the Chief executive
officer and other members of the senior executive team, and
reviewing the ongoing appropriateness and relevance of the
executive remuneration policy;
determining the remuneration for the executive Directors and
the Company Secretary, reviewing the proposed remuneration for
the senior executive team, ensuring that contractual terms on
termination, and any payments made, are fair to the individual
and Brambles, that failure is not rewarded and that the duty
to mitigate loss is fully recognised, and, in determining such
packages and arrangements, giving due regard to all relevant
regulations and associated guidance;
insofar as they impact on the executive Directors and the senior
executive team, approving the design of, and determining targets
for, all cash-based executive incentive plans, and approving the
total proposed payments from all such plans;
keeping all equity-based plans under review in the light of
legislative, regulatory and market developments, determining
each year whether awards will be made under such plans and
whether there are exceptional circumstances which allow awards
at other times, approving total proposed awards under each plan,
and approving awards to executive Directors and reviewing
awards made to the senior executive team;
annually reviewing and taking account of the remuneration trends
across Brambles in its main markets, and advising on any major
changes in employee benefit structures throughout Brambles;
reviewing the funding and performance of Brambles’ retirement
plans and reporting to the Board; and
selecting, appointing and setting the terms of reference for
external remuneration consultants who advise the Committee
in respect of the remuneration of the executive Directors.
—
—
—
—
—
—
ReMuneRAtIon polICY
8.1.5
Details of Brambles’ remuneration policy can be found in the Directors’
Report – Remuneration Report on pages 35, 36 and 44.
the remuneration of the Chairman of Brambles is determined by
the Remuneration Committee. the remuneration of the other
non-executive Directors is determined by the executive Directors,
with the non-executive Directors taking no part in the discussion or
decision relating to their remuneration. In setting remuneration,
advice is sought from external remuneration consultants.
BramBles limited Annu Al RepoRt 2009
31
COrpOratE gOvErnanCE statEmEnt – CONTINUED
the following checklist summarises Brambles' compliance with the CGpR and contains cross references to the sections of this Statement and
to the exact location of information disclosed at www.brambles.com.
prinCiple/reCommendation
referenCe
prinCiple 1: lay solid foundations for manaGement and oversiGHt
Recommendation 1.1
Role of the board and management
Recommendation 1.2
performance evaluation of senior executives
Corporate Governance Statement: 1.1
Corporate Governance Statement: 1.2
Recommendation 1.3
Companies should provide the following information in the corporate governance statement:
—
an explanation of any departures from Recommendations 1.1, 1.2 or 1.3
not applicable
—
whether a performance evaluation for senior executives has taken place in the reporting
period and whether it was in accordance with the process disclosed
Corporate Governance Statement: 1.2
A statement of matters reserved for the board, or the board charter or the statement of
areas of delegated authority to senior executives should be made publicly available, ideally
by posting it to the company’s website in a clearly marked corporate governance section
www.brambles.com
See “Corporate Governance”, "Board
of Directors", “Role of the Board”.
prinCiple 2: struCture tHe Board to add value
Recommendation 2.1
Independent directors
Recommendation 2.2
Independent chairman
Recommendation 2.3
Roles of chairman and chief executive officer
Recommendation 2.4 nomination committee
Corporate Governance Statement: 2.1
Corporate Governance Statement: 2.2
Corporate Governance Statement: 2.3
Corporate Governance Statement: 2.4
Recommendation 2.5
process for evaluating the performance of the board, its committees and directors
Corporate Governance Statement: 2.5
Recommendation 2.6
Companies should provide the following information in the corporate governance statement:
Corporate Governance Statement:
—
—
—
the skills, experience and expertise relevant to the position of director held by each
director in office at the date of the annual report
the names of the directors considered by the board to constitute independent directors
and the company’s materiality thresholds
the existence of any of the relationships listed in Box 2.1 and an explanation of why the
board considers a director to be independent, notwithstanding the existence of those
relationships
2
2.1.2
2.1.2
—
a statement as to whether there is a procedure agreed by the board for directors to take
independent professional advice at the expense of the company
2.1.1
—
the period of office held by each director in office at the date of the annual report
2
—
—
the names of members of the nomination committee and their attendance at meetings
of the committee, or where a company does not have a nomination committee, how the
functions of a nomination committee are carried out
2.4.3 and Directors' Report – other
Information, page 50.
whether a performance evaluation for the board, its committees and directors has
taken place in the reporting period and whether it was in accordance with the process
disclosed
2.5
—
an explanation of any departures from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6
not applicable
the following material should be made publicly available, ideally by posting it to
the company’s website in a clearly marked corporate governance section:
—
a description of the procedure for the selection and appointment of new directors and
the re-election of incumbent directors
—
—
the charter of the nomination committee or a summary of the role, rights,
responsibilities and membership requirements for that committee
the board’s policy for the nomination and appointment of directors
www.brambles.com
See "Corporate Governance", "Board of
Directors", "Board Succession planning
and Renewal".
www.brambles.com
See “Corporate Governance”,
“Committees of the Board”,
“nominations Committee”.
32
BramBles limited Annu Al RepoRt 2009
prinCiple/reCommendation
referenCe
prinCiple 3: promote etHiCal and responsiBle deCision-maKinG
Recommendation 3.1
establish a code of conduct
Recommendation 3.2
Securities trading policy
Corporate Governance Statement: 3.1
Corporate Governance Statement: 3.2
Recommendation 3.3
Companies should provide the following information in the corporate governance statement:
—
an explanation of any departures from Recommendations 3.1, 3.2 or 3.3
not applicable
the following material should be made publicly available, ideally by posting it to the
company’s website in a clearly marked corporate governance section:
—
—
any applicable code of conduct or a summary
the trading policy or a summary
prinCiple 4: safeGuard inteGrity in finanCial reportinG
Recommendation 4.1
establish an audit committee
Recommendation 4.2
Structure of the audit committee
Recommendation 4.3
Audit committee charter
Recommendation 4.4
Companies should provide the following information in the corporate governance statement:
www.brambles.com
See “Corporate Governance”, “other”,
“Brambles Code of Conduct”
(which incorporates the Securities
trading policy as Schedule 8).
Corporate Governance Statement: 4.1
Corporate Governance Statement: 4.2
Corporate Governance Statement: 4.3
—
—
the names and qualifications of those appointed to the audit committee and their
attendance at meetings of the committee, or, where a company does not have an audit
committee, how the functions of an audit committee are carried out
the number of meetings of the audit committee
Corporate Governance Statement: 4.3
and Directors’ Report – other
Information, page 50.
—
an explanation of any departures from Recommendations 4.1, 4.2, 4.3 or 4.4
not applicable
the following material should be made publicly available, ideally by posting it to the
company’s website in a clearly marked corporate governance section:
—
—
the audit committee charter
information on procedures for the selection and appointment of the external auditor, and
for the rotation of external audit engagement partners
www.brambles.com
See “Corporate Governance”,
“Committees of the Board”, “Audit
Committee”.
prinCiple 5: maKe timely and BalanCed disClosure
Recommendation 5.1
establish a continuous disclosure policy
Corporate Governance Statement: 5.1
Recommendation 5.2
Companies should provide the following information in the corporate governance statement:
—
an explanation of any departures from Recommendations 5.1 or 5.2
not applicable
the policies or a summary of those policies designed to guide compliance with listing Rule
disclosure requirements should be made publicly available, ideally by posting them to the
company’s website in a clearly marked corporate governance section
www.brambles.com
See “Corporate Governance”, “other”,
“Brambles Code of Conduct” (which
incorporates the Continuous Disclosure
and Communications policy as
Schedule 3).
BramBles limited Annu Al RepoRt 2009
33
COrpOratE gOvErnanCE statEmEnt – CONTINUED
prinCiple/reCommendation
referenCe
prinCiple 6: respeCt tHe riGHts of sHareHolders
Recommendation 6.1
establish a communications policy
Corporate Governance Statement: 6.1
Recommendation 6.2
Companies should provide the following information in the corporate governance statement:
—
an explanation of any departures from Recommendations 6.1 or 6.2
not applicable
the company should describe how it will communicate with its shareholders publicly, ideally
by posting this information on the company’s website in a clearly marked corporate
governance section
www.brambles.com
See “Corporate Governance”, “other”,
“Brambles Code of Conduct” (which
incorporates the Continuous Disclosure
and Communications policy as
Schedule 3).
prinCiple 7: reCoGnise and manaGe risK
Recommendation 7.1
establish policies for the oversight and management of material business risks
Corporate Governance Statement: 7.1
Recommendation 7.2
Reporting on effective management of material business risks
Corporate Governance Statement: 7.2
Recommendation 7.3
Chief executive officer and Chief Financial officer declaration
Corporate Governance Statement: 7.3
Recommendation 7.4
Companies should provide the following information in the corporate governance statement:
—
an explanation of any departures from Recommendations 7.1, 7.2 or 7.3 or 7.4
not applicable
—
whether the board has received the report from management under Recommendation 7.2
Corporate Governance Statement: 7.2
—
whether the board has received assurance from the chief executive officer (or equivalent)
and the chief financial officer (or equivalent) under Recommendation 7.3
Corporate Governance Statement: 7.3
the following material should be made publicly available, ideally by posting it to the
company’s website in a clearly marked corporate governance section:
—
a summary of the company’s policies on risk oversight and management of material
business risks
prinCiple 8: remunerate fairly and responsiBly
Recommendation 8.1
establish a remuneration committee
Recommendation 8.2
Comparison of remuneration structure
www.brambles.com
See “Corporate Governance”,
“Management Committees”, “Group
Risk Committee”.
Corporate Governance Statement: 8.1
Corporate Governance Statements: 8.1.2
and Directors’ Report – Remuneration
Report pages 35, 36 and 44.
Recommendation 8.3
Companies should provide the following information in the corporate governance statement:
—
the names of the members of the remuneration committee and their attendance at
meetings of the committee, or where a company does not have a remuneration
committee, how the functions of a remuneration committee are carried out
Corporate Governance Statement: 8.1.3
and Directors’ Report – other
Information, page 50.
—
the existence and terms of any schemes for retirement benefits, other than
superannuation, for non-executive directors
not applicable
—
an explanation of any departures from Recommendations 8.1, 8.2 or 8.3
not applicable
the following material should be made publicly available, ideally by posting it to the
company’s website in a clearly marked corporate governance section:
—
—
the charter of the remuneration committee or a summary of the role, rights,
responsibilities and membership requirements for that committee
a summary of the company’s policy on prohibiting entering into transactions in
associated products which limit the economic risk of participating in unvested
entitlements under any equity-based remuneration schemes
www.brambles.com
See “Corporate Governance”,
“Committees of the Board”,
“Remuneration Committee” and
“Corporate Governance”, “other”,
“Brambles Code of Conduct”
(which incorporates the Securities
trading policy as Schedule 8).
34
BramBles limited Annu Al RepoRt 2009
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt
At the 2008 Annual General Meeting, Brambles’ shareholders
endorsed the Company’s proposals for a revised remuneration plan,
which was designed to underpin our long term growth strategy. the
Remuneration Committee believes that this plan is still relevant, even
though Brambles has experienced significant economic challenges and
volatility in many of its markets.
Brambles has fallen short of the financial targets that were set
for the current financial year, although some executives did achieve
a number of their personal strategic objectives. Short term incentive
cash payments for the year were therefore either nil or modest. In the
circumstances the executive Directors did not receive bonuses.
enhanced Short term Incentive and long term Incentive equity
awards, made as at 30 August 2006, will not vest due to the
relative total shareholder return performance condition not being
achieved. the actual achievement against the relevant performance
conditions is set out in section 4.2.1. Short term Incentive equity
awards granted on 19 January 2007, which are dependent only on
continued employment for three years, will vest in accordance with
the 2006 performance Share plan rules.
Contents
1. Background
2. Remuneration Committee
3. Remuneration policy and structure
4. performance of Brambles
5. executive Directors and Disclosable executives
6. non-executive Directors’ disclosures
7. Appendices
BaCKGround
1.
this Remuneration Report includes information on Brambles’
executive Directors, non-executive Directors, and other Group
executives whose details are required to be disclosed (Disclosable
executives).
Disclosable executives include those persons having authority and
responsibility for planning, directing and controlling the activities
of the Group, and who, for some or all of the year ending 30 June
2009 (Year), have been a member of the executive leadership team
of Brambles (Key Management personnel), as well as the five highest
paid executives of each of Brambles limited and the Group (other
Senior executives).
this report includes all disclosures required by the Act, regulations
made under that Act, and Australian Accounting Standard AASB 124:
Related party Disclosures. the disclosures required by s300A of the
Act have been audited. Disclosures required by the Act cover both
Brambles limited and the Group.
remuneration Committee
2.
the Remuneration Committee (Committee) operates under delegated
authority from Brambles’ Board. the Committee’s responsibilities
include recommending overall remuneration policy to the Board,
approving the remuneration arrangements for the executive Directors,
the executive leadership team and the Company Secretary and
reviewing the remuneration policy and individual arrangements for
other executives.
the Committee’s activities are governed by its Charter, which is
available on the Brambles website at www.brambles.com on the
Corporate Governance page. the website details the Remuneration
Committee, its charter and membership as well as a full list of
In recognition of Brambles' financial performance and strong
focus on controlling costs, the Company has taken the following
key actions:
—
—
executive salaries will be generally frozen for financial year 2010;
salaries below the executive leadership team will also be frozen,
with small increases at lower levels being limited to any
exceptional performers who are paid below market level;
there will again be no increase in Directors’ fees; and
short term bonuses, if awarded at all, have been modest and
significantly lower than in recent years.
—
—
We are not proposing to make any changes to the executive
remuneration policies and incentive framework approved by
shareholders at the 2008 Annual General Meeting.
luke mayhew
non-executive Director and Chairman of the Remuneration Committee
advisors who provided data or consulting services to the Committee
during the Year.
remuneration poliCy and struCture
3.
the Board has adopted a remuneration policy for the Group which is
consistent with its business objectives and designed to attract and
retain high calibre executives, align executive rewards with the
creation of shareholder value, and motivate executives to achieve
challenging performance levels.
When setting and reviewing remuneration levels for the executive
Directors and other members of the executive leadership team, the
Committee considers the experience, responsibilities and performance
of the individual and takes into account market data relevant to the
individual’s role and location, as well as Brambles’ size, geographic
spread and complexity. the Group’s remuneration policy is to pay
at the median level of remuneration for target capability and
performance and to provide upper quartile rewards for outstanding
capability and performance.
the structure of Brambles’ current incentive arrangements was
approved by shareholders at the 2008 Annual General Meeting. these
plans received a 96% vote in favour and amended the previous long
term incentive plans approved by shareholders in 2006.
Remuneration is divided into those components which are not directly
linked to target capability and performance (that is, they are “Fixed”),
and those components which are variable and are directly linked to
Brambles’ financial performance and the delivery of personal and
safety objectives (that is, they are “At Risk”).
fixed remuneration
3.1
Fixed remuneration generally consists of base salary and benefits.
However, as is common elsewhere, the executive Directors and certain
other managers based in Australia are provided with an annual total
Fixed Remuneration (tFR) amount and have flexibility as to the precise
mixture of cash and benefits they receive within that amount. these
benefits are provided at cost and are inclusive of any Fringe Benefits
tax (FBt) incurred by the relevant employing company. they may
include motor vehicles, health care, and disability and life insurance.
executives who are not covered by tFR may receive similar benefits
in addition to their base salary.
BramBles limited Annu Al RepoRt 2009
35
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
As a global group, Brambles operates an international mobility policy
which can include the provision of housing, payment of relocation
costs and other location adjustment expenses where appropriate.
at risk remuneration
3.2
In addition to those elements of remuneration which are Fixed, a
significant element of executives’ total potential reward is required
to be At Risk. this means that an individual’s maximum potential
remuneration may be achieved only in circumstances where they have
met challenging objectives which contribute to Brambles’ overall
profitability and performance for the benefit of all shareholders. the
proportion of executives' remuneration packages at risk is illustrated
in section 3.3.
At Risk remuneration is provided to Brambles’ executives through
short term incentive (StI) and long term incentive (ltI)
arrangements. All the incentive plans under which awards to
executive Directors and the Disclosable executives are still to vest
or be exercised are summarised in sections 7.2 and 7.3.
Brambles’ At Risk remuneration includes three different types of
award, an StI cash award, StI share award and an ltI share award,
the key features of which are illustrated in the following diagram.
total Shareholder Return (tSR) measures the returns that a company
has provided for its shareholders, reflecting share price movements
and reinvestment of dividends over a specified period. the manner in
which the awards operate is summarised below:
STI CASH AWARD
Size determined by
performance against
Key Performance
Indicators (see
section 4.1 for
details) for the Year.
Equity award date↓
(Normally made late August)
Vesting date ↓
(3rd anniversary of
equity award date)
STI SHARE AWARD
Size normally
derived from size of
STI cash award.
=
Awards vest subject
to continued
employment at 3rd
anniversary of grant.
LTI SHARE AWARD
Size calculated as %
of salary/TFR.
TSR – Out
performance of
median ranked
company.
Full vesting for out
performance of 25%.
Sales revenue
growth with BVA
hurdle.
↑ Start of
Financial Year 1
End of ↑
Financial Year 3
PERFORMANCE PERIOD
the market value at the date of grant of all equity awards made to any
person in any financial year should not normally (and did not during
the Year) exceed two times their tFR or equivalent. the Committee
may, however, increase this limit to three times tFR in exceptional
circumstances. the StI and ltI share awards have a maximum life
of six years from grant date.
Brambles' Securities trading policy applies to awards granted under
the incentive arrangements described above. that policy prohibits
senior managers from acquiring financial products or entering into
arrangements which have the effect of limiting exposure to the risk
of price movements of Brambles securities. It is a term of senior
executives' employment contracts that they are required to comply
with all Brambles policies (including the Securities trading policy).
36
BramBles limited Annu Al RepoRt 2009
Management declarations are obtained twice yearly and include
a statement that all policies have been complied with.
More detailed information on Brambles’ current incentive
arrangements is set out in section 4, and in the relevant plan rules,
which can be found on the Brambles website.
remuneration packages – fixed vs. at risk
3.3
At Risk remuneration is performance based and is made up of
short term and long term incentives. It represents approximately
65-71% of the executive’s remuneration package (based on target
performance for StI and using the fair market value for share awards).
the remuneration mix below illustrates that executive remuneration is
heavily tied to performance, with over two thirds of executive
remuneration packages being At Risk and tied to performance.
Remuneration mix based on achievement of target STI and LTI
Fixed
STI
LTI
I
N
O
T
A
R
E
N
U
M
E
R
L
A
T
N
E
T
O
P
I
100%
80%
60%
40%
20%
0%
38%
33%
37%
37%
33%
31%
30%
30%
29%
32%
34%
34%
32%
38%
35%
35%
33%
35%
29%
29%
35%
31%
35%
35%
CEO
CFO
GROUP
PRESIDENT,
AMERICAS
GROUP
PRESIDENT,
EMEA
GROUP
PRESIDENT,
ASIA-
PACIFIC
GROUP
PRESIDENT,
RECALL
SVP HR
SVP
STRATEGIC
PLANNING
POSITIONS
the following bar graph illustrates the remuneration mix, based on
actual StI payments, including StI cash awards made in respect to the
Year, and StI and ltI share awards that vested during the Year. Share
awards that vested during the Year were granted as at 30 August 2006.
As shown below, the actual remuneration of executives is between
44% and 67% less than the potential, due to StI financial results not
achieving the StI threshold, and ltI share awards only partially
vesting during the Year.
Details of the percentages of the StI cash award expected to be paid
to executive Directors and Disclosable executives and the percentages
of StI cash award forfeited in respect to performance during the Year,
are detailed in section 5.4.
Remuneration mix based on actual STI and vested LTI for the Year
Fixed
STI
LTI
I
N
O
T
A
R
E
N
U
M
E
R
100%
80%
60%
40%
20%
0%
5%
10%
3%
5%
4%
5%
16%
3%
9%
4%
6%
13%
33%
35%
29%
29%
35%
31%
35%
35%
CEO
CFO*
GROUP
PRESIDENT,
AMERICAS
GROUP
PRESIDENT,
EMEA*
GROUP
PRESIDENT,
ASIA-
PACIFIC
GROUP
PRESIDENT,
RECALL
SVP HR*
SVP
STRATEGIC
PLANNING
POSITIONS
* ltI Awards that vested during the Year were granted as at 30 August 2006,
prior to the individual becoming a Disclosable executive.
performanCe of BramBles
4.
Brambles’ remuneration policy is directly linked to its performance,
both in terms of earnings and the creation of shareholder wealth.
this link is achieved in the following ways:
—
by placing a significant portion of executives’ remuneration
At Risk;
by selecting appropriate Key performance Indicators (KpIs) for
annual StI cash awards and performance conditions for equity
awards; and
by requiring those KpIs or conditions to be met in order for the
At Risk component of remuneration to be awarded or to vest.
—
—
the relationship between Brambles’ remuneration policy and its
performance over the Year and the previous four financial years is
set out in section 4.2.1. the table in section 4.2.1 shows the level
of vesting of awards triggered by performance over those periods.
sti Key performance indicators
4.1
As outlined in section 3.2, executives have the opportunity to receive an
annual StI cash and share award based on performance against KpIs (the
share element vests three years after the award). the financial KpIs chosen
for the Year (in addition to an individual’s personal and safety objectives)
were Brambles value Added (BvA), plus (for the Ceo and the CFo) profit
After tax (pAt). For CHep and Recall Group presidents, KpIs included
Brambles BvA and their respective business unit (CHep or Recall) BvA.
A focus on BvA helps ensure the efficient use of capital within
Brambles. pAt captures interest and tax charges which are not
directly incorporated in BvA.
the key levels of performance possible against each of the financial KpIs
relevant to the StI awards for the Year were: threshold (the minimum
necessary to qualify for the awards); target (where the performance
targets have been met); and Maximum (where the targets have been
exceeded, and the related rewards have reached their upper limit).
In addition to financial measures, which comprises 70% of Brambles
executive leadership team’s StI, each member has 30% of their StI
based on the achievement of personal strategic objectives which
encompass the delivery of objectives relating to business strategy,
growth, customer, people and talent management and safety.
Safety comprises two key metrics.
—
—
lost time Injury Frequency Rate (ltIFR), which measures the
number of lost time injuries per million work hours.
lost time Injury Severity Rate (ltISR) target, being the number
of workdays lost per million work hours due to lost time injuries.
ltISR is intended to complement the focus on injury prevention
with a further incentive to improve injury management.
Brambles regards the safety of its people as a major priority and the
executive leadership team (elt), have Group-wide oversight of the
Zero Harm environment. this means that all elt members will lose
any entitlement under their safety incentive if a fatality occurs
anywhere in the Brambles Group.
the actual levels of performance achieved for the Year against the
financial KpIs are summarised in the table below.
Kpis
Brambles BvA
Brambles pAt
level of performanCe aCHieved durinG
tHe year1
Below threshold
Below threshold
CHep Americas BvA
Below threshold
CHep eMeA BvA
Below threshold
CHep Asia-pacific BvA
Below threshold
Recall BvA
Below threshold
the table in section 5.4 illustrates the impact of the above results
on the level of StI cash award payable and forfeited during the Year.
equity award vesting conditions
4.2
As outlined in section 3.2, Disclosable executives also have the
opportunity to receive equity awards in the form of ltI share awards.
the vesting of these only occurs three years from the date of award and
depends on Brambles’ tSR performance relative to the S&p/ASx100
over a three year performance period (performance period), as well as,
in the most recent awards, Brambles’ performance against sales
revenue growth and BvA hurdles, as described in the following tables.
A relative tSR performance condition helps ensure that value is only
delivered to participants if the investment return actually received
by Brambles’ shareholders is sufficiently high relative to the return they
could have received by investing in a portfolio of alternative stocks over the
same period. vesting is also conditional on the Board being satisfied that the
financial performance of Brambles over the performance period has been
at an acceptable level. under the 2006 Share plan, tSR calculations are
normally based on average daily closing share prices in the three months
immediately preceding the start and end of the performance period.
Details of the equity awards granted to Disclosable executives and the
performance hurdles which apply to each of the awards are set out
in section 7.2. the table in section 4.2.1 illustrates the relationship
between Brambles’ remuneration policy and performance, showing
the level of vesting of equity awards triggered by performance over
various periods to 30 June 2008 and to 30 June 2009.
peRFoRMAnCe AWARDS unDeR tHe 2004 AnD 2006 peRFoRMAnCe SHARe plAnS
4.2.1
Awards under the above performance Share plans are subject to performance hurdles based on relative tSR. the following table details,
for awards made during the financial years indicated, the performance against the applicable hurdle for the periods indicated.
awards made
durinG year
performanCe
Condition
start of performanCe
period
ranKinG performanCe
(out of 100)
vestinG triGGered
(% of oriGinal award)
vestinG triGGered
(% of oriGinal award)
period to 30 June 2008
period to 30 June 2009
2005
2006
Relative tSR2
1 July 2004
17.42
100% enhanced StI Awards
100% ltI Awards
n/A
Relative tSR2
1 July 2005
46.62
20074
Relative tSR3
21 February 2007
81.03
n/A
n/A
0% enhanced StI Awards
39.52% ltI Awards
0% enhanced StI Awards
0% ltI Awards
BramBles limited Annu Al RepoRt 2009
37
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
the following table provides similar details for awards which have yet to be tested.
period to 30 June 2009
awards made
durinG year
performanCe
Condition
start of performanCe
period
ranKinG performanCe
(out of 100)
vestinG if Current performanCe is maintained until earliest
testinG date (% of oriGinal award)
20084
20095
Relative tSR3
1 July 2007
Relative tSR3
1 July 2008
673
513
0% enhanced StI Awards
0% ltI Awards
0% ltI Awards
ltI AWARD veStInG ConDItIonS
4.2.2
In november 2008, shareholders approved changes to the 2006
Share plan, to introduce two sets of performance hurdles, each
with equal weighting.
All eMploYee SHARe plAn
4.2.3
At the 2008 Annual General Meeting, shareholders gave approval
to an all employee share plan (MyShare), which was implemented
in January 2009.
the initial launch was highly successful with approximately 20% of
employees electing to participate in the plan. MyShare was offered
to over 11,000 employees in 24 countries.
the plan is an employee contribution and company matching scheme.
this type of plan is considered to offer the best opportunity for
employees to make a personal commitment to contribute, and
receive a benefit commensurate with their contribution.
under MyShare, employees acquire ordinary shares (Acquired Shares)
by means of deductions from their after-tax pay and must hold the
Acquired Shares for a two year period. If they hold the shares, and
remain employed at the end of that two year period, then Brambles
will match the number of shares they hold by issuing or transferring
to them the same number of shares which they held for the qualifying
period at no additional cost to the employee (Matched Shares). the
plan is capped at A$5,000 in contributions per individual per annum
to ensure that the overall costs of the plan are not excessive.
Members of the executive leadership team are eligible to participate
in MyShare. their level of participation is shown in section 5.5.
At the end of the 2009 calendar year MyShare will be offered to
employees for the 2010 calendar year. employees in taiwan will be
invited to participate in MyShare for the first time and an interim offer
will be made to new employees, giving them the opportunity of taking
up MyShare half way through a plan year. In the 2010 calendar year,
there will be significant moves toward being paperless, relying heavily
on the Internet to minimise paper use and postage costs.
Half of the ltI award continues to be measured on relative tSR
based on the extent to which the Brambles tSR over the performance
period exceeds the tSR of the median ranked company in the ASx 100
over this period. this measurement is designed to smooth out the
cyclical volatility in the ASx 100 index.
the other half of the ltI award is measured against the achievement
of profitable growth objectives. the growth element of the ltI is
designed to incentivise both long term revenue and BvA growth.
vesting is primarily based on achievement of sales revenue with three
year performance hurdles set on a compound annual growth rate basis,
with the sales revenue growth underpinned by BvA hurdles to ensure
quality of earnings is maintained at a strong level. Both sales revenue
growth and BvA are measured in constant currency. the sales revenue
growth targets underpinned by BvA hurdles are designed to drive
profitable business growth and deliver increased shareholder value.
the following table provides the vesting framework for the relevant
awards made during the Year. If current performance is maintained
until the performance hurdles are assessed, the awards will
not vest.
vestinG%
Cumulative, 3 year Bva
us$m at fixed June 2007 fx rates
sales revenue CaGr*
1,800
2,000
2,200
7%
8%
9%
10%
11%
12%
13%
–
20%
40%
50%
70%
90%
100%
20%
40%
50%
70%
90%
100%
100%
40%
50%
70%
90%
100%
100%
100%
* three year compound annual growth rate (CAGR) over base year
38
BramBles limited Annu Al RepoRt 2009
5.
exeCutive direCtors and disClosaBle exeCutives
executive director changes
5.1
there were no appointments or resignations of executive Directors during the Year.
5.2
service contracts
name and role(s)
ContraCt type and any speCial terms
salary/tfr
termination
executive directors
m f ihlein
Chief executive
officer
m e doherty6
Chief Financial
officer
Continuing contract. on death, estate
entitled to 1.3 times tFR amount.
tFR (including pension
contributions) amount of
A$2,363,000 as at 30 June 2009.
Standard termination provisions apply. payments
in lieu of notice calculated by reference to
annual tFR.
Continuing contract. on death, estate
entitled to 1.3 times tFR amount.
tFR (including pension
contributions) of A$1,260,000
as at 30 June 2009.
Standard termination provisions apply. payments in
lieu of notice calculated by reference to annual tFR.
Current Key management personnel
C a van der laan
Group president
CHep Asia-pacific
and Global Head of
Mergers &
Acquisitions
Continuing contract. on death, estate
entitled to 0.5 times tFR amount and
0.5 times average annual StI paid to
him over three previous years.
tFR (including pension
contributions) amount of
A$1,025,000 as at 30 June 2009.
May be terminated without cause by the employer
giving 12 months’ notice, or by employee giving
six months’ notice. payments in lieu of notice
calculated by reference to annual tFR and
average StI cash award payment over previous
three years.
t J Gorman
Continuing contract
Group president
CHep europe, Middle
east and Africa
(eMeA)
Base Salary of uS$630,000 as at
30 June 2009.
Standard termination provisions apply.
K J shuba
Continuing contract
Group president
CHep Americas
Base Salary of uS$530,000 as at
30 June 2009.
e e potts
Continuing contract
president and Chief
operating officer
Recall Corporation
n p smith
Continuing contract
Senior vice president
- Human Resources
J r a Judd
Continuing contract
Senior vice president
- Strategic
Development
former senior executive
C m norin
Standard contract
president – Recall
Americas
Base Salary of uS$489,000 as at
30 June 2009.
May be terminated without cause by the employer
giving 12 months’ notice, or by employee giving
six months’ notice. payments in lieu of notice
calculated by reference to annual base salary
and health insurance benefits.
