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Cardtronics Inc.Annual Report 2012
www.brambles.com
Brambles is a pooling solutions company specialising in
the provision of reusable pallets, crates and containers and
associated logistics services. Headquartered in Sydney, Australia,
Brambles operates across multiple industry supply chains in more
than 50 countries. We operate our pooling solutions business under
two core brands, CHEP and IFCO. Brambles also operates the Recall
business, a leading provider of information management services.
In 2012, we have upgraded our website and included an enhanced
online Annual Review. To visit the 2012 Annual Review micro-site,
go to www.brambles.com/2012review.
The Brambles website has
been relaunched with improved
shareholder experience in mind.
The new website includes an upgraded
Investor Centre with access to key
announcements and webcasts.
The 2012 online Annual Review contains
an interactive Strategy Scorecard with
highlights of our progress.
www.brambles.com
www.brambles.com/investor-centre
www.brambles.com/2012review
CONTENTS
Letter from the Chairman & the CEO
Operational & Financial Review
Treasury & Risk Review
Sustainability Review
Board & Executive Leadership Team
Corporate Governance Statement
Directors’ Report – Remuneration Report
1
4
12
14
29
33
46
Directors’ Report – Other Information
Shareholder Information
Financial Report
Auditors’ Independence Declaration
Five Year Financial Performance Summary
Glossary
Contact Information
63
68
71
137
138
139
141
Brambles Limited
ABN 89 118 896 021
LETTER FROM THE CHAIRMAN & THE CEO
5 September 2012
During the 2012 financial year, Brambles
remained committed to generating value
for all stakeholders, delivering further sales
and Underlying profit growth and increasing
momentum with the implementation of its
long-term growth strategy.
We reported a strong increase in sales revenue for the period amid a
challenging economic backdrop. We drove growth by adding new
customers and by entering new segments and regions. We
strengthened our established operations in the Pallets segment and
expanded our less established operations in the high-growth
Reusable Plastic Crates (RPCs) and Containers segments, as well as
in emerging markets. We delivered this sales growth at a stable
Underlying profit margin for the Group while continuing to increase
investment in business development and improvement programs to
strengthen our business for the future.
The Board declared dividends for the 2012 financial year
of 26.0 Australian cents per share, comprising a final dividend
of 13.0 Australian cents per share, payable on 11 October 2012, and
the interim dividend of 13.0 Australian cents per share paid in April
2012. The level of franking on the final dividend has increased to
30% from 20%.
Full discussion of our 2012 results and details of the dividend are
available in the Operational & Financial Review on pages 4 to 11 of
this report.
ORGANISING TO DELIVER
In October 2011, we completed the reorganisation of our Pooling
Solutions operations into three segments: Pallets, RPCs and
Containers. This organisation structure aligns with the way we
engage with different customers – and enables us to operate with
more strategic rigour as we evaluate opportunities for growth and
development within the three segments. This new structure is
allowing us to focus on delivering greater efficiencies while
providing higher levels of transparency for management and
shareholders into the performance of our specific operations.
During the Year, we undertook a divestment process for Recall, our
information management business. This reflected our focus on
growing the Pooling Solutions business and our belief that we could
obtain a sale valuation for Recall that reflected our view of its
quality and potential. In June 2012, after a rigorous and extensive
process and amid challenging capital markets conditions, the Board
concluded that offers from bidders did not reflect Recall’s value or
offer sufficient certainty. Therefore, it was in the best interests of
Brambles’ shareholders to retain Recall, which is a profitable and
growing business.
BRAMBLES’ CHIEF EXECUTIVE OFFICER TOM GORMAN
(LEFT) AND CHAIRMAN GRAHAM KRAEHE AO (RIGHT)
Throughout the divestment process, our employees at Recall
performed with outstanding professionalism, continuing to deliver
consistently high levels of customer service. We are committed to
continuing to manage Recall to generate value for shareholders,
customers and employees.
As a result of the cancellation of the Recall sale, we carried out in
June 2012 a fully underwritten, 1-for-20 pro rata accelerated
renounceable entitlement offer, raising A$448 million. The purpose
of the equity raising was to replace funds Brambles would have
raised through the underwritten dividend reinvestment plan for the
2011 final and 2012 interim dividends (which formed part of the
IFCO acquisition funding plan but which we cancelled in August 2011
because of our expectation at that time that we would receive funds
from selling Recall).
Raising equity to help fund the IFCO acquisition was necessary to
maintain investment-grade credit ratings. These ratings are
important for a company of Brambles’ size and global scale to retain
the funding flexibility to execute our strategy effectively.
STRATEGY
Today, we are approaching strategy under four key themes:
diversification; cost leadership; go to market; and people and
leadership. Our 2012 online Annual Review, which is accessible via
the Brambles website, provides an in-depth discussion of our
progress in relation to these themes. The online review includes a
Strategy Scorecard, a snapshot of which we provide on the inside
front cover of this report and which is summarised in our Annual
Review & Notice of Annual General Meeting document.
DIVERSIFICATION
Our growth strategy involves diversifying our global Pooling Solutions
business, operating primarily under the CHEP and IFCO brands, by
expanding into more customer segments, broadening our range of
products and services, and growing geographically, including in
emerging markets. In Recall, we continue to diversify and develop
the way we deliver services to customers, including the delivery of
digital document management services.
To support diversification in Pooling Solutions, we made strong
progress in the Year with our program to invest US$550 million over
two years to expand our RPCs business, grow the Pallets business in
emerging markets and develop our operations in the Containers
business. In all, we invested US$240 million under this program in
2012, in line with our target for the first year of the program.
As we diversify, our three Pooling Solutions segments are achieving
their sales growth targets. In the largest and most developed – the
Pallets segment – we continue to deliver constant currency sales
growth in our major markets such as the USA, Canada, Western
Europe and Australia & New Zealand. This reflects our ability to win
business by converting new customers to our solutions, despite poor
economic conditions leading to a subdued environment for like-for-
Brambles Annual Report 2012 - Page 1
LETTER FROM THE CHAIRMAN & THE CEO - CONTINUED
like “organic” volume and pricing growth. In the emerging markets
of Middle East & Africa, Latin America, Central & Eastern Europe
and Asia, which now represent 15% of our CHEP sales revenue in the
Pallets segment, we delivered constant currency sales revenue
growth of 20% in the 2012 financial year, in line with the target we
set 12 months ago for each of 2012 and 2013.
In RPCs, we are on track to deliver our target of 15% constant
currency sales revenue growth, when normalised for the impact of
acquisitions, in the 2013 financial year, having achieved that goal in
2012. The acquisition in March 2011 of IFCO Systems – operator of
the world’s largest RPC pooling business – gave a significant boost to
Brambles in this area. Today, our RPCs segment is growing strongly
as retailers continue to drive their suppliers of fresh produce to
adopt reusable pooled solutions, which are more sustainable and
efficient than disposable alternatives. We are expanding strongly by
penetrating further into new regions, in particular in the USA.
We are also progressing our growth strategy in the smallest of our
three Pooling Solutions segments, Containers, through which we
provide specialist solutions in the automotive, manufacturing,
chemicals and aerospace sectors. Over the past 24 months, we have
made a number of small acquisitions to support our expansion and
continued to win new business. We formally launched the CHEP
Aerospace Solutions brand during the 2012 financial year, and have
strong momentum with customer growth in that sector. We are also
making progress with our strategy of expanding our automotive and
intermediate bulk container operations in the USA.
Our Pallets, RPCs and Containers segments share certain
characteristics that align with Brambles’ core pooling expertise: a
common platform is used by multiple parties; assets (i.e. pallets,
crates and containers) flow freely; the ownership of those assets is
not a competitive differentiator to the user (i.e. our customer);
pooling those assets can create a “network advantage” through
increased efficiency; and expert management of that network can
generate superior economic profit for the pooler. These common
characteristics enable us to apply the unique intellectual property
we have from our well-established operations into these newer
operations. Each of our new initiatives offers a compelling market
opportunity and, at scale, long-term return on capital invested in
excess of 20%, pre-tax, in line with our pre-existing Pooling
Solutions operations.
We are proud of the strong return on capital profile of our company,
but also conscious of the continuous improvement required to
protect that return and to continue to create value for our three key
stakeholder groups – shareholders, customers and employees.
COST LEADERSHIP
We have positive momentum with our growth strategy, but the
journey has not been without challenges, not least in the context of
the severe economic headwinds we face in many of our major
countries of operation. While these economic conditions are beyond
our control, they place in sharper focus the importance of
maximising efficiency. Therefore, we continue to strengthen our
efforts in our second area of strategic focus: cost leadership, by
which we mean delivering a low-cost business model that leverages
our global scale to create sustainable competitive advantage.
In 2012, we demonstrated positive momentum in cost leadership. In
Recall, we delivered substantial cost reduction and efficiency
improvements, helping to drive a significant increase in Underlying
profit margin.
In the Pallets segment, there were continued improvements in the
efficiency of delivery of the Better Everyday business improvement
program in CHEP USA. Also in the Americas, we delivered the first
tranches of savings from the integration of the IFCO acquisition, and
best-practice standardisation in operations and logistics.