May be terminated without cause by the employer
giving 12 months’ notice, or by employee giving
six months’ notice. payments in lieu of notice
calculated by reference to annual base salary
and health insurance benefits.
Base Salary of A$575,000 as at
30 June 2009.
Standard termination provisions apply.
Base Salary of A$500,000 as at
30 June 2009.
Standard termination provisions apply.
Base Salary of uS$432,600 as at
17 February 2009 (date of
cessation).
Standard termination provisions apply, plus an
amount equal to the excess of twelve months of
premium for statutory continuation of medical
and dental benefits.
notes:
• Standard Termination provisions for Executive Directors and Key Management Personnel are that they may be terminated without cause by the employer giving
12 months’ notice, or by employee giving six months’ notice, with payments in lieu of notice calculated by reference to tFR/annual base salary, except where
indicated otherwise.
• Executives remunerated on a Base Salary approach receive pension contributions of 15% of Base Salary.
• Standard service contracts require that any termination payments made would be reduced by any value to be received under any new employment.
BramBles limited Annu Al RepoRt 2009
39
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
total remuneration and benefits for the year
5.3
the following table shows details of the total remuneration and benefits provided to the executive Directors and the Disclosable executives
for the Year, together with prior year comparatives. the tFR amounts shown for the Australian-based executives and denoted by*, are those to
which they were entitled for the Year, and which they elected to receive in a combination of one or more of the following elements: cash salary
payments; pension contributions; and motor vehicle benefits.
sHort term employee Benefits
post
employment
Benefits
otHer
sHare Based payment
name
year
CasH Bonus
us$'000
CasH/
salary/
tfr/fees
us$'000
non-
monetary
Benefits8
us$'000
super-
annuation
us$'000
termination/
siGn-on
payments/
retirement
Benefits
us$'000
otHer
us$'000
total
Before
equity
us$'000
options/
awards7
us$'000
as %
of total
total
us$'000
executive directors
M F Ihlein*
M e Doherty*
totals
20099
2008
20099
2008
2009
2008
2,006
2,070
973
693
2,979
2,763
Current Key management personnel
t J Gorman
J R A Judd
e e potts
K J Shuba
n p Smith
2009
2008
2009 9
2008
2009
2008
2009
2008
2009 9
2008
C A van der laan* 2009 9
2008
former other senior executive
770
323
701
728
497
447
554
448
461
340
945
938
–
669
–
228
–
897
94
118
41
360
53
93
–
177
54
119
76
934
C M norin10
totals
2009
2008
2009
2008
294
–
4,222
3,224
9
–
327
1,801
38
55
21
17
59
72
19
3
5
29
–
159
4
9
–
–
3
4
104
–
135
204
–
–
–
–
–
–
80
48
55
64
80
43
71
57
62
45
–
–
49
–
397
257
–
–
–
174
–
174
–
400
–
–
–
–
–
–
–
–
–
–
631
–
631
400
–
–
–
–
–
–
21
–
–
–
18
13
19
17
–
–
–
–
6
–
64
30
2,044
2,794
994
1,112
3,038
3,906
984
892
802
1,181
648
755
648
708
577
504
1,024
1,876
1,093
–
5,776
5,916
1,543
1,255
323
28
1,866
1,283
293
25
354
322
407
320
373
269
106
–
999
835
43%
31%
25%
2%
–
–
23%
3%
31%
21%
39%
30%
37%
28%
15%
–
49%
31%
3,587
4,049
1,317
1,140
4,904
5,189
1,277
917
1,156
1,503
1,055
1,075
1,021
977
683
504
2,023
2,711
497
–
3,029
1,771
31%
1,590
–
–
–
–
8,805
7,687
Bonuses and equity based awards
5.4
the following table shows the StI cash award expected to be paid to the executive Directors and the Disclosable executives shortly in respect
of performance during the Year, expressed as a percentage of the amount which would have been paid, had all of their KpIs been achieved at
Maximum (with the balance being forfeited). the percentages have been calculated relative to the amount which can be paid if the maximum
targets are met.
the table also shows details of equity based awards made to the Disclosable executives during the Year, being rights to Brambles shares
under the 2006 Share plan. All the awards shown were made on 27 August 2008, relating to performance in the financial year ending 30 June
2008, have a vesting date of 27 August 2011 and an expiry date of 27 August 201441. the estimated maximum and minimum possible total future
value of these awards is also detailed11. For continuing employees none of the equity awards shown will vest or be forfeited until calendar year
2010, when performance against the relevant conditions can be determined. StI share awards vest on the third anniversary of their date of
grant, subject to continuing employment. ltI Awards vest on the third anniversary of their date of grant, subject to continuing employment with
50% of the award subject to a tSR performance condition and 50% subject to a sales revenue and BvA performance condition.
40
BramBles limited Annu Al RepoRt 2009
name
type of award
executive directors
M F Ihlein
StI Cash Award
StI Share Award
ltI Award
total
M e Doherty
StI Cash Award
StI Share Award
ltI Award
total
Current Key management personnel
t J Gorman
J R A Judd
e e potts
K J Shuba
n p Smith
StI Cash Award
StI Share Award
ltI Award
total
StI Cash Award
StI Share Award
ltI Award
total
StI Cash Award
StI Share Award
ltI Award
total
StI Cash Award
StI Share Award
ltI Award
total
StI Cash Award
StI Share Award
ltI Award
total
C A van der laan
StI Cash Award
StI Share Award
ltI Award
total
former other senior executive
C M norin
StI Cash Award
StI Share Award
ltI Award
total
equity Based awards
equity Based and
sti CasH awards
numBer
value at
Grant
us$'00012
minimum
future
value of
awards yet
to vest
us$'00013
maximum
future
value of
awards yet
to vest
us$'00012
% CasH paid/
equity
vested
% CasH/
equity
forfeited
–
102,538
358,546
461,084
–
59,928
157,968
217,896
–
57,018
126,060
183,078
–
27,538
65,958
93,496
–
15,119
75,554
90,673
–
28,529
105,050
133,579
–
27,887
69,284
97,171
–
59,996
128,348
188,344
–
30,667
47,514
78,181
–
501
1,429
1,930
–
293
630
923
–
278
503
781
–
134
263
397
–
74
301
375
–
139
419
558
–
136
276
412
–
293
512
805
–
150
189
339
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
501
1,429
1,930
–
293
630
923
–
278
503
781
–
134
263
397
–
74
301
375
–
139
419
558
–
136
276
412
–
–
–
–
–
–
–
–
100%
–
–
–
100%
–
–
–
17%
83%
–
–
–
–
–
–
15%
85%
–
–
–
–
–
–
13%
87%
–
–
–
–
–
–
–
–
–
–
100%
–
–
–
17%
83%
–
–
–
–
–
–
–
15%
85%
293
512
805
–
150
189
339
–
–
–
5%
100%
– 14
–
–
–
–
95%
–
79%
–
BramBles limited Annu Al RepoRt 2009
41
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
BalanCe at
start of
tHe year
numBer
646,470
602,526
–
–
28,406
–
–
36,365
–
69,654
142,669
–
45,000
166,236
–
27,780
104,010
140,509
–
–
–
–
130,862
371,060
–
164,292
–
Granted durinG
exerCised durinG
tHe year
tHe year
lapsed durinG
tHe year
CHanGes
total value
BalanCe at
amount paid
durinG tHe
of Granted,
end of tHe
on exerCise
vested
vested and
durinG
exerCisaBle
year
exerCised
and lapsed
us$'000
year47
us$’00015
tHe year
at end of
tHe year
numBer17
value at
Grant
us$’00012
value at
exerCise
us$’000
value at
lapse
us$’00018
numBer
numBer
numBer
numBer
numBer
numBer
461,084
1,930
136,762
802
117,406
684
2,048
809,442
802
136,762
–
137,054
–
783,524
183,078
781
781
219,443
93,496
397
30,785
156
28,085
389
177,295
156
30,785
90,673
375
25,436
129
21,620
126
378
209,853
129
25,436
217,896
923
–
292
–
151
–
245
–
151
–
253
–
–
253
–
292
–
–
1
–
1
–
1
–
1
–
1
–
–
1
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
164
(19,064)
10,151
245
5,689
253
292
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(115,862)
115
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
450
–
292
10,151
923
246,302
151
245
245
50,590
151
50,689
253
28,033
104,010
253
292
292
15,000
1
–
1
–
1
–
1
–
1
–
–
1
–
1
–
–
98
–22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
188,344
805
64,490
376
52,252
304
877
442,662
376
64,490
–
78,181
–
339
35,826
209
90,324
115
116,323
–
209
94,311
58,485
70
–22
70
– 22
–
–22
70
133,579
558
23,746
139
20,184
118
579
230,158
139
23,746
21,198
104,010
97,171
412
412
97,171
shareholdings and interests in options/share rights
5.5
the table below shows details of Brambles shares in which the
Disclosable executives held relevant interests in relation to:
—
ordinary shares, being issued shares held by them and their
related parties;
options, being awards made under the 2001 option plans;
share rights, being awards made before 30 June 2004 under
the 2001 Share plans, awards made on 21 october 2005 under
the 2004 Share plans, and awards made on 19 January 2007,
29 August 2007 and 27 August 2008 under the 2006 Share plan;
matching conditional rights, being awards made during the Year
under MyShare.
—
—
—
name
HoldinGs16
executive directors
M F Ihlein
ordinary shares20
Share rights
MyShare matching
conditional rights
over the five year period commencing from the date of employment
with Brambles, the Chief executive officer must, as a minimum,
achieve and maintain a shareholding equal to 150% of tFR before
tax. other members of the executive leadership team must, as a
minimum, achieve and maintain a shareholding equal to 75% of tFR
or 100% of base salary before tax.
M e Doherty
ordinary shares
Share rights
MyShare matching
conditional rights
Current Key management personnel
t J Gorman
ordinary shares
J R A Judd
e e potts
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
K J Shuba19
ordinary shares
n p Smith
options
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
C A van der laan
ordinary shares
Share rights
former senior executive
C M norin
ordinary shares
Share rights
MyShare matching
conditional rights
42
BramBles limited Annu Al RepoRt 2009
name
HoldinGs16
executive directors
M F Ihlein
M e Doherty
ordinary shares
Current Key management personnel
t J Gorman
ordinary shares
ordinary shares20
Share rights
MyShare matching
conditional rights
Share rights
MyShare matching
conditional rights
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
options
Share rights
MyShare matching
conditional rights
ordinary shares
Share rights
MyShare matching
conditional rights
Share rights
ordinary shares
Share rights
MyShare matching
conditional rights
J R A Judd
e e potts
n p Smith
K J Shuba19
ordinary shares
C A van der laan
ordinary shares
former senior executive
C M norin
BalanCe at
start of
tHe year
numBer
646,470
602,526
–
–
–
–
–
–
–
–
–
–
–
–
–
69,654
142,669
45,000
166,236
27,780
104,010
140,509
130,862
371,060
164,292
Granted durinG
tHe year
exerCised durinG
tHe year
lapsed durinG
tHe year
numBer17
value at
Grant
us$’00012
numBer
value at
exerCise
us$’000
numBer
value at
lapse
us$’00018
CHanGes
durinG tHe
year
total value
of Granted,
exerCised
and lapsed
us$'000
BalanCe at
end of tHe
year47
amount paid
on exerCise
us$’00015
vested
durinG
tHe year
vested and
exerCisaBle
at end of
tHe year
numBer
numBer
numBer
numBer
–
–
–
–
–
–
137,054
–
783,524
–
–
461,084
1,930
136,762
802
117,406
684
28,406
217,896
923
292
–
1
–
151
–
1
–
36,365
183,078
781
245
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
93,496
397
30,785
156
28,085
151
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
164
–
–
90,673
375
25,436
129
21,620
126
253
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133,579
558
23,746
139
20,184
118
253
–
1
–
97,171
412
292
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,151
–
–
245
–
–
(19,064)
–
–
5,689
–
–
253
–
–
–
292
–
–
(115,862)
2,048
809,442
802
136,762
1
–
292
10,151
923
246,302
1
–
151
245
781
219,443
1
–
245
50,590
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
389
177,295
156
30,785
1
–
151
50,689
–
–
–
–
378
209,853
129
25,436
1
–
–
253
28,033
104,010
–
–
–
–
–
–
1
–
253
292
412
97,171
1
–
292
15,000
–
–
–
–
–
–
–
–
–
–
188,344
805
64,490
376
52,252
304
–
877
442,662
376
64,490
579
230,158
139
23,746
21,198
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
104,010
–
–
–
–
–
–
–
–
78,181
–
339
–
–
–
35,826
209
90,324
–
450
70
–22
70
– 22
–
–
115
–
–
–
98
–22
115
116,323
–
209
–
94,311
58,485
–
–22
70
–
BramBles limited Annu Al RepoRt 2009
43
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
6.
non-exeCutive direCtors’ disClosures
non-executive directors’ remuneration policy
6.1
non-executive Directors’ fees are determined by the executive
Directors, with the non-executive Directors taking no part in the
discussion or decision relating to their fees. In setting the fees, advice is
sought from external remuneration consultants on the appropriate level
of fees, taking into account the responsibilities of Directors in dealing
with the complexity and global nature of Brambles’ affairs and the level
of fees paid to non-executive directors in comparable companies.
the following table sets out the current annual fees payable to each
of the non-executive Directors. the fee supplement is only payable
to a Committee Chairman who is not also the Board Chairman.
Chairman
other non-executive Directors
Fee supplement for Audit
Committee Chairman
Fee supplement for other
Committee Chairmen
uS$489,000
uS$117,000
uS$30,000
uS$20,000
the maximum permissible annual fees for Directors of Brambles
(other than executive Directors) is currently uS$2,300,000. this
amount includes any remuneration paid to those Directors by
Brambles or by any of its subsidiaries for their services.
the base fees for non-executive Directors have not been increased
since 1 January 2006. there will not be an increase in non-executive
Director fees in FY10.
non-executive directors’ appointment letters
6.2
Directors are appointed for an unspecified term but are subject to
election by shareholders at the first Annual General Meeting after
their initial appointment by the Board. under Brambles limited’s
constitution, no member of the Board may serve for more than
three years from the date of appointment without being re-elected
by shareholders. Re-appointment is not automatic. the Board reviews
whether retiring Directors should stand for re-election, having regard
to their performance and the contribution of their individual skills and
experience to the desired overall composition of the Board.
letters of appointment for the non-executive Directors, which are
contracts for service but not contracts of employment, have been put
in place. these letters confirm that the non-executive Directors have
no right to compensation on the termination of their appointment for
any reason, other than for unpaid fees and expenses for the period
actually served.
the non-executive Directors do not participate in Brambles’ short or
long term incentive plans. now that all remaining retirement benefits
have been paid out, the non-executive Directors do not receive any
benefits in kind.
Details of the years in which the non-executive Directors are next
due for re-election by shareholders are shown in the Corporate
Governance Statement in section 2.
non-executive directors’ remuneration for the year
6.3
the fees and other benefits provided to non-executive Directors during
the Year and during the prior year are set out in the table below24.
Any contributions to personal superannuation or pension funds on
behalf of the non-executive Directors are deducted from their overall
fee entitlements.
name
Current non–executive directors
A G Froggatt
D p Gosnell
S p Johns
S C H Kay
G J Kraehe Ao
C l Mayhew
B M Schwartz AM 10
totals
44
BramBles limited Annu Al RepoRt 2009
sHort term
employee
Benefits
post
employment
Benefits
year
direCtors’
fees
us$'000
super-
annuation
us$'000
otHer23
us$'000
total
us$'000
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
108
113
113
114
136
137
108
109
471
282
133
134
33
–
1,102
889
10
5
4
4
12
12
10
10
21
25
5
5
3
–
65
61
–
–
22
–
–
–
–
–
4
–
–
–
–
–
118
118
139
118
148
149
118
119
496
307
138
139
36
–
26
–
1,193
950
non-executive directors’ shareholdings
6.4
non-executive Directors are expected to hold shares in Brambles
equal to their annual fees after tax within three years of their
appointment.
the following table contains details of Brambles limited shares in
which the non-executive Directors held relevant interests, being
issued shares held by them and their related parties. the non-
executive Directors do not participate in Brambles’ equity based
incentive schemes.
ordinary sHares
BalanCe at tHe
start of tHe year
CHanGes durinG
tHe year
BalanCe at tHe
end of tHe year
non-executive directors
A G Froggatt25
D p Gosnell26
S p Johns27
S C H Kay28
G J Kraehe Ao29
C l Mayhew30
14,890
14,450
47,500
10,400
41,561
16,500
–
–
–
3,000
20,000
–
B M Schwartz AM31
–
10,000
14,890
14,450
47,500
13,400
61,561
16,500
10,000
7.
appendiCes
Basis of valuation of equity based awards
7.1
unless otherwise specified, the fair value of the options and share
rights included in the tables in this report, has been estimated using a
pricing model independently developed by ernst & Young transaction
Advisory Services limited on behalf of Brambles.
the following assumptions have been used in the valuation of awards
made during the Year. Awards of share rights have been valued at their
date of grant.
date of Grant
volatility
risK free
interest rate
dividend yield
27 August 2008
27 August 2008
1 June 200932
MyShare 200933
33%
33%
33%
33%
5.53%
3.56%
5.60%
5.50%
3.90%
3.80%
3.50%
3.50%
BramBles limited Annu Al RepoRt 2009
45
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
summary of 2001, 2004 and 2006 plans
7.2
the table below contains details of the 2001 Share plans, the 2001 option plans, the 2004 Share plans and the 2006 Share plan under which the
executive Directors and the Disclosable executives have unvested and/or unexercised awards which could affect remuneration in this or future
reporting periods.
plan
nature of award
siZe of award
vestinG Condition
vestinG sCHedule
2001 option
plans
Share Rights
% of salary/tFR
Share Rights
% of salary/tFR
Share Rights
% of salary/tFR
2001 Share
plans
2004 & 2006
Share plans
(tSR ltI)
Share Rights
Share Rights
2004 & 2006
Share plans
(StI)
2004 & 2006
Share plans
(enhanced StI)
up to 100% of
size of StI cash
award
up to 50% of size
of StI share
award
2006 Share
plan (BvA ltI)
Share Rights
% of salary/tFR
Share Rights
% of salary/tFR
2006 Share
plan (tSR ltI)
as amended at
the 2008 AGM
time and relative
tSR hurdle
(between 50th
and 25th out of
100).
time and epS
CAGR hurdle
(between 7%
and 15% p.a.).
time and relative
tSR hurdle
(between 50th
and 25th out
of 100).
time only.
time and relative
tSR hurdle
(between 37th
and 25th out of
100).
time and sales
revenue growth
and BvA
performance.
time and relative
tSR Hurdle
(outperformance
of the median
company and
outperformance
of the median
by 25%).
38% vesting if tSR in ranked 50th
out of 100 companies. 100% vesting
if ranked 25th or better.
25% vesting if epS CAGR is 7% p.a.
100% vesting if epS CAGR is 15%
p.a.
30% vesting if tSR is ranked 50th
out of 100 companies. 100% vesting
if 25th or better.
performanCe/
vestinG period
life of award
three years,
with retests
after four and
five years.
three years,
with retests
after four and
five years.
three years.
Maximum of
six years.
Maximum of
six years.
Maximum of
six years.
100% vesting based on continuous
employment.
three years.
Maximum of
six years.
4% vesting if tSR is ranked 37th out
of 100 companies. 100% vesting if
25th or better.
three years.
Maximum of
six years.
three years.
Maximum of
six years.
three years.
Maximum of
six years.
20% vesting occurs if CAGR is 7%
and BvA is uS$2,000m over three
year period. 100% vesting occurs if
CAGR is 11% and BvA is uS$2,200m
over three year period35.
40% vesting if tSR is better than
the median ranking company. 100%
vesting if outperformance of the
median ranked company by 25%
(absolute percentage) over a three
year period.
MyShare
Matching
Conditional
Share Rights
1:1 match for
every acquired
share purchased
time and
retention of
acquired share.
n/A
two years from
first acquisition.
Automatic
exercise on
second
anniversary of
first acquisition.
the 2004 Share plans operate in the same way as the 2006 Share plan described in section 4.2 although, under the 2004 Share plans, relative
tSR performance is measured relative to the S&p/ASx50 and the FtSe 100.
46
BramBles limited Annu Al RepoRt 2009
options and share rights
7.3
the terms and conditions of each grant of options and share rights affecting remuneration in this or future reporting periods are outlined in the
table below. options and share rights granted under the plans carry no dividends or voting rights36:
plans under wHiCH
awards made
plan
numBer
Grant date
expiry date
exerCise priCe37
value at
Grant37,38
status/vestinG date
2001 option plan
1)
4 March 2004
4 March 2010
A$5.31/£2.11
A$1.17/£.044 100% exercisable from
2001 Share plans
2)
4 March 2004
4 March 2010
2004 Share plans
3)
21 october 2005
22 october 201141
4 March 2007.
–
–
A$4.67/£1.85 100% exercisable from
4 March 2007.
A$7.52/A$7.71 100% exercisable from
21 october 2008.
2006 Share plans
MyShare
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
21 october 2005
22 october 201141
–
A$3.58/A$3.67 100% lapsed
21 october 2008.
21 october 2005
22 october 201141
–
A$4.19/A$4.30 39.52% exercisable from
21 october 2008, remainder lapsed.
19 January 200739,40
31 August 201241
19 January 200742,40
31 August 201241
19 January 200743,40
31 August 201241
29 August 200739
30 August 201341
29 August 200742
30 August 201341
29 August 200743
30 August 201341
26 February 200839,44
2 December 2013
19 March 200839,45
2 March 201441
28 April 200839
29 April 2014
27 August 200839
27 August 201441
27 August 200843
27 August 201441
27 August 200846
27 August 201441
31 March 200934
1 April 2011
30 April 200934
1 April 2011
29 May 200934
1 April 2011
30 June 200934
1 April 2011
31 July 200934
1 April 2011
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A$12.60 30 August 2009.
A$5.72 30 August 2009.
A$6.97 30 August 2009.
A$12.64 29 August 2010.
A$6.75
29 August 2010.
A$8.11 29 August 2010.
A$9.39 1 December 2010.
A$8.84 1 March 2011.
A$8.01 28 April 2011.
A$6.53 27 August 2011.
A$5.99
27 August 2011.
A$4.67
27 August 2011.
A$5.09 31 March 2011.
A$5.97 31 March 2011.
A$5.91 31 March 2011.
A$5.91 31 March 2011.
A$5.97 31 March 2011.
luke mayhew
non-executive Director and Chairman of the Remuneration Committee
20 August 2009
BramBles limited Annu Al RepoRt 2009
47
dirECtOrs’ rEpOrt - rEmunEratiOn rEpOrt – CONTINUED
22.
value at grant was uS$252.50. value at exercise was uS$296.86. total value
granted and exercised was uS$549.36.
23.
other refers to personal / spouse travel.
24.
the total emoluments for all the Directors for the year ended 30 June 2009
was uS$ 4.038 million (2008: uS$ 8.198 million). the aggregate minimum
contributions of all Directors to complying superannuation funds to avoid
incurring the superannuation guarantee levy under the Superannuation
Guarantee (Administration) Act 1997 (Australia) was A$ 85,969 (2008:
A$97,187). the total number of Directors who made such contributions was
seven (2008: ten).
25.
of which 7,000 shares were held by Christine Joanne Froggatt.
26.
Held by Susan Gosnell.
27.
of which 27,500 shares were held by Canzak pty limited and 20,000 shares
were held by Caran pty limited.
28.
of which 8,500 were held by the Sarah Carolyn Hailes Kay Superannuation
Fund.
29.
Held by Invia Custodians for Graham John Kraehe private Superannuation
Fund.
30.
Held by Worldwide nominees limited.
31.
Held by the Schwartz Superannuation Fund.
32.
the valuation for this tranche of grants was established at 24 november
2008, being the date on which shareholder approval to the modified
performance condition was obtained.
33.
Awards made between 31 March 2009 and 29 February 2010
34.
these Matching Conditional Rights granted under MyShare vest on
31 March 2011 subject to continuing employment and retention of the
associated Acquired Shares. on vesting they are automatically exercised.
35.
Full vesting framework outlined at 4.2.2.
36.
Awards granted under the 2001 plans and 2004 plans were formerly over
both BIl and BIp Shares.
37.
All values in A$ relate to awards originally made over BIl shares, and in £ to
awards made over BIp shares.
38.
these are the fair values calculated using the methodology set out in
Section 7.1. Where two values in one currency are shown for awards on or
after november 2004, the second related to rights awarded to elton potts
and Kevin Shuba, which expire on the third, rather than the sixth anniversary
of the grant.
39.
StI share awards vest on the third anniversary of their grant date, subject
to continuing employment.
40.
Awards granted on 19 January 2007 were, for pricing and vesting purposes,
taken to have been granted on 30 August 2006.
41.
Awards granted to elton potts, tom Gorman and Kevin Shuba expire three
years earlier than the date shown, or immediately after vesting, if earlier.
42.
enhanced StI share awards vest on the third anniversary of their grant
date, subject to continuing employment and meeting a tSR performance
condition.
43.
these ltI share awards vest on the third anniversary of their grant date,
subject to continuing employment and meeting a tSR performance
condition.
44.
Awards granted on 26 February 2008 were, for pricing and vesting purposes,
taken to have been granted on 1 December 2007.
45.
Awards granted on 19 March 2008, were for pricing and vesting purposes,
taken to have been granted on 1 March 2008.
46.
these ltI Share Awards vest on the third anniversary of their grant date,
subject to continuing employment and meeting a sales growth and BvA
performance condition.
47.
Since the end of the Year, on 31 July 2009 the following executive Directors
and Key Management personnel acquired ordinary shares under MyShare
and received the corresponding number of MyShare matching conditional
rights: Mike Ihlein (70), tom Gorman (57), nick Smith (70), Kevin Shuba (54)
and elton potts (54).
1.
Financial targets set for the forthcoming financial year under Brambles’
incentive plans will not constitute profit forecasts and the Board is
conscious that their publication may therefore be misleading. Accordingly
Brambles does not publish in advance the coming year’s financial targets for
incentive purposes. Brambles BvA performance for the Year is however, set
out on page 15.
2.
the average of the ranking of BIl (or from the date of unification, the
primary listing of Brambles) against the ASx100; and the ranking of BIp
(or from the date of unification, the secondary listing of Brambles) against
the FtSe 350.
3.
the ranking of the primary listing of Brambles against the ASx100.
4.
5.
6.
7.
8.
9.
these performance share rights were granted under the 2006 Share plan.
Rights under this plan vest on the third anniversary of their grant date,
subject to meeting a relative tSR performance condition. If the performance
condition is not met, the rights will lapse.
these performance share rights were granted under the 2006 Share plan,
as amended in november 2008. Rights under this plan vest on the third
anniversary of their grant date. 50% of the award made will vest subject to
meeting a relative tSR performance condition. the balance of the award will
vest subject to sales revenue growth and BvA performance, the complete
vesting matrix for this component of the award is detailed at 4.2.2.
liz Doherty holds a Directorship with SABMiller plc and is permitted
to retain the fees from that appointment, being £67,500 per year.
As part of the Brambles’ transition to AIFRS, only awards made on or after
7 november 2002 have been included in the calculation of equity based
remuneration.
non-monetary benefits include car parking, personal / spouse travel, club
membership, motor vehicles and shipment and storage costs.
the year-on-year comparison of remuneration costs is affected by the
movement of exchange rate from A$1 = uS$0.9040 for 2008 to A$1 =
uS$0.7479 for 2009.
10.
Brian Schwartz became a non-executive Director on 13 March 2009. this
individual was not a Disclosable executive for 2008 and therefore no data
was disclosed in respect of him.
11.
Section 4.2.1 contains details of those awards which vested after 30 June
2008 or 2009 based on Brambles’ performance to those dates.
12.
the total value of the relevant equity award(s) valued as at the date of
grant using the methodology set out in section 7.1.
13.
Assumes performance and/or service conditions not met.
14.
the remaining 21% will be retained for testing and will vest subject to the
achievement of the relevant performance conditions on 27 August 2011.
15.
there were no amounts payable but unpaid on the exercise of options during
the Year.
16.
of those awards detailed in Section 7.3; plan numbers 3-11, 15-17 are
applicable to Mike Ihlein, and exercises occurred from plan numbers 3 and 5;
plan numbers 12, 15-19 are applicable to liz Doherty; plan numbers 13,
15-21 are applicable to tom Gorman; plan numbers 3-11, 15-19 are
applicable to Jasper Judd, and exercised occurred from plan numbers 3 and
5; plan numbers 3-11, 15-21 are applicable to elton potts, and exercises
occurred from plan numbers 3 and 5; plan numbers 1-11, 15-21 are
applicable to Kevin Shuba, and exercises occurred from plans numbers 3 and
5; plan numbers 15-21 are applicable to nick Smith; plan numbers 3-11,
15-17 are applicable to Craig van der laan, and exercises occurred from plan
numbers 3 and 5; plan numbers 3-11, 15-18 are applicable for Mikael norin,
and exercises occurred from plan numbers 3 and 5.
17.
During the year 3,946,120 performance share rights were granted under the
2006 Share plan of which 461,084 were granted to Mike Ihlein and 217,896
were granted to liz Doherty. Approval for the issue of these securities was
obtained under ASx listing Rule 10.14 at the AGM held on 25 november 2008.
18.
“lapse” in this context means that the award was forfeited due to either the
service condition performance condition not being met.
19.
Kevin Shuba was the only Disclosable executive to hold options during
the Year.
20.
of which 115,000 shares were held by uBS Wealth Management Australia
pty limited for the Ihlein Family Superannuation Fund, 1,000 shares were
held in the form of CDIs by Citibank and 292 shares were held by
Computershare nominees CI ltd.
21.
the opening and closing balance for Jasper Judd reported in the 2008
Annual Report incorrectly included 79,100 options, these balances should
have been zero.
48
BramBles limited Annu Al RepoRt 2009
dirECtOrs’ rEpOrt - OthEr inFOrmatiOn
direCtors
the name of each person who was a Director of Brambles limited
at any time during, or since the end of the Year, and the period for
which they served as a Director are set out below. the qualifications,
experience and special responsibilities for Directors are set out on
page 19.
M e Doherty
A G Froggatt
D p Gosnell
M F Ihlein
S p Johns
S C H Kay
G J Kraehe Ao
C l Mayhew
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
1 July 2008 to date
B M Schwartz AM
13 March 2009 to date
seCretary
Details of the qualifications and the experience of the Company
Secretary of Brambles limited are as follows: Robert Gerrard joined
Brambles in 2003 as Senior Counsel and was appointed Group
Company Secretary in February 2008. prior to joining Brambles, he
was General Counsel to, and Company Secretary of, Roc oil Company
limited; Group legal Manager, Cairn energy plc; General Counsel
to, and Company Secretary of, Command petroleum limited; and a
solicitor with Allen Allen & Hemsley. He holds a Masters of law (llM)
from the university of Sydney and Bachelor of Science (BSc) and
Bachelor of law (llB) degrees from the university of new South
Wales. He is a Solicitor of the Supreme Court of new South Wales.
the information presented in this Report relates to the consolidated
entity, the Brambles Group, consisting of Brambles limited and
the entities it controlled at the end of, or during the year ended
30 June 2009 (Year).
prinCipal aCtivity
the principal activity of the Group during the Year was the provision
of supply chain and information management solutions, in which it
is a leading global provider. there were no significant changes in the
nature of the Group’s principal activity during the Year.
review of operations and results
A review of the Group’s operations, a review of the results of those
operations and details of any significant changes in its state of affairs
during the Year, are given in the operational and Financial Review on
pages 10 to 17.
Information about the financial position of the Group is included in
the operational and Financial Review on pages 10 to 17 and in
the performance Summary on pages 2 to 3.
matters sinCe tHe end of tHe finanCial year
the Directors are not aware of any matter or circumstance that has
arisen since 30 June 2009 that has significantly affected or may
significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in future financial
years, except as may be stated elsewhere in the Chairman and
Ceo's Report on page 1 and the operational and Financial Review
on pages 10 to 17.
Business strateGies and prospeCts for future
finanCial years
the business strategies and prospects for future financial years,
together with likely developments in the operations of the Group in
future financial years and the expected results of those operations
known at the date of this Report, are set out in the Chairman and
Ceo's Report on page 1, the Strategy Matrix on pages 6 to 7 and
the operational and Financial Review on pages 10 to 17. Further
information in relation to such matters has not been included
because the Directors believe it would be likely to result in
unreasonable prejudice to the Group.
dividends
the Directors have declared a final dividend of 12.5 Australian cents
per share, which will be 20% franked. the dividend will be paid on
thursday, 8 october 2009 to shareholders on the register on Friday,
18 September 2009. on 9 April 2009, an interim dividend was paid,
which was 17.5 Australian cents per share and 10% franked. on
9 october 2008, a final dividend for the year ended 30 June 2008
was paid, which was 17.5 Australian cents per share and 10% franked.
the unfranked component of each dividend paid during the Year was
conduit foreign income.
BramBles limited Annu Al RepoRt 2009
49
dirECtOrs’ rEpOrt - OthEr inFOrmatiOn – CONTINUED
direCtors’ meetinGs
Details of the general frequency of Board meetings and membership of Board committees are given in the Corporate Governance Statement
on pages 22 to 34. the following table shows the actual Board and committee meetings held during the Year and the number attended by each
Director or committee member.
direCtors
Board meetinGs
reGular
speCial Committees
audit Committee
meetinGs
remuneration Committee
meetinGs
nominations Committee
meetinGs
M e Doherty(c)
A G Froggatt(d)
D p Gosnell
M F Ihlein
S p Johns
S C H Kay
G J Kraehe Ao
C l Mayhew
B M Schwartz AM(e)
(a)
12
12
12
12
12
12
12
12
4
(b)
10
11
12
12
12
12
12
12
4
(a)
5
1
1
5
4
1
5
1
–
(b)
5
1
1
5
4
1
5
1
–
(a)
–
–
7
–
7
7
–
–
–
(b)
–
–
7
–
7
7
–
–
–
(a)
–
6
–
–
–
–
6
6
–
(b)
–
6
–
–
–
–
6
6
–
(a)
(b)
–
5
–
–
5
–
5
–
–
–
5
–
–
5
–
5
–
–
(a) this column refers to the number of meetings held while the Director was a member of the Board or relevant committee which the Director was eligible to attend.
(b) this column refers to the number of meetings attended during the period the Director was a member of the Board or relevant committee which the Director was
eligible to attend.
(c) liz Doherty missed two tele-conference Board meetings because she was travelling on Brambles business at the time those meetings were held.
(d) tony Froggatt missed a tele-conference Board meeting.
(e) Brian Schwartz was appointed as a Director with effect from 13 March 2009.
50
BramBles limited Annu Al RepoRt 2009
direCtors’ direCtorsHips of otHer listed Companies
the following lists the directorships held by the Directors in listed companies (other than Brambles limited) since 30 June 2006 and the period
for which each directorship has been held.
direCtor
listed Company
period direCtorsHip Held
M e Doherty
SABMiller plc
A G Froggatt
AxA Asia pacific Holdings limited
Billabong International limited
Brambles Industries limited
Brambles Industries plc
Scottish & newcastle plc
D p Gosnell
Brambles Industries limited
Brambles Industries plc
M F Ihlein
Brambles Industries limited
Brambles Industries plc
S p Johns
Brambles Industries limited
Brambles Industries plc
Spark Infrastructure Group
Westfield Group:
Westfield Holdings limited
Westfield America trust (director of responsible entity, Westfield America
Management limited)
2006 to current
2008 to current
2008 to current
2006
2006
2003 to 2007
2006
2006
2004 to 2006
2004 to 2006
2004 to 2006
2004 to 2006
2005 to current
1985 to current
1996 to current
Westfield trust (director of responsible entity, Westfield Management limited)
1985 to current
S C H Kay
Brambles Industries limited
Brambles Industries plc
Commonwealth Bank of Australia
Symbion Health limited
G J Kraehe Ao
Bluescope Steel limited
Brambles Industries limited
Brambles Industries plc
Djerriwarrh Investments limited
C l Mayhew
Brambles Industries limited
Brambles Industries plc
WH Smith plc
WH Smith Retail Holdings limited
B M Schwartz AM
Insurance Australia Group limited
Westfield Group:
Westfield Holdings limited
Westfield America trust (director of responsible entity, Westfield America
Management limited)
2006
2006
2003 to current
2001 to 2007
2002 to current
2005 to 2006
2005 to 2006
2002 to current
2005 to 2006
2005 to 2006
2006 to current
2005 to 2006
2005 to current
2009 to current
2009 to current
Westfield trust (director of responsible entity, Westfield Management limited)
2009 to current
BramBles limited Annu Al RepoRt 2009
51
dirECtOrs’ rEpOrt - OthEr inFOrmatiOn – CONTINUED
interests in seCurities
pages 42, 43 and 45 of the Remuneration Report include details of
the relevant interests of Directors in shares and other securities
of Brambles limited.
indemnities
Indemnities provided to Directors and officers in accordance with
the constitution of Brambles limited are detailed in note 36 on
page 125. Insurance policies are in place to cover Directors and
executive officers, however, the terms of the policies prohibit
disclosure of the details of the insurance cover and the premiums paid.
environment, employees and researCH and
development
Brambles’ environmental policy is set by the Board. It applies in all
countries where Brambles operates and provides that Brambles will
act with integrity and respect for the community and the environment,
be committed to sound environmental practice in its daily operations,
that it is a minimum requirement that all Brambles operations
comply with all relevant environmental laws and regulations, that
all employees care for the environment by adopting a specified set
of environmental principles, that every business unit must ensure
that those principles are adhered to and that each business unit
should set environmental performance targets, monitor progress
and report results.
Regular environmental audits are conducted to evaluate compliance
with applicable laws and regulations and implementation of the
environmental policy. A copy of the complete environmental policy
is set out in Brambles’ Code of Conduct, which is available at
www.brambles.com.
the Board is responsible for setting Brambles’ Health and Safety
policy, which states that Brambles is to provide and maintain a healthy
and safe working environment and to prevent injury, illness or
impairment to the health of employees, contractors, customers
or the public.
Brambles is committed to achieving Zero Harm, meaning no injuries
and no environmental damage. the Zero Harm Charter, which sets
out the vision, values and behaviours and commitment required to
work safely and ensure environmental compliance, is provided to all
employees and, together with the complete Health and Safety policy,
is on the Brambles website at www.brambles.com.
the Group presidents of CHep and the Group president and Chief
operating officer of Recall are responsible for policy implementation
and safety performance.
Health and safety performance indicators measure compliance with
corporate objectives and milestones, allow assessment of progress
and comparison with industry benchmarks and provide incentives
for improvement.
the principal safety performance measures are lost time Injury
Frequency Rate (ltIFR) and lost time Injury Severity Rate (ltISR).
ltIFR measures the number of injuries that result in an employee
being absent from work for one or more whole shifts per million work
hours. ltISR measures the number of injury days lost per million
work hours. From the 2010 year, Brambles will also adopt Brambles’
Injury Frequency Rate, or BIFR, which measures the combined
number of fatalities, lost time injuries, modified duties and medical
treatments per million hours worked.
52
BramBles limited Annu Al RepoRt 2009
Brambles employs over 12,000 people worldwide. Its employment
policies commit Brambles to:
—
providing a safe working environment with an objective of
achieving Zero Harm through industry best practice in health
and safety management;
being an equal opportunities employer, committed to developing
a diverse workforce where everyone is treated fairly irrespective
of gender, sexual orientation, age, disability, race or religion;
creating an environment where everyone is encouraged to give
their best and realise their full potential, by providing learning
and development opportunities for individuals and groups; and
ensuring employees can discuss any problem connected with their
work confident that they will receive a fair, impartial and
confidential review of the issue.
—
—
—
Brambles conducts an annual employee survey to gather data about
employee perceptions of their workplace. the data is used to track
progress from previous surveys, measure Brambles against internal
and external best practice and identify key actions for improvement.
Brambles carries out research and development activities in relation
to both its CHep and Recall businesses. these activities comprise
continuously testing its pallets and containers to make them more
durable and safer for use in the supply chain, designing and improving
pallet and container repair equipment, development of radio frequency
identification, development of document management processes and
developing and improving software.
environmental reGulation
except as set out below, the operations of the Group in Australia are
not subject to any particular and significant environmental regulation
under a law of the Commonwealth or a State or territory. the
operations of the Group in Australia involve the use or development
of land, the use of transportation equipment and the transport of
goods. these operations may be subject to State, territory or local
government environmental and town planning regulations, or require
a licence, consent or approval from Commonwealth, State or territory
regulatory bodies. there were no material breaches of environmental
statutory requirements and no material prosecutions during the Year.
Brambles’ businesses comply with all relevant environmental laws
and regulations and none were involved in any material environmental
prosecutions during the Year.
sHare Capital, options and sHare riGHts
Details of the changes in the issued share capital of Brambles limited
and options, share rights and MyShare matching conditional rights
outstanding over Brambles limited ordinary shares at the year end are
given in notes 27 and 28 on pages 98 to 102. no options, share rights
or MyShare matching conditional rights over the shares of Brambles
limited’s controlled entities were granted during or since the end of
the Year to the date of this Report. Since the year end to the date of
this Report, the following grants, exercises and forfeits in options,
performance share rights and MyShare matching conditional rights
have taken place, broken down by reference to the plan numbers
shown on page 47 of the Remuneration Report:
—
—
89,408 grants under plan 22;
74,722 exercises, resulting in the issue of fully paid ordinary
shares: 6,926 under plan 3; 11,423 under plan 4; 14,682 under
plan 6; 19,777 under plan 9; 10,440 under plan 15. Additionally,
5,894 share rights were exercised under the 2001 Share plans
(exercise price A$0.00, expiry date 10 September 2009) and 5,580
auditors’ independenCe deClaration
A copy of the auditors’ independence declaration as required under
section 307C of the Act is set out on page 129.
annual General meetinG
the AGM will be held at 2.00pm (AeDt) on 19 november 2009 at
the Savoy Ballroom, Grand Hyatt Melbourne, 123 Collins Street,
Melbourne, vIC 3000.
this Directors’ Report is made in accordance with a resolution of
the Board.
G J Kraehe ao
Chairman
m f ihlein
Chief executive officer
20 August 2009
—
share options were exercised under the 2001 option plans
(exercise price A$4.75, expiry date 10 September 2009); and
1,188,354 lapses: 6,753 under plan 6; 307,030 under plan 7;
787,025 under plan 8; 6,272 under plan 9; 5,685 under plan 10;
15,788 under plan 11; 6,888 under plan 15; 25,688 under plan 16;
25,688 under plan 17; 396 under plan 18; 323 under plan 19; 316
under plan 20; 322 under plan 21; and 180 under plan 22.
sHare Buy-BaCKs
no ordinary shares were bought-back and cancelled during the Year.
there is no current on-market buy-back in operation.
prinCipal risKs and unCertainties
the principal risks and uncertainties facing Brambles are described
in section 7.2 of the Corporate Governance Statement on pages 29
and 30.
responsiBility statement
For the purposes of compliance with the uK Disclosure and
transparency Rules, the Directors confirm that to the best of their
knowledge, the management report (which comprises the Directors’
Report – other Information and the other sections of the Annual
Report referred to in it) includes a fair review of the development and
performance of the business and the position of Brambles, together
with a description of the principal risks and uncertainties that it faces.
non-audit serviCes
the amount of uS$110,000 was paid or is payable to
pricewaterhouseCoopers, the Group’s auditors, for non-audit services
provided during the Year by them (or another person or firm on their
behalf). these services primarily related to tax advice. the Audit
Committee has reviewed the provision of non-audit services by
pricewaterhouseCoopers and its related practices and provided the
Directors with formal written advice of a resolution passed by the Audit
Committee. Consistent with this advice, the Directors are satisfied that
the provision of non-audit services by pricewaterhouseCoopers and
its related practices did not compromise the auditor independence
requirements of the Act for the following reasons: the nature of the
non-audit services provided during the Year; the quantum of non-audit
fees compared to overall audit fees; and the pre-approval, monitoring
and ongoing review requirements under the Audit Committee Charter
and the Charter of Audit Independence in relation to non-audit work.
the auditors have also provided the Audit Committee with a letter
confirming that, in their professional judgement, as at 7 August 2009,
they have maintained their independence in accordance with their
firm’s requirements, with the provisions of ApeS 110 – Code of ethics
for professional Accountants, the applicable provisions of the Act, and
other professional and regulatory requirements in Australia. on the
same basis, they also confirm that the objectivity of the audit
engagement partners and the audit staff is not impaired.
BramBles limited Annu Al RepoRt 2009
53
sharEhOLdEr inFOrmatiOn
direCtors
G J Kraehe ao
(non-executive Chairman)
m e doherty
(Chief Financial officer)
a G froggatt
(non-executive Director)
d p Gosnell
(non-executive Director)
m f ihlein
(Chief executive officer)
s p Johns
(non-executive Director)
s C H Kay
(non-executive Director)
C l mayhew
(non-executive Director)
B m schwartz am
(non-executive Director)
Company seCretary
r n Gerrard
reGistered offiCe
Brambles limited
level 40, Gateway
1 Macquarie place
Sydney nSW 2000
Australia
ACn 118 896 021
telephone: 61 (0) 2 9256 5222
61 (0) 2 9256 5299
Facsimile:
www.brambles.com
Website:
stoCK exCHanGe listinGs
Brambles’ ordinary shares have a primary listing on the Australian
Securities exchange and a secondary listing (where ordinary shares
traded are settled via CDIs) on the london Stock exchange.
sHare reGistrars
online access to shareholding and CDI holding information is available
to investors through the link Market Services and equiniti websites.
ordinary shareholders
link Market Services limited
level 12, 680 George Street
Sydney nSW 2000
Australia
locked Bag A14
Sydney South nSW 1235
Australia
telephone: 1300 883 073 (freecall within Australia)
61 (0) 2 8280 7143 (from outside Australia)
Facsimile:
email:
Website:
61 (0) 2 9287 0303
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Cdi holders
For CDI holders who use the equiniti (formerly lloyds tSB Registrars)
corporate nominee service (including former BIp shareholders who
held their shares in certificated form), contact:
equiniti Corporate nominees limited
Aspect House, Spencer Road
lancing Bn99 6DA
united Kingdom
telephone: 0871 384 2030* (uK only)
44 (0) 121 415 7047 (from outside the uK)
Facsimile:
0871 384 2100* (uK only)
44 (0) 1903 698 403 (from outside the uK)
*Calls to this number will be charged at 8p per minute from a Bt landline. other
telephony providers’ costs may vary.
Website:
www.shareview.co.uk
For CDI holders who are CReSt participants (including former BIp
shareholders who held their shares in dematerialised form through
CReSt) contact:
euroclear uK & Ireland limited
33 Cannon Street
london eC4M 5SB
united Kingdom
telephone: 08459 645 648 (uK only)
Facsimile:
Website:
44 (0) 8459 645 648 (from outside the uK)
020 7849 0134 (uK only)
44 (0) 20 7849 0134 (from outside the uK)
www.euroclear.co.uk
54
BramBles limited Annu Al RepoRt 2009
annual General meetinG
the Brambles limited 2009 AGM will be held at 2.00pm (AeDt) on 19 november 2009 at the Savoy Ballroom, Grand Hyatt Melbourne,
123 Collins Street, Melbourne, vIC 3000.
finanCial Calendar
final dividend 2009
ex dividend date – Monday, 14 September 2009
Record date – Friday, 18 September 2009
payment date – thursday, 8 october 2009
2010 (provisional)
Announcement of interim results – mid February
Interim dividend – mid April
Announcement of final results – mid August
Final dividend – mid october
AGM – november
analysis of Holders of equity seCurities as at 20 auGust 2009
substantial shareholders
Brambles has been notified of the following substantial shareholding:
Holder
Commonwealth Bank of Australia and its subsidiaries
(a) percentages are as disclosed in substantial holding notices given to Brambles limited.
number of ordinary shares on issue and distribution of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
total
numBer of ordinary
sHares
% of issued ordinary
sHare Capital(a)
180,184,910
13.01
Holders
sHares
35,812
37,059
6,353
3,692
194
19,023,997
89,025,374
45,775,034
78,839,617
1,169,279,253
83,110
1,401,943,275
the number of members holding less than a marketable parcel of 70 ordinary shares (based on a market price of A$7.15 on 20 August 2009)
is 2,102 and they hold a total of 96,839 ordinary shares. the voting rights of ordinary shares are described on page 56.
number of options/rights on issue and distribution of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
total
Holders
options/riGHts
1,522
46
61
103
12
1,744
228,657
170,666
413,491
3,767,548
2,996,260
7,576,622
the voting right of options, performance share rights and MyShare matching conditional rights are described on page 56.
BramBles limited Annu Al RepoRt 2009
55
sharEhOLdEr inFOrmatiOn – CONTINUED
twenty largest ordinary shareholders
name
1
2
3
4
HSBC Custody nominees (Australia) limited
J p Morgan nominees Australia limited
national nominees limited
Citicorp nominees pty limited
5(a) AnZ nominees limited (Cash Income A/C)
6
7
8
Cogent nominees pty limited
Queensland Investment Corporation
Australian Reward Investment Alliance
9 AMp life limited
10 RBC Dexia Investor Services Australia nominees pty limited
11 Citicorp nominees pty limited (CFS WSle 452 AuSt SHARe A/C)
12 HSBC Custody nominees (Australia) limited-GSCo eCA
13 Australian Foundation Investment Company limited
14 RBC Dexia Investor Services Australia nominees pty limited (BKCuSt A/C)
15 Warnford nominees pty limited (no 1 ACCount)
16 Citicorp nominees pty limited (CFSIl CWltH AuSt SHS 1 A/C)
17 Argo Investments limited
18 Citicorp nominees pty limited (CWltH BAnK oFF SupeR A/C)
19 Citicorp nominees pty limited (CFSIl CFSWS GeAR 452 Au A/C)
20 perpetual trustee Company limited
percentage of total holdings of 20 largest holders
numBer of ordinary
sHares
% of sHare Capital
322,341,322
253,420,878
224,039,594
122,096,901
48,111,821
21,244,327
15,049,639
9,001,260
8,982,515
8,907,309
8,644,099
8,033,919
7,687,940
7,445,281
5,106,547
4,694,000
4,252,106
3,858,492
3,633,000
3,472,685
22.99%
18.08%
15.98%
8.71%
3.43%
1.52%
1.07%
0.64%
0.64%
0.64%
0.62%
0.57%
0.55%
0.53%
0.36%
0.33%
0.30%
0.28%
0.26%
0.25%
1,090,023,635
77.75%
(a) the AnZ nominees limited (Cash Income A/C) holding includes the nominee holding of ordinary shares underlying the CDIs which trade on the london Stock
exchange.
voting rights: ordinary shares
Brambles limited’s constitution provides that each member entitled
to attend and vote may do so in person or by proxy, by attorney or,
where the member is a body corporate, by representative. the
Directors may also determine that at any general meeting, a member
who is entitled to attend and vote on a resolution at that meeting is
entitled to a direct vote in relation to that resolution. the Directors
have prescribed rules to govern direct voting which are available at
www.brambles.com.
on a show of hands, every member present in person, by proxy, by
attorney or, where the member is a body corporate, by representative
and having the right to vote on a resolution has one vote. the Directors
have determined that members who submit a direct vote will be
excluded on a vote by a show of hands.
on a poll, every member present in person, by proxy, by attorney or,
where the member is a body corporate, by representative and having
the right to vote on the resolution has one vote for each ordinary share
held. the Directors have determined that votes cast by members who
submit a direct vote will be included on a vote by a poll, being one vote
for each ordinary share held.
voting rights: options/rights
options over ordinary shares, performance share rights and MyShare
matching conditional rights do not carry any voting rights.
56
BramBles limited Annu Al RepoRt 2009
FinanCiaL rEpOrt
▶
for tHe year ended 30 June 2009
index
paGe
Consolidated income statement
parent entity income statement
Balance sheets
statements of recognised income and expense
Cash flow statements
notes to the financial statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
Basis of preparation
Significant accounting policies
Critical accounting estimates and judgements
Segment information
profit from ordinary activities – continuing operations
Significant items – continuing operations
employment costs – continuing operations
net finance costs
Income tax
earnings per share
Dividends
Discontinued operations
Business combination
Cash and cash equivalents
trade and other receivables
Inventories
Derivative financial instruments
other assets
Investments
property, plant and equipment
Goodwill
Intangible assets
trade and other payables
Borrowings
provisions
Retirement benefit obligations
Contributed equity
Share-based payments
Reserves and retained earnings
Financial risk management
Cash flow statement – additional information
Commitments
Contingencies
Auditors' remuneration
Key management personnel
Related party information
events after balance sheet date
directors’ declaration
independent auditors’ report
58
59
60
61
62
3
6
3
6
0
7
1
7
3
7
7
4
5
7
5
7
6
7
9
7
0
8
1
8
2
8
3
8
3
8
4
8
5
8
5
8
6
8
8
8
9
8
1
9
2
9
2
9
4
9
5
9
8
9
9
9
3
10
5
10
5
11
7
11
8
11
9
11
9
11
2
12
5
12
126
127
BramBles limited Annu Al RepoRt 2009
57
COnsOLidatEd inCOmE statEmEnt
▶
for tHe year ended 30 June 2009
Continuing operations
Sales revenue
other income
operating expenses
Share of results of joint ventures
operating profit
Finance revenue
Finance costs
net finance costs
profit before tax
tax expense
profit from continuing operations
profit from discontinued operations
profit for the year attributable to members of the parent entity
earnings per share (cents)
total
– basic
– diluted
Continuing operations
– basic
– diluted
note
2009
us$m
2008
us$m
4,018.6
4,358.6
96.7
181.5
(3,402.1)
(3,515.4)
5.0
5.9
718.2
1,030.6
7.1
10.5
(128.0)
(160.0)
(120.9)
(149.5)
597.3
881.1
(163.3)
(234.2)
434.0
18.6
452.6
646.9
1.8
648.7
5a
5a
5b
19c
8
9
12b
10
32.6
32.5
31.3
31.2
46.0
45.7
45.9
45.6
the consolidated income statement should be read in conjunction with the accompanying notes.
non-statutory measure:
underlying profit
underlying profit is profit from continuing operations before finance costs, tax and Significant items (refer note 6). It is presented to assist users of the
financial statements to understand Brambles’ business results and reconciles with operating profit as follows:
underlying profit
Significant items:
– foreign exchange gain on capital repatriation
– restructuring costs
– Walmart transition impact
– uSA pallet quality program costs
– adviser costs – share register activity
operating profit
900.6
1,071.9
6
6
6
6
6
77.3
(153.3)
(29.0)
(77.4)
–
–
(5.1)
(10.9)
(20.6)
(4.7)
718.2
1,030.6
58
BramBles limited Annu Al RepoRt 2009
parEnt Entity inCOmE statEmEnt
▶
for tHe year ended 30 June 2009
Continuing operations
Revenue
other income
operating expenses
operating profit
Finance revenue
Finance costs
net finance revenue
profit before tax
tax expense
profit for the year
the parent entity income statement should be read in conjunction with the accompanying notes.
note
2009
us$m
2008
us$m
5a
5a
5b
8
9
–
–
–
–
–
–
–
–
678.2
1,061.4
(182.3)
(250.3)
495.9
495.9
811.1
811.1
(148.8)
(240.0)
347.1
571.1
BramBles limited Annu Al RepoRt 2009
59
BaLanCE shEEts
▶
as at 30 June 2009
Consolidated
parent entity
note
2009
us$m
2008
us$m
2009
us$m
2008
us$m
assets
Current assets
Cash and cash equivalents
trade and other receivables
Inventories
Derivative financial instruments
other assets
total current assets
non-current assets
other receivables
Investments
property, plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Derivative financial instruments
other assets
total non-current assets
total assets
liaBilities
Current liabilities
trade and other payables
Borrowings
Derivative financial instruments
tax payable
provisions
total current liabilities
non-current liabilities
Borrowings
Derivative financial instruments
provisions
Retirement benefit obligations
Deferred tax liabilities
other liabilities
total non-current liabilities
total liabilities
net assets
equity
Contributed equity
Reserves
Retained earnings
parent entity interest
minority interest
total equity
the balance sheets should be read in conjunction with the accompanying notes.
60
BramBles limited Annu Al RepoRt 2009
14
15
16
17
18
15
19
20
21
22
9
17
18
23
24
17
25
24
17
25
26
9
23
27
29
29
29
90.1
653.6
35.1
1.1
72.2
104.8
829.0
45.1
4.4
51.7
852.1
1,035.0
2.5
–
–
–
16.0
18.5
5.4
0.5
–
–
7.3
13.2
8.1
13.8
9.1
13,428.8
14,883.6
16.9
5,838.9
6,921.3
3,441.6
3,698.9
612.3
163.0
7.0
–
0.6
676.1
186.9
8.8
4.3
0.8
–
–
–
–
–
–
–
–
–
–
–
–
4,246.4
4,601.8
19,267.7
21,804.9
5,098.5
5,636.8
19,286.2
21,818.1
683.7
850.7
68.0
12.9
64.6
93.6
91.5
6.0
54.9
74.2
922.8
1,077.3
2,165.5
2,439.5
5.8
53.0
50.8
449.9
21.4
2.7
49.8
63.4
443.5
–
–
–
26.8
–
26.8
–
–
–
–
–
–
–
–
5.4
–
5.4
5.0
–
–
–
–
17.1
4,603.8
4,487.4
2,746.4
3,016.0
4,603.8
4,492.4
3,669.2
4,093.3
4,630.6
4,497.8
1,429.3
1,543.5
14,655.6
17,320.3
13,847.6
13,778.6
13,847.6
13,778.6
(14,938.7) (14,671.5)
2,520.1
2,436.1
423.7
384.3
3,139.0
402.7
1,429.0
1,543.2
14,655.6
17,320.3
0.3
0.3
–
–
1,429.3
1,543.5
14,655.6
17,320.3
statEmEnts OF rECOgnisEd inCOmE
and ExpEnsE
▶
for tHe year ended 30 June 2009
Actuarial losses on defined benefit pension plans
26e
(2.9)
(34.5)
–
–
Consolidated
parent entity
note
2009
us$m
2008
us$m
2009
us$m
2008
us$m
exchange differences on translation of foreign operations:
– foreign operations
– entities disposed taken to profit
Cash flow hedges:
– losses taken to equity
– transferred to profit or loss
Income tax:
– on items taken directly to or transferred directly from equity
– on items transferred to profit or loss
net (expense)/income recognised directly in equity
(262.6)
263.5
(2,718.0)
2,003.1
(0.6)
–
–
(27.9)
13.7
(3.8)
(0.1)
9a
9a
9.5
(4.8)
9.1
–
–
–
–
–
–
–
–
–
–
(275.6)
234.2
(2,718.0)
2,003.1
profit for the year
452.6
648.7
347.1
571.1
total recognised income and expense for the year
attributable to members of the parent entity
177.0
882.9
(2,370.9)
2,574.2
Adjustment to opening retained earnings for AASB 117: leases
29
–
(2.5)
–
–
the statements of recognised income and expense should be read in conjunction with the accompanying notes.
BramBles limited Annu Al RepoRt 2009
61
Cash FLOw statEmEnts
▶
for tHe year ended 30 June 2009
Cash flows from operating activities
Receipts from customers
payments to suppliers and employees
Cash generated from operations
Dividends received from joint ventures
Interest received
Interest paid
Income taxes paid on operating activities
Consolidated
parent entity
note
2009
us$m
2008
us$m
2009
us$m
2008
us$m
4,575.7
4,998.7
(3,306.8)
(3,467.9)
1,268.9
1,530.8
7.1
8.0
5.2
9.6
(131.8)
(146.4)
–
–
–
–
–
–
–
–
0.9
(0.2)
0.2
(2.3)
(129.2)
(232.9)
(131.6)
(246.9)
net cash inflow/(outflow) from operating activities
31b
1,023.0
1,166.3
(130.9)
(249.0)
Cash flows from investing activities
proceeds from disposal of businesses
Costs incurred on disposal of businesses
Acquisition of subsidiaries, net of cash acquired
purchases of property, plant and equipment
proceeds from sale of property, plant and equipment
purchases of intangible assets
loan inflows with associates and subsidiaries
net cash (outflow)/inflow from investing activities
Cash flows from financing activities
proceeds from borrowings
Repayments of borrowings
net (outflow)/inflow from hedge borrowings
proceeds from issue of ordinary shares
Buy-back of ordinary shares
Dividends paid, net of Dividend Reinvestment plan
net cash outflow from financing activities
net increase/(decrease) in cash and cash equivalents
Cash and deposits, net of overdrafts, at beginning of the year
effect of exchange rate changes
Cash and deposits, net of overdrafts, at end of the year
31a
the cash flow statements should be read in conjunction with the accompanying notes.