Across the Group, we expect to deliver total IFCO integration
synergies of US$40 million by the end of the 2014 financial year and
total Pallets operations and logistics efficiencies of US$60 million by
the end of 2015.
Cost leadership is also about maximising capital efficiency. Our
focus on asset utilisation continues to increase, in particular in
Pallets. The three main drivers of asset cost in equipment pooling
are loss, cycle time and damage – that is, what proportion of the
pool leaves our network control, how quickly we can retrieve our
assets, and the extent of wear and tear that those assets endure
while they are under hire.
During the Year, we continued to invest in projects aimed at
addressing these three key issues so we can improve control of our
assets over the long term. For example, in CHEP USA, we have
worked with some customers in the grocery manufacturing sector to
reduce the number of pallets sent into distribution and retail
channels that do not participate fully in the CHEP pooling network.
This means fewer of our pallets get lost, we are able to retrieve and
return them more quickly and – because they spend less time in the
field – damage rates should reduce. We are pleased to report a
modest reduction in the size of the Irrecoverable Pooling Equipment
Provision – which provides for non-compensated pallets that have
leaked from our system – in the Americas region of the Pallets
segment as a result of these initiatives.
GO TO MARKET
We are investing in enhancing and developing the way we go to
market by strengthening our brand position and continuing to
enhance the customer experience through improved quality of our
products and services.
Since the launch of the new organisation structure in October we
have made significant progress building our strategy and making the
organisational changes necessary to support that strategy.
We have streamlined and accelerated our product development
efforts by linking them more closely to our customer engagement
programs and innovation processes.
We have implemented a standardised go-to-market approach for our
commercial teams to drive an improved quality and efficiency in our
interaction with customers.
We have set up a dedicated global accounts team for our largest
customers, resulting in a significant improvement in customer
satisfaction and the conversion of major growth opportunities.
During the Year, we relaunched CHEP’s website, representing all our
CHEP-branded operations. The new CHEP.com looks better, is easier
to use and contains information that more accurately reflects the
structure of CHEP’s operations and customer solutions. We have also
recently relaunched the Brambles corporate website, to make
information easier to find for shareholders.
Ongoing improvements to the quality of our product and service
continue. The Better Everyday program in CHEP USA – to improve
repair standards, enhance ease of doing business for our customers
and strengthen our sales organisation - progressed further in 2012.
The strongest indication of this program’s success is the
strengthening rate of new business wins we have recorded in the
USA despite subdued economic conditions. In the USA and globally,
we are also recording continued improvements in our Net Promoter
Score results, which monitor customer loyalty.
PEOPLE & LEADERSHIP
The other of our four key themes is people and leadership:
attracting, developing and retaining the right individuals and teams
that can enhance our culture and bring the required capability for
sustainable success.
Brambles Annual Report 2012 - Page 2
LETTER FROM THE CHAIRMAN & THE CEO - CONTINUED
A key aspect of this is the Board itself, which we strengthened with
three international appointments in the 2012 financial year: Tahira
Hassan, who has had a distinguished 26-year career with leading
nutrition, health and wellness company Nestlé; David Gosnell,
President of Global Supply & Procurement with leading premium
drinks business Diageo, who previously served on the Brambles Board
from 2006 to 2010; and Doug Duncan, who had a 30-year career in
the transport and logistics sector, culminating in the position of
President & CEO, FedEx Freight.
The Board reviews best practice in corporate governance on an
ongoing basis. More details are available in the Corporate
Governance Statement on pages 33 to 45.
In addition to strengthening the Board, we made three appointments
to the Executive Leadership Team (ELT) during the Year: Jean
Holley, as Chief Information Officer; Jason Rabbino, as Group
President, Containers; and Zlatko Todorcevski, as Chief Financial
Officer. Jean’s and Jason’s biographies are on pages 31 to 32 of this
report. Zlatko will join Brambles before the end of the 2012
calendar year from Oil Search, one of the largest oil and gas
production and exploration companies on the Australian Securities
Exchange. He previously had a successful career with BHP Billiton,
including as Chief Financial Officer of its energy division. Zlatko’s
appointment follows Greg Hayes’ decision to retire. Greg came out
of retirement to join Brambles in November 2009 and played an
important role in the successful operations of the company during
his tenure, in particular the development of our strategy to expand
our Pooling Solutions operations and the IFCO acquisition. He will
cease employment with Brambles in March 2013.
The new appointments we have made at the Board and ELT level
have advanced the objectives set out in the Diversity Policy that the
Board adopted in the 2011 financial year.
We continue to invest in developing our people. An example is our
relationship with CEDEP (the European Centre for Executive
Development, based on the INSEAD business school campus at
Fontainebleau, France). Building on previous development programs
we have run with CEDEP, in 2012 we developed and ran a program to
support our growth efforts in emerging markets. Some 35 executives
from around the Group attended the initial workshop, with the
objective of sharing best practice and learning from subject matter
experts from other companies and academia.
SAFETY & SUSTAINABILITY
It is with great sadness that we report two employee fatalities that
occurred in the USA during the Year. In October 2011, Alfredo Ruiz,
a warehouse assistant in the CHEP Catalyst & Chemical Container
business in Houston, Texas, suffered a serious injury while at work.
Sadly, he did not recover from his injury and passed away in June
2012. We also suffered the loss of Roland Haggins, a Recall
employee, as a result of structural damage at a Recall-operated
facility in Landover, Maryland in June 2012. These events are
unacceptable and, in line with our Zero Harm policy, we continue to
seek to improve our overall safety performance. Full details of our
progress during the Year are set out in the Sustainability Review on
page 24 of this report.
Brambles believes it makes a positive contribution to sustainable
business practices through its operations’ unique position in the
supply chains they serve. Brambles is committed to being a
responsible and valuable partner in the supply chain and is focused
on building a long-term sustainable business that serves its
customers, employees, shareholders and the communities in which
they live. Details of key sustainability activities in the 2012 financial
year are set out in the Sustainability Review on pages 14 to 28.
OUTLOOK
We have provided guidance for the 2013 financial year to deliver
constant currency sales revenue in each of our four segments:
Pallets, RPCs, Containers and Recall. We expect Recall to deliver
Underlying profit margins comparable to the 2012 financial year.
We have given guidance for Underlying profit for the Group of
between US$1,010 million and US$1,070 million, at 30 June 2012
foreign exchange rates. This profit guidance represents year-on-year
growth of 4% to 10% at those exchange rates. We expect net finance
costs of US$125 million and an effective tax rate of approximately
28%. All guidance is subject to unforeseen events and ongoing
economic uncertainty.
Brambles has entered the 2013 financial year in robust and resilient
shape, despite the ongoing challenges created by the uncertain and
volatile economic conditions in many of our major markets. Against
this backdrop, we are committed to delivering on our growth
strategy, to driving ongoing improvements in our underlying
business, and to continuing to innovate and enhance service for
our customers while providing a safe and stimulating workplace
for our employees.
We wish to thank all Brambles’ management and employees as well
as our fellow directors for their continued commitment and support
during the Year.
GRAHAM KRAEHE AO
Chairman
TOM GORMAN
CEO
Brambles Annual Report 2012 - Page 3
OPERATIONAL & FINANCIAL REVIEW
SALES & STATUTORY PROFIT SUMMARY
US$M
SALES REVENUE
Pallets - Americas
Pallets - EMEA
Pallets - Asia-Pacific
Total Pallets
RPCs
Containers
Total Pooling Solutions
Recall
Total Brambles
OPERATING PROFIT
Pallets - Americas
Pallets - EMEA
Pallets - Asia-Pacific
Total Pallets
RPCs
Containers
Total Pooling Solutions
Recall
Brambles HQ
Total Continuing operations
PROFIT AFTER TAX
Operating profit from Continuing operations
Net finance costs
Tax expense
Profit from discontinued operations
Total Brambles
EARNINGS PER SHARE (BASIC, US CENTS)
Weighted average number of shares (millions)
Total Brambles EPS
2012
2011
Change %
(actual FX)
Change %
(constant FX)1
2,041.3
1,326.8
375.8
1,654.8
1,318.3
340.0
3,743.9
3,313.1
759.5
276.6
4,780.0
845.0
5,625.0
310.0
233.8
3,856.9
815.3
4,672.2
346.4
269.3
75.7
691.4
109.3
32.8
833.5
160.1
(54.4)
939.2
939.2
(152.0)
(212.3)
1.4
576.3
275.6
299.9
74.1
649.6
27.8
37.9
715.3
145.8
(51.9)
809.2
809.2
(127.5)
(209.9)
3.6
475.4
23
1
11
13
145
18
24
4
20
26
(10)
2
6
293
(13)
17
10
(5)
16
16
(19)
(1)
(61)
21
25
4
7
15
149
20
26
4
22
27
(8)
(3)
8
301
(11)
18
10
(1)
18
18
(22)
(3)
(78)
23
1,482.3
38.9
1,445.6
32.9
18
20
1Brambles calculates constant currency by translating results for the period into US dollars at the exchange rates applicable during the prior corresponding period.