1.8
(4.8)
(0.1)
6.6
–
(64.3)
(683.8)
(869.4)
104.6
(24.3)
–
133.8
(18.4)
0.3
(606.6)
(811.4)
–
–
–
–
–
–
–
–
–
–
–
–
398.9
398.9
1,038.0
1,038.0
1,404.2
2,280.3
(1,513.5)
(2,010.6)
(7.9)
0.8
–
95.1
38.5
(392.0)
–
–
–
7.1
–
–
–
–
52.3
(392.0)
(277.6)
(444.8)
(277.6)
(444.8)
(394.0)
(433.5)
(270.5)
(784.5)
22.4
68.1
(36.4)
54.1
(78.6)
126.9
19.8
68.1
(2.5)
5.4
(0.4)
2.5
4.5
0.6
0.3
5.4
62
BramBles limited Annu Al RepoRt 2009
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts
▶
for tHe year ended 30 June 2009
Basis of preparation
note 1.
these financial statements present the consolidated results of
Brambles limited (ACn 118 896 021) (Company) and its subsidiaries
(Brambles or the Group) for the year ended 30 June 2009.
the financial statements comply with International Financial
Reporting Standards (IFRS). this general purpose financial report
has been prepared in accordance with Australian equivalents
to International Financial Reporting Standards (AIFRS) and in
accordance with the requirements of the Corporations Act 2001
(Act). they comply with applicable accounting standards and other
authoritative pronouncements of the Australian Accounting Standards
Board (AASB) and the urgent Issues Group (uIG).
the financial statements are drawn up in accordance with the
conventions of historical cost accounting, except for derivative
financial instruments and financial assets and liabilities at fair value
through profit or loss.
References to 2009 and 2008 are to the financial years ended
30 June 2009 and 30 June 2008 respectively.
Details of unification, whereby Brambles limited acquired all the
share capital of Brambles Industries limited (BIl) and Brambles
Industries plc (BIp) under separate schemes of arrangement on
4 December 2006, are set out in the Brambles 2007 Annual Report.
siGnifiCant aCCountinG poliCies
note 2.
the consolidated financial statements and all comparatives have
been prepared using consistent accounting policies, except for the
disclosure of Significant items and underlying profit described below
which were introduced in 2009.
significant items and underlying profit
to assist users of the financial statements in understanding Brambles’
business results, Brambles now discloses Significant items as a
footnote to its income statement. previously Brambles presented
Special items in a separate column in its income statement.
Significant items are items of income or expense which are, either
individually or in aggregate, material to Brambles or to the relevant
business segment and:
—
outside the ordinary course of business (eg gains or losses on the
sale or termination of operations, the cost of significant
reorganisations or restructuring); or
part of the ordinary activities of the business but unusual due to
their size and nature.
—
underlying profit has been introduced as a non-statutory profit
measure. It is profit from continuing operations before finance costs,
tax and Significant items.
Comparative figures have been provided for both Significant items and
underlying profit.
early adoption of standards
Brambles has elected to prospectively apply AASB 2008-7:
Amendments to Australian Accounting Standards – Cost of an
Investment in a Subsidiary, Jointly Controlled entity or Associate
to annual reporting periods commencing on or after 1 July 2008.
the impact of this change in policy is that all dividends received from
investments in subsidiaries, joint ventures and associates can be
recognised as revenue, even if they are paid out of pre-acquisition
profits. However, the investments may need to be tested for
impairment following the dividend receipt.
other new accounting standards and interpretations
At 30 June 2009, certain other new accounting standards and
interpretations have been published that will become mandatory in
future reporting periods. Brambles has not elected to early-adopt
these new or amended accounting standards and interpretations.
the expected impact of these changed accounting requirements
should not materially alter Brambles’ current accounting policies.
AASB 8: operating Segments and AASB 2007-3: Amendments to
Australian Accounting Standards arising from AASB 8 are applicable
to annual reporting periods beginning on or after 1 January 2009.
AASB 8 requires adoption of a management approach to reporting
segment performance. the information being reported will be based
on Brambles’ internal management reporting to the chief operating
decision-maker and will reflect what the key decision makers use
internally for evaluating segment performance and deciding how to
allocate resources to operating segments. the application of AASB 8
will result in additional disclosures in the financial report. Brambles
will adopt AASB 8 from 1 July 2009.
AASB 101: presentation of Financial Statements and AASB 2007-8:
Amendments to Australian Accounting Standards arising from
AASB 101 are applicable to annual reporting periods beginning on
or after 1 January 2009. AASB 101 requires the presentation of
a statement of comprehensive income and makes changes to the
statement of changes in equity, but will not affect any of the amounts
recognised in the financial statements. If a prior period adjustment or
reclassification is made in the financial statements, a third balance
sheet as at the beginning of the comparative period will need to be
disclosed. Brambles will apply the revised standard from 1 July 2009.
AASB 123: Borrowing Costs and AASB 2007-6: Amendments
to Australian Accounting Standards arising from AASB 123
are applicable to annual reporting periods beginning on or after
1 January 2009. AASB 123 removes the option to expense all
borrowing costs and will require the capitalisation of all borrowing
costs directly attributable to the acquisition, construction or
production of a qualifying asset. there will be no impact on Brambles’
financial report as the current policy is to capitalise borrowing costs
relating to qualifying assets.
AASB 2008-1: Amendments to Australian Accounting Standard –
Share-based payments: vesting Conditions and Cancellations is
applicable for annual reporting periods beginning on or after
1 January 2009 and clarifies that only service conditions and
performance conditions constitute vesting conditions and that other
features of a share-based payment are not vesting conditions. It also
specifies that cancellation of awards by the entity or by other parties
should receive the same accounting treatment. the amendment is
not expected to affect the accounting for Brambles’ share-based
payments. Brambles will apply the revised standard from 1 July 2009.
BramBles limited Annu Al RepoRt 2009
63
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FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 2. siGnifiCant aCCountinG poliCies – ContInueD
Revised AASB 3: Business Combinations, AASB 127: Consolidated
and Separate Financial Statements and AASB 2008-3: Amendments
to Australian Accounting Standards arising from AASB 3 and
AASB 127 are operative for annual reporting periods beginning on
or after 1 July 2009. the revised AASB 3 continues to apply the
acquisition method to business combinations, but with some
significant changes. these changes include expensing all acquisition-
related costs, recording all payments to purchase a business at fair
value at the acquisition date, with any contingent payments that are
classified as debt subsequently remeasured through the income
statement. AASB 3 will now allow acquiring entities a choice on an
acquisition-by-acquisition basis to measure the non-controlling
interest in the acquiree either at fair value or based on the proportion
of the net assets acquired. these new requirements are different to
the Group’s current policies. the revised AASB 127 specifies that
when an entity loses control of a subsidiary, any continuing ownership
interest in the subsidiary must be remeasured to fair value through
the income statement. the current policy requires the carrying
amount of the continuing ownership interest to remain at cost.
Brambles will apply the revised standards prospectively to
transactions that occur after 1 July 2009.
AASB 2008-6: Further Amendments to Australian Accounting
Standards arising from the Annual Improvements project is
applicable to annual reporting periods commencing on or after
1 July 2009 and amends AASB 5: Discontinued operations and
AASB 1: First-time Adoption of Australian Accounting Standards.
these amendments clarify that, if a plan exists to partially dispose
a subsidiary which will result in loss of control, then all of the
subsidiary’s assets and liabilities are to be classified as held for sale.
Brambles will apply the amendments prospectively to any partial
disposals of subsidiaries that occur after 1 July 2009.
AASB 2008-8: Amendment to AASB 139 Financial Instruments:
Recognition and Measurement is applicable to reporting periods
commencing on or after 1 July 2009 and makes two significant
changes. It prohibits designating inflation as a hedgeable component
of a fixed rate debt. It also prohibits including time value in one-sided
hedged risk when designating options as hedges. the amendment is
not expected to have a significant impact on Brambles’ financial
statements. Brambles will apply the amendments from 1 July 2009.
AASB Interpretation 16: Hedges of a net Investment in a Foreign
operation is applicable to annual reporting periods beginning on or
after 1 october 2008. this interpretation provides guidance on
identifying foreign currency risks that qualify as hedged risk in the
hedge of net investments in foreign operations. AASB Interpretation
16 also provides guidance on determining amounts to be reclassified
from equity to profit or loss for both the hedging instrument and
hedged items. Brambles will apply AASB Interpretation 16 from
1 July 2009, but it is not expected to have any impact on the Group’s
financial report.
Basis of consolidation
the consolidated financial statements of Brambles include the
financial statements of Brambles limited and all its legal subsidiaries.
the consolidation process eliminates all inter-entity accounts and
transactions. the financial statements of overseas subsidiaries have
been prepared in accordance with overseas accounting practices and,
for consolidation purposes, have been adjusted to comply with AIFRS.
64
BramBles limited Annu Al RepoRt 2009
the financial statements of all subsidiaries are prepared for the same
reporting period.
on acquisition, the assets and liabilities and contingent liabilities
of a subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values
of the identifiable net assets acquired is recognised as goodwill.
Any deficiency of the cost of acquisition below the fair values of the
identifiable net assets acquired (ie discount on acquisition) is credited
to the income statement in the period of acquisition. the interest of
minority shareholders is stated at the minority’s proportion of the fair
values of the assets and liabilities recognised.
the results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
investment in controlled entities
Shares in controlled entities, as recorded in the parent entity, are
recorded at cost.
investment in joint ventures and associates
Investments in associates, where Brambles exercises significant
influence, and other joint venture entities are accounted for using
the equity method in the consolidated financial statements, and
include any goodwill arising on acquisition. under this method,
Brambles’ share of the profits or losses of associates and joint
ventures is recognised in the consolidated balance sheet and its
share of movements in reserves is recognised in consolidated
reserves. Cumulative movements are adjusted against the cost
of the investment.
If Brambles’ share of losses in an associate or joint venture exceeds
its interest in the associate or joint venture, Brambles does not
recognise further losses unless it has incurred obligations or made
payments on behalf of its associate or joint venture.
loans to equity accounted associates and joint ventures under formal
loan agreements are long term in nature and are included as
investments.
Where there has been a change recognised directly in the joint
venture’s or associate’s equity, Brambles recognises its share of
any changes as a change in equity.
non-current assets held for sale
non-current assets and disposal groups classified as held for sale
are measured at the lower of carrying amount and fair value less
costs to sell.
non-current assets and disposal groups are classified as held for sale
if their carrying amount will be recovered through a sale transaction
rather than through continuing use. this condition is regarded as met
only when the sale is highly probable and the asset (or disposal group)
is available for immediate sale in its present condition. Management
must be committed to the sale which should be expected to qualify
for recognition as a completed sale within one year from the date
of classification.
discontinued operations
the trading results for business operations disposed during the year
or classified as held for sale are disclosed separately as discontinued
operations in the income statement. the amount disclosed includes
any related impairment losses recognised and any gains or losses
arising on disposal.
Comparative amounts for the prior year are restated in the income
statement to include current year discontinued operations.
the financial statements of foreign subsidiaries, joint ventures and
associates that report in the currency of a hyperinflationary economy
are restated in terms of the measuring unit current at the balance
sheet date before they are translated into uS dollars.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
the principal exchange rates affecting Brambles were:
segment reporting
Brambles’ primary segment for reporting purposes is by business as
Brambles’ risks and rates of return are affected predominantly by the
difference in the products and services between business streams.
Secondary segment information is reported geographically.
primary segment information is further analysed between continuing
and discontinued operations.
us$:a$
us$:€
us$:£
average
2009
0.7479
1.3822
1.6103
2008
0.9040
1.4835
2.0111
year end
30 June 2009
0.8114
1.4106
1.6637
30 June 2008
0.9629
1.5793
1.9936
presentation currency
the consolidated and parent entity financial statements are presented
in uS dollars.
Brambles has selected the uS dollar as its presentation currency
for the following reasons:
—
a significant portion of Brambles’ activity is denominated in uS
dollars; and
the uS dollar is widely understood by Australian, uK and
international investors and analysts.
—
foreign currency
Items included in the financial statements of each of Brambles’
entities are measured using the functional currency of each entity.
Foreign currency transactions are translated into the functional
currency of each entity using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions, and from the translation
at year-end rates of monetary assets and liabilities denominated in
foreign currencies, are recognised in the income statement, except
where deferred in equity as qualifying cash flow hedges or qualifying
net investment hedges.
non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Gains
and losses arising on retranslation are recognised directly in equity.
the results and cash flows of Brambles limited, subsidiaries, joint
ventures and associates are translated into uS dollars using the
average exchange rates for the period. Where this average is not
a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, the exchange rate on the
transaction date is used. Assets and liabilities of Brambles limited,
subsidiaries, joint ventures and associates are translated into uS
dollars at the exchange rate ruling at the balance sheet date.
Following unification, the share capital of Brambles limited is
translated into uS dollars at historical rates. All resulting exchange
differences arising on the translation of Brambles’ overseas and
Australian entities are recognised as a separate component of equity.
revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to Brambles and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net of duties
and taxes paid (Goods and Services tax and local equivalents).
Revenue for services is recognised when invoicing the customer
following the provision of the service and/or under the terms of agreed
contracts in accordance with agreed contractual terms in the period in
which the service is provided.
other income
other income includes net gains on disposal of property, plant and
equipment in the ordinary course of business, which are recognised
when control of the property has passed to the buyer. Amounts
arising from compensation for irrecoverable pooling equipment are
recognised only when it is probable that they will be received.
DIvIDenDS
Dividend revenue is recognised when the shareholders’ right to receive
the payment is established.
finance revenue
Interest revenue is recognised as the interest accrues (using the
effective interest method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial instrument) to the net carrying amount of the financial asset.
Borrowing costs
Borrowing costs are recognised as expenses in the year in which
they are incurred, except where they are included in the cost of
qualifying assets.
the capitalisation rate used to determine the amount of borrowing
costs to be capitalised is the weighted average interest rate applicable
to the entity’s outstanding borrowings during the year. no borrowing
costs were capitalised in 2009 or 2008.
BramBles limited Annu Al RepoRt 2009
65
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 2. siGnifiCant aCCountinG poliCies – ContInueD
pensions and other post-employment benefits
payments to defined contribution pension schemes are charged as an
expense as they fall due. payments made to state-managed retirement
benefit schemes are dealt with as payments to defined contribution
schemes where Brambles’ obligations under the schemes are
equivalent to those arising in a defined contribution pension scheme.
A liability in respect of defined benefit pension schemes is recognised in
the balance sheet, measured as the present value of the defined benefit
obligation at the reporting date less the fair value of the pension
scheme’s assets at that date. pension obligations are measured as
the present value of estimated future cash flows discounted at rates
reflecting the yields of high quality corporate bonds.
the costs of providing pensions under defined benefit schemes are
calculated using the projected unit credit method, with actuarial
valuations being carried out at each balance sheet date. past service
cost is recognised immediately to the extent that the benefits are
already vested, and otherwise is amortised on a straight-line basis
over the average period until the benefits become vested.
Actuarial gains and losses arising from differences between expected
and actual returns, and the effect of changes in actuarial assumptions
are recognised in full through the statement of recognised income and
expense in the period in which they arise.
the costs of other post-employment liabilities are calculated in a similar
way to defined benefit pension schemes and spread over the period
during which benefit is expected to be derived from the employees’
services, in accordance with the advice of qualified actuaries.
executive and employee option plans
Incentives in the form of share-based compensation benefits
are provided to executives and employees under share option,
performance share and MyShare employee share plans approved
by shareholders.
options and share awards are fair valued by qualified actuaries at
their grant dates in accordance with the requirements of AASB 2:
Share-based payments, using a binomial model. the cost of equity-
settled transactions is recognised, together with a corresponding
increase in equity, on a straight-line basis over the period in which the
performance conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (vesting date).
assets
Cash and cash equivalents
For purposes of the cash flow statement, cash includes deposits
at call with financial institutions and other highly liquid investments
which are readily convertible to cash on hand and are subject to an
insignificant risk of changes in value, net of outstanding bank
overdrafts. Bank overdrafts are presented within borrowings in
the balance sheet.
receivables
trade receivables due within one year do not carry any interest and
are recognised at amounts receivable less an allowance for any
uncollectible amounts. trade receivables are recognised when
services are provided and settlement is expected within normal
credit terms.
Bad debts are written-off when identified. A provision for doubtful
receivables is established when there is a level of uncertainty as to
the full recoverability of the receivable, based on objective evidence.
Significant financial difficulties of the debtor, probability that the
debtor will enter liquidation, receivership or bankruptcy, and default
or significant delay in payment are considered indicators that the
trade receivable is doubtful. the amount of the provision has been
measured as the difference between the carrying amount of the
trade receivables and the estimated future cash flows expected to be
received from the relevant debtors. When a trade receivable for which
a provision had been recognised becomes uncollectible in a subsequent
period, it is written off against the provision account. Subsequent
recoveries of amounts previously written off are credited against
other expenses in the income statement.
inventories
Stock and stores on hand are valued at the lower of cost and net
realisable value and, where appropriate, provision is made for possible
obsolescence. Work in progress, which represents partly-completed
work undertaken at pre-arranged rates but not invoiced at the balance
sheet date, is recorded at the lower of cost or net realisable value.
Cost is determined on a first-in, first-out basis and, where relevant,
includes an appropriate portion of overhead expenditure. net
realisable value is the estimated selling price in the ordinary course
of business, less estimated costs of completion and costs to make
the sale.
executives and employees in certain jurisdictions are provided cash
incentives calculated by reference to the options and awards under
the share option schemes (phantom shares). these phantom shares
are fair valued on initial grant and at each subsequent reporting date.
the cost of such phantom shares is charged to the income statement
over the relevant vesting periods, with a corresponding increase
in provisions.
recoverable amount of non-current assets
At each reporting date, Brambles assesses whether there is any
indication that an asset, or cash generating unit to which the asset
belongs, may be impaired. Where an indicator of impairment exists,
Brambles makes a formal estimate of recoverable amount. the
recoverable amount of an asset is the greater of its fair value less
costs to sell and its value in use.
the fair value calculation of options granted excludes the impact
of any non-market vesting conditions. non-market vesting conditions
are included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date,
Brambles reviews its estimate of the number of options that are
expected to become exercisable. the employee benefit expense
recognised each period takes into account the most recent estimate.
Where the carrying value of an asset exceeds its recoverable
amount, the asset is considered to be impaired and is written
down to its recoverable amount. the impairment loss is recognised
as a Significant item in the reporting period in which the write-
down occurs.
the expected net cash flows included in determining recoverable
amounts of non-current assets are discounted to their present values
using a market risk adjusted discount rate.
66
BramBles limited Annu Al RepoRt 2009
property, plant and equipment
property, plant and equipment (ppe) is stated at cost, net of
depreciation and any impairment, except land which is shown at cost
less impairment. Cost includes expenditure that is directly attributable
to the acquisition of assets, and, where applicable, an initial estimate
of the cost of dismantling and removing the item and restoring the site
on which it is located.
Subsequent expenditure is capitalised only when it is probable that
future economic benefits associated with the expenditure will flow
to Brambles. Repairs and maintenance are expensed in the income
statement in the period they are incurred.
Depreciation is charged in the financial statements so as to write-off
the cost of all ppe, other than freehold land, to their residual value on
a straight-line or reducing balance basis over their expected useful
lives to Brambles. Residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
impairment loss is recognised when the recoverable amount of
the cash generating unit is less than its carrying amount.
on disposal of an operation, goodwill associated with the disposed
operation is included in the carrying amount of the operation when
determining the gain or loss on disposal.
intangible assets
Intangible assets acquired are capitalised at cost, unless acquired as
part of a business combination in which case they are capitalised at
fair value as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less provisions for amortisation
and impairment.
the costs of acquiring and developing computer software for internal
use are capitalised as intangible non-current assets where it is used to
support a significant business system and the expenditure leads to the
creation of a durable asset.
the expected useful lives of ppe are generally:
—
—
—
buildings
pooling equipment
other plant and equipment (owned and leased)
50 years
5–10 years
3–20 years
useful lives have been established for all non-goodwill intangible
assets. Amortisation charges are expensed in the income statement
on a straight-line basis over those useful lives. estimated useful lives
are reviewed annually.
the cost of improvements to leasehold properties is amortised over
the unexpired portion of the lease, or the estimated useful life of the
improvement to Brambles, whichever is the shorter.
provision is made for irrecoverable pooling equipment based on
experience in each market. the provision is presented within
accumulated depreciation.
the carrying values of ppe are reviewed for impairment when
circumstances indicate their carrying values may not be recoverable.
Assets are assessed within the cash generating unit to which they
belong. Any impairment losses are recognised in the income statement.
the recoverable amount of ppe is the greater of its fair value less
costs to sell and its value in use. value in use is determined as
estimated future cash flows discounted to their present value using
a pre-tax discount rate reflecting current market assessments of the
time value of money and the risk specific to the asset.
ppe is derecognised upon disposal or when no future economic
benefits are expected to arise from continued use of the asset. Any
net gain or loss arising on derecognition of the asset is included in the
income statement and presented as other income in the period in
which the asset is derecognised.
Goodwill
Goodwill is carried at cost less accumulated impairment losses.
Goodwill is not amortised.
Goodwill represents the excess of the cost of an acquisition over the
fair value of Brambles’ share of the net identifiable assets of the
acquired subsidiary, joint venture or associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill on acquisitions of joint ventures and
associates is included in investments in joint ventures and associates.
upon acquisition, any goodwill arising is allocated to each cash
generating unit expected to benefit from the acquisition. Goodwill
is tested annually for impairment, or more frequently if events or
changes in circumstances indicate that it might be impaired. An
the expected useful lives of intangible assets are generally:
—
—
customer lists and relationships
computer software
3–20 years
3–10 years
there are no non-goodwill intangible assets with indefinite lives.
Intangible assets are tested for impairment where an indicator
of impairment exists, either individually or at the cash generating
unit level.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognised in the income
statement when the asset is derecognised.
liaBilities
payables
trade and other creditors represent liabilities for goods and services
provided to Brambles prior to the end of the financial year which
remain unpaid at the reporting date. the amounts are unsecured
and are paid within normal credit terms.
non-current payables are discounted to present value using the
effective interest method.
provisions
provisions for liabilities are made on the basis that, due to a past
event, the business has a constructive or legal obligation to transfer
economic benefits that are of uncertain timing or amount. provisions
are measured at the present value of management’s best estimate
at the balance sheet date of the expenditure required to settle the
obligation. the discount rate used is a pre-tax rate that reflects
current market assessments of the time value of money and the
risks appropriate to the liability.
Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost in the income statement.
BramBles limited Annu Al RepoRt 2009
67
nOtEs tO and FOrming part OF thE
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for tHe year ended 30 June 2009
note 2. siGnifiCant aCCountinG poliCies – ContInueD
interest bearing liabilities
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the borrowing proceeds (net of
transaction costs) and the redemption amount is recognised in
the income statement over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless Brambles has
an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
employee entitlements
employee entitlements are provided by Brambles in accordance with
the legal and social requirements of the country of employment.
principal entitlements are for annual leave, sick leave, long service
leave and contract entitlements. Annual leave and sick leave
entitlements are presented within trade and other payables.
liabilities for annual leave, as well as those employee entitlements
which are expected to be settled within one year, are measured at
the amounts expected to be paid when they are settled. All other
employee entitlement liabilities are measured at the estimated
present value of the future cash outflows to be made in respect
of services provided by employees up to the reporting date.
dividends
A provision for dividends is only recognised where the dividends have
been declared prior to the reporting date.
—
leases
leases are classified at their inception as either operating or finance
leases based on the economic substance of the agreement so as to
reflect the risks and benefits incidental to ownership.
opeRAtInG leASeS
the minimum lease payments under operating leases, where the
lessor effectively retains substantially all of the risks and benefits
of ownership of the leased item, are recognised as an expense on a
straight-line basis over the term of the lease.
FInAnCe leASeS
Finance leases, which effectively transfer substantially all of the risks
and benefits incidental to ownership of the leased item to Brambles,
are capitalised at the inception of the lease at the fair value of the
leased asset or, if lower, present value of the minimum lease
payments, and disclosed as property, plant and equipment held
under lease. A lease liability of equal value is also recognised.
lease payments are allocated between finance charges and a
reduction of the lease liability so as to achieve a constant period rate
of interest on the lease liability outstanding each period. the finance
charge is recognised as a finance cost in the income statement.
Capitalised lease assets are depreciated over the shorter of the
estimated useful life of the assets and the lease term.
68
BramBles limited Annu Al RepoRt 2009
income tax
the income tax expense or benefit for the year is the tax payable or
receivable on the current year’s taxable income based on the national
income tax rate for each jurisdiction, adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax is accounted for using the balance sheet liability method
in respect of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding
tax basis used in the computation of taxable profit, calculated using
tax rates which are enacted or substantively enacted by the balance
sheet date.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses. the carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are not recognised:
—
where the deferred tax arises from the initial recognition of an
asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
in respect of temporary differences associated with investments
in subsidiaries, joint ventures and associates where the timing of
the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the
foreseeable future.
Current and deferred tax attributable to amounts recognised directly
in equity are also recognised directly in equity.
financial assets
Brambles classifies its financial assets in the following two
categories: financial assets at fair value through profit or loss and
loans and receivables. the classification depends on the purpose for
which the financial assets were acquired.
FInAnCIAl ASSetS At FAIR vAlue tHRouGH pRoFIt oR loSS
Financial assets at fair value through profit or loss are financial assets
held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term.
loAnS AnD ReCeIvABleS
loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
Financial assets are recognised on Brambles’ balance sheet when
Brambles becomes a party to the contractual provisions of the
instrument. Derecognition takes place when Brambles no longer
controls the contractual rights that comprise the financial instrument,
which is normally the case when the instrument is sold, or all the cash
flows attributable to the instrument are passed through to an
independent third party.
derivatives and hedging activities
Derivative instruments used by Brambles, which are used solely for
hedging purposes (ie to offset foreign exchange and interest rate
risks), comprise interest rate swaps, caps, collars, forward rate
agreements and forward foreign exchange contracts. Such derivative
instruments are used to alter the risk profile of Brambles’ existing
underlying exposure in line with Brambles’ risk management policies.
Derivative financial instruments are stated at fair value. the fair
value of forward exchange contracts is calculated by reference to
current forward exchange rates for contracts with similar maturities
at the balance sheet date. the fair value of interest rate swap
contracts is calculated as the present value of the forward cash
flows of the instrument after applying market rates and standard
valuation techniques.
For the purposes of hedge accounting, hedges are classified as either
fair value hedges, cash flow hedges or net investment hedges.
FAIR vAlue HeDGeS
Fair value hedges are derivatives that hedge exposure to changes in
the fair value of a recognised asset or liability, or an unrecognised
firm commitment. In relation to fair value hedges which meet the
conditions for hedge accounting, any gain or loss from remeasuring
the hedging instrument at fair value is recognised immediately in the
income statement.
For all other cash flow hedges, the gains or losses that are recognised
in equity are transferred to the income statement in the same year in
which the hedged firm commitment affects the net profit and loss,
for example when the future sale actually occurs.
When the hedged firm commitment results in the recognition of an
asset or a liability, then, at the time the asset or liability is recognised,
the associated gains or losses that had previously been recognised in
equity are included in the initial measurement of the acquisition cost
or other carrying amount of the asset or liability.
net InveStMent HeDGeS
Hedges for net investments in foreign operations are accounted for
similarly to cash flow hedges.
Any gain or loss on the hedging instrument that is determined to be
an effective hedge is recognised directly in equity and the ineffective
portion is recognised in the income statement.
Gains and losses accumulated in equity are included in the income
statement when the foreign operation is partially disposed or sold.
DeRIvAtIveS tHAt Do not QuAlIFY FoR HeDGe ACCountInG
Where derivatives do not qualify for hedge accounting, gains or losses
arising from changes in their fair value are taken directly to net profit
or loss for the year.
Any gain or loss attributable to the hedged risk on remeasurement of
the hedged item is adjusted against the carrying amount of the hedged
item and recognised in the income statement. Where the adjustment
is to the carrying amount of a hedged interest-bearing financial
instrument, the adjustment is amortised to the income statement
such that it is fully amortised by maturity.
Contributed equity
ordinary shares including share premium are classified as contributed
equity. no gain or loss is recognised in the income statement on the
purchase, sale, issue or cancellation of Brambles’ own equity instruments.
Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction from the proceeds of issue.
Hedge accounting is discontinued prospectively if the hedge is
terminated or no longer meets the hedge accounting criteria. In this
case, any adjustment to the carrying amounts of the hedged item
for the designated risk for interest-bearing financial instruments
is amortised to the income statement following termination of
the hedge.
CASH FloW HeDGeS
Cash flow hedges are derivatives that hedge exposure to variability
in cash flows that is either attributable to a particular risk associated
with a recognised asset or liability, or a highly probable forecast
transaction.
In relation to cash flow hedges to hedge forecast transactions which
meet the conditions for hedge accounting, the portion of the gain or
loss on the hedging instrument that is determined to be an effective
hedge is recognised directly in equity and the ineffective portion is
recognised in the income statement.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting.
At that point in time, any cumulative gain or loss on the hedging
instrument recognised in equity is kept in equity until the forecast
transaction occurs.
If a hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in equity is transferred to net profit
or loss for the year.
earnings per share (eps)
Basic epS is calculated as net profit attributable to members of the
parent entity, adjusted to exclude costs of servicing equity (other than
dividends), divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted epS is calculated as net profit attributable to members of the
parent entity, adjusted for:
—
costs of servicing equity (other than dividends) and preference
share dividends;
the after-tax effect of dividends and finance costs associated
with dilutive potential ordinary shares that have been recognised
as expenses;
other non-discretionary changes in revenues or expenses during
the year that would result from the dilution of potential ordinary
shares;
—
—
and divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
epS on underlying profit after finance costs and tax is calculated as
underlying profit after finance costs and tax attributable to members
of the parent entity, divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
rounding of amounts
As Brambles is a company of a kind referred to in ASIC Class order
98/0100, relevant amounts in the financial statements and Directors’
Report have been rounded to the nearest hundred thousand uS dollars
or, in certain cases, to the nearest thousand uS dollars.
BramBles limited Annu Al RepoRt 2009
69
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
CritiCal aCCountinG estimates
note 3.
and JudGements
In applying its accounting policies, Brambles has made estimates and
assumptions concerning the future, which may differ from the related
actual outcomes. those estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
discussed below.
irrecoverable pooling equipment provisioning
loss or damage is an inherent risk of pooling equipment operations.
CHep’s pooling equipment operations around the world differ in terms
of business model, market dynamics, customer and distribution
channel profiles, contractual arrangements and operational details.
Brambles conducts audits on a regular basis to confirm the existence
and the condition of its pooling equipment assets, and monitors its
pooling equipment operations using detailed key performance
indicators (KpIs).
the irrecoverable pooling equipment provision is determined by
reference to historical statistical data in each market, including the
outcome of audits and relevant KpIs, together with management
estimates of future equipment losses.
impairment of goodwill
Brambles’ business units undertake an impairment review process
annually to ensure that goodwill balances are not carried at amounts
that are in excess of their recoverable amounts. the recoverable
amount of the goodwill in continuing operations is determined based
on value in use calculations undertaken at the cash generating unit
level. these calculations require the use of key assumptions which
are set out in note 21.
income taxes
Brambles is a global company and is subject to income taxes in many
jurisdictions around the world. Significant judgement is required in
determining the provision for income taxes on a worldwide basis.
there are many transactions and calculations undertaken during the
ordinary course of business for which the ultimate tax determination
is uncertain. Brambles recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from
amounts provided, such differences will impact the current and
deferred tax provisions in the period in which such outcome is
obtained. Refer to note 9 for further details.
provisions on divestments
Brambles has made provisions in relation to vendor warranties and
other matters associated with the divestments made in 2007 and prior
years. these provisions have been established by management using
information currently available. Where the eventual outcome of these
matters is different from amounts currently provided, such
differences will impact profits in the period in which such outcome
is recognised. Refer to note 25 for further details.
70
BramBles limited Annu Al RepoRt 2009
seGment information
note 4.
Brambles' continuing business segments are CHep (pallet and container pooling) and Recall (information management).
Discontinued operations primarily comprise the Cleanaway businesses (waste management), which were divested in 2006 and 2007.
Intersegment revenue during the year was immaterial.
By business segment
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
total
By geographic origin
Americas
europe
Australia/new Zealand
Rest of World
total
By business segment
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
Brambles HQ
Continuing operations
Discontinued operations
total
total inCome
sales revenue
2009
us$m
2008
us$m
2009
us$m
2008
us$m
1,615.4
1,713.5
1,556.9
1,581.3
1,479.7
1,678.3
1,452.6
1,642.1
332.6
398.7
323.4
386.9
3,427.7
3,790.5
3,332.9
3,610.3
687.6
749.6
685.7
748.3
4,115.3
4,540.1
4,018.6
4,358.6
1,929.3
2,047.8
1,870.2
1,914.7
1,559.8
1,768.7
1,537.1
1,737.2
477.8
148.4
580.1
143.5
468.8
142.5
568.2
138.5
4,115.3
4,540.1
4,018.6
4,358.6
operatinG profit 1
siGnifiCant items
Before tax 2
underlyinG profit 2
2009
us$m
2008
us$m
2009
us$m
2008
us$m
2009
us$m
2008
us$m
229.0
286.5
57.9
573.4
95.9
48.9
452.3
396.5
95.9
944.7
121.9
(36.0)
(205.4)
(31.5)
(41.0)
(3.2)
–
–
(249.6)
(31.5)
(8.4)
75.6
(0.5)
(9.3)
434.4
327.5
61.1
823.0
104.3
483.8
396.5
95.9
976.2
122.4
(26.7)
(26.7)
718.2
1,030.6
(182.4)
(41.3)
900.6
1,071.9
15.2
1.2
15.2
1.2
733.4
1,031.8
(167.2)
(40.1)
1 operating profit is segment revenue less segment expense and excludes net finance costs.
2 underlying profit is profit from continuing operations before finance costs, tax and Significant items. Refer note 6.
BramBles limited Annu Al RepoRt 2009
71
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 4. seGment information – ContInueD
Capital expenditure
(inCludinG aCquisitions)
depreCiation
and amortisation
2009
us$m
2008
us$m
2009
us$m
2008
us$m
312.6
223.6
93.0
629.2
59.0
5.4
375.2
340.4
95.1
810.7
88.1
0.3
173.3
168.5
36.5
378.3
46.0
0.3
173.3
193.8
43.2
410.3
47.8
0.5
693.6
899.1
424.6
458.6
338.2
207.7
83.0
64.7
411.6
339.5
73.2
74.8
693.6
899.1
seGment assets
seGment liaBilities
2009
us$m
2008
us$m
2009
us$m
2008
us$m
1,739.5
1,838.6
1,752.1
2,051.9
430.4
449.5
3,922.0
4,340.0
1,020.1
1,129.8
11.0
18.5
241.6
360.3
72.3
674.2
167.7
79.3
270.8
402.2
94.4
767.4
179.7
116.8
4,953.1
5,488.3
921.2
1,063.9
90.1
34.5
7.0
13.8
104.8
2,233.5
2,531.0
18.0
8.8
16.9
64.6
449.9
–
54.9
443.5
–
5,098.5
5,636.8
3,669.2
4,093.3
2,196.5
2,329.1
1,901.7
2,275.7
616.7
238.2
700.2
183.3
4,953.1
5,488.3
By business segment
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
Brambles HQ
total
By geographic origin
Americas
europe
Australia/new Zealand
Rest of World
total
By business segment
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
Brambles HQ
total segment assets and liabilities
Cash and borrowings
Current tax balances
Deferred tax balances
equity-accounted investments
total assets and liabilities
By geographic origin
Americas
europe
Australia/new Zealand
Rest of World
total
72
BramBles limited Annu Al RepoRt 2009
note 5.
profit from ordinary aCtivities – ContinuinG operations
a) revenue and other income – continuing operations
Sales revenue
net gains on disposals of property, plant and equipment
other operating income
other income
total income
b) operating expenses – continuing operations
employment costs (note 7)
Service suppliers:
– transport
– repairs and maintenance
– subcontractors and other service suppliers
Raw materials and consumables
occupancy
Depreciation of property, plant and equipment
Impairment of pooling equipment (refer note 6)
Irrecoverable pooling equipment provision expense
Amortisation:
– software
– acquired intangible assets (other than software)
– deferred expenditure
other 1
c) net foreign exchange gains and losses – continuing operations
net gains/(losses) included in operating profit 1
net gains/(losses) included in net finance costs
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
4,018.6
4,358.6
11.9
84.8
96.7
46.4
135.1
181.5
4,115.3
4,540.1
778.2
787.9
758.5
353.4
434.1
181.1
254.3
391.3
33.6
97.8
22.8
6.6
3.9
813.2
294.9
501.5
195.7
217.3
414.0
–
91.2
34.5
6.5
3.6
86.5
155.1
3,402.1
3,515.4
75.5
0.1
75.6
(1.4)
(12.0)
(13.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Includes a uS$77.3 million foreign exchange gain on capital repatriation from an overseas subsidiary during 2009. Refer note 6 for further details.
BramBles limited Annu Al RepoRt 2009
73
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
siGnifiCant items – ContinuinG operations
note 6.
Significant items are items of income or expense which are, either individually or in aggregate, material to Brambles or to the relevant business
segment and:
—
outside the ordinary course of business (eg gains or losses on the sale or termination of operations, the cost of significant reorganisations
or restructuring); or
part of the ordinary activities of the business but unusual due to their size and nature.
—
Significant items are disclosed to assist users of the financial statements to understand Brambles’ business results.
Items outside the ordinary course of business:
– restructuring costs 1
– reset of tax cost bases and other unification tax matters 2
– foreign exchange gain on capital repatriation 3
Items within ordinary activities, but unusual due to size and nature:
– Walmart transition impact 4
– uSA pallet quality program costs 5
Significant items from continuing operations
Items outside the ordinary course of business:
– restructuring costs 6
– reset of tax cost bases and other unification tax matters 2
– adviser costs – share register activity 7
Items within ordinary activities, but unusual due to size and nature:
– Walmart transition impact 4
– uSA pallet quality program costs 5
Significant items from continuing operations
Consolidated
2009
Before tax
us$m
tax
us$m
after tax
us$m
(153.3)
–
77.3
(29.0)
(77.4)
(182.4)
47.0
(6.5)
–
11.3
30.3
82.1
(106.3)
(6.5)
77.3
(17.7)
(47.1)
(100.3)
2008
Before tax
us$m
tax
us$m
after tax
us$m
(5.1)
–
(4.7)
(10.9)
(20.6)
(41.3)
4.2
31.6
0.2
4.2
8.0
48.2
(0.9)
31.6
(4.5)
(6.7)
(12.6)
6.9
1 on 16 February 2009, Brambles announced a restructure of its operations, estimated to cost uS$159–uS$169 million before tax, as a response to the effects of
the global economic crisis on its businesses. An impairment charge of uS$33.6 million, a uS$61.6 million charge for storage and scrapping costs and uS$3.8 million
depreciation expense have been booked against surplus pallets within the CHep uSA pool. Redundancy and plant closure expenses estimated to cost
uS$60–uS$70 million will be incurred in various countries, of which uS$54.3 million (including uS$2.4 million depreciation expense) was booked in 2009.
2 In 2008, following receipt of a private ruling from the Australian taxation office, a tax benefit of uS$31.6 million was recognised on the reset of Australian tax cost
bases as a result of unification. A net adjustment of uS$(6.5) million was made to tax cost bases and other unification tax matters in 2009.
3 During 2009, capital of €460 million was repatriated to Australia from an overseas subsidiary. As required by AASB 121: the effects of Changes in Foreign exchange
Rates, a portion of the accumulated foreign currency translation reserve previously held in relation to the overseas subsidiary was recognised in the income
statement, resulting in a uS$77.3 million foreign exchange gain.
4 During 2009, non-recurring transition costs of uS$29.0 million (2008: uS$10.9 million) due to loss of white wood revenue and net additional operational costs were
incurred within CHep uSA as a result of Walmart's decision to modify management of pallet flows within its network in the uSA.
5 In February 2008, Brambles announced a two year program under which CHep would invest over uS$100 million in operational and capital initiatives focused on
quality improvement and innovation. During 2009, costs of uS$77.4 million (2008: uS$20.6 million) were incurred within CHep uSA on the pallet quality program. As
advised in February 2009, this program is expected to be completed by December 2009 with total operational and capital spending now estimated at uS$160 million.
6 During 2008, Brambles incurred further employment-related and other costs of uS$5.1 million (uS$0.9 million after tax) in relation to restructuring and unification.
7 As a consequence of the share register activity first disclosed to the Australian Securities exchange on 8 August 2007, Brambles incurred advisers' fees of
uS$4.7 million during 2008.
74
BramBles limited Annu Al RepoRt 2009
note 7.
employment Costs – ContinuinG operations
Wages and salaries
Social security costs
Share-based payment expense
pension costs:
– defined contribution plans
– defined benefit plans
other post-employment benefits
the average monthly number of employees in continuing operations was:
CHep
Recall
Brambles HQ
note 8.
net finanCe Costs
finance revenue
Bank accounts and short term deposits
Interest income from subsidiaries and other
finance costs
Interest expense on bank loans and borrowings
other
net finance (costs)/revenue
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
648.2
652.2
72.2
14.2
19.7
4.9
19.0
74.0
18.0
20.3
4.6
18.8
778.2
787.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2009
2008
2009
2008
7,911
4,784
90
7,456
4,773
76
12,785
12,305
–
–
–
–
–
–
–
–
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
5.3
1.8
7.1
7.8
2.7
10.5
–
678.2
678.2
–
1,061.4
1,061.4
(110.9)
(141.4)
(182.3)
(250.3)
(17.1)
(18.6)
–
–
(128.0)
(160.0)
(182.3)
(250.3)
(120.9)
(149.5)
495.9
811.1
BramBles limited Annu Al RepoRt 2009
75
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 9.
inCome tax
a) Components of tax expense
amounts recognised in the income statement
Current income tax – continuing operations:
– income tax charge
– prior year adjustments
Deferred tax – continuing operations:
– origination and reversal of temporary differences
– previously unrecognised tax losses
– prior year adjustments
tax expense – continuing operations
tax benefit – discontinued operations (note 12b)
tax expense recognised in the income statement
amounts recognised in the statement of recognised income and expense
– on actuarial losses on defined benefit pension plans
– on losses on revaluation of cash flow hedges
tax benefit recognised directly in the statement of recognised income and expense
b) reconciliation between tax expense and accounting profit before tax
profit before tax – continuing operations
tax at standard Australian rate of 30% (2008: 30%)
effect of tax rates in other jurisdictions
prior year adjustments
Current year tax losses not recognised
Foreign withholding tax – unrecoverable
Change in tax rates
non-deductible expenses
prior year tax losses recouped/recognised
other
tax expense – continuing operations
tax benefit – discontinued operations (note 12b)
total income tax expense
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
147.3
(18.1)
129.2
29.1
(9.4)
14.4
34.1
222.7
(26.8)
195.9
44.6
(15.6)
9.3
38.3
148.8
242.9
–
(2.9)
148.8
240.0
–
–
–
–
–
–
–
–
163.3
234.2
148.8
240.0
(3.4)
(0.6)
–
–
159.9
233.6
148.8
240.0
0.2
(4.9)
(4.7)
(7.4)
(1.7)
(9.1)
–
–
–
–
–
–
597.3
179.2
(3.6)
(3.7)
14.6
9.4
(1.1)
6.1
(9.4)
(28.2)
163.3
(3.4)
881.1
264.3
8.1
(17.5)
6.8
13.5
(15.9)
20.0
(15.6)
(29.5)
495.9
148.8
–
–
–
–
–
–
–
–
811.1
243.3
–
(2.9)
–
–
–
–
–
(0.4)
234.2
148.8
240.0
(0.6)
–
–
159.9
233.6
148.8
240.0
76
BramBles limited Annu Al RepoRt 2009
c) Components of and changes in deferred tax assets
Deferred tax assets shown in the balance sheet are
represented by cumulative temporary differences attributable to:
items recognised through the income statement
employee benefits
provisions
losses available against future taxable income
other
items recognised directly in equity
Actuarial losses on defined benefit pension plans
Cash flow hedges
Share-based payments
Set-off of deferred tax liabilities
net deferred tax assets
Changes in deferred tax assets were as follows:
at 1 July
Credited/(charged) to the income statement
Credited directly to equity
Acquisition of subsidiary
offset against deferred tax liabilities
Currency variations
at 30 June
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
7.5
52.0
116.8
46.9
223.2
2.3
5.3
0.3
7.9
14.8
17.4
102.5
42.4
177.1
–
–
3.3
3.3
(224.1)
(171.6)
7.0
8.8
8.8
51.1
4.6
–
(52.5)
(5.0)
7.0
3.1
(10.7)
4.1
2.7
8.7
0.9
8.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Deferred tax assets are recognised for carried forward tax losses to the extent that the realisation of the related tax benefit through future
taxable profits is probable. At reporting date, Brambles has unused tax losses of uS$493.1 million (2008: uS$458.7 million) available for offset
against future profits. A deferred tax asset has been recognised in respect of uS$324.8 million (2008: uS$276.8 million) of such losses.
the benefit for tax losses will only be obtained if:
—
Brambles derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses
to be realised;
Brambles continues to comply with the conditions for deductibility imposed by tax legislation; and
no changes in tax legislation adversely affect Brambles in realising the benefit from the deductions for the losses.
—
—
no deferred tax asset has been recognised in respect of the remaining unused tax losses of uS$168.3 million (2008: uS$181.9 million) due to the
unpredictability of future profit streams in the relevant jurisdictions. other than China losses of uS$23.1 million which will expire between 2012
and 2014, all other losses may be carried forward indefinitely.
BramBles limited Annu Al RepoRt 2009
77
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 9. inCome tax – ContInueD
d) Components and changes in deferred tax liabilities
Deferred tax liabilities shown in the balance sheet are
represented by cumulative temporary differences attributable to:
items recognised through the income statement
Accelerated depreciation for tax purposes
other
items recognised in the statement of recognised income and expense
on actuarial losses on defined benefit pension plans
on cash flow hedges
Set-off of deferred tax assets
net deferred tax liabilities
Changes in deferred tax liabilities were as follows:
at 1 July
Charged to the income statement
Credited to the statement of recognised income and expense
Acquisition of subsidiary
offset against deferred tax asset
Currency variations
at 30 June
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
565.7
108.3
674.0
541.9
64.1
606.0
–
–
–
7.4
1.7
9.1
(224.1)
(171.6)
449.9
443.5
443.5
389.8
85.2
(9.1)
–
(52.5)
(17.2)
449.9
27.6
(8.3)
6.9
8.7
18.8
443.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At reporting date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred
tax liabilities have not been recognised in the consolidated financial statements was uS$1,769.3 million (2008: uS$1,790.9 million). no liability
has been recognised in respect of these temporary differences because Brambles is in a position to control distributions from subsidiaries
and it is probable that such differences will not reverse in the foreseeable future. unremitted earnings totalled uS$2,134.7 million (2008:
uS$2,032.4 million), of which uS$212.3 million relates to earnings post unification.
e) tax consolidation
Brambles limited and its Australian subsidiaries formed a tax consolidated group in 2006. Brambles limited, as the head entity of the tax
consolidated group, and its Australian subsidiaries have entered into a tax sharing agreement in order to allocate income tax expense. the tax
sharing agreement uses a stand-alone basis of allocation. Consequently, Brambles limited and its Australian subsidiaries account for their own
current and deferred tax amounts as if they each continue to be taxable entities in their own right. In addition, the agreement provides funding
rules setting out the basis upon which subsidiaries are to indemnify Brambles limited in respect of tax liabilities and the methodology by which
subsidiaries in tax loss are to be compensated.
78
BramBles limited Annu Al RepoRt 2009
note 10.
earninGs per sHare
earnings per share
– basic
– diluted
From continuing operations
– basic
– diluted
– basic, on underlying profit after finance costs and tax
From discontinued operations
– basic
– diluted
Consolidated
2009
us Cents
2008
us Cents
32.6
32.5
31.3
31.2
38.5
1.3
1.3
46.0
45.7
45.9
45.6
45.4
0.1
0.1
options, performance share rights and MyShare matching conditional rights granted under Brambles' share plans are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. Details are set
out in note 28.
a) weighted average number of shares during the year
used in the calculation of basic earnings per share
Adjustment for share options and rights
used in the calculation of diluted earnings per share
b) reconciliations of profits used in eps calculations
statutory profit
profit from continuing operations
profit from discontinued operations
profit used in calculating basic and diluted epS
underlying profit after finance costs and tax
underlying profit (note 4)
net finance costs (note 8)
underlying profit before tax
tax expense on underlying profit
underlying profit after finance costs and tax
which reconciles to statutory profit:
underlying profit after finance costs and tax
Significant items after tax (note 6)
profit from continuing operations
2009
million
2008
million
1,388.3
1,409.2
4.4
8.9
1,392.7
1,418.1
2009
us$m
2008
us$m
434.0
18.6
452.6
646.9
1.8
648.7
900.6
1,071.9
(120.9)
(149.5)
779.7
922.4
(245.4)
(282.4)
534.3
640.0
534.3
(100.3)
434.0
640.0
6.9
646.9
BramBles limited Annu Al RepoRt 2009
79
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 11.
dividends
a) dividends declared and paid during the year
Dividend per share (in Australian cents)
Franked amount at 30% tax (in Australian cents)
Cost (in uS$ million)
payment date
b) dividend declared after reporting date
Dividend per share (in Australian cents)
Franked amount at 30% tax (in Australian cents)
Cost (in uS$ million)
payment date
Dividend record date
As this dividend had not been declared at the reporting date, it is not reflected in the financial statements.
interim
2009
17.5
1.75
176.3
final
2008
17.5
1.75
163.2
9 april 2009
9 october 2008
final
2009
12.5
2.5
144.4
8 october 2009
18 september 2009
2009
us$m
2008
us$m
c) franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
22.0
14.0
the amounts above represent the balance of the franking account as at the end of the year, adjusted for:
—
—
—
—
franking credits that will arise from the payment of the current tax liability;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
franking credits that will arise from dividends recognised as receivables at the reporting date; and
franking credits that may be prevented from being distributed in subsequent financial years.
the dividends declared by Brambles limited after reporting date will be franked to the extent indicated out of existing franking credits or out of
franking credits arising from the payment of income tax in the year ending 30 June 2010.
80
BramBles limited Annu Al RepoRt 2009
note 12.
a) description
disContinued operations
there were minor disposals in 2009 and 2008, with immaterial impact.
b) income statement and cash flow information – discontinued operations
total revenue
operating expenses
profit before tax and Significant items
Significant items:
– gain recognised on completed disposals 1
profit before tax from discontinued operations
tax benefit:
– on profit before tax and Significant items
– on Significant items
total tax benefit from discontinued operations
profit for the year from discontinued operations
net cash outflow from operating activities
net cash outflow from investing activities
net cash outflow from financing activities
net decrease in cash from discontinued operations
Consolidated
2009
us$m
2008
us$m
–
–
–
15.2
15.2
–
3.4
3.4
18.6
–
–
–
1.2
1.2
–
0.6
0.6
1.8
(2.2)
(4.7)
–
–
–
–
(2.2)
(4.7)
1 In 2009, net favourable provision adjustments of uS$15.2 million (2008: uS$1.2 million) were recognised in respect of divestments completed in 2007 and prior
years which were outside the ordinary course of business.
BramBles limited Annu Al RepoRt 2009
81
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
Business ComBination
note 13.
on 4 March 2008, Brambles announced it had agreed to purchase 100% of the issued share capital of leanlogistics, Inc, a leading provider
of technology-based transport and supply chain solutions in the uSA. Change of control was effective on 7 March 2008.
For the period from 7 March 2008 to 30 June 2008, leanlogistics contributed revenue of uS$3.3 million and incurred a loss after tax of
uS$1.2 million. these results are included within the CHep Americas business segment. If the acquisition had occurred on 1 July 2007, Brambles'
revenue for 2008 would have been uS$7.6 million higher and profit after tax for 2008 uS$0.6 million lower after allowing for finance costs.
the fair value of the leanlogistics assets acquired, liabilities assumed and goodwill were as follows:
Cash paid
Direct costs relating to the acquisition
total purchase consideration
Fair value of net identifiable assets acquired
Goodwill
2008
us$m
44.7
2.4
47.1
13.8
33.3
the goodwill acquired is attributable to the profitability of the acquired business and anticipated synergies with CHep's existing operations.
the fair values of assets and liabilities acquired, including intangibles such as customer contracts, were established using professional valuers,
where relevant.
on acquisition of leanlogistics, assets acquired and liabilities assumed were:
aCquiree's
CarryinG
amount
us$m
fair value
us$m
0.9
1.6
0.1
0.3
1.0
2.7
6.6
(2.7)
(0.3)
–
(3.0)
3.6
0.9
1.6
0.1
0.3
17.5
2.8
23.2
(2.7)
(0.3)
(6.4)
(9.4)
13.8
2008
us$m
0.9
(47.1)
(46.2)
Cash and cash equivalents
trade and other receivables
other current assets
property, plant and equipment
Intangible assets
Current and deferred tax assets
trade and other payables
Borrowings
Current and deferred tax liabilities
net assets
Cash outflow on acquisition of leanlogistics was as follows:
Cash and cash equivalents acquired
Cash consideration
net cash outflow
In addition to the leanlogistics acquisition, there were minor acquisitions in 2009 and 2008, with immaterial impact.
82
BramBles limited Annu Al RepoRt 2009
note 14.
CasH and CasH equivalents
Cash at bank and in hand
Short term deposits
Short term deposits have initial maturities varying between 7 days and 3 months.
Refer to note 30 for other financial instruments disclosures.
note 15.
Current
trade and otHer reCeivaBles
trade receivables
provision for doubtful receivables (a)
net trade receivables
other debtors
Accrued and unbilled revenue
non-current
Receivables from subsidiaries
other receivables
a) provision for doubtful receivables
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
55.0
35.1
90.1
62.8
42.0
104.8
2.5
–
2.5
461.8
(11.7)
450.1
119.6
83.9
653.6
532.4
(7.6)
524.8
177.9
126.3
829.0
–
–
–
–
–
–
5.4
–
5.4
–
–
–
0.5
–
0.5
–
8.1
8.1
–
13,428.8
14,883.6
9.1
9.1
–
–
13,428.8
14,883.6
trade receivables are non-interest bearing and are generally on 30–90 day terms. A provision for doubtful receivables is established when there is
a level of uncertainty as to the full recoverability of the receivable, based on objective evidence. A provision of uS$8.4 million (2008: uS$2.0 million)
has been recognised as an expense in the current year for specific trade and other receivables for which such evidence exists.
Movements in the provision for doubtful receivables were as follows:
at 1 July
Charge for the year
Amounts written off
Foreign exchange differences
at 30 June
7.6
8.4
(4.8)
0.5
11.7
9.5
2.0
(4.7)
0.8
7.6
–
–
–
–
–
–
–
–
–
–
BramBles limited Annu Al RepoRt 2009
83
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 15. trade and otHer reCeivaBles – ContInueD
At 30 June, the ageing analysis of trade receivables
by reference to due dates was as follows:
not past due
past due 0–30 days but not impaired
past due 31–60 days but not impaired
past due 61–90 days but not impaired
past 90 days but not impaired
Impaired
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
271.8
115.7
27.5
18.5
16.6
11.7
410.8
72.5
16.3
10.7
14.5
7.6
461.8
532.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 June 2009, trade receivables of uS$178.3 million (2008: uS$114.0 million) were past due but not doubtful. these trade receivables
comprise customers who have a good debt history and are considered recoverable.
At 30 June 2009, trade receivables of uS$11.7 million (2008: uS$7.6 million) were considered to be impaired. A provision of uS$11.7 million
(2008: uS$7.6 million) has been recognised for doubtful receivables.
other debtors primarily comprise GSt/vAt recoverable, loss compensation receivables and certain balances arising from outside Brambles'
ordinary business activities, such as deferred proceeds on sale of businesses and property, plant and equipment.
At 30 June 2009, other debtors of uS$35.0 million (2008: uS$70.9 million) were past due but not considered to be impaired. no specific collection
issues have been identified with these receivables. An ageing of these receivables was as follows:
past due 0–30 days but not impaired
past due 31–60 days but not impaired
past due 61–90 days but not impaired
past 90 days but not impaired
10.1
0.6
2.0
22.3
35.0
9.2
9.8
2.4
49.5
70.9
–
–
–
–
–
–
–
–
–
–
At 30 June 2009, there were no balances within other debtors that were considered to be impaired (2008: uS$0.1 million). no provision has been
recognised (2008: uS$0.1 million).
Receivables from subsidiaries are unsecured, committed advances repayable in September 2012.
Refer to note 30 for other financial instruments disclosures.
note 16.
inventories
Raw materials and consumables
Work in progress
Consolidated
2009
us$m
2008
us$m
27.8
7.3
35.1
32.3
12.8
45.1
Inventory write-downs recognised as an expense during the year amounted to uS$0.1 million (2008: uS$0.1 million). the expense has been
included in raw materials and consumables in the consolidated income statement.
84
BramBles limited Annu Al RepoRt 2009
note 17.
derivative finanCial instruments
Interest rate swaps – cash flow hedges
Forward foreign exchange contracts – cash flow hedges
Forward foreign exchange contracts – held for trading
Consolidated
2009
us$m
2008
us$m
2009
us$m
2008
us$m
Current assets
Current liaBilities
–
–
1.1
1.1
3.1
0.1
1.2
4.4
12.3
0.5
0.1
12.9
5.8
–
0.2
6.0
non-Current assets
non-Current liaBilities
Interest rate swaps – cash flow hedges
–
4.3
5.8
2.7
Refer to note 30 for other financial instruments disclosures.
note 18.
otHer assets
Current
prepayments
Current tax receivable
non-current
prepayments
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
37.7
34.5
72.2
33.7
18.0
51.7
–
16.0
16.0
–
7.3
7.3
0.6
0.8
–
–
BramBles limited Annu Al RepoRt 2009
85
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 19.
a) Joint ventures
investments
Brambles has investments in the following joint ventures, both of which are unlisted jointly controlled entities, which are accounted for using the
equity method.
name (and nature of Business)
plaCe of inCorporation
CISCo – total Information Management pte. limited
(Information management)
Recall Becker GmbH & Co. KG
(Document management services)
Singapore
Germany
b) movement in carrying amount of investments in joint ventures
at 1 July
Share of results after income tax (note 19c)
Dividends received/receivable
Disposals and repayments
Foreign exchange differences
transfer to investments in subsidiaries
other movements
at 30 June
Consolidated
% interest Held
at reportinG date
June
2009
June
2008
49%
49%
50%
50%
Consolidated
2009
us$m
2008
us$m
16.9
5.0
(7.1)
–
(1.0)
–
–
13.8
23.5
5.9
(5.2)
(0.4)
2.8
(9.2)
(0.5)
16.9
86
BramBles limited Annu Al RepoRt 2009
c) share of results of joint ventures
Continuing operations
trading revenue
expenses
profit from ordinary activities before tax
tax expense on ordinary activities
profit for the year
d) share of assets and liabilities of joint ventures
Current assets
non-current assets
total assets
Current liabilities
non-current liabilities
total liabilities
net assets – continuing operations
e) share of commitments and contingent liabilities of joint ventures
Contingent liabilities
lease commitments
total – continuing operations
f) investments in subsidiaries
Investments in subsidiaries – at cost
Consolidated
2009
us$m
2008
us$m
11.6
(5.6)
6.0
(1.0)
5.0
3.2
13.8
17.0
2.3
0.9
3.2
17.4
(10.5)
6.9
(1.0)
5.9
4.0
16.4
20.4
2.5
1.0
3.5
13.8
16.9
0.7
2.5
3.2
0.7
2.0
2.7
parent entity
2009
us$m
2008
us$m
5,838.9
6,921.3
this amount when added to the net intercompany receivables of uS$8,825.0 million (2008: uS$10,396.2 million) reflects the total carrying value
of Brambles limited's investment in subsidiaries. these amounts are eliminated on consolidation and are assessed for impairment at each
reporting period.
BramBles limited Annu Al RepoRt 2009
87
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 20.
property, plant and equipment
at 1 July 2007
Cost
Accumulated depreciation
net carrying amount
year ended 30 June 2008
opening net carrying amount
Additions
Acquisition of subsidiaries
Disposals
Disposal of subsidiaries
other transfers
Depreciation charge
Irrecoverable pooling equipment provision expense
Foreign exchange differences
Closing net carrying amount
at 30 June 2008
Cost
Accumulated depreciation
net carrying amount
year ended 30 June 2009
opening net carrying amount
Additions
Disposals
other transfers
Depreciation charge 1
Impairment of pooling equipment
Irrecoverable pooling equipment provision expense
Foreign exchange differences
Closing net carrying amount
at 30 June 2009
Cost
Accumulated depreciation
net carrying amount
Consolidated
land and
BuildinGs
us$m
plant and
equipment
us$m
total
us$m
126.2
5,148.6
5,274.8
(44.1)
(2,010.8)
(2,054.9)
82.1
3,137.8
3,219.9
82.1
12.4
1.4
(4.1)
(0.2)
(1.2)
(7.6)
–
7.3
3,137.8
3,219.9
838.8
7.0
(79.9)
(1.0)
(27.3)
851.2
8.4
(84.0)
(1.2)
(28.5)
(406.4)
(414.0)
(91.2)
231.0
(91.2)
238.3
90.1
3,608.8
3,698.9
145.9
5,935.8
6,081.7
(55.8)
(2,327.0)
(2,382.8)
90.1
3,608.8
3,698.9
90.1
3,608.8
3,698.9
5.4
(3.4)
–
668.6
674.0
(88.6)
(92.0)
(7.6)
(7.6)
(7.0)
(384.3)
(391.3)
–
–
(33.6)
(97.8)
(33.6)
(97.8)
(10.4)
(298.6)
(309.0)
74.7
3,366.9
3,441.6
129.0
5,566.9
5,695.9
(54.3)
(2,200.0)
(2,254.3)
74.7
3,366.9
3,441.6
1 During 2009, a residual value was applied to plastic pooling equipment within certain CHep business units to ensure uniform treatment of regrind proceeds
throughout CHep. the effect in the current period was a decrease in depreciation expense of uS$10.3 million.
the net carrying amounts above include plant and equipment held under finance lease uS$1.9 million (2008: uS$2.8 million); leasehold improvements
uS$6.4 million (2008: uS$7.1 million); and capital work in progress uS$17.9 million (2008: uS$18.3 million).