Brambles Annual Report 2012 - Page 4
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
2012
2011
Change %
(actual FX)
Change %
(constant FX)
363.6
274.8
76.6
715.0
125.5
32.8
873.3
174.2
(37.8)
1,009.7
276.9
302.6
75.4
654.9
53.8
37.9
746.6
145.3
(34.7)
857.2
31
(9)
2
9
133
(13)
17
20
(9)
18
33
(6)
(3)
11
138
(11)
19
19
(5)
20
2012
1,009.7
2011
857.2
(2.8)
(37.0)
(16.2)
(5.8)
12.5
(21.2)
(70.5)
939.2
(19.1)
(3.4)
(25.5)
-
-
-
(48.0)
809.2
UNDERLYING PROFIT2
US$M
Pallets - Americas
Pallets - EMEA
Pallets - Asia-Pacific
Total Pallets
RPCs
Containers
Total Pooling Solutions
Recall
Brambles HQ
Underlying profit
RECONCILIATION OF UNDERLYING PROFIT TO OPERATING PROFIT
US$M
Underlying profit
Significant items:
Acquisition-related costs
Restructuring costs
IFCO integration costs
Pension costs
Foreign exchange gain on capital repatriation
Recall transaction costs
Total Significant items
Operating profit
2Underlying profit is profit from Continuing operations before finance costs, tax and Significant items.
Brambles Annual Report 2012 - Page 5
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
GROUP REVIEW
SALES
Brambles’ sales revenue in the 12 months ended 30 June 2012 was
US$5,625.0 million, up 20% (22% at constant currency) compared
with the prior corresponding period.
The increase reflected a full-year contribution from businesses
acquired since the start of the prior corresponding period – primarily
IFCO Systems, acquired in March 2011 – as well as new business wins
across all segments and modest growth in like-for-like volumes and
pricing. On a pro forma3 basis, adjusting for the contribution of
acquisitions, sales revenue was up 6% (7% at constant currency).
The Pooling Solutions segments of Pallets, Reusable Plastic Crates
(RPCs) and Containers contributed sales revenue of
US$4,780.0 million, up 24% (26% at constant currency). The Recall
information management segment contributed sales revenue
of US$845.0 million, up 4% (4% at constant currency).
BUSINESS WINS
The contribution to sales revenue of net new business wins4
was US$184 million, or 3 percentage points of total constant
currency sales revenue growth, as all segments won more business
than they lost during the period. The Pooling Solutions segments
contributed US$160 million of the net new business wins. Recall
contributed US$24 million. The net annualised value of new
business Brambles won during the period was US$314 million,
comprising US$290 million from Pooling Solutions and US$24 million
from Recall.
OPERATING & UNDERLYING PROFIT
Operating profit was US$939.2 million, up 16% (18% at constant
currency). This included the impact of US$(70.5) million of
Significant items, consisting of: US$(37.0) million of restructuring
costs; US$(16.2) million of IFCO integration costs; US$(21.2) million
of transaction costs from the unsuccessful divestment of Recall; a
US$12.5 million gain on repatriation of capital returns from overseas
subsidiaries; US$(5.8) million of pension costs; and US$(2.8) million
of acquisition-related costs.
Underlying profit was US$1,009.7 million, up 18% (20% at constant
currency), reflecting sales revenue growth and the investment in
expanding the Pooling Solutions operations into less developed
segments and geographies at the same time as delivering
efficiencies. On a pro forma basis3, Underlying profit was
up 9% (11% at constant currency).
RETURN ON CAPITAL
Return on capital invested5 was 16%, down 1 percentage point,
reflecting the inclusion for a full year of US$1,003.8 million of
goodwill and US$164.3 million of acquired identifiable
intangible assets from the IFCO acquisition and increased growth
capital expenditure.
INTEREST
Net finance costs were US$152.0 million, up 19% (22% at constant
currency). The increased costs were mainly attributable to the
funding costs for the IFCO acquisition.
3Pro forma growth assumes Brambles owned businesses acquired since 1 July 2010 for all of
the prior corresponding and reported periods. Pro forma Underlying profit growth is
calculated by including the results of the IFCO RPC and PMS businesses in the prior
corresponding period adjusted for the amortisation expense arising from acquired
identifiable intangible assets.
4Brambles defines net new business wins as the change in sales revenue in the reporting
period resulting from business won or lost in that period and the previous financial year.
The revenue impact of net new business wins is included across reporting periods for a
total of 12 months from the date of the win or loss and calculated on a constant currency
basis. Net new business wins are based on pro forma figures. Brambles defines net
annualised new business as the implied sales revenue in 12 months from net new business
won during the reporting period.
5Brambles defines return on capital invested as Underlying profit divided by Average
capital invested.
TAX
Tax expense was US$212.3 million, up 1%. The effective tax rate on
operating profit was 27%, compared with 31% the prior year. The
decrease was principally a result of a reduction in non-deductible
expenditure relating to the IFCO acquisition and integration,
together with increased utilisation of prior year unrecognised tax
losses. The effective tax rate on Underlying profit was 27%,
compared with 28% in the prior year.
PROFIT AFTER TAX
Profit after tax was US$576.3 million, up 21% (23% at constant
currency). Basic earnings per share were 38.9 US cents, up 18% (20%
at constant currency).
CASH FLOW
Cash flow from operations, prior to Significant items,
was US$591.2 million, down US$133.9 million. Higher profits were
insufficient to offset fully a US$184.7 million increase in cash capital
expenditure (primarily resulting from investment in growth
programs), negative movements in working capital (primarily
resulting from a reduction in creditors days in response to tough
economic conditions for suppliers) and the impact on provisions of
settlements of outstanding litigation in the Pallets segment.
DIVIDEND
A¢ per
share
Franking
Ex date
Record
date
Payment
date
Final
Interim
13.0
13.0
30%
20%
17/09/12
21/09/12
11/10/12
5/03/12
9/03/12
12/04/12
Brambles’ Board has declared a final dividend per share of
13.0 Australian cents, the same as the previous final dividend. Total
dividends for the year are unchanged at 26.0 Australian cents per
share. Brambles paid an interim dividend of 13.0 Australian cents
per share on 12 April 2012. The final dividend is 30% franked, up
from 20% previously.
The unfranked component of the final dividend is conduit foreign
income. Consequently, shareholders not resident in Australia will
not pay Australian dividend withholding tax on this dividend.
The Dividend Reinvestment Plan remains suspended.
SEGMENT REVIEW
PALLETS
Sales
Sales revenue in the Pallets segment was US$3,743.9 million, up 13%
(15% at constant currency), driven by a full 12 months’ contribution
from the IFCO Pallet Management Services (PMS) business in the
USA, new business growth in particular in CHEP’s operations in the
Americas and expansion in the emerging markets regions.
On a pro forma basis, sales revenue in the Pallets segment was
up 5% (6% at constant currency). Net new business wins in the
Pallets segment were US$130 million, contributing pro forma
constant currency sales revenue growth of 4%. Pricing and like-for-
like sales volume increases contributed the remaining growth.
Combined sales revenue from the emerging markets regions (Asia,
Central & Eastern Europe, Latin America and Middle East & Africa)
of the Pallets segment was US$462.9 million, up 11 % (20% at
constant currency), ahead of the company’s forecast of at least 15%
constant currency growth.
The net annualised value of new business Brambles secured in the
Pallets segment during the year was US$228 million.
Brambles Annual Report 2012 - Page 6
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
Profit
Operating profit in the Pallets segment was US$691.4 million,
up 6% (8% at constant currency) after Significant items
of US$23.6 million. The operating profit margin was 18%, down
2 percentage points.
Underlying profit was US$715.0 million, up 9% (11% at constant
currency). The Underlying profit margin was down 1 percentage
point to 19%. Improvements in the Americas margin were
insufficient to offset fully the impact of lower profitability in EMEA.
On a pro forma basis, Underlying profit growth was 7% (9% at
constant currency).
During the year, the Pallets segment delivered the first US$5 million
of IFCO integration synergies and the first US$10 million of global
Pallets segment efficiencies. Brambles has forecast US$35 million
total IFCO integration synergies by the end of financial year 2014
and US$60 million global Pallets segment efficiencies by the end of
financial year 2015.
Return on capital invested in the Pallets segment was unchanged at
19%, as a strong improvement in the Americas region offset the
decline in EMEA profitability.
Cash flow
Cash flow from operations in Pallets was US$513.6 million,
down US$78.9 million - despite higher profit and stable capital
expenditure – as a result of adverse working capital movements and
the impact of the settlement of outstanding litigation.
PALLETS – AMERICAS
US$M
Change
2012
2011
Actual FX Constant FX
Sales revenue
2,041.3 1,654.8
Operating profit
346.4
275.6
Margin
17%
17%
23%
26%
-
Significant items:
Restructuring
17.2
1.3
Underlying profit
363.6
276.9
31%
18%
17%
272.3
272.6
1pp
(0.3)
Margin
Cash flow from
operations
Return on capital
invested
25%
27%
-
33%
1pp
CHEP Latin America’s sales revenue was US$232.2 million, up 10%
(18% at constant currency), reflecting the continued expansion of
CHEP’s operations in this region.