88
BramBles limited Annu Al RepoRt 2009
note 21.
Goodwill
a) net carrying amounts and movements during the year
at 1 July
Carrying amount
year ended 30 June
opening net carrying amount
Acquisition of subsidiaries
Disposal of subsidiaries
other transfers
Foreign exchange differences
Closing net carrying amount
at 30 June
Gross carrying amount
Accumulated impairment
net carrying amount
Consolidated
2009
us$m
2008
us$m
676.1
606.1
676.1
–
(0.6)
0.3
(63.5)
612.3
606.1
44.7
(14.0)
(2.2)
41.5
676.1
612.3
676.1
–
–
612.3
676.1
b) segment-level summary of net carrying amount
Goodwill acquired through business combinations is allocated to cash generating units (CGu), which are the smallest identifiable groupings of
Brambles' cash generating assets. A segment-level summary of the goodwill allocation is presented as follows:
CHep Americas
CHep eMeA
CHep Asia-pacific
total CHep
Recall
total goodwill
51.3
41.0
24.5
51.9
47.6
28.7
116.8
128.2
495.5
612.3
547.9
676.1
BramBles limited Annu Al RepoRt 2009
89
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 21. Goodwill – ContInueD
c) recoverable amount testing – continuing operations
the recoverable amount of goodwill is determined based on value in use calculations undertaken at the CGu level. the value in use is calculated
using a discounted cash flow methodology covering a 10 year period with an appropriate terminal value at the end of that period.
Based on the impairment testing, the recoverable amounts of goodwill in the CGus related to continuing operations at reporting date were fully
supported.
the following describes the key assumptions on which management has based its cash flow projections:
CASH FloW FoReCAStS
Cash flow forecasts are based on the most recent financial projections covering a maximum period of five years. Cash flows beyond that period
are extrapolated using estimated growth rates. Financial projections are based on assumptions that represent management’s best estimates.
GRoWtH RAteS
Growth rates ranging from nil to 4% were used beyond the period covered in the financial projections. they are based on management’s
expectations for future performance and do not normally exceed the long term growth rate for the business in which the CGu operates.
teRMInAl vAlue
the terminal value calculated after year 10 is determined using the stable growth model, having regard to the weighted average cost of capital
and terminal growth factor appropriate to each CGu.
DISCount RAteS
Discount rates used are the pre-tax weighted average cost of capital (WACC) and include a premium for market risks appropriate to each country
in which the CGu operates. WACCs ranged between 9.9% and 22.7%.
SenSItIvItY
Any reasonable change to the above key assumptions would not cause the carrying value of the CGu to materially exceed its recoverable amount.
90
BramBles limited Annu Al RepoRt 2009
note 22.
intanGiBle assets
at 1 July 2007
Gross carrying amount
Accumulated amortisation
net carrying amount
year ended 30 June 2008
opening carrying amount
Additions
Acquisition of subsidiaries
Disposals
Disposal of subsidiaries
other transfers
Amortisation charge
Foreign exchange differences
Closing carrying amount
at 30 June 2008
Gross carrying amount
Accumulated amortisation
net carrying amount
year ended 30 June 2009
opening carrying amount
Additions
Disposals
other transfers
Amortisation charge 2
Foreign exchange differences
Closing carrying amount
at 30 June 2009
Gross carrying amount
Accumulated amortisation
net carrying amount
Consolidated
software
us$m
otHer 1
us$m
total
us$m
276.9
125.9
402.8
(196.8)
(55.7)
(252.5)
80.1
70.2
150.3
80.1
16.5
8.8
(1.6)
(0.2)
14.1
70.2
1.7
20.9
–
–
13.1
150.3
18.2
29.7
(1.6)
(0.2)
27.2
(34.5)
(10.1)
(44.6)
0.4
83.6
7.5
103.3
7.9
186.9
314.5
174.3
488.8
(230.9)
(71.0)
(301.9)
83.6
103.3
186.9
83.6
20.9
(0.1)
2.4
(22.8)
(6.8)
77.2
103.3
3.5
–
2.1
(10.5)
(12.6)
186.9
24.4
(0.1)
4.5
(33.3)
(19.4)
85.8
163.0
307.9
160.2
468.1
(230.7)
(74.4)
(305.1)
77.2
85.8
163.0
1 other intangible assets primarily comprise acquired customer lists and agreements.
2 During 2009, the estimated useful life of certain customised software in the CHep business was revised from seven years to ten years to reflect the extended
utilisation of the software. the effect in the current period was a decrease in amortisation expense of uS$10.5 million.
BramBles limited Annu Al RepoRt 2009
91
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 23.
trade and otHer payaBles
Current
trade payables
GSt/vAt and other payables
Accruals and deferred income
non-current
payables to subsidiaries
other liabilities
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
287.1
72.6
324.0
683.7
341.0
111.5
398.2
850.7
–
–
–
–
–
–
–
–
–
21.4
21.4
–
4,603.8
4,487.4
17.1
17.1
–
–
4,603.8
4,487.4
trade payables and other current payables are non-interest bearing and are generally settled on 30–90 day terms.
Refer to note 30 for other financial instruments disclosures.
note 24.
Current
BorrowinGs
unsecured:
– bank overdraft
– bank loans
– accrued interest on loan notes
– finance lease liabilities (note 32)
non-current
unsecured:
– bank loans 1
– loan notes 2,3
– finance lease liabilities (note 32)
total borrowings
36.0
16.6
14.9
0.5
68.0
36.7
39.7
14.3
0.8
91.5
1,629.1
2,012.5
535.0
425.0
1.4
2.0
2,165.5
2,439.5
2,233.5
2,531.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.0
–
–
5.0
5.0
1 unsecured bank loans include the following: (i) revolving loans in various currencies priced off lIBoR and drawn under multi-currency global banking facilities with a
range of maturities out to December 2013 and (ii) various regional banking facilities providing local currency funding to certain subsidiaries. Included in bank loans is
a borrowing of uS$71.2 million (2008: uS$79.8 million) which has been designated as a hedge of the net investment in Brambles’ european subsidiaries and is being
used to partially hedge Brambles’ exposure to foreign exchange risks on these investments.
2 notes issued in respect of uS$425.0 million uS private placement in August 2004. the terms of the note are (i) Series A uS$171.0 million 5.39% Guaranteed Senior
unsecured notes due 4 August 2011; (ii) Series B uS$157.5 million 5.77% Guaranteed Senior unsecured notes due 4 August 2014; and (iii) Series C uS$96.5 million
5.94% Guaranteed Senior unsecured notes due 4 August 2016.
3 notes issued in respect of uS$110.0 million uS private placement in May 2009. the terms of the note are (i) Series A uS$35.0 million 7.29% Guaranteed Senior
unsecured notes due 7 May 2014; (ii) Series B uS$55.0 million 7.83% Guaranteed Senior unsecured notes due 7 May 2016; and (iii) Series C uS$20.0 million 8.23%
Guaranteed Senior unsecured notes due 7 May 2019.
Refer to note 30 for other financial instruments disclosures.
92
BramBles limited Annu Al RepoRt 2009
a) Borrowing facilities and credit standby arrangements
total facilities:
– committed borrowing facilities
– loan notes
– credit standby/uncommitted arrangements
Facilities used at reporting date:1
– committed borrowing facilities
– loan notes
– credit standby/uncommitted arrangements
Facilities available at reporting date:
– committed borrowing facilities
– credit standby/uncommitted arrangements
Consolidated
2009
us$m
2008
us$m
2,845.3
3,647.5
535.0
129.6
425.0
162.0
3,509.9
4,234.5
1,647.5
2,018.9
535.0
43.5
425.0
61.3
2,226.0
2,505.2
1,197.8
1,628.6
86.1
100.7
1,283.9
1,729.3
Borrowing facilities are arranged by Brambles on behalf of its subsidiaries. Funding is generally sourced from relationship banks on a medium to
long term basis. the expiry dates of committed facilities range out to calendar year 2013. the average term of maturity of these facilities and the
uS private placement notes is equivalent to 3.3 years (2008: 2.2 years). All facilities are unsecured, generally structured on a multi-currency
revolving basis and are guaranteed as described in note 33a.
b) Borrowing facilities maturity profile
maturity
type
2009
less than 1 year
Bank loans/overdrafts
1–2 years
2–3 years
3–4 years
4–5 years
Bank loans
Bank loans/loan notes
Bank loans
Bank loans/loan notes
over 5 years
loan notes
2008
less than 1 year
Bank loans/overdrafts
1–2 years
2–3 years
3–4 years
4–5 years
over 5 years
Bank loans
Bank loans
loan notes
Bank loans
loan notes
Consolidated
total
faCilities
us$m
faCilities
used 1
us$m
faCilities
availaBle
us$m
134.7
685.8
795.6
583.0
981.8
329.0
45.2
332.8
557.3
380.6
581.1
329.0
89.5
353.0
238.3
202.4
400.7
–
3,509.9
2,226.0
1,283.9
679.2
4.3
63.9
2.8
615.3
1.5
2,975.6
1,910.0
1,065.6
171.4
150.0
254.0
171.4
103.1
254.0
–
46.9
–
4,234.5
2,505.2
1,729.3
1 Facilities used represents the principal value of loan notes and borrowings debited against the relevant facilities to reflect the correct amount of funding headroom.
this amount differs by uS$7.5 million (2008: uS$25.8 million) from loan notes and borrowings as shown in the balance sheet which are measured on the basis of
amortised cost as determined under the effective interest method and include accrued interest.
BramBles limited Annu Al RepoRt 2009
93
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 25.
provisions
at 1 July 2008
Current
non-current
Charge to income statement:
– additional provisions
– unused amounts reversed
utilisation of provision
unwinding of discount
Currency variations
at 30 June 2009
Current
non-current
Consolidated
employee
entitlements
us$m
Business
disposals
us$m
otHer
us$m
total
us$m
38.1
4.4
42.5
11.3
40.3
51.6
24.8
5.1
29.9
45.0
–
80.1
–
(14.8)
–
(33.6)
(1.3)
(36.0)
–
(6.7)
47.2
41.8
5.4
–
(8.6)
26.9
8.1
18.8
0.2
(1.7)
72.5
43.7
28.8
74.2
49.8
124.0
125.1
(14.8)
(70.9)
0.2
(17.0)
146.6
93.6
53.0
employee entitlements provision comprises uS$9.0 million (2008: uS$7.9 million) for long service leave, uS$1.3 million for phantom shares
(2008: uS$1.8 million) and uS$36.9 million (2008: uS$32.8 million) for other employee related obligations (other than those resulting from
pension plans). none of these amounts related to phantom shares which had vested at reporting date. uS$3.6 million (2008: uS$3.5 million) of
the long service leave provision has been recognised as current as it is expected to vest within one year from reporting date. the remaining balance
of long service leave of uS$5.4 million (2008: uS$4.4 million) is expected to vest within the next two to ten years and has been discounted to
present value.
other provisions comprise uS$39.8 million (2008: nil) for restructuring costs, uS$1.3 million (2008: uS$3.3 million) for litigation and customer
disputes and uS$31.4 million (2008: uS$26.6 million) for other known exposures.
94
BramBles limited Annu Al RepoRt 2009
note 26.
retirement Benefit oBliGations
a) defined contribution plans
Brambles operates a number of defined contribution retirement benefit plans for qualifying employees. the assets of these plans are held in
separately administered trusts or insurance policies. In some countries, Brambles’ employees are members of state-managed retirement benefit
plans. Brambles is required to contribute a specified percentage of payroll costs to the retirement benefit plan to fund benefits. the only obligation
of Brambles with respect to defined contribution retirement benefit plans is to make the specified contributions.
uS$19.7 million (2008: uS$20.3 million) representing contributions paid and payable to these plans by Brambles at rates specified in the rules
of the plans relating to continuing operations has been recognised as an expense in the income statement.
b) defined benefit plans
Brambles operates a number of defined benefit pension plans, which are closed to new entrants. the majority of the plans are self-administered
and the plans’ assets are held independently of Brambles' finances. under the plans, members are entitled to retirement benefits based upon a
percentage of final salary. no other post-retirement benefits are provided. the plans are funded plans.
the plan assets and the present value of the defined benefit obligation recognised in Brambles' balance sheet are based upon the most recent
formal actuarial valuations which have been updated to 30 June 2009 by independent professionally qualified actuaries and take account of the
requirements of AASB 119. the present value of the defined benefit obligation, the related current service cost and past service cost were
measured using the projected unit credit method.
In addition to the principal defined benefit plans included in disclosures below, Brambles has a number of other arrangements in several countries
that are either defined benefit pension plans or have certain defined benefit characteristics. each of these arrangements has been assessed as
immaterial separately and in aggregate and they have not been subjected to an independent AASB 119 valuation.
c) Balance sheet amounts
the amounts recognised in Brambles’ balance sheet in respect of defined benefit plans were as follows:
present value of defined benefit obligations
Fair value of plan assets
net liability recognised in the balance sheet
Consolidated
2009
us$m
2008
us$m
196.0
242.5
(145.2)
(179.1)
50.8
63.4
Brambles has no legal obligation to settle this liability with an immediate contribution or additional one-off contributions. Brambles intends to
continue to make contributions to the plans at the rates recommended by the funds' actuaries. Refer note 26(i).
d) income statement amounts
the amounts recognised in Brambles’ income statement in respect of defined benefit plans were as follows:
Current service cost
Interest cost
expected return on plan assets
Changes arising from curtailments and settlements
net benefit expense included in employment cost (note 7)
e) statement of recognised income and expense amounts
Actuarial losses reported in the statement of recognised income and expense:
– continuing operations
Cumulative actuarial losses recognised
3.6
12.8
4.9
12.7
(10.9)
(13.0)
(0.6)
4.9
–
4.6
(2.9)
(12.4)
(34.5)
(9.5)
BramBles limited Annu Al RepoRt 2009
95
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 26. retirement Benefit oBliGations – ContInueD
f) defined benefit obligation
Changes in the present value of the defined benefit obligation were as follows:
at 1 July
Current service cost
Interest cost
Contributions from plan members
Actuarial gains and losses
Currency variations
Benefits paid
Curtailments
at 30 June
Consolidated
2009
us$m
2008
us$m
242.5
216.8
3.6
12.8
0.7
(23.4)
(33.9)
(5.7)
(0.6)
4.9
12.7
0.9
13.9
(1.9)
(4.8)
–
196.0
242.5
All Brambles' defined benefit pension arrangements are closed to new entrants. under the projected unit method, the current service cost of these
arrangements will increase as a percentage of payroll as the members of the plan approach retirement.
g) plan assets
Consolidated
2009
fair value
2008
fair value
us$m
%
us$m
%
66.3
25.5
4.9
16.2
32.3
45.7
17.6
3.4
11.1
22.2
86.2
31.5
8.4
19.1
33.9
48.1
17.6
4.7
10.7
18.9
145.2
100.0
179.1
100.0
2009
us$m
2008
us$m
179.1
10.9
(26.3)
(20.3)
6.8
0.7
187.2
13.0
(20.7)
(4.9)
8.4
0.9
(5.7)
(4.8)
145.2
179.1
Assets held in the plans fell within the following categories:
equities
Bonds
Insurance bonds
Cash
other
Changes in the fair value of the plan assets were as follows:
at 1 July
expected return on plan assets
Actuarial gains and losses
Currency variations
Contributions from sponsoring employers
Contributions from plan members
Benefits paid
at 30 June
the actual return on plan assets was uS$(15.4) million (2008: uS$(7.8) million).
96
BramBles limited Annu Al RepoRt 2009
h) principal actuarial assumptions
uK
europe
otHer
tHan uK
soutH
afriCa
principal actuarial assumptions (expressed as weighted averages) used in determining Brambles’ defined benefit obligations were:
at 30 June 2009
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Retail price inflation
Return on equities
Return on bonds
Return on cash
at 30 June 2008
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Retail price inflation
Return on equities
Return on bonds
Return on cash
4.4%
3.4%
6.2%
3.4%
8.3%
6.0%
5.0%
5.2%
4.0%
6.1%
4.2%
8.3%
6.6%
5.0%
3.7%
2.9%
6.2%
2.4%
7.8%
4.5%
2.4%
4.0%
3.5%
5.9%
2.5%
7.8%
4.9%
3.0%
8.0%
6.5%
9.0%
6.5%
12.6%
9.3%
7.6%
8.0%
8.0%
10.5%
8.0%
13.5%
11.0%
9.0%
Assumptions about mortality are made using actuarial tables, for example 115% of standard table pA00 based on members' years of birth and
incorporating the medium cohort projections of longevity improvements for the uK schemes. using these tables, the life expectancy of a uK
pensioner aged 65 today would be 89 years for both men and women.
the expected return on plan assets is based on market expectations at the beginning of the period for returns over the entire life of the benefit
obligation.
i) employer contributions
During the year, employer contributions to the main defined benefit plans ranged between 11% and 17% of pensionable pay.
the obligation to contribute to the various defined benefit plans is covered by trust deeds and/or legislation. Funding levels and contributions for
these plans are based on regular actuarial advice. Comprehensive actuarial valuations are made at no more than three yearly intervals. Additional
annual contributions of uS$3.4 million (2008: uS$4.2 million) are being paid to remove the identified deficits over a period of 6 years.
Contributions paid to the plans during 2009 were uS$6.8 million (2008: uS$8.4 million) of which nil (2008: nil) related to discontinued operations.
It is estimated that the amount of contributions to be paid to the plans during 2010 will be uS$8.4 million.
j) Historical summary
the history of the defined benefit plan deficit at the end of each year is as follows:
– plan liabilities
– plan assets
net liability recognised in the balance sheet
the history of favourable/(unfavourable) experience adjustments made in each
year is as follows:
– on plan liabilities
– on plan assets
net favourable/(unfavourable) adjustment
Consolidated
2009
us$m
2008
us$m
2007
us$m
2006
us$m
2005
us$m
(196.0)
(242.5)
(216.8)
(602.1)
(583.6)
145.2
(50.8)
179.1
(63.4)
187.2
453.1
394.6
(29.6)
(149.0)
(189.0)
23.4
(26.3)
(2.9)
(13.9)
(20.7)
(34.6)
(17.2)
17.2
–
3.0
31.1
34.1
(47.4)
38.2
(9.2)
BramBles limited Annu Al RepoRt 2009
97
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 27.
ContriButed equity
total ordinary shares, of no par value, issued and fully paid:
At 1 July 2007
Issued during the year on the exercise of options
purchased on-market and cancelled
at 30 June 2008
At 1 July 2008
Issued during the year on the exercise of options
Issued during the year under the Dividend Reinvestment plan
at 30 June 2009
sHares
us$m
1,415,485,064
14,062.8
10,475,382
52.3
(42,409,560)
(336.5)
1,383,550,886
13,778.6
1,383,550,886
13,778.6
1,630,312
16,687,841
7.1
61.9
1,401,869,039
13,847.6
ordinary shares of Brambles limited entitle the holder to participate in dividends and the proceeds on any winding up of the Company in proportion
to the number of shares held.
98
BramBles limited Annu Al RepoRt 2009
sHare-Based payments
note 28.
on unification, options and performance share rights over Brambles Industries limited (BIl) and Brambles Industries plc (BIp) shares held by
employees and former employees were cancelled and replaced by options and performance share rights over Brambles limited shares on
substantially similar terms. this was accounted for as a modification without incremental value under AASB 2: Share-based payments and did
not result in any additional remuneration expense.
the Remuneration Report sets out details relating to the Brambles share plans (pages 46 to 47), together with details of options, performance
share rights and MyShare matching conditional rights issued to executive Directors and Key Management personnel (pages 40 to 41). options and
rights granted by Brambles do not result in an entitlement to participate in share issues of any other corporation.
Set out below are summaries of options and rights granted under the plans.
a) Grants over Brambles limited shares issued subsequent to unification
Grant date
expiry date
exerCise
priCe
a$
BalanCe
at 1 July
Granted
durinG
tHe year
exerCised
durinG
tHe year
forfeited
durinG
tHe year
BalanCe
at 30 June
2009
myshare and performance share rights
19 January 2007
29 August 2007
31 August 2012
30 August 2013
26 February 2008
2 December 2013
2 March 2014
29 April 2014
27 August 2014
31 March 2011
31 March 2011
31 March 2011
1 June 2010
31 March 2011
19 March 2008
28 April 2008
27 August 2008
31 March 2009
30 April 2009
29 May 2009
1 June 2009
30 June 2009
total rights
2008 (summarised)
total rights
–
–
–
–
–
–
–
–
–
–
–
2,041,506
2,210,790
28,406
36,365
125,250
–
–
–
–
–
–
–
–
–
–
–
(83,866)
(57,010)
1,900,630
(88,750)
(139,245)
1,982,795
–
–
–
–
–
–
28,406
36,365
125,250
3,946,117
(12,406)
(88,898)
3,844,813
70,407
59,149
46,958
85,830
43,509
–
–
–
–
–
(911)
(610)
(260)
–
–
69,496
58,539
46,698
85,830
43,509
4,442,317
4,251,970
(185,022)
(286,934)
8,222,331
2,588,281
2,506,597
(230,875)
(421,686)
4,442,317
of the above grants, 135,613 rights were exercisable at 30 June 2009.
Weighted average data:
– fair value at grant date of grants made during the year
– share price at exercise date of grants exercised during the year
– remaining contractual life at 30 June
2009
2008
A$
A$
years
5.61
6.57
4.3
10.03
11.41
4.6
BramBles limited Annu Al RepoRt 2009
99
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 28. sHare-Based payments – ContInueD
b) Grants over Bil shares pre-unification, now over Brambles limited shares
Grant date
expiry date
exerCise
priCe
a$
BalanCe
at 1 July
Granted
durinG
tHe year
exerCised
durinG
tHe year
forfeited
durinG
tHe year
BalanCe
at 30 June
2009
options
7 August 2001
25 June 2003
1 July 2008
25 December 2008
10 September 2003
10 September 2009
4 March 2004
27 June 2005
total options
4 March 2010
27 December 2008
performance share rights
5 September 2002
5 September 2008
10 September 2003
10 September 2009
24 november 2004
4 March 2010
8 September 2004
8 September 2010
21 october 2005
21 october 2011
total rights
total
11.24
4.74
4.75
5.31
8.20
–
–
–
–
–
278,300
326,824
122,590
155,586
1,452,506
2,335,806
4,429
19,069
10,599
85,399
2,262,855
2,382,351
4,718,157
Weighted average exercise price of options
A$
7.70
2008 (summarised)
total options
total rights
total
9,140,389
7,211,692
16,352,081
Weighted average exercise price of options
A$
6.64
of the above grants, 263,757 options and 194,253 rights were exercisable at 30 June 2009.
Weighted average data:
– share price at exercise date of grants exercised during the year
– remaining contractual life at 30 June
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(278,300)
(224,625)
(102,199)
–
–
(14,419)
–
–
–
108,171
155,586
(21,794)
(1,430,712)
–
(260,838)
(1,811,211)
263,757
(4,429)
(3,605)
–
–
–
–
(44,264)
(7,346)
–
15,464
10,599
33,789
(882,849)
(1,245,605)
134,401
(935,147)
(1,252,951)
194,253
(1,195,985)
(3,064,162)
458,010
5.03
8.47
5.08
(4,848,533)
(1,956,050)
2,335,806
(4,147,522)
(681,819)
2,382,351
(8,996,055)
(2,637,869)
4,718,157
5.93
7.10
7.70
2009
2008
A$
years
7.40
1.1
12.73
2.0
100
BramBles limited Annu Al RepoRt 2009
c) Grants over Bip shares pre-unification, now over Brambles limited shares
Grant date
expiry date
exerCise
priCe
£
BalanCe
at 1 July
Granted
durinG
tHe year
exerCised
durinG
tHe year
forfeited
durinG
tHe year
BalanCe
at 30 June
2009
options
10 September 2003
10 September 2009
4 March 2004
total options
4 March 2010
performance share rights
5 September 2002
5 September 2008
10 September 2003
10 September 2009
4 March 2004
4 March 2010
8 September 2004
9 September 2010
21 october 2005
22 october 2011
total rights
total
1.72
2.11
196,110
155,586
351,696
–
–
–
–
–
5,470
13,175
10,599
66,273
919,805
1,015,322
1,367,018
Weighted average exercise price of options
£
1.89
2008 (summarised)
total options
total rights
total
1,232,421
2,457,477
3,689,898
Weighted average exercise price of options
£
2.15
of the above grants, 258,177 options and 152,781 rights were exercisable at 30 June 2009.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Weighted average data:
– share price at exercise date of grants exercised during the year
– remaining contractual life at 30 June
(14,419)
–
(14,419)
(3,623)
(3,605)
–
–
–
–
181,691
155,586
337,277
(1,847)
–
–
–
9,570
10,599
34,818
97,794
(8,820)
(22,635)
(328,051)
(493,960)
(344,099)
(518,442)
152,781
(358,518)
(518,442)
490,058
1.72
–
1.90
(285,077)
(595,648)
351,696
(1,295,540)
(146,615)
1,015,322
(1,580,617)
(742,263)
1,367,018
2.09
2.33
1.89
2009
2008
£
years
3.53
0.9
5.85
2.7
there were 89,408 grants, 74,722 exercises and 1,188,354 forfeits in options, performance share rights and MyShare matching conditional rights
over Brambles limited shares between the end of the financial year and 19 August 2009.
BramBles limited Annu Al RepoRt 2009
101
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 28. sHare-Based payments – ContInueD
d) fair value calculations
the fair value of equity-settled options, performance share rights and MyShare matching conditional rights was determined as at grant date, using
a binomial valuation methodology. the values calculated do not take into account the probability of options and rights being forfeited prior to
vesting, as a probability adjustment is made when computing the share-based payment expense.
the significant inputs into the valuation models for the equity-settled grants made during the year were:
Weighted average share price
expected volatility
expected life
Annual risk-free interest rate
expected dividend yield
2009
Grants
a$7.22
33%
2008
Grants
A$13.18
22%
1.0–3.0 years
2.8–3.0 years
3.56–5.60%
5.94–6.77%
3.5–3.9%
2.2–3.5%
the expected volatility was determined based on a two-year historic volatility of Brambles' share prices.
e) share-based payment expense – continuing operations
Brambles recognised a total expense of uS$14.213 million (2008: uS$18.012 million) relating to share-based payments for continuing operations.
of this amount, uS$(0.240) million related to write-back of phantom share provisions (2008: uS$2.299 million expense).
102
BramBles limited Annu Al RepoRt 2009
note 29.
reserves and retained earninGs
Reserves
Retained earnings
Minority interests in reserves and retained earnings
a) movements in reserves and retained earnings
Consolidated
year ended 30 June 2008
opening balance
Adjustment for AASB 117 leases (Recall uSA) 1
Actuarial loss on defined benefit plans
Foreign exchange differences
Cash flow hedges:
– fair value losses
– tax on fair value losses
– transfers to net profit
Share-based payments:
– expense recognised during the year
– shares issued
– equity component of related tax
Buy-back of ordinary shares
Dividends paid
net profit for the year
Closing balance
year ended 30 June 2009
opening balance
Actuarial loss on defined benefit plans
FCtR released to profits during the year
FCtR on entities disposed taken to profit
Foreign exchange differences
Cash flow hedges:
– fair value losses
– tax on fair value losses
– transfers to net profit
– tax on transfers to net profit
Share-based payments:
– expense recognised during the year
– shares issued
– equity component of related tax
Dividends paid
net profit for the year
Closing balance
2009
us$m
2008
us$m
(14,938.7) (14,671.5)
2,520.1
2,436.1
(12,418.6) (12,235.4)
0.3
0.3
reserves
HedGinG
us$m
sHare-
Based
payments
us$m
foreiGn
CurrenCy
translation
us$m
unifiCation
us$m
otHer
us$m
retained
earninGs
us$m
1.8
–
–
0.2
(3.8)
1.7
(0.1)
–
–
–
–
–
–
61.6
273.6
(15,385.8)
167.3
2,241.1
–
–
–
–
–
–
14.8
(13.9)
3.3
–
–
–
–
–
263.3
–
–
–
–
–
–
(55.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2.5)
(27.1)
–
–
–
–
–
–
–
–
(424.1)
648.7
(0.2)
65.8
481.4
(15,385.8)
167.3
2,436.1
(0.2)
65.8
481.4
(15,385.8)
167.3
2,436.1
–
–
–
–
(27.9)
9.7
13.7
(4.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
14.5
(6.3)
(2.9)
–
–
–
(77.3)
(0.6)
(185.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.1)
–
–
–
–
–
–
–
–
–
–
(365.5)
452.6
(9.5)
71.1
218.2
(15,385.8)
167.3
2,520.1
1 During 2008, an adjustment was made to amortise fixed rental increases on operating leases on a straight line basis over the life of the lease. the effect of
this adjustment was to increase other liabilities by uS$4.1 million, increase deferred tax assets by uS$1.6 million and decrease opening retained earnings by
uS$2.5 million.
BramBles limited Annu Al RepoRt 2009
103
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 29. reserves and retained earninGs – ContInueD
b) movements in reserves and retained earnings
parent entity
year ended 30 June 2008
opening balance
Foreign exchange differences
Share-based payments – shares to be issued
Buy-back of ordinary shares
Dividends declared during the year
net profit for the year
Closing balance
year ended 30 June 2009
opening balance
Foreign exchange differences
Share-based payments – shares to be issued
Dividends declared during the year
net profit for the year
Closing balance
reserves
sHare-
Based
payments
us$m
foreiGn
CurrenCy
translation
us$m
retained
earninGs
us$m
11.9
1,166.8
255.7
–
2,003.1
12.7
–
–
–
–
(55.5)
–
–
24.6
3,114.4
–
–
–
(424.1)
571.1
402.7
24.6
3,114.4
402.7
–
(2,718.0)
2.7
–
–
–
–
–
27.3
396.4
–
–
(365.5)
347.1
384.3
As a result of unification, Brambles limited is only permitted to declare dividends out of profits generated by it subsequent to 4 December 2006.
c) nature and purpose of reserves
HeDGInG ReSeRve
this comprises the cumulative portion of the gain or loss of cash flow hedges that are determined to be effective hedges. Amounts are recognised
in the income statement when the associated hedged transaction is recognised or the hedge or a portion thereof becomes ineffective.