IFCO PMS’s sales revenue of US$366.8 million was up 9% (9% at
constant currency) on a pro forma basis, primarily reflecting net
new business wins.
LeanLogistics’ sales revenue was US$19.0 million, up 14% (14% at
constant currency), as it won new business in the USA and expanded
in other countries.
Business wins
The net annualised value of new business secured during the period
was US$134 million, with strong contributions from all business
units, in particular CHEP USA. Key wins during the period for CHEP
included PepsiCo in the USA and Brazil, Sunny Delight and Mott’s in
the USA, Coca-Cola in Canada, La Costeña in Mexico and Unilever in
Chile. Business wins for IFCO PMS were also strong.
Profit
Operating profit, after Significant items of US$17.2 million, was
US$346.4 million, up 26% (27% at constant currency). The operating
profit margin was flat at 17%.
Underlying profit was US$363.6 million, up 31% (33% at constant
currency). On a pro forma basis, Underlying profit growth was
25% (27% at constant currency). The Underlying profit margin was
18%, up 1 percentage point. Excluding IFCO PMS, the Underlying
profit margin was 20%, up 3 percentage points.
Margin improvement reflected the delivery of US$32 million of
efficiencies in the Better Everyday business improvement program in
CHEP USA, and combined savings of US$15 million from the delivery
of operations and logistics efficiencies and IFCO integration
synergies. Total Better Everyday spending was US$53 million.
Return on capital invested was 17%, up 2 percentage points, despite
a full year of additional goodwill from the acquisition of IFCO PMS,
reflecting increased profit and capital efficiencies.
Cash flow
Cash flow from operations was US$272.3 million, down
US$0.3 million, as higher profits offset increased capital
expenditure and working capital.
PALLETS – EMEA
US$M
Change
2012
2011
Actual FX Constant FX
17%
15%
2pp
Sales revenue
1,326.8
1,318.3
1%
Operating profit
269.3
299.9
(10)%
4%
(8)%
Sales
Sales revenue in the Americas region of the Pallets segment
was US$2,041.3 million, up 23% (25% at constant currency), as a
result of strong new business growth in all business units plus a
modest contribution from increases in like-for-likes volumes and
pricing growth. On a pro forma basis, sales revenue was up 7% (7% at
constant currency).
The impact during the period of net new business wins
was US$79 million, contributing 4% constant currency sales revenue
growth. Like-for-like volumes and pricing each contributed the rest
of the constant currency sales revenue growth.
CHEP USA’s sales revenue was US$1,166.8 million, up 5% (5% at
constant currency), predominantly as a result of strong new business
growth and targeted pricing initiatives.
CHEP Canada’s sales revenue was US$256.7 million, up 13% (14% at
constant currency), reflecting continued business growth and the
contribution of Paramount Pallet, acquired in November 2011.
CHEP Canada’s pro forma sales revenue growth was 6% (6% at
constant currency).
Margin
20%
23%
(3)pp
(3)pp
Significant items:
Restructuring
(0.3)
2.7
Pension costs
5.8
Underlying profit
274.8
302.6
(9)%
Margin
21%
23%
(2)pp
(6)%
(2)pp
Cash flow from
operations
Return on capital
invested
215.4
259.1
(43.7)
21%
24%
(3)pp
Sales
Sales revenue in the EMEA region of the Pallets segment was
US$1,326.8 million, up 1% (4% at constant currency) as new business
wins, modest pricing growth and expansion in Central & Eastern
Europe, Middle East & Africa and under-penetrated parts of Western
Europe offset the impact of weak economic conditions in more
Brambles Annual Report 2012 - Page 7
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
established markets. Net new business wins of US$41 million
contributed constant currency sales revenue growth of 3%, while
pricing contributed 2% growth and like-for-like sales volumes had a
negative impact of (1)%.
CHEP Western Europe sales revenue was US$1,137.4 million, down
1% (up 2% in constant currency), as a relatively resilient result in the
UK & Ireland and France and continued expansion in the under-
penetrated Mid Europe region (Germany, Italy, Benelux, Scandinavia
and Austria & Switzerland) offset the impact of weak economic
conditions in Iberia.
PALLETS – ASIA-PACIFIC
US$M
Change
2012
2011
Actual FX Constant FX
Sales revenue
375.8
340.0
Operating profit
75.7
74.1
11%
2%
7%
(3)%
Margin
20%
22%
(2)pp
(2)pp
Within CHEP Western Europe:
Significant items:
- Mid Europe sales revenue was US$358.2 million, up 3% (6% at
Restructuring
0.9
1.3
constant currency);
- UK & Ireland sales revenue was US$350.9 million, up 1% (1% at
-
-
constant currency);
Iberia sales revenue was US$258.8 million, down 6% (4% at
constant currency; and
France sales revenue was US$169.5 million, down 1% (up 2% at
constant currency).
CHEP Middle East & Africa sales revenue was US$135.1 million,
up 3% (14% at constant currency), as this region continued to deliver
growth in pricing, like-for-like sales volumes and new business.
CHEP Central & Eastern Europe sales revenue was US$54.3 million,
up 24% (37% at constant currency), reflecting continued expansion in
the region, in particular in Turkey and Poland.
Business wins
The net annualised value of new business signed during the period
was US$82 million. Key wins included: Kellogg’s in Scandinavia;
Colgate-Palmolive and Henkel in Turkey; Eckes Granini in Germany
and Horizon Tissue in Estonia.
Profit
Operating profit was US$269.3 million, down 10% (8% at constant
currency), after Significant items of US$5.5 million. The operating
profit margin was 20%, down 3 percentage points.
Underlying profit was US$274.8 million, down 9% (6% at constant
currency). The Underlying profit margin was 21%,
down 2 percentage points.
The main drivers of the decline in profit were increases in
inflationary pressures and quality spending, as well as business
development costs in emerging markets. Operating margins remain
lower in emerging markets than in more developed regions of
Europe in which costs have not come down sufficiently to offset the
impact of reduced sales growth. In the second half, the business
made progress in delivering targeted efficiencies and overhead
reductions to offset these margin pressures.
Return on capital invested was 21%, down 3 percentage points, as
reductions in capital expenditure were unable to offset fully the
impact of reduced profit.
Cash flow
Cash flow from operations was US$215.4 million, down
US$43.7 million, primarily reflecting reduced Underlying profit.
Underlying profit
76.6
75.4
2%
(3)%
Margin
20%
22%
(2)pp
(2)pp
Cash flow from
operations
Return on capital
invested
25.9
60.8
(34.9)
20%
23%
(3)pp
Sales
Sales revenue in the Asia-Pacific region of the Pallets segment
was US$375.8 million, up 11% (7% at constant currency), as Australia
& New Zealand delivered a robust performance and new business
growth continued throughout Asia.
Net new business wins contributed 3% constant currency sales
revenue growth. Like-for-like sales volume increases and
pricing initiatives contributed the remaining sales growth. The
total contribution during the period of net new business wins
was US$10 million.
Australia & New Zealand sales revenue was US$334.5 million, up 7%
(4% at constant currency), primarily as a result of volume increases
with existing customers in Australia.
Asia sales revenue was US$41.3 million, up 45% (46% at constant
currency), reflecting sales growth with new and existing customers.
Business wins
The net annualised value of new business secured during the period
was US$12 million. Key business wins included: F&N Foods in
Malaysia; Swire Luohe, Annto Logistics and FM Logistics in China;
and Knorr Bremse and Schenker in India.
Profit
Operating profit was US$75.7 million, up 2% (down 3% at constant
currency), after Significant items of US$0.9 million. The operating
profit margin was at 20%, down 2 percentage points.
Underlying profit was US$76.6 million, up 2% (down 3% at constant
currency). The Underlying profit margin was 20%,
down 2 percentage points.
The main drivers of the reduced margin was the continued
investment in expansion in Asia, where margins are currently lower
while CHEP expands its network to a more efficient scale, and the
non-recurrence of insurance gains in Australia.
Return on capital invested was 20%, down 3 percentage points,
reflecting increased capital investment to support growth.
Cash flow
Cash flow from operations was US$25.9 million, down
US$34.9 million, reflecting higher capital expenditure in Asia and
the impact in the first half of a court case in Australia.
Brambles Annual Report 2012 - Page 8
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
RPCS
US$M
CONTAINERS
Change
US$M
Change
2012
2011
Actual FX Constant FX
2012
2011
Actual FX Constant FX
Sales revenue
759.5
310.0
Operating profit
109.3
27.8
145%
293%
Margin
14%
9%
5pp
149%
301%
5pp
Significant items:
IFCO integration 16.2
25.5
Restructuring
-
Underlying profit
125.5
Margin
17%
0.5
53.8
17%
133%
138%
-
-
Cash flow from
operations
Return on capital
invested
(40.8)
42.8
(83.6)
9%
12%
(3)pp
Sales
Sales revenue in the RPCs segment was US$759.5 million,
up 145% (149% at constant currency), reflecting a full 12 months
contribution from IFCO and sales growth in all regions. On a pro
forma basis, sales revenue was up 13% (15% at constant currency), in
line with management forecasts for constant currency growth of
15%. Sales volume increases with existing retail partners contributed
10% pro forma constant currency sales revenue growth while net
new business wins contributed 4% and pricing and mix improvements
contributed 1%. On a pro forma basis:
- Europe sales revenue was US$489.5 million, up 14% (16% at
constant currency);
- North America sales revenue was US$138.3 million, up 16% (16% at
constant currency); and
- South America sales revenue was US$24.1 million, up 13% (22% at
constant currency).
The RPCs operations in Australia, New Zealand and South Africa
delivered sales revenue of US$107.6 million, up 6% (6% at
constant currency).
Business wins
The net annualised value of new business won during the period
was US$42 million. Key contributors in the period included provision
of services to the retail supply chains of Loblaw’s in Canada, Vega
in Italy, Waitrose and Asda in the UK and Systeme U in France, and a
contract with Coolibah Herbs in Australia.
Profit
Operating profit was US$109.3 million, up 293% (301% at constant
currency), after Significant items of US$16.2 million related to IFCO
integration. The operating profit margin was 14%, up 5 percentage
points, reflecting the high integration costs in the prior year.
Underlying profit was U$125.5 million, up 133% (138% at constant
currency), including US$19.3 million of costs from the amortisation
of identified acquired intangible assets. On a pro forma basis,
Underlying profit growth was 16% (19% at constant currency). The
Underlying profit margin was 17%, the same as the prior year. The
RPCs segment delivered US$5 million in integration synergies in
Europe in the period, in line with management forecasts. Return on
capital invested was 9%, down 3 percentage points, including a full
year of goodwill attributable to IFCO’s RPC business.
Cash flow
Cash flow from operations was US$(40.8) million,
down US$83.6 million, primarily reflecting increased capital
expenditure and working capital to support growth.
Sales revenue
276.6
233.8
18%
Operating profit
Margin
32.8
12%
Underlying profit
32.8
12%
29.2
Margin
Cash flow from
operations
Return on capital
invested
20%
(11)%
(4)pp
(11)%
(4)pp
37.9
16%
37.9
16%
29.7
(13)%
(4)pp
(13)%
(4)pp
(0.5)
14%
20%
(6)pp
Sales
Sales revenue in the Containers segment was US$276.6 million,
up 18% (20% at constant currency), reflecting the contribution of
acquisitions, and a modest contribution from like-for-like sales
volumes and net new business wins.
The total sales revenue of Brambles’ new Containers operations in
the Automotive and IBCs sectors in the USA and the global
Aerospace Solutions business was US$57 million, up 167%, ahead of
management forecasts that it would double on the prior year.
By industry segment, Containers’ sales revenue was as follows:
- Automotive sales revenue was US$154.8 million, up 4% (6% at
constant currency), as solid growth in Asia and Europe more than
offset weakness in operating conditions in Australia and a slower
than anticipated rate of growth in the USA;
- CHEP Catalyst & Chemical Containers (CCC) sales revenue
was down 1% (flat at constant currency) at US$37.9 million,
reflecting muted customer activity levels;
- Intermediate Bulk Containers (IBCs) sales revenue was
US$43.1 million, up 28% (29% at constant currency), primarily
reflecting new business wins in the CAPS business in the USA; and
- CHEP Aerospace Solutions sales revenue was US$40.8 million,
up 219% (211% at constant currency), reflecting the impact
of acquisitions.
On a pro forma basis, sales revenue in the Containers segment was
up 4% (5% at constant currency).
Business wins
The net annualised value of new business won during the period
was US$20 million, reflecting the strong rate of new sales growth
in the second half of the year. Key drivers of the wins included
expansion with white goods manufacturers in Turkey, expansion of
the IBCs business in the USA and new contracts with United Airlines,
Air Pacific, Air Cargo Japan, Qatar Airways and Jetstar in CHEP
Aerospace Solutions.
Profit
Operating profit was US$32.8 million, down 13% (11% at constant
currency), reflecting business development costs to support growth
in the automotive and IBC operations in the USA and the global
Aerospace Solutions operations. Underlying profit was the same as
operating profit as there were no Significant items. The profit
margin was 12%, down 4 percentage points.
Return on capital invested was 14%, down 6 percentage points, as a
result of the lower profit, increased capital expenditure to support
growth, and the impact of acquired goodwill.
Cash flow
Cash flow from operations was US$29.2 million, down
US$0.5 million, reflecting the reduction in Underlying profit.
Brambles Annual Report 2012 - Page 9
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
RECALL
US$M
Change
ADDITIONAL FINANCIAL INFORMATION
CAPITAL EXPENDITURE ON PROPERTY,
PLANT & EQUIPMENT (ACCRUALS BASIS)
2012
2011
Actual FX Constant FX
US$M
2012
2011
Change
Sales revenue
845.0
815.3
Operating profit
160.1
145.8
4%
10%
4%
10%
Margin
19%
18%
1pp
1pp
Significant items:
Restructuring
14.1
(0.5)
Underlying profit
174.2
145.3
20%
19%
Pallets – Americas
Pallets – EMEA
Pallets - Asia-Pacific
Total Pallets
RPCs
Containers
282.9
266.5
(16.4)
233.5
282.7
84.9
84.4
601.3
633.6
227.2
48.4
69.7
36.7
49.2
(0.5)
32.3
(157.5)
(11.7)
Margin
21%
18%
3pp
2pp
Total Pooling Solutions
876.9
740.0
(136.9)
Recall
Brambles HQ
42.8
81.8
1.4
0.1
39.0
(1.3)
Total Brambles
921.1
821.9
(99.2)
Brambles’ capital expenditure (accruals basis) was US$921.1 million,
up US$99.2 million, reflecting increased investment in expanding
the Pooling Solutions operations. Growth capital expenditure in
RPCs, Containers and emerging markets Pallets was US$240 million,
in line with the US$550 million program of investment in these areas
over the 2012 and 2013 financial years.
Cash flow from
operations
Return on capital
invested
131.6
92.6
39.0
16%
14%
2pp
Sales
Recall’s sales revenue was US$845.0 million, up 4% (4% at constant
currency), with net new business wins of US$24 million contributing
3% growth and like-for-like sales volume increases and pricing
contributing a combined 1% growth. The net annualised value of
new business was US$24 million.
Profit
Operating profit was US$160.1 million, up 10% (10% at constant
currency), after US$(14.1) million of Significant items associated
with restructuring. The operating profit margin was 19%,
up 1 percentage point.
Underlying profit was US$174.2 million, up 20% (19% at constant
currency) reflecting sales growth and efficiency improvements. The
Underlying profit margin was 21%, up 3 percentage points.
At 30 June 2011 foreign exchange rates, Underlying profit was
US$182.1 million, within the guidance range previously provided.
Cash flow
Cash flow from operations was US$131.6 million, up US$39.0 million,
reflecting profit growth.
Brambles Annual Report 2012 - Page 10
OPERATIONAL & FINANCIAL REVIEW – CONTINUED
CASH FLOW
US$M
2012
2011
Change
US$M, fixed June 2011 FX
2012
2011
Change
BRAMBLES VALUE ADDED
Underlying profit
1,009.7
857.2
152.5
Pallets – Americas
Depreciation and amortisation
552.2
479.8
72.4
Pallets - EMEA
EBITDA
1,561.9 1,337.0
224.9
Pallets - Asia-Pacific
134.9
128.5
30.8
76.5
58.4
152.9
(24.4)
36.6
(5.8)
Capital expenditure
(949.4)
(764.7)
(184.7)
Total Pallets
294.2
266.0
28.2
Proceeds from sale of PP&E
93.5
100.8
(7.3)
Working capital movement
(107.9)
(14.8)
(93.1)
Irrecoverable pooling equipment
provision
100.1
104.9
(4.8)
Provisions/other
(107.0)
(38.1)
(68.9)
591.2
725.1
(133.9)
RPCs
Containers
(41.8)
3.2
(45.0)
6.2
17.8
(11.6)
Total Pooling Solutions
258.6
287.0
(28.4)
Recall
45.5
23.5
22.0
Brambles HQ
(29.1)
(29.0)
(0.1)
Cash flow from Continuing
operations
Significant items from continuing
operations
Cash flow from discontinued
operations
Cash flow from operations
(incl. Significant items)
(37.2)
(30.4)
(6.8)
Total Brambles
275.0
281.5
(6.5)
(1.0)
(4.7)
3.7
553.0
690.0
(137.0)
Brambles Value Added (BVA), the company’s definition of economic
profit, was US$275.0 million, down US$6.5 million. Improvements in
the Pallets segment and Recall were insufficient to offset the
impact of increased investment to support growth in the RPCs and
Containers segment.
Financing costs and tax
(373.5)
(386.7)
13.2
Free cash flow
Dividends paid
179.5
303.3
(123.8)
(397.7)
(224.0)
(173.7)
NET DEBT & KEY RATIOS
US$M
Jun 12
Jun 11
Change
Free cash flow after dividends
(218.2)
79.3
(297.5)
Current debt
86.4
325.6
(239.2)
Cash flow from Continuing operations was US$591.2 million,
down US$133.9 million, reflecting increased capital expenditure to
support growth in the Pooling Solutions segments and negative
movements in working capital and provisions.