SHARe-BASeD pAYMentS ReSeRve
this comprises the cumulative share-based payment expense recognised in the income statement in relation to equity-settled options and share
rights issued but not yet exercised. Refer to note 28 for further details.
FoReIGn CuRRenCY tRAnSlAtIon ReSeRve
this comprises cumulative exchange differences arising from the translation of the financial statements of foreign subsidiaries, net of qualifying
net investment hedges. the relevant accumulated balance is recognised in the income statement on disposal of a foreign subsidiary.
unIFICAtIon ReSeRve
on unification, Brambles limited issued shares on a one-for-one basis to those BIl and BIp shareholders who did not elect to participate in the
Cash Alternative. the unification reserve of uS$15,385.8 million represents the difference between the Brambles limited share capital measured
at fair value on 4 December 2006, and the carrying value of the share capital of BIl and BIp at that date.
otHeR
this comprises the merger reserve created at the time of the formation of the DlC, following internal reorganisations within BIp, and the capital
redemption reserve created in 2006 as a result of the cancellation of BIp shares.
104
BramBles limited Annu Al RepoRt 2009
finanCial risK manaGement
note 30.
Brambles is exposed to a variety of financial risks: market risk (including the effect of fluctuations in interest rates and exchange rates), liquidity
risk and credit risk.
Brambles' overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
on the financial performance of Brambles.
Brambles uses standard derivative financial instruments to manage its risk exposure in the normal course of business. Brambles does not trade
in financial instruments for speculative purposes. Hedging activities are conducted through Brambles' treasury department on a centralised basis
in accordance with Board policies and guidelines through standard operating procedures and delegated authorities.
policies with respect to financial risk management and hedging activities are discussed below and should be read in conjunction with detailed
information contained in the Financial Review on pages 16 to 17.
a) fair values
Set out below is a comparison by category of the carrying amounts and fair values of financial instruments recognised in the balance sheet. With
the exception of loans and receivables and derivatives designated as hedging instruments, all other financial assets are classified as financial
assets at fair value through profit or loss.
Consolidated
financial assets
– cash at bank and in hand (note 14)
– short term deposits (note 14)
– trade receivables (note 15)
– interest rate swaps (note 17)
– forward foreign currency contracts (note 17)
financial liabilities
– trade payables (note 23)
– bank overdrafts (note 24)
– bank loans (note 24)
– loan notes (note 24)
– finance lease liabilities (note 24)
– interest rate swaps (note 17)
– forward foreign currency contracts (note 17)
parent entity
financial assets
– cash at bank and in hand (note 14)
– receivables from subsidiaries (note 15)
financial liabilities
– payables to subsidiaries (note 23)
– bank loans (note 24)
CarryinG amount
fair value
2009
us$m
2008
us$m
2009
us$m
2008
us$m
55.0
35.1
62.8
42.0
55.0
35.1
62.8
42.0
450.1
524.8
450.1
524.8
–
1.1
7.4
1.3
–
1.1
7.4
1.3
287.1
36.0
341.0
36.7
287.1
36.0
341.0
36.7
1,645.7
2,052.2
1,645.7
2,052.2
549.9
439.3
515.6
438.2
1.9
18.1
0.6
2.8
8.5
0.2
1.9
18.1
0.6
2.8
8.5
0.2
CarryinG amount
fair value
2009
us$m
2008
us$m
2009
us$m
2008
us$m
2.5
5.4
2.5
5.4
13,428.8
14,883.6
13,428.8
14,883.6
4,603.8
4,487.4
4,603.8
4,487.4
–
5.0
–
5.0
For forward foreign exchange contracts, the net fair value is taken to be the unrealised gain or loss at balance date calculated by reference to the
current forward rates for contracts with similar maturity dates. Fair value for other financial assets and liabilities has been calculated by
discounting future cash flows at prevailing interest rates for the relevant yield curve.
BramBles limited Annu Al RepoRt 2009
105
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 30. finanCial risK manaGement – ContInueD
b) market risk
Brambles has the following risk policies in place with respect to market risk.
InteReSt RAte RISK
Brambles' exposure to potential volatility in finance costs, predominantly uS dollars, Australian dollars and euros, is managed by maintaining a mix
of fixed and floating-rate instruments within select target bands over defined periods. In most cases, interest rate derivatives are used to achieve
these targets synthetically.
the following table sets out the financial instruments exposed to interest rate risk at reporting date:
financial assets (floating rate)
Cash at bank
Short term deposits
Receivables from subsidiaries
Weighted average effective interest rate
financial liabilities (floating rate)
Bank overdrafts
Bank loans
Interest rate swaps (notional value)
payables to subsidiaries
net exposure to cash flow interest rate risk
Weighted average effective interest rate
financial liabilities (fixed rate)
loan notes
Finance lease liabilities
Interest rate swaps (notional value)
net exposure to fair value interest rate risk
Weighted average effective interest rate
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
55.0
35.1
–
90.1
1.0%
62.8
42.0
2.5
–
5.4
–
–
13,428.8
14,883.6
104.8 13,431.3
14,889.0
3.8%
3.6%
7.9%
36.0
36.7
1,645.7
2,052.2
(612.3)
(738.9)
–
–
–
–
5.0
–
–
–
4,603.8
4,487.4
1,069.4
1,350.0
4,603.8
4,492.4
3.2%
5.7%
3.1%
7.9%
549.9
439.3
1.9
2.8
612.3
738.9
1,164.1
1,181.0
6.0%
5.7%
–
–
–
–
–
–
–
–
–
–
interest rate swaps – cash flow hedges
Brambles enters into various interest rate risk management transactions for the purpose of managing finance costs to achieve more stable and
predictable finance expense results. the instruments primarily used are interest rate swaps and caps.
During 2009, Brambles entered into or maintained interest rate swap transactions with various banks hedging variable rate borrowings in uS and
Australian dollars. the purpose of the interest rate swaps was to hedge variable interest expense under borrowings against rising interest rates.
Interest rate swaps achieve this by synthetically converting the variable interest rate payment into a fixed interest liability on the dates on which
interest is payable on the underlying debt. the fair value of these contracts at reporting date was uS$(18.1) million (2008: uS$(1.1) million).
the terms of the contracts have been negotiated to match the projected drawdowns and rollovers of variable rate bank debt.
the gain or loss from re-measuring the interest rate swaps at fair value is deferred and recognised in the hedging reserve in equity, to the extent
that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised. Any ineffective portion is charged
to the income statement. For 2009 and 2008, all interest rate swaps were effective hedging instruments.
106
BramBles limited Annu Al RepoRt 2009
sensitivity analysis
the following table sets out the sensitivity of Brambles' financial assets and financial liabilities to interest rate risk applying the following
assumptions:
Consolidated
uS dollar interest rates
Australian dollar interest rates
Sterling interest rates
euro interest rates
Impact on profit after tax
Impact on equity
interest rate risK
2009
2008
lower
rates
HiGHer
rates
lower
rates
HiGHer
rates
- 25 bps
+ 50 bps
- 150 bps + 150 bps
- 50 bps
+ 50 bps
- 100 bps + 100 bps
- 25 bps
+ 50 bps
- 75 bps
+ 75 bps
- 25 bps
+ 50 bps
- 50 bps
+ 50 bps
us$m
us$m
us$m
us$m
2.0
(0.3)
(5.4)
0.7
10.2
(6.3)
(10.2)
5.7
Based on financial instruments held at 30 June 2009, if interest rates were to parallel shift by the number of basis points in the different
currencies noted above with all other variables held constant, profit after tax for the year would have been uS$2.0 million higher or uS$5.4 million
lower (2008: uS$10.2 million higher/lower), mainly as a result of lower/higher interest expense on bank borrowings. the impact on equity would
have been uS$0.3 million lower or uS$0.7 million higher (2008: uS$6.3 million lower or uS$5.7 million higher) mainly as a result of the incremental
movement through the hedging reserve relating to the effective portion of cash flow hedges. Given its geographically diverse operations, Brambles
has interest rate exposure positions against a variety of currencies, but predominantly uS dollars, Australian dollars and euros.
parent entity
interest rate risK
2009
2008
lower
rates
HiGHer
rates
lower
rates
HiGHer
rates
Australian dollar interest rates
- 50 bps
+ 50 bps
- 100 bps
+100 bps
Impact on profit after tax
Impact on equity
us$m
us$m
us$m
us$m
(32.4)
32.4
(72.8)
–
–
–
72.8
–
Based on financial instruments held at 30 June 2009, if interest rates were to parallel shift by -/+ 50 basis points with all other variables held
constant, profit after tax for the year for the parent entity would have been uS$32.4 million lower/higher (2008: uS$72.8 million lower/higher),
mainly as a result of lower/higher interest income/(expense) on interest bearing loans to/from subsidiaries. the intercompany loans to/from the
parent entity are denominated in Australian dollars.
BramBles limited Annu Al RepoRt 2009
107
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 30. finanCial risK manaGement – ContInueD
b) market risk – continued
FoReIGn exCHAnGe RISK
exposure to foreign exchange risk generally arises in transactions affecting either the value of transactions translated back to the functional
currency of a subsidiary or affecting the value of assets and liabilities of overseas subsidiaries when translated back to the Group's reporting
currency. Foreign exchange hedging is used when a transaction exposure exceeds certain thresholds and as soon as a defined exposure arises.
Currency profile
the following table sets out the currency mix profile of Brambles' financial instruments at reporting date:
Consolidated
2009
financial assets
– cash at bank and in hand
– short term deposits
– forward foreign currency contracts
financial liabilities
– bank overdrafts
– bank loans
– loan notes
– finance lease liabilities
– interest rate swaps
– forward foreign currency contracts
– net investment hedge
2008
financial assets
– cash at bank and in hand
– short term deposits
– interest rate swaps
– forward foreign currency contracts
financial liabilities
– bank overdrafts
– bank loans
– loan notes
– finance lease liabilities
– interest rate swaps
– forward foreign currency contracts
– net investment hedge
us
dollar
us$m
aust.
dollar
us$m
sterlinG
us$m
euro
us$m
otHer
us$m
total
us$m
2.8
–
3.4
6.2
2.3
12.2
129.2
143.7
–
–
48.8
48.8
–
–
8.2
894.3
549.9
0.7
16.6
101.0
–
161.0
–
–
1.5
1.9
–
–
–
–
–
3.1
–
8.6
2.8
7.2
18.6
22.8
397.3
–
1.0
–
48.3
71.2
41.3
20.1
1.3
62.7
55.0
35.1
189.9
280.0
5.0
36.0
121.9
1,574.5
–
0.2
–
35.1
–
549.9
1.9
18.1
189.4
71.2
1,562.5
164.4
11.3
540.6
162.2
2,441.0
11.7
–
3.4
1.8
16.9
10.3
–
4.0
191.6
205.9
–
–
1,015.4
768.1
439.3
0.5
8.5
101.1
–
–
–
–
5.3
–
1,564.8
773.4
–
–
–
0.6
0.6
15.9
20.0
–
–
–
39.6
–
75.5
17.1
2.1
–
42.2
61.4
17.0
2.1
–
1.8
–
0.1
79.8
23.7
39.9
–
5.5
69.1
62.8
42.0
7.4
241.7
353.9
3.8
36.7
166.8
1,972.4
–
0.5
–
94.5
–
439.3
2.8
8.5
240.6
79.8
100.8
265.6
2,780.1
parent entity
the parent entity's financial instruments are all denominated in Australian dollars.
108
BramBles limited Annu Al RepoRt 2009
forward foreign exchange contracts – cash flow hedges
Brambles enters into forward foreign exchange contracts to hedge currency exposures arising from normal commercial transactions such as the
purchase and sale of equipment and services, intercompany interest and royalties.
During 2009, Brambles entered into forward foreign exchange transactions with various banks in a variety of cross-currencies for terms ranging
up to six months. Most contracts create an obligation on Brambles to take receipt of or deliver a foreign currency which is used to fulfil the
foreign currency sale or purchase order.
the gain or loss from re-measuring the foreign exchange contracts at fair value is deferred and recognised in the hedging reserve in equity to the
extent that the hedge is effective and reclassified into profit and loss when the hedged item is recognised. Any ineffective portion is charged to
the income statement. For 2009 and 2008, all foreign exchange contracts were effective hedging instruments.
Foreign exchange contracts are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining
period to maturity. the fair value of these contracts at reporting date was uS$(0.5) million (2008: uS$0.1 million).
forward foreign exchange contracts – held for trading
Brambles enters into forward foreign exchange contracts for the purpose of hedging various cross-border intercompany loans to overseas
subsidiaries. In this case, the forward foreign exchange contract provides an economic hedge against exchange fluctuations in the foreign
currency loan balance. the face value and terms of the foreign exchange contracts match the intercompany loan balances. Gains and losses
on realignment of the intercompany loan and foreign exchange contracts to spot rates are offset in the income statement. Consequently, these
foreign exchange contracts are not designated for hedge accounting purposes.
these contracts are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to
maturity. Any changes in fair values are taken to the income statement immediately. the fair value of these contracts at reporting date was
uS$1.0 million (2008: uS$1.0 million).
Hedge of net investment in foreign entity
Included in bank loans at 30 June 2009 is a borrowing of uS$71.2 million (2008: uS$79.8 million) denominated in euros. this loan has been
designated as a hedge of the net investment in Brambles’ european subsidiaries and is being used to partially hedge Brambles’ exposure to
foreign exchange risks on these investments. For 2009 and 2008, there was no ineffectiveness to be recorded from such partial hedges of net
investments in foreign entities.
BramBles limited Annu Al RepoRt 2009
109
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 30. finanCial risK manaGement – ContInueD
b) market risk – continued
sensitivity analysis
the following table sets out the sensitivity of Brambles' financial assets and financial liabilities to foreign exchange risk (transaction
exposures only):
Consolidated
exchange rate movement
Impact on profit after tax
Impact on equity
foreiGn exCHanGe risK
2009
2008
lower
rates
HiGHer
rates
lower
rates
HiGHer
rates
-10%
+10%
-10%
+10%
us$m
us$m
us$m
us$m
3.2
(5.0)
(3.2)
5.0
1.6
(5.6)
(1.3)
5.6
Based on the financial instruments held at 30 June 2009, if exchange rates were to weaken/strengthen by 10% with all other variables held
constant, profit after tax for the year would have been uS$3.2 million higher/lower (2008: uS$1.6 million higher or uS$1.3 million lower).
the impact on equity would have been uS$5.0 million lower/higher (2008: uS$5.6 million lower/higher) as a result of the incremental movement
through the foreign currency translation reserve relating to the effective portion of a net investment hedge.
parent entity
the sensitivity of the parent entity's financial assets and financial liabilities to foreign exchange risk (transaction exposures only) on profit after
tax and equity is not considered material.
110
BramBles limited Annu Al RepoRt 2009
c) liquidity risk
Brambles' objective is to maintain adequate liquidity to meet its financial obligations as and when they fall due. Brambles funds its operations
through existing equity, retained cash flow and borrowings, principally from bank credit facilities. the credit facilities are generally structured
on a committed multi-currency revolving basis. Maturities range out to December 2013. Borrowings under the facilities are floating-rate,
unsecured obligations with covenants and undertakings typical for these types of arrangements. to minimise foreign exchange risks, borrowings
are arranged in the currency of the relevant operating asset to be funded. Brambles also has access to further funding through overdrafts,
uncommitted and standby lines of credit, principally to manage day-to-day liquidity.
Refer to note 24a for borrowing facilities and credit standby arrangements disclosures.
maturities of derivative financial assets and liabilities
the maturity of Brambles' contractual cash flows on net and gross settled derivative financial instruments, based on the remaining period to
contractual maturity date, is presented below. Cash flows on interest rate swaps and forward foreign exchange contracts are discounted based
on forward interest rates applicable at reporting date.
Consolidated
year 1
us$m
year 2
us$m
year 3
us$m
year 4
us$m
over 4
years
us$m
total
ContraCtual
CasH flows
us$m
CarryinG
amount
assets/
(liaBilities)
us$m
2009
net settled
Interest rate swaps
Gross settled
Forward foreign exchange contracts
– inflow
– (outflow)
2008
net settled
Interest rate swaps
Gross settled
Forward foreign exchange contracts
– inflow
– (outflow)
(12.3)
(4.4)
(1.1)
(0.3)
–
(18.1)
(18.1)
189.9
(189.4)
(11.8)
–
–
–
–
–
–
(4.4)
(1.1)
(0.3)
–
–
–
189.9
(189.4)
0.5
–
(17.6)
(17.6)
(2.6)
(0.9)
0.3
1.4
0.7
(1.1)
(1.1)
241.7
(240.6)
–
–
(1.5)
(0.9)
–
–
0.3
–
–
1.4
–
–
0.7
241.7
(240.6)
–
1.1
–
–
parent entity
no derivative financial assets or liabilities are held by the parent entity.
BramBles limited Annu Al RepoRt 2009
111
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 30. finanCial risK manaGement – ContInueD
c) liquidity risk – continued
maturities of non-derivative financial liabilities
the maturity of Brambles' contractual cash flows on non-derivative financial liabilities, based on the remaining period to contractual maturity
date, is presented below. Refer to note 24b for borrowing facilities maturity profile.
Consolidated
year 1
us$m
year 2
us$m
year 3
us$m
year 4
us$m
over 4
years
us$m
total
ContraCtual
CasH flows
us$m
CarryinG
amount
us$m
2009
financial liabilities
trade payables
Bank overdrafts
Bank loans
loan notes
Finance lease liabilities
2008
financial liabilities
trade payables
Bank overdrafts
Bank loans
loan notes
Finance lease liabilities
287.1
36.0
78.2
47.5
0.6
–
–
391.6
32.5
0.9
–
–
434.7
195.1
0.5
–
–
–
–
287.1
36.0
287.1
36.0
411.4
546.2
1,862.1
1,645.7
23.3
0.1
414.7
713.1
549.9
–
2.1
1.9
449.4
425.0
630.3
434.8
960.9
2,900.4
2,520.6
341.0
36.7
151.9
38.3
0.8
–
–
–
–
114.0
1,958.7
24.0
1.0
24.0
0.6
–
–
5.4
186.6
0.4
–
–
102.8
296.3
–
341.0
36.7
341.0
36.7
2,332.8
2,052.2
569.2
2.8
439.3
2.8
568.7
139.0
1,983.3
192.4
399.1
3,282.5
2,872.0
the maturity of the parent entity's contractual cash flows on non-derivative financial liabilities, based on the remaining period to contractual
maturity date, is presented below.
parent entity
year 1
us$m
year 2
us$m
year 3
us$m
year 4
us$m
over 4
years
us$m
total
ContraCtual
CasH flows
us$m
CarryinG
amount
us$m
2009
financial liabilities
payables to subsidiaries
2008
financial liabilities
payables to subsidiaries
Bank loans
–
–
–
4,603.8
–
4,603.8
4,603.8
–
–
4,487.4
–
–
5.0
–
–
–
–
4,487.4
4,487.4
5.0
5.0
112
BramBles limited Annu Al RepoRt 2009
d) Credit risk exposure
Brambles is exposed to credit risk on its financial assets, which comprise cash and cash equivalents, trade and other receivables and derivative
financial instruments. this exposure to credit risks arises from the potential failure of counterparties to meet their obligations. the maximum
exposure to credit risk at the reporting date is the carrying amount of the financial instruments as set out in note 30a. there is no significant
concentration of credit risk.
Brambles trades only with recognised, creditworthy third parties. Collateral is generally not obtained from customers.
Customers are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past
experience and industry reputation. Credit limits are set for each individual customer and approved by the credit manager in accordance with
an approved authority matrix. these credit limits are regularly monitored and revised based on historic turnover activity and credit performance.
In addition, overdue receivable balances are monitored and actioned on a regular basis.
exposure to credit risk also arises from amounts receivable from unrealised gains on derivative financial instruments. At the reporting date, this
amount was uS$1.1 million (2008: uS$8.7 million). Brambles transacts derivatives with prominent financial institutions and has credit limits in
place to limit exposure to any potential non-performance by its counterparties.
e) Capital risk management
Brambles’ objective when managing capital is to ensure Brambles continues as a going concern as well as to provide a balance between financial
flexibility and balance sheet efficiency. In determining its capital structure, Brambles considers the robustness of future cash flows, potential
funding requirements for growth opportunities and acquisitions, the cost of capital and ease of access to funding sources.
Brambles manages its capital structure to be consistent with a solid investment grade credit. Initiatives available to Brambles to achieve its
desired capital structure include adjusting the amount of dividends paid to shareholders, returning capital to shareholders, buying-back share
capital, issuing new shares, selling assets to reduce debt and varying the maturity profile of its borrowings.
Brambles considers its capital to comprise:
total borrowings
less: cash and cash equivalents
net debt
total equity
total capital
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
2,233.5
2,531.0
90.1
104.8
–
2.5
5.0
5.4
2,143.4
2,426.2
(2.5)
(0.4)
1,429.3
1,543.5
14,655.6
17,320.3
3,572.7
3,969.7
14,653.1
17,319.9
under the terms of its major borrowing facilities, Brambles is required to comply with the following financial covenants:
—
—
the ratio of net debt to eBItDA is to be no more than 3.5 to 1; and
the ratio of eBItDA to net finance costs is to be no less than 3.5 to 1.
the following definitions apply in the calculation of these financial covenants:
—
eBItDA means Brambles’ consolidated operating profit (excluding Significant items outside the ordinary course of business) before
depreciation, amortisation, impairment, profit of joint ventures and associates and certain fair value adjustments in respect of financial
derivatives; and
net debt means Brambles' consolidated total borrowings, excluding the impact of fair value adjustments in relation to hedge accounting,
less cash and cash equivalents.
—
BramBles limited Annu Al RepoRt 2009
113
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 30. finanCial risK manaGement – ContInueD
e) Capital risk management – continued
Brambles has complied with these financial covenants for 2009 and prior years. At balance date, under these definitions, the ratios were:
total borrowings
less: cash and cash equivalents
net debt
eBItDA
net finance costs
net debt/eBItDA (times)
eBItDA/net finance cost (times)
Consolidated
2009
us$m
2008
us$m
2,233.5
2,531.0
90.1
104.8
2,143.4
2,426.2
1,207.6
1,493.1
120.9
149.5
1.8
10.0
1.6
10.0
114
BramBles limited Annu Al RepoRt 2009
note 31.
CasH flow statement – additional information
a) reconciliation of cash
For the purpose of the cash flow statement, cash comprises:
Cash at bank and in hand (note 14)
Short term deposits (note 14)
Bank overdraft (note 24)
Consolidated
parent entity
2009
us$m
2008
us$m
2009
us$m
2008
us$m
55.0
35.1
(36.0)
54.1
62.8
42.0
(36.7)
68.1
2.5
–
–
2.5
5.4
–
–
5.4
b) reconciliation of profit after tax to net cash flows from operating activities
profit after tax
452.6
648.7
347.1
571.1
Adjustments for:
– depreciation and amortisation
– irrecoverable pooling equipment provision expense
– net gains on disposals of property, plant and equipment
– impairment of pooling equipment
– foreign exchange gain on capital repatriation
– other valuation adjustments
– net gains on disposal of businesses and investments
– net gains after tax on completed disposals of discontinued operations
– joint ventures
– equity-settled share-based payments
– finance revenues and costs
Movements in operating assets and liabilities, net of acquisitions and disposals:
– decrease/(increase) in trade and other receivables
– (increase)/decrease in prepayments
– decrease/(increase) in inventories
– decrease in deferred tax
– decrease in trade and other payables
– (decrease)/increase in tax payables
– increase/(decrease) in provisions
– other
424.6
97.8
(11.9)
33.6
(77.3)
(1.9)
(0.6)
(17.0)
2.1
14.5
(3.0)
56.3
(6.0)
7.3
49.7
(31.9)
(19.0)
53.5
(0.4)
458.6
91.2
(46.4)
–
–
(1.0)
(1.2)
(2.6)
(0.6)
14.8
12.7
35.9
1.9
(9.7)
39.3
(2.1)
(38.8)
(30.3)
(4.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(495.7)
(813.2)
0.5
(0.5)
–
–
–
–
17.2
–
–
–
–
–
–
(2.4)
–
(4.0)
net cash inflow/(outflow) from operating activities
1,023.0
1,166.3
(130.9)
(249.0)
BramBles limited Annu Al RepoRt 2009
115
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 31. CasH flow statement – additional information – ContInueD
c) reconciliation of movement in net debt
net debt at beginning of the year
net cash inflow from operating activities
net cash outflow from investing activities
net outflow/(inflow) from hedge borrowings
proceeds from issue of ordinary shares
Buy-back of ordinary shares
Dividends paid, net of Dividend Reinvestment plan
Increase on business acquisitions and disposals
Interest accruals, finance leases and other
Foreign exchange differences
net debt at end of the year
Being:
Current borrowings
non-current borrowings
Cash and cash equivalents
net debt at end of the year
Consolidated
2009
us$m
2008
us$m
2,426.2
1,996.9
(1,023.0)
(1,166.3)
606.6
7.9
(0.8)
–
277.6
–
(7.5)
(143.6)
811.4
(95.1)
(38.5)
392.0
444.8
0.3
3.1
77.6
2,143.4
2,426.2
68.0
91.5
2,165.5
2,439.5
(90.1)
(104.8)
2,143.4
2,426.2
d) non-cash financing or investing activities
As shown in note 27, dividends of uS$61.9 million were satisfied by the issue of shares under the Dividend Reinvestment plan. there were no other
financing or investing transactions during the year which have had a material effect on the assets and liabilities of Brambles that did not involve
cash flows.
116
BramBles limited Annu Al RepoRt 2009
note 32.
Commitments
a) Capital expenditure commitments
At 30 June 2009, Brambles' continuing operations had commitments of uS$29.2 million (2008: uS$66.3 million) principally relating to property,
plant and equipment.
Capital expenditure in respect of continuing operations contracted for but not recognised as liabilities at reporting date were as follows:
Within one year
Between one and five years
Consolidated
2009
us$m
2008
us$m
29.2
–
29.2
40.7
25.6
66.3
b) operating lease commitments
Brambles' continuing operations are party to operating leases for offices, operational locations and plant and equipment. the leases have varying
terms, escalation clauses and renewal rights. escalation clauses are rare and any impact is considered immaterial.
the future minimum lease payments under such non-cancellable operating leases are as follows:
Within one year
Between one and five years
After five years
Minimum lease payments
Consolidated
plant
oCCupanCy
2009
us$m
2008
us$m
2009
us$m
33.1
59.5
4.3
96.9
31.7
50.8
1.0
83.5
140.4
464.1
363.7
968.2
2008
us$m
148.4
512.5
453.4
1,114.3
During the year, operating lease expense of uS$147.2 million (2008: uS$102.8 million) was recognised within underlying profit in the income
statement. In addition, storage costs of uS$37.8 million were recognised as part of the CHep uSA restructuring costs described in note 6.
c) finance lease commitments
Finance leases of plant and equipment are not a material feature of Brambles' funding arrangements.
Finance lease commitments of Brambles' continuing operations are payable as follows:
Within one year
Between one and five years
Minimum lease payments recognised as a liability
Consolidated
plant
2009
us$m
2008
us$m
0.5
1.4
1.9
0.8
2.0
2.8
BramBles limited Annu Al RepoRt 2009
117
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
ContinGenCies
note 33.
a) Brambles limited and certain of its subsidiaries are parties to a deed of cross-guarantee which supports global financing credit facilities
available to certain Brambles’ subsidiaries. total facilities available amount to uS$2,826.6 million (2008: uS$3,616.4 million) of which
uS$1,640.9 million (2008: uS$2,008.1 million) has been drawn.
Brambles limited and certain of its subsidiaries are parties to guarantees which support uS private placement borrowings of
uS$535.0 million (2008: uS$425.0 million) by a subsidiary.
Brambles limited has guaranteed repayment of certain facilities and financial accommodations made available to certain Brambles’
subsidiaries. total facilities available amount to uS$315.9 million (2008: uS$398.5 million), of which uS$98.8 million (2008: uS$148.4 million)
has been drawn.
b) Subsidiaries of Brambles limited have contingent unsecured liabilities in respect of guarantees given relating to performance under
contracts entered into totalling uS$83.8 million (2008: uS$122.2 million), of which uS$79.4 million (2008: uS$117.8 million) is also
guaranteed by Brambles limited and is included in (a) above.
c) A subsidiary has provided guarantees on a several basis in relation to a reduction in the share premium account of a subsidiary of Brambles
in favour of certain creditors which amounts to uS$5.4 million (2008: uS$9.8 million).
d) Subsidiaries have guaranteed the lease obligations of third parties totalling uS$21.7 million (2008: uS$31.8 million). A subsidiary of
Brambles limited has provided guarantees to support lease facilities entered into by certain Brambles’ subsidiaries. total facilities available
amount to uS$13.9 million (2008: uS$22.3 million), of which uS$13.9 million (2008: uS$22.3 million) has been drawn.
e) environmental contingent liabilities
Brambles’ activities have included the treatment and disposal of hazardous and non-hazardous waste through subsidiaries and corporate
joint ventures. In addition, other activities of Brambles entail using, handling and storing materials which are capable of causing
environmental impairment.
As a consequence of the nature of these activities, Brambles has incurred and may continue to incur environmental costs and liabilities
associated with site and facility operation, closure, remediation, aftercare, monitoring and licensing. provisions have been made in respect
of estimated environmental liabilities at all sites and facilities where obligations are known to exist and can be reliably measured.
However, additional liabilities may emerge due to a number of factors including changes in the numerous laws and regulations which govern
environmental protection, liability, land use, planning and other matters in each jurisdiction in which Brambles operates or has operated.
these extensive laws and regulations are continually evolving in response to technological advances, scientific developments and other
factors. Brambles cannot predict the extent to which it may be affected in the future by any such changes in legislation or regulation.
f) In the ordinary course of business, Brambles becomes involved in litigation, most of which falls within Brambles’ insurance arrangements.
provision has been made for known obligations where the existence of the liability is probable and can be reasonably quantified. Receivables
have been recognised where recoveries, for example from insurance arrangements, are virtually certain. As the outcomes of these matters
remain uncertain, contingent liabilities exist for possible amounts eventually payable that are in excess of the amounts provided.
g) Brambles has given vendor warranties in relation to businesses sold in 2009 and prior years. Brambles has recognised the financial impact of
such vendor warranties and adjustments on the basis of information currently available. A contingent liability exists for any amounts which
may ultimately be borne by Brambles which are in excess of the amounts provided at 30 June 2009.