Free cash flow after dividends was US$(218.2) million, down
US$297.5 million, reflecting the lower cash flow from operations
and the suspension of the dividend reinvestment program.
Non-current debt
2,777.7
2,811.7
(34.0)
Gross debt
2,864.1
3,137.3
(273.2)
Less cash
Net debt
KEY RATIOS (X)
(174.2)
(138.5)
(35.7)
2,689.9
2,998.8
(308.9)
Net debt to EBITDA
1.7x
2.2x
EBITDA interest cover
10.3x
10.5x
Net debt was US$2,689.9 million at 30 June 2012, down
US$308.9 million from 30 June 2011, as a result of the receipt in
June 2012 of proceeds of A$332.8 million before costs from the
institutional component of the A$448.1 million rights issue. The
retail component of the rights issue raised A$115.3 million before
costs and was received in July 2012.
The impact on net debt from the net US$(218.2) million negative
free cash flow after dividends was offset by a positive translation
effect from the stronger US dollar against Brambles’ other
borrowing currencies.
At 30 June 2012, Brambles had committed credit facilities including
bonds and notes of US$4,008.8 million. The average term to
maturity of committed credit facilities was 3.7 years. Undrawn
committed facilities of US$1,223.1 million provide additional
financial flexibility.
The ratio of net debt to EBITDA at 30 June 2012 was 1.7 times,
compared with 2.2 times at 30 June 2011, reflecting the reduction
in net debt from the rights issue. The ratio is in line with Brambles
financial policy to target net debt to EBITDA of less than 1.75 times.
During the year, the Company maintained investment grade credit
ratings of BBB+/Baa1.
Brambles Annual Report 2012 - Page 11
TREASURY & RISK REVIEW
CAPITAL STRUCTURE
Brambles manages its capital structure to maintain a solid
investment grade credit rating. During the financial year
ended 30 June 2012, Brambles held investment-grade credit
ratings of BBB+ from Standard & Poor’s and Baa1 from Moody’s
Investors Service.
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. 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 borrowings.
Brambles’ financial policy is to target a net debt to EBITDA ratio of
less than 1.75 times. The ratio at 30 June 2012 was 1.7 times.
In June 2012, Brambles announced its intention to raise additional
equity of A$448 million through a fully underwritten, 1-for-20 pro
rata accelerated renounceable entitlement offer. The purpose of
the equity raising was to replace funds Brambles would have raised
through the underwritten dividend reinvestment plan for the 2011
final and 2012 interim dividends, which formed part of the equity
component of the original IFCO acquisition funding plan. The
institutional portion of the rights offer raised A$332.8 million before
costs and was received in June 2012. The net proceeds were used to
retire bank borrowings drawn under various revolving credit
facilities. The retail portion of the rights issue was received in July
2012 totalling A$115.3 million before costs.
TREASURY POLICIES
Brambles’ treasury function is responsible for the management of
certain financial risks within Brambles. Key treasury activities
include liquidity management, interest rate and foreign exchange
risk management, and securing access to short- and long-term
sources of debt finance at competitive rates. These activities are
conducted on a centralised basis in accordance with Board policies
and guidelines, through standard operating procedures and
delegated authorities. These policies provide the framework for
treasury to arrange and implement lines of credit from its financier,
select and deal in approved financial derivatives for hedging
purposes, and generally execute Brambles’ financial strategy.
Brambles’ policies with respect to interest and exchange rate risks
and appropriate hedging instruments are described below. Further
information is contained in Note 30 on pages 113 to 122 of this
report, including a sensitivity analysis (pages 116 and 118) with
respect to these financial instruments.
The Group uses standard financial derivatives to manage financial
exposures in the normal course of business. It does not use
derivatives for speculative purposes and transacts derivatives
predominantly with relationship banks with a reasonable
understanding of its business operations. Individual credit limits are
assigned to those banks, thereby limiting exposure to credit-related
losses in the event of non-performance by any counterparty.
Treasury reports are circulated each month to the Chief Financial
Officer and other senior finance executives. These reports include
statistical analyses, details of funding utilisation and capacity, and
commentary on other significant matters.
FUNDING AND LIQUIDITY
Brambles funded its operations during the 2012 financial year
through equity issuance, retained cash flow and new borrowings.
The Group generally sources debt funding from relationship banks
and debt capital market investors on a medium-to-long-term basis.
Brambles enters into operating leases for office and operational
locations and certain plant and equipment.
Bank borrowing facilities are generally structured on multi-currency,
revolving bases and currently have maturities ranging to December
2016. Borrowings under the facilities are floating-rate, unsecured
obligations with covenants and undertakings typical for these types
of arrangements.
Net debt at 30 June 2012 was US$2.689.9 million, down
US$308.9 million from 30 June 2011, reflecting the proceeds from
the institutional portion of the rights issue.
Key financial ratios continue to reflect the Company’s strong
balance sheet position and remain well within the financial
covenants included in Brambles’ major financing agreements, with
net debt to EBITDA at 1.7 times (2011: 2.2 times) and EBITDA
interest cover at 10.2 times (2011: 10.4 times).
At 30 June 2012, Brambles had committed credit facilities including
bonds and notes totalling US$4,008.8 million. Undrawn committed
borrowing capacity totalled US$1,223.1 million. The average term to
maturity of Brambles’ committed credit facilities at 30 June 2012
was 3.7 years (2011: 4.1 years).
The table below shows the maturity profile of the Group’s
committed borrowing facilities and outstanding bonds, including the
percentage due in each 12-month maturity bucket.
MATURITY PROFILE OF COMMITTED BORROWING
FACILITIES AND OUTSTANDING BONDS (US$B)
1.5
1.0
0.5
26%
29%
22%
13%
9%
1%
0.0
< 1 yr 1-2yrs 2-3yrs 3-4yrs 4-5yrs > 5yrs
% = percentage of total credit facilities
Undrawn Facilities
Bank Borrowings
Bonds / Notes
Brambles’ liquidity policy requires, among other things, that no
more than 25% of total committed credit facilities mature in
any rolling 12-month period. At 30 June 2012, the one-to-two-
year maturity period had maturities totalling 26% of total
committed facilities, which was slightly higher than the 25%
threshold level. The Group actively manages its maturity profile
and expects to attain full compliance with the policy as it
refinances credit facilities.
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.
The policy requires the level of fixed-rate debt to be within 40% to
70% of total forecast debt arising over the immediate 12-month
period, decreasing to a range of 20% to 60% for debt maturities of
one to two years, a range of 10% to 50% for debt maturities of two
to three years, and a range of 0% to 50% for debt maturities
extending beyond three years.
Brambles Annual Report 2012 - Page 12
TREASURY & RISK REVIEW - CONTINUED
As at 30 June 2012, Brambles had 51% of its weighted average
interest-bearing debt over the next 12 months at fixed interest rates
(2011: 58%). Beyond 12 months, the proportion of fixed rate debt in
the range one to two years was 47% (2011: 50%), 45% for two to
three years (2011: 47%) and 39% for three to four years (2011: 45%)
with a decreasing proportion for each year thereafter. The weighted
average maturity period was 5.1 years (2011: 5.5 years). The fair
value of all interest rate swap instruments was US$23.5 million net
gain (2011: US$13.9 million net gain).
FOREIGN EXCHANGE RISK
Foreign exchange exposures are managed from a perspective of
reducing volatility in the value of the foreign currency cash flows
and assets of the business.
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 the hedging of transaction exposures where
such exposures 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. Given the nature of the Group’s operations,
these exposures are not significant.
Brambles mitigates translation exposures generally by raising debt in
currencies where there are matching assets. During the Year
Brambles maintained net investment hedge borrowings in euro of
€350.5 million to match the euro-denominated assets. At the end of
the financial year, the fair value of foreign exchange instruments
was US$1.8 million net loss (2011: US$1.2 million net gain).
SIGNIFICANT RISKS & UNCERTAINTIES
Brambles has adopted a risk management framework which sets out
the processes for the identification and management of risk
throughout the Group. Full details of the objects of the framework
and the strategies and processes applied to manage these risks are
described in section 7 of the Corporate Governance Statement on
pages 40 to 42.
The risk management framework provides for a biannual production
of a Group risk matrix, which sets out the top 10 “net” risks facing
the Group and the steps being taken to mitigate those risks. The
top 10 “net” risks are rated on the basis of their potential impact
on the Group as a whole after taking into account current
mitigating actions.
Listed below are the top 10 net risks on the risk matrix for the Year.
Investors should be aware that there are other risks associated with
an investment in Brambles. Some of the principal factors that may,
either individually or in combination, affect the future operating
and financial performance of Brambles and the value of Brambles
shares are set out in the Investor Presentation dated 4 June 2012, a
copy of which can be found in the ASX Announcements section of
the Brambles website.
- Business model – changing supply chain dynamics and customer
needs could render CHEP’s existing service offering and business
model out of date. Current market issues that, in combination or
separately, could support competitive service offerings include:
differing segmental needs, attributes of wood versus alternative
materials, use of track-and-trace technology, increasing fuel
costs, changes in retailer behaviour and the embedded cost of
asset losses in the current model. These issues could, over time,
have an impact on revenue, cost base, economies of scale and the
value of CHEP’s existing assets.