118
BramBles limited Annu Al RepoRt 2009
note 34.
auditors' remuneration
pricewaterhouseCoopers (pwC) earned the following remuneration
from Brambles during the year:
Amounts received or due and receivable by pwC (Australia) for:
Audit services:
– audit and review of Brambles' financial reports
– other assurance services
other services:
– tax advisory services
– other
total remuneration of pwC (Australia)
Amounts received or due and receivable by related practices of pwC (Australia) for:
Audit services:
– audit and review of Brambles' financial reports
– other assurance services
other services:
– tax advisory services
– acquisition due diligence
total remuneration of related practices of pwC (Australia)
Consolidated
parent entity
2009
us$'000
2008
us$'000
2009
us$'000
2008
us$'000
1,252
1,650
31
96
1,283
1,746
37
22
59
258
–
258
1,342
2,004
3,209
4,175
6
4
3,215
4,179
51
–
51
73
133
206
3,266
4,385
30
–
30
–
–
–
30
–
–
–
–
–
–
–
30
–
30
–
–
–
30
–
–
–
–
–
–
–
total auditors' remuneration
4,608
6,389
30
30
From time to time, Brambles employs pwC on assignments additional to their statutory audit duties where pwC, through their detailed knowledge
of the Group, are best placed to perform the services from an efficiency, effectiveness and cost perspective. the performance of such non-audit
related services is always balanced with the fundamental objective of ensuring pwC's objectivity and independence as auditors. to ensure this
balance, the Audit Committee has established a policy whereby its prior approval is required wherever management recommends that pwC
undertake non-audit work. Management consultancy, It implementation and specialist internal audit work will not be performed by pwC.
In 2009 and 2008, non-audit assignments primarily related to tax consulting advice, acquisition due diligence and other services.
Auditors' remuneration for the parent entity relates to the audit of the parent entity accounts. Auditors' remuneration in relation to the
consolidated accounts is borne by a subsidiary.
note 35.
Key manaGement personnel
a) Key management personnel compensation
Short term employee benefits
post employment benefits
other benefits
termination/sign-on/retirement benefits
Share-based payments
Consolidated
2009
us$'000
2008
us$'000
7,722
8,961
397
64
631
257
30
574
4,895
3,054
13,709
12,876
BramBles limited Annu Al RepoRt 2009
119
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 35. Key manaGement personnel – ContInueD
b) equity instruments disclosure relating to key management personnel
the number of ordinary shares, options, performance share rights and MyShare matching conditional rights in Brambles held during the financial
year by each key management personnel, including their related parties, are set out below:
BalanCe
at start
of tHe year
Granted
durinG tHe
year
exerCised
durinG
tHe year
lapsed
durinG
tHe year
CHanGes
durinG
tHe year
BalanCe
at end
of tHe year
vested and
exerCisaBle
at end
of tHe year
name and HoldinGs
2009
executive directors
m f ihlein
ordinary shares
Share rights
MyShare matching conditional rights
m e doherty
ordinary shares
Share rights
MyShare matching conditional rights
Current Key management personnel
t J Gorman
ordinary shares
Share rights
MyShare matching conditional rights
J r a Judd
ordinary shares
Share rights
e e potts
ordinary shares
Share rights
K J shuba
ordinary shares
options
Share rights
MyShare matching conditional rights
n p smith
ordinary shares
Share rights
MyShare matching conditional rights
C a van der laan
ordinary shares
Share rights
former senior executive
C m norin
ordinary shares
Share rights
MyShare matching conditional rights
–
151
MyShare matching conditional rights
–
253
646,470
–
–
–
137,054
783,524
602,526
461,084
136,762
117,406
–
–
292
–
28,406
217,896
–
151
–
–
36,365
183,078
–
245
69,654
–
–
–
–
–
–
–
–
–
–
–
809,442
292
10,151
10,151
–
–
246,302
151
245
245
–
–
219,443
245
–
–
209,853
253
253
28,033
–
–
–
292
–
–
253
292
97,171
292
–
–
–
–
–
–
–
–
–
–
–
–
142,669
93,496
30,785
28,085
–
(19,064)
50,590
–
–
177,295
151
45,000
–
–
5,689
50,689
166,236
90,673
25,436
21,620
–
–
–
–
–
–
–
–
27,780
104,010
–
–
140,509
133,579
23,746
20,184
104,010
104,010
230,158
21,198
–
–
–
–
253
–
97,171
292
130,862
–
–
–
–
–
–
–
(115,862)
15,000
371,060
188,344
64,490
52,252
–
442,662
–
–
–
–
115
115
164,292
78,181
35,826
90,324
–
–
116,323
58,485
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
MyShare matching conditional rights
–
70
70
–
120
BramBles limited Annu Al RepoRt 2009
name and HoldinGs
2008
executive directors
m f ihlein
ordinary shares
Share rights
m e doherty
Share rights
former executive director
d mezzanotte
ordinary shares
options
Share rights
Current Key management personnel
t J Gorman
Share rights
J r a Judd
ordinary shares
Share rights
e e potts
ordinary shares
options
Share rights
K J shuba
ordinary shares
options
Share rights
n p smith
ordinary shares
Share rights
C a van der laan
ordinary shares
options
Share rights
other senior executives
m d'Cotta Carreras
options
Share rights
m d lamb
ordinary shares
options
Share rights
BalanCe
at start
of tHe year
Granted
durinG tHe
year
exerCised
durinG
tHe year
lapsed
durinG
tHe year
CHanGes
durinG
tHe year
BalanCe
at end
of tHe year
vested and
exerCisaBle
at end
of tHe year
127,000
–
–
952,389
169,607
519,470
–
28,406
–
–
–
–
519,470
646,470
–
602,526
–
28,406
358,402
109,976
508,895
–
–
–
–
–
109,976
149,934
51,527
–
149,934
508,336
–
–
–
307,434
–
36,365
–
–
–
–
–
–
36,365
–
69,654
69,654
173,295
41,200
69,654
2,172
–
142,669
27,000
48,108
–
–
–
–
133,396
82,116
48,136
–
18,000
45,000
48,108
1,140
–
–
–
166,236
–
151,806
–
–
–
–
148,502
37,919
44,780
–
–
787,488
156,412
–
–
–
–
–
–
–
–
–
27,780
27,780
104,010
104,010
140,509
21,198
47,796
1,132
–
–
–
–
–
–
–
–
316,336
170,032
112,110
3,198
158,502
–
126,316
32,186
219,564
50,135
85,888
762
–
(656,626)
130,862
156,412
–
–
–
–
–
371,060
–
183,049
31,894
98,160
–
–
–
–
165,815
40,152
59,176
–
61,673
93,567
98,160
2,007
–
–
–
144,784
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
c) other transactions with key management personnel
other transactions with key management personnel are set out in note 36d.
Further remuneration disclosures are set out in the Directors' Report on pages 35 to 48 of the Annual Report.
BramBles limited Annu Al RepoRt 2009
121
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 36.
related party information
a) Brambles
Brambles comprises Brambles limited and the entities which it controls.
Borrowings under the bilateral bank credit facilities are undertaken by a limited number of Brambles subsidiaries. Funding of other subsidiaries
within Brambles is by way of intercompany loans, all of which are documented and carry commercial interest rates applicable to the currency
and terms of the loans.
the global financing credit facilities are supported by a deed of cross guarantee for which Brambles limited charges Brambles’ borrowers a
commercially determined guarantee fee.
Dividends are declared within the group only as required for funding or other commercial reasons.
Brambles also has in place cost sharing agreements to ensure that relevant costs are taken up by the entities receiving the benefits.
All amounts receivable and payable by entities within Brambles and any interest thereon are eliminated on consolidation.
122
BramBles limited Annu Al RepoRt 2009
b) material subsidiaries
the principal subsidiaries of Brambles during the year were:
name
CHep
CHep uSA
CHep Canada, Inc.
CHep uK limited
CHep France SA
CHep Deutschland GmbH
CHep espana SA
CHep Mexico SA de Cv
plaCe of inCorporation
uSA
Canada
uK
France
Germany
Spain
Mexico
CHep Benelux nederland Bv
the netherlands
CHep Italia SRl
Brambles enterprises limited
Italy
uK
CHep South Africa (proprietary) limited
South Africa
CHep Australia limited
CHep (Shanghai) Company limited
CHep technology pty limited
CHep India pvt limited
leanlogistics Inc
recall
Recall limited
Recall France SA
Recall Corporation, Inc.
Recall do Brasil ltda
AuSDoC Holdings pty limited
Australia
China
Australia
India
uSA
uK
France
uSA
Brazil
Australia
Recall Information Management pty limited
Australia
Recall Deutschland GmbH
Germany
Brambles Hq
Brambles Industries limited
Brambles Holdings (uK) limited
Australia
uK
Brambles International Finance Bv
the netherlands
Brambles uSA Inc.
Brambles north America Incorporated
Brambles Finance plc
Brambles Finance limited
uSA
uSA
uK
Australia
% interest Held
at reportinG date
2009
2008
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
In addition to the list above, there are a number of other subsidiaries within Brambles which are mostly intermediary holding companies
or are dormant.
BramBles limited Annu Al RepoRt 2009
123
nOtEs tO and FOrming part OF thE
FinanCiaL statEmEnts – CONTINUED
▶
for tHe year ended 30 June 2009
note 36. related party information – ContInueD
para 264(b) of the German trade law grants an exemption from the requirement to prepare individual audited statutory financial statements and
management reports for those German companies which are included within the consolidated group financial statements. Relief from such
German statutory reporting requirements will be taken in respect of Recall Deutschland GmbH & Co. KG as this entity is consolidated within
these Brambles’ financial statements.
Investments in subsidiaries are primarily by means of ordinary or common shares. All subsidiaries prepare accounts with a 30 June balance date.
c) Joint ventures
Brambles’ share of the net results of joint ventures is disclosed in note 19.
d) other transactions
other transactions entered into during the year with Directors of Brambles limited; with Director-related entities; with key management
personnel (KMp, as set out in the Directors’ Report); or with KMp-related entities were on terms and conditions no more favourable than those
available to other employees, customers or suppliers and include transactions in respect of the employee option plans, contracts of employment
and reimbursement of expenses. Any other transactions were trivial or domestic in nature.
e) other related parties
A subsidiary has a non-interest bearing advance outstanding as at 30 June 2009 of uS$1.099 million (2008: uS$1.297 million) to Brambles
Custodians pty limited, the trustee under Brambles’ employee loan scheme. the advance is administered by Brambles Custodians pty limited
and enabled employees to acquire shares in BIl prior to unification, pursuant to the terms and conditions of the employee loan scheme approved
by shareholders.
124
BramBles limited Annu Al RepoRt 2009
f) directors’ indemnities
under its constitution, to the extent permitted by law, Brambles limited indemnifies each person who is, or has been a Director or Secretary of
Brambles limited against any liability which results from facts or circumstances relating to the person serving or having served in the capacity
of Director, Secretary, other officer or employee of Brambles limited or any of its subsidiaries, other than:
(aa) in respect of a liability other than for legal costs:
(i) a liability owed to Brambles limited or a related body corporate;
(ii) a liability for a pecuniary penalty order under section 1317G of the Act or a compensation order under section 1317H of the Act; or
(iii) a liability that is owed to someone (other than Brambles limited or a related body corporate) and did not arise out of conduct in good
faith; and
(bb) in respect of a liability for legal costs:
(i)
in defending or resisting proceedings in which the person is found to have a liability for which they could not have been indemnified under
paragraph (aa)(i) above;
(ii) in defending or resisting criminal proceedings in which the person is found guilty;
(iii) in defending or resisting proceedings brought by ASIC or a liquidator for a court order if the grounds for making the order are found
by the Court to be established; or
(iv) in connection with proceedings for relief to any persons under the Act in which the Court denies the relief.
paragraph (bb)(iii) above does not apply to costs incurred in responding to actions brought by ASIC or a liquidator as part of an investigation
before commencing proceedings for the Court order.
As allowed by its constitution, Brambles limited has provided indemnities from time to time to Directors, Secretaries or other Statutory officers
of its subsidiaries (Beneficiaries) against all loss, cost and expenses (collectively loss) caused by or arising from any act or omission by the
relevant person in performance of that person’s role as a Director, Secretary or Statutory officer.
the indemnity given by the Company excludes the following matters:
(a) any loss to the extent caused by or arising from an act or omission of the Beneficiary prior to the effective date of the indemnity;
(b) any loss to the extent indemnity in respect of that loss is prohibited under the Corporations Act (or any other law);
(c) any loss to the extent it arises from private or personal acts or omissions of the Beneficiary;
(d) any loss comprising the reimbursement of normal day-to-day expenses such as travelling expenses;
(e) any loss to the extent the Beneficiary failed to act reasonably to mitigate the loss;
(f) any loss to the extent it is caused by or arises from acts or omissions of the Beneficiary after the date the indemnity is revoked by the
Company in accordance with the terms of the indemnity;
(g) any loss to the extent it is caused by or arises from any breach by the Beneficiary of the terms of the indemnity.
Insurance policies are in place to cover Directors, Secretaries and other Statutory officers of Brambles limited and its subsidiaries, however
the terms of the policies prohibit disclosure of the details of the insurance cover and the premiums paid.
events after BalanCe sHeet date
note 37.
other than those outlined in the Directors’ Report, there have been no events that have occurred subsequent to 30 June 2009 that have had
a material impact on Brambles’ financial performance or position.
BramBles limited Annu Al RepoRt 2009
125
dirECtOrs’ dECLaratiOn
In the opinion of the Directors of Brambles limited:
(a) the financial statements and notes set out on pages 57 to 125 are in accordance with the Australian Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the financial position of Brambles and Brambles limited as at 30 June 2009 and of their performance for
the year ended on that date;
(b) there are reasonable grounds to believe that Brambles limited will be able to pay its debts as and when they become due and payable; and
(c) the audited remuneration disclosures set out on pages 35 to 48 of the Directors’ Report comply with Accounting Standard AASB 124: Related
party Disclosures and the Corporations Regulations 2001.
the Directors have been given the declarations by the Chief executive officer and Chief Financial officer required by section 295A of the
Corporations Act 2001.
this declaration is made in accordance with a resolution of the Directors.
G J Kraehe ao
Chairman
20 August 2009
m f ihlein
Chief executive officer
126
BramBles limited Annu Al RepoRt 2009
indEpEndEnt auditOrs’ rEpOrt
to tHe memBers of BramBles limited
PricewaterhouseCoopers
ABN 52 780 433 757
Darling Park Tower 2
201 Sussex Street
GPO BOX 2650
SYDNEY NSW 1171
DX 77 Sydney Australia
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
www.pwc.com/au
report on tHe finanCial report
We have audited the accompanying financial report of Brambles limited (the Company), which comprises the balance sheet as at 30 June 2009,
and the income statement, statement of recognised income and expense and cash flow statement for the year ended on that date, a summary
of significant accounting policies, other explanatory notes and the Directors’ declaration for both Brambles limited and Brambles. Brambles
comprises the Company and the entities it controlled at the year’s end or from time to time during the financial year.
directors’ responsibility for the financial report
the Directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian
Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. this responsibility includes
establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In note 1, the Directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial
report, comprising the financial statements and notes, complies with International Financial Reporting Standards.
auditors’ responsibility
our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. these Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. the procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the
financial report.
our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with
the financial report.
our audit did not involve an analysis of the prudence of business decisions made by Directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
liability limited by a scheme approved under professional Standards legislation
BramBles limited Annu Al RepoRt 2009
127
independent auditors’ report – continued
to the memBers of BramBles limited
independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
auditors’ opinion
In our opinion:
(a) the financial report of Brambles limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and Brambles’ financial position as at 30 June 2009 and of their performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
rePort oN the remUNeratioN rePort
We have audited the Remuneration Report included in pages 35 to 48 of the Directors’ Report for the year ended 30 June 2009. 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 responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
auditors’ opinion
In our opinion, the Remuneration Report of Brambles limited for the year ended 30 June 2009 complies with section 300A of the Corporations
Act 2001.
matters relating to the electronic presentation of the audited financial report
this auditors’ report relates to the financial report and Remuneration Report of Brambles limited (the Company) for the year ended 30 June
2009 included on Brambles’ website. the Company’s Directors are responsible for the integrity of Brambles’ website. We have not been engaged
to report on the integrity of this website. the auditors’ report refers only to the financial report and Remuneration Report named above. It does
not provide an opinion on any other information which may have been hyperlinked to/from these statements or the Remuneration Report. If users
of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the
audited financial report and Remuneration Report to confirm the information included in the audited financial report and Remuneration Report
presented on this website.
pricewaterhouseCoopers
m G Johnson
partner
Sydney
20 August 2009
m K Graham
partner
128
BramBles limited Annu Al RepoRt 2009
auditOrs’ indEpEndEnCE dECLaratiOn
PricewaterhouseCoopers
ABN 52 780 433 757
Darling Park Tower 2
201 Sussex Street
GPO BOX 2650
SYDNEY NSW 1171
DX 77 Sydney Australia
Telephone +61 2 8266 0000
Facsimile +61 2 8266 9999
www.pwc.com/au
As lead auditor for the audit of Brambles limited for year ended 30 June 2009, I declare that to the best of my knowledge and belief,
there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
this declaration is in respect of Brambles limited and the entities it controlled during the period.
m G Johnson
partner
pricewaterhouseCoopers
Sydney
20 August 2009
liability limited by a scheme approved under professional Standards legislation
BramBles limited Annu Al RepoRt 2009
129
FivE yEar FinanCiaL pErFOrmanCE summary
2009
us$m
2008
us$m
2007
us$m
2006
us$m
2005
us$m
4,018.6
4,358.6
3,868.8
3,522.1
3,274.8
900.6
1,071.9
921.8
767.9
598.5
(120.9)
(149.5)
(59.9)
(111.8)
(130.1)
779.7
922.4
861.9
656.1
468.4
(245.4)
(282.4)
(285.1)
(228.4)
(160.0)
534.3
640.0
576.8
427.7
308.4
(100.3)
6.9
(143.1)
(65.1)
434.0
646.9
433.7
362.6
18.6
1.8
857.6
1,101.8
452.6
648.7
1,291.3
1,464.4
4.7
313.1
135.7
448.8
424.6
458.6
404.3
–
–
–
412.0
80.7
393.0
212.4
579.2
735.6
–
–
517.8
21.3
474.7
133.6
443.3
222.4
672.5
419.5
277.6
141.9
782.3
412.6
444.8
726.5
490.2
604.0
(32.2)
(113.8)
900.7
559.7
296.7
263.0
903.9
622.2
256.5
365.7
3,572.7
3,969.7
3,419.6
4,643.1
4,595.6
2,143.4
2,426.2
1,996.9
1,690.1
2,208.3
1,429.3
1,543.5
1,422.7
2,953.0
2,387.3
12,785
12,305
12,327
12,249
11,813
–
–
1,841
14,043
15,759
32.6
31.3
38.5
30.0
–
46.0
45.9
45.4
34.5
–
83.4
28.0
37.3
17.0
–
86.7
21.5
25.3
25.0
34.5
26.4
18.5
18.2
21.5
–
Continuing operations
sales revenue
underlying profit
net finance costs
underlying profit before tax
tax expense on underlying profit
underlying profit after finance costs and tax
Significant items, after tax
profit from continuing operations, after tax
profit from discontinued operations, after tax
profit for the year
depreciation and amortisation
Continuing operations
Discontinued operations
net capex on property, plant & equipment
Continuing operations
Discontinued operations
Cash flow
Cash flow from operations (after net capex)
Free cash flow
Dividends paid
Free cash flow after dividends
Balance sheet
Capital employed
net debt
equity
employees
Continuing operations
Discontinued operations
earnings per share (us cents)
Basic
From continuing operations
on underlying profit after finance costs and tax
dividend declared per share (australian cents)
Interim and final
Special
130
BramBles limited Annu Al RepoRt 2009
gLOssary
2001 option plans
2001 share plans
2004 share plans
2006 share plan
act
actual rates
aGm
aifrs
asx
the Brambles Industries limited 2001 executive Share option plan and the Brambles
Industries plc 2001 executive Share option plan, incorporating Brambles limited rollover
amendments of 22 August 2006.
the Brambles Industries limited 2001 executive performance Share plan and the Brambles
Industries plc 2001 executive performance Share plan, incorporating Brambles limited
rollover amendments of 22 August 2006.
the Brambles Industries limited 2004 performance Share plan and the Brambles Industries
plc 2004 performance Share plan, incorporating Brambles limited rollover amendments of
22 August 2006.
the Brambles limited 2006 performance Share plan, as amended.
the Corporations Act 2001 (Cth).
In the statutory financial statements, foreign currency results are translated into uS dollars
at the applicable actual monthly exchange rates ruling in each period.
Annual General Meeting.
Australian equivalents to International Financial Reporting Standards, used by Brambles
to report its financial results.
Australian Securities exchange.
average Capital invested
Average Capital Invested or ACI is a 12 month average of Capital Invested.
B1208a pallet
B1210a pallet
Bil
Bip
Board
Capital Invested is calculated as net assets before tax balances, cash and borrowings, but
after adjustment for accumulated pre-tax Significant items, actuarial gains or losses and net
equity adjustments for equity-settled share-based payments.
the 1200x800mm general purpose pallet used by CHep in europe.
the 1200x1000mm block pallet used by CHep in europe.
Brambles Industries limited, which was previously one of the two listed entities in the
dual-listed companies structure.
Brambles Industries plc, which was previously one of the two listed entities in the dual-listed
companies structure.
the Board of Brambles limited.
Brambles, Brambles Group or Group
Brambles limited and all of its related bodies corporate.
Bva
CaGr
Capital expenditure
Cash flow from operations
Cdi
Constant currency
Brambles value Added or BvA represents the value generated over and above the cost of the
capital used to generate that value.
It is calculated using fixed June 2008 exchange rates as:
—
—
—
underlying profit; plus
Significant items that are part of the ordinary activities of the business; less
Average Capital Invested, adjusted for accumulated pre-tax Significant items that are part
of the ordinary activities of the business, multiplied by 12%.
Compound Annual Growth Rate. the CAGR of sales revenue is the annualised percentage
at which sales revenue would have grown over a period if it grew at a steady rate.
unless otherwise stated, capital expenditure is presented on an accruals basis and excludes
intangible assets, investments in associates and equity acquisitions. It is shown gross of any
fixed asset disposals proceeds.
Cash flow generated after net capital expenditure but excluding Significant items that are
outside the ordinary course of business.
CReSt Depository Interest, the mechanism by which ordinary shares are traded and settled
on the london Stock exchange. one CDI represents an underlying beneficial interest in one
ordinary share of Brambles limited.
In the commentary, constant currency results are presented by translating both current and
comparable period foreign currency results into uS dollars at the actual monthly exchange
rates applicable in the comparable period, so as to show relative performance between the
two periods before the translation impact of currency fluctuations.
Continuing operations
Continuing operations refers to CHep, Recall and Brambles HQ.
Crest
the uK’s electronic registration and settlement system for equity security trading.
BramBles limited Annu Al RepoRt 2009
131
gLOssary – CONTINUED
discontinued operations
operations which have been divested or which are held for sale.
dlC
dms
dps
eps
Dual-listed companies structure – a contractual arrangement between Brambles Industries
limited and Brambles Industries plc under which they operated as if they were a single
economic enterprise, whilst retaining their separate legal identities, tax residencies and
stock exchange listings. the Brambles Group operated as a DlC from August 2001 to
December 2006.
Document Management Solutions, a Recall service line.
Data protection Services, a Recall service line.
earnings per share.
free cash flow
Cash flow generated after net capital expenditure, finance costs and tax, but excluding the net
cost of acquisitions and proceeds from business disposals.
fx
fy10
Kpi(s)
lean
lse
lti
ltifr
ltisr
oHs&e
organic growth
myshare
net new business wins
pat
rfid
roCi
rpC
sds
significant items
six sigma
sti
tfr
tsr
underlying profit
unification
Foreign exchange.
the 2010 financial year commencing 1 July 2009 and ending 30 June 2010.
Key performance Indicators.
lean, or lean thinking, is derived from the toyota production System and assists in the
identification and steady elimination of waste, the improvement of quality, production time
and cost reduction.
london Stock exchange.
long term Incentive.
lost time Injury Frequency Rate.
lost time Injury Severity Rate.
occupational Health Safety and environment.
Growth from existing customers.
the Brambles limited MyShare plan, an all employee share plan.
new business and lane expansion won in the period plus wins from the prior year carried
forward 12 months, less business losses in the period.
profit After tax.
Radio Frequency Identification.
Return on Capital Invested or RoCI is calculated as underlying profit divided by Average
Capital Invested.
Reusable plastic Container.
Secure Destruction Services, a Recall service line.
Significant items are items of income or expense which are, either individually or in aggregate,
material to Brambles or to the relevant business segment and:
—
outside the ordinary course of business (eg gains or losses on the sale or termination
of operations, the cost of significant reorganisations or restructuring); or
part of the ordinary activities of the business but unusual due to their size and nature.
—
A methodology that uses fact, data and statistical analysis to improve business processes,
grow sales, reduce costs and improve quality and customer satisfaction.
Short term Incentive.
total Fixed Remuneration.
total Shareholder Return. tSR measures the returns that a company has provided for its
shareholders, reflecting share price movements and reinvestment of dividends over a specified
performance period. under the 2006 Share plan, tSR is normally calculated on the average
daily closing share prices in the three months immediately preceding the start of a period and
the end of a period.
underlying profit is profit from continuing operations before finance costs, tax and
Significant items.
the unification of the dual-listed companies structure which operated between Brambles
Industries limited and Brambles Industries plc under a new single Australian holding company,
Brambles limited.
vesting
When rights under share plan awards may first be exercised.
132
BramBles limited Annu Al RepoRt 2009
EVERY SECOND
eVeRY DAY
EVERY TRADING
Continent
Through our global businesses
of CHEP and Recall, we meet
the demands of our customers
efficiently, safely and sustainably
using sophisticated operating
models tailored to the demands
of diverse trading environments
around the world.
Despite the challenging
economic environment, the
world doesn’t stop – and neither
do we. Our businesses help
keep the world moving. From
fresh produce and groceries to
the most sensitive paper and
digital documents, our 12,000
employees are committed to
the optimal movement of goods
and information.
Contents
001 _ Chairman and CEO’s Report
002 _ Performance Summary
004 _ Our Global Reach
006 _ Strategy Matrix
010 _ Operational and Financial Review
018 _ Board of Directors
020 _ Executive Leadership Team
022 _ Corporate Governance Statement
035 _ Directors’ Report – Remuneration Report
049 _ Directors’ Report – Other Information
054 _ Shareholder Information
057 _ Financial Report – Financial Statements
126 _ Financial Report – Directors’ Declaration
127 _ Financial Report – Independent Auditors’ Report
129 _ Auditors’ Independence Declaration
130 _ Five Year Financial Performance Summary
131 _ Glossary
IBC _ Investor Information
note: All growth percentages in this Annual Report are in constant currency, unless stated otherwise.
brambles Limited
AbN 89 118 896 021
inVestoR inFoRMAtion
BramBles limited
Level 40, Gateway
1 Macquarie Place
Sydney NSW 2000
Australia
Telephone: 61 (0) 2 9256 5222
Facsimile: 61 (0) 2 9256 5299
Website: www.brambles.com
brambles Limited has a primary listing on
the Australian Securities Exchange and a
secondary listing on the London Stock
Exchange. The global headquarters of
brambles is in Sydney, Australia.
All currency amounts in this report are
in US dollars unless otherwise specified.
annual General meetinG
The 2009 Annual General Meeting of
brambles Limited will be held on Thursday,
19 November 2009 at 2.00pm (AEDT) at:
The Savoy ballroom
Grand hyatt Melbourne
123 collins Street
Melbourne Vic 3000
A live webcast of the meeting will be
broadcast on www.brambles.com.
dividend
The final dividend of 12.5 Australian cents
per share is 20% franked for all shareholders
in brambles Limited and will be paid on
8 october 2009.
brambles Limited offers a dividend
reinvestment plan for shareholders resident
in Australia and New Zealand. Further details
are available from Link Market Services,
whose contact details shown on page 54.
cDi holders will receive their dividend
payments as soon as possible after ordinary
shareholders, once fx transactions have
been completed.
cDis holders who are also cREST
participants can expect to receive their
dividend payments via cREST electronic
Unmatched Stock Event (USE) messages,
once the cash has been received and
reconciled by Euroclear UK & ireland, taking
note of their election (if any) of a default
payment currency option as detailed in the
Euroclear UK and ireland international
service description.
For cDi holders who use the Equiniti
corporate nominee service, additional
processing time is required to print and mail
cheques, or, for holders who have completed
dividend mandate forms, to set up cash
transfers into their bank accounts. All cDi
holders who use the Equiniti corporate
nominee service will receive their dividends
in pounds sterling.
BramBles Business units
cheP americas
8517 South Park circle
orlando FL 32819-9040
United States of America
Telephone: 1 407 370 2437
Facsimile: 1 407 363 5354
Email: chep@brambles.com
Website: www.chep.com
cheP emea
Rotherwick house
3 Thomas More Street
London
E1W 1YZ
United Kingdom
Telephone: 44 (0) 1932 833 089
Facsimile: 44 (0) 207 702 1612
cheP asia-Pacific
Level 6, building c
11 Talavera Road,
North Ryde NSW 2113
Australia
Telephone: 61 (0) 2 9856 2437
Facsimile: 61 (0) 2 9856 2404
recall
one Recall center
180 Technology Parkway
Norcross GA 30092
United States of America
Telephone: 1 770 776 1000
Facsimile: 1 770 776 1001
Email: recall@brambles.com
Website: www.recall.com
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www.BramBles.com
BramBles limited
Level 40, Gateway
1 Macquarie Place
Sydney NSW 2000, Australia
Tel: 61 (0) 2 9256 5222
Fax: 61 (0) 2 9256 5299
General enquiries
Email: info@brambles.com
investor and analyst enquiries
MichAEL RobERTS
Vice President investor Relations and corporate Affairs
Tel: 61 (0) 2 9256 5222
Fax: 61 (0) 2 9256 5299
Email: michael.roberts@brambles.com
retail shareholders
For Share Registrars’ details go to page 54 of this Annual Report.
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09:00 | CHEP SALES REP ON THE WAY
TO MEET WITH A CUSTOMER
brambles is committed to achieving Zero harm, which
means zero injuries and zero environmental damage,
and has used a PEFc, chain of custody accredited
printer to produce this Annual Report.
PEFC/01-00-01
business
NEVER sLeePs
bRAMbLES ANNUAL REPORT 2009
09:00 | TRUCkLOAd Of PALLETS HEAdINg
TO CHEP SERvICE CENTRE fOR
INSPECTION ANd REPAIR
08:30 | MANUfACTURER dESPATCHEd
gOOdS ON CHEP PALLETS TO
A RETAILER dISTRIbUTION
CENTRE
09:00 | RECALL COURIER EN ROUTE
TO PICk-UP CUSTOMER
dOCUMENT CARTONS fOR
ARCHIvINg