- 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 market structure, bargaining position and intensity of
competition. The above risks could have an impact on market
penetration, revenue, profitability, economies of scale and the
value of existing assets.
- Strategy and execution – Brambles is subject to the risk of not
having effective strategies in place to guide the Group’s
performance and to drive sales and profit growth, enable
innovation, safety improvements and improve customer and
employee satisfaction. Further, it is subject to the risk of not
being able to effectively execute against agreed strategies
resulting in loss of market and investor confidence and reduced
share performance.
- 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.
- Equipment losses – Brambles is subject to the risk of a lack of
control of Pooling Solutions equipment. This could impact
financial performance and lead to a reduction in customer
satisfaction.
- 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.
- Market communication – Brambles is subject to risks relating to
not effectively communicating to the market, which may lead to a
loss of investor confidence in the business and its management
and reduced share performance.
- People capability – Brambles is subject to the risk of not
attracting, developing and retaining high-performing individuals.
Furthermore, succession planning may not be managed
effectively, so that talented individuals are able to be developed
and promoted within the Group, rather than sourced externally.
This could result in Brambles not having sufficient quality and
quantity of people to meet its growth and business objectives.
- Systems and technology – Brambles relies on the continuing
operation of its information technology and communications
systems, including those in CHEP’s global data centre.
Interruption, compromise or failure of these systems 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.
- Zero Harm – Brambles is subject to inherent operational risks,
including industrial hazards, road traffic or transportation
accidents that could potentially result in serious injury or fatality
of employees, contractors or members of the public. There is also
a risk of prosecution of its Officers and Directors due to wilful or
negligent breaches of safety regulations.
Brambles Annual Report 2012 - Page 13
SUSTAINABILITY REVIEW
Brambles believes it makes a positive contribution to sustainable
business practices through its unique position in the supply chain.
It is a global leader in responsible and sustainable pooling
solutions in the industries it serves.
Brambles is committed to being a responsible and valuable
partner in the supply chain and is focused on building a long-term
sustainable business that serves its customers, employees and
shareholders and the communities in which they live.
Brambles’ success relies on its ability to optimise supply chain
networks and make the most from the hundreds of millions of
journeys its pallet, crate and container assets make each year.
Brambles has a unique ability to provide an efficient and expertly
managed network that can reduce the distances travelled by its
assets and is engaging with key stakeholders to build long-term
resilience within its supply chains.
A low-cost business model that leverages global scale is
fundamental to Brambles’ growth strategy. Brambles is applying
best-practice standards throughout its operations and logistics
and is continuously vigilant in reducing asset losses, cycle times
and damage. Fundamental to these efficiency efforts are the
principles of reduce, reuse and recycle.
The repeated use of higher quality assets when compared to
alternative disposable or limited-use platforms reduces material
and energy requirements. Brambles retains ownership of its
assets at all times, thereby ensuring that end of life management
is controlled and recovery, re-use and recycling efforts can be
maximised. The fundamental principles on which Brambles’
business models are built are inherently sustainable.
Reporting Initiative (GRI) reporting principles for delivering
content and quality.
ASSURANCE
During the Year, Brambles engaged KPMG to provide limited
assurance on Brambles’ adherence to the GRI principles for
defining content (being: materiality, stakeholder inclusiveness,
sustainability context and completeness) and selected indicators,
which include greenhouse gas emissions of pallets, lumber
purchases subject to chain of custody and gender diversity1.
The selected indicator data covered by KPMG’s limited
assurance opinion contained in the review are identified by an
asterisk. KPMG issued an unmodified opinion on 27 August 2012.
KPMG’s statement of limited assurance can be found on
Brambles’ website.
KPMG will report key observations and recommendations on its
findings to Brambles in the first quarter of FY13 for consideration
by Brambles’ Sustainability Committee, which is a management
committee. Brambles has developed an assurance
implementation plan that will increase its assurance coverage to
include more indicators and the remaining parts of the Pallets
segment (under the IFCO Pallet Management Services (PMS) and
Paramount Pallet brands in the Americas region), the RPCs
segment, the Containers segment and Recall over a three-year
period. Key observations made during this period will inform and
shape the assurance process as it progresses.
A description of the scope of this limited assurance is available
on Brambles’ website.
The intent of Brambles’ sustainability strategy and roadmap is to:
KEY ACTIVITIES DURING THE YEAR
– demonstrate the inherent sustainability value that exists for
Brambles and its stakeholders; and
– focus on areas in the supply chain where Brambles can improve
its sustainability offering.
Brambles aims to integrate sustainability into the way it does
business so it can continuously improve and develop more
efficient, safer and environmentally sustainable supply chains.
BOUNDARIES
The Sustainability Review covers Brambles’ CHEP and Recall sites
for the financial year ended 30 June 2012 (the Year).
The review does not include information from recent acquisitions
made in the last two years, with the exception of information
provided from IFCO to identify key sustainability issues,
participation in the Brambles Employee Survey (BES) and other
specific issues detailed throughout the review. As integration of
the recently acquired businesses into the new organisational
structure of the three pooling solutions segments of Pallets,
Reusable Plastic Crates (RPCs) and Containers continues,
Brambles expects to collect data for all owned entities in its new
online data collection system, iCARE, in FY13. The review does
not include data from any service centre operated by a third
party, with the following exceptions:
– an estimation of emissions associated with third-party operated
service centres operated on CHEP’s behalf and transportation
associated with balancing its pallet pool; and
– CHEP’s purchase of wood pallets in Europe from suppliers that
use chain of custody certified lumber. In all other cases CHEP
purchases the lumber used in the manufacturing and repair of
CHEP pallets.
CRITERIA
Details about the measurement techniques and methodologies
used in this Sustainability Review are either described herein or
can be found on Brambles’ website. The Sustainability Review
has been prepared with reference to the G3.1 Global
In August 2011, Brambles announced it would focus on building
its Pooling Solutions business under a new organisation structure
with three segments: Pallets, RPCs and Containers. This took
effect on 1 October 2011.
Brambles also announced in August 2011 it intended to divest the
Recall information management business. On 4 June 2012,
following an extensive process, Brambles announced that it
would retain the business because offers from potential buyers
did not reflect Recall’s value or offer sufficient certainty amid
challenging capital markets conditions.
Brambles also undertook the following activities:
– developed the assurance implementation plan outlined above;
– commissioned a new global Occupational Health & Safety and
Environment reporting system (iCARE);
– updated the Roadmap: Five Year Plan (set out below); and
– reviewed sustainability targets.
BRAMBLES’ SUSTAINABILITY STRATEGY
In 2010, Brambles announced its sustainability strategy and
outlined its strategic objectives and initiatives over the five years
to 2015. The strategy is available on Brambles’ website.
ROADMAP: FIVE-YEAR PLAN
On the following pages are the targets Brambles has set for 2015
and beyond and commentary on progress during the Year.
These targets are key drivers in Brambles’ efforts to improve
continuously and deliver more efficient, safer and
environmentally sustainable supply chains.
1 The limited assurance engagement consisted of KPMG making inquiries,
primarily of persons who are responsible for Brambles’ adherence to the
GRI principles, for defining the content of this Sustainability Review and
for the preparation of the selected indicators presented in this
Sustainability Review, and applying analytical and other evidence
gathering procedures to that information, as appropriate.
Brambles Annual Report 2012 - Page 14
SUSTAINABILITY REVIEW - CONTINUED
Customer — all things begin with the customer
Measure
Customer
loyalty
Target
Commentary
Introduce Net Promoter Score (NPS)
methodology into every country in
which we operate
Once baseline is established, achieve
year-on-year improvements in NPS
Pallets EMEA and Americas have achieved improvements in satisfaction and customer
participation scores and they are tracking in line with the Group’s strategy. In the
Pallets segment, CHEP has completed one survey cycle in every country, with the
exception of China, which will commence later this year, and the recent acquisitions.
Customer
engagement
Increased participation in relevant
industry forums and customer
advisory panels
Brambles has memberships with numerous industry forums and associations. The new
CHEP.com website lists those associations and memberships.
Environment — working towards Zero Harm by reducing Brambles’ environmental footprint
Target
Commentary
Measure
Lumber
sourcing
Chain of custody certification for
lumber purchased for CHEP pallets
by 2015
Greenhouse
gas emissions
20% reduction on 2010 emission
levels by 20152
During the Year, CHEP’s Programme for the Endorsement of Forest Certification
(PEFC) and Forest Stewardship Council (FSC) accreditation in Europe was expanded to
include all European countries. Work plans and timelines for remaining countries are
in place. Brambles is collaborating with the new global procurement function in the
Pallets segment on this target (see page 18).
Greenhouse gas (GHG) emissions for the Group decreased by 15% from FY10 as energy
efficiency programs begin to take effect (see page 19). Brambles will standardise
reporting through iCARE (integrated compliance analysis and reporting environment),
its new online data collection system, in FY13.
Lumber waste Zero CHEP lumber waste to landfill
by 2015
Data collection processes are in place to track waste and businesses are investigating
avenues where lumber waste can be re-used (see page 22).
Solid waste
Year-on-year improvements in
service centre recycling rates
Data collection processes are in place (see page 22); during the Year, Brambles
worked with suppliers to improve the quality and accuracy of data. Brambles will
standardise reporting in FY13.
Water
management
Targets to be established once IFCO
is fully integrated into Brambles
Brambles will collect FY12 and FY13 water data from IFCO and pre-existing
businesses.
People — engaging our people and making sure they are safe
Measure
Diversity
Target
Commentary
Women to represent 30% of Brambles’
Board and the Executive Leadership
Team by 2015; management positions
by 2018
Revised target. Progress has been made in pre-existing businesses. With the addition
of recently acquired businesses, which have lower female populations, it is apparent
that additional time will be needed to meet part of the target. The Board and ELT
target will remain for 2015, with management positions extended to 2018 (see
page 38 for breakdown by position).
Zero Harm
25% reduction in Brambles Injury
Frequency Rate (BIFR) on 2012
adjusted levels (including recent
acquisitions) by 2017
Updated target to include recently acquired businesses. While CHEP and Recall
recorded a BIFR rate of 9.3 events per million hours worked, Brambles suffered two
work-related fatalities for the Year; one in the CHEP Catalyst & Chemical Container
(CCC) business and the other in Recall. Both occurred in the USA (see page 24).
Brambles
Employee
Survey (BES)
BES overall
engagement
score
Education,
Training &
Development
(ETD)
Participation rate at minimum
of 90% by 2015
With an overall participation rate of 86% for the 2012 survey, which includes recently
acquired businesses for the first time, the target of 90% that was met in the previous
year will be maintained for 2015.
Target of 73% by 2015
Updated target to include recently acquired businesses; an incremental increase of
two percentage points per annum from the 2012 score of 67%, to 73% by 2015.
25% increase in ETD days on 2012
participation levels by 2015
Brambles reported a total of 32,415 training days in the Year.
The target has been restated; the 25% increase will be based on the number of
training days recorded in FY12.
2 Based on existing businesses and sites that have reported data since 2010; new acquisitions not included, excluding those economies defined as emerging and
developing by the International Monetary Fund; target based on internally-projected growth assumptions.
Brambles Annual Report 2012 - Page 15
SUSTAINABILITY REVIEW - CONTINUED
Community — making a positive contribution to the communities in which we operate
Measure
Target
Commentary
Restated target; in the second half of the Year, the Pallets segment appointed a head
of global procurement to lead a team that is responsible for defining suppliers’
standards and monitoring supplier performance. Brambles’ supplier policy is currently
being developed in consultation with this team, which will then be shared with the
Group for input and review. The policy will be rolled out in FY13.
For the Year, Brambles recorded 0.24 volunteer hours per employee.
Supplier Policy Develop and introduce a global
policy and framework by the end
of FY13
At least one volunteer hour per
employee during working hours
by 2015
Introduction of
“volunteer”
time for
employees
Introduction of
“give as you
earn” policies
All businesses where legislation
allows it by 2015
CHEP USA, through its CHEP Cares program, is the first business to introduce the
policy. Roll-out of the policy across Brambles is due to commence in 2013.
KEY SUSTAINABILITY TOPICS IN THE YEAR
The key sustainability topics process enables Brambles to identify
and prioritise issues raised by stakeholders that will impact on
Brambles and its stakeholders.
The topics identified through this process are used to update and
maintain targets and activities identified in Brambles five-year
roadmap and monitor the relevance of its sustainability strategy.
Brambles conducted its first formal analysis of sustainability topics
it considers important to its stakeholders in FY11, using a third-
party provider, with AccountAbility Principles Standards AA1000
five-part test as a guide.
Brambles has not undertaken any specific external stakeholder
analysis in the Year to identify sustainability issues. It has identified
and prioritised stakeholder issues through senior management, with
reference to employee and customer engagement tools, amongst
others. For the Year, the key sustainability topics were:
A survey based on the 18 topics identified in FY11 was distributed to
the segments and key functions responsible for engagement with
customers, employees and shareholders to test completeness of the
topics identified and prioritise them based on their interactions with
and understanding of their key constituents.
The new organisation structure for the Pooling Solutions business
(Pallets, RPCs and Containers) has resulted in some reordering of
the key topics in comparison to the prior year. A notable movement
in terms of increasing influence of the topic to Brambles’ corporate
strategies was community investment, which can be attributed to a
growing understanding of an effective strategic investment
program, such as IFCO’s worldwide responsibility initiative.
Another notable movement was the topic of governance, with an
emphasis on the importance of accountability and testing
sustainability claims through third party assessment and assurance.
CUSTOMER
Brambles is focused on delivering efficient, lowest total cost supply
solutions to our customers. One of Brambles’ shared values is that
all things begin with the customer.
CUSTOMER SOLUTIONS
By listening to customers and responding with innovative solutions,
Brambles will enable its customers of today to be its customers of
tomorrow. Brambles believes it makes a positive contribution to
sustainable business practices and aims to integrate sustainability
into the way it does business and the value proposition it offers.
In June 2012, CHEP in Europe and Unilever announced the successful
completion of a pilot carbon neutral program in Spain. Through this
program, Unilever is able to offset the annual carbon footprint of its
CHEP pallet movements in Spain. Unilever chose to invest the
internationally recognised VCS-certified3 offset credits it generates
through the program in a reforestation project in Tanzania. In the
development of its carbon neutral service offering, CHEP in Europe
applied recognised international standards and established
partnerships with groups and organisations. Requirements included
that the product’s materials come from sustainable sources (for
more information, see page 18); a robust measurement system that
covers all service centres, subcontracted locations, offices and
transportation functions; a comprehensive lifecycle analysis
developed in partnership with an independent third party, carried
out under ISO14040 standards and peer-reviewed; and a partnership
with a recognised leader in the carbon credit industry. The program
is now ready to be offered to other customers in Europe.
3 The verified carbon standard is used to quantify a project’s greenhouse gas
emissions and issue credits in voluntary markets.
Brambles Annual Report 2012 - Page 16
SUSTAINABILITY REVIEW – CONTINUED
During the Year, CHEP USA’s and CHEP EMEA’s dedicated value
solutions teams continued to provide industry best practices and
processes on issues that matter most to customers. The teams work
in partnership with the customer to evaluate objectively their
supply chains and develop solutions based on Lean and Six Sigma
methodologies that deliver lower financial and environmental costs
across the supply chain.
For example, CHEP USA’s customer solutions team analysed a food
service distributor’s supply chain to determine the effect of its use
of one way pallets. The team was able to demonstrate the benefits
that a pooled pallet solution could provide in cost savings, pallet
procurement, platform management, transportation, material
handling efficiency and product damage. The food service
distributor is now looking to convert its customers from one way to
pooled pallets.
CHEP's Innovation Center in Orlando, Florida is a world-class product
testing and engineering facility. CHEP collaborates with customers
to test their packaging, new products and technologies at the
Innovation Center, which adds value and drives innovation and
savings for customers. CHEP also runs a pallet test track facility that
simulates the pallet life-cycle and allows CHEP to test innovations
quickly and bring new platforms to market. Within the controlled
environment of the test track CHEP can generate the same amount
of data from a 5,000 pallet field trial with customers, using 90%
fewer pallets.
In FY12, the Innovation Center:
– supported over 100 projects for internal and external customers;
– evaluated hundreds of customer unit loads for supply chain
performance;
– tested 20 lumber species to determine their impact and strength
characteristics; and
– bench-marked several automotive container suppliers and designs
to support automotive asset procurement.
The test track facility examined three of CHEP’s largest supply
chains, which led to four major pallet test track programs that
evaluated 17 platform options for several large markets. The
programs addressed issues such as life-cycle, market needs,
material sustainability and selection, design and repair operations.
IFCO collaborates with customers to identify RPC value
opportunities and to develop packaging and supply chain
improvements through innovative product design, operational
efficiencies and better quality control. In FY12, this included RPC
solutions for bananas, eggs and strawberries. For these large volume
and highly perishable products, IFCO’s innovation improved
transport packaging performance from farm to retail.
Product innovation is a key focus for Recall, which holds regular
global customer forums. One example is Recall’s use of radio
frequency identification (RFID) solutions to solve customer
problems. Resolving filing issues as a result of human error could
take months to fix manually in a large records centre. With RFID
solutions, an error can be solved in minutes. In one instance of
human error, two employees had RFID-tagged a carton on two
separate occasions and then logged a slightly different description
of the files. When the company tried to locate the files, they
thought these were two unique records and were unable to access
the specific documents they needed. However, since the company
used RFID tagging with auditing capabilities, a search by date range
enabled the error to be discovered and the files located. Without
the use of this type of technology, finding these files would have
been time consuming.
Further details about Brambles’ innovation, research and
development activities during the Year are set out in the Directors’
Report — Other Information on page 66.
CUSTOMER SATISFACTION
Brambles’ business units are focused on improving levels of
customer satisfaction and making sure their products, services and
customer relationships are a source of competitive advantage.
Brambles is committed to improving customers’ experience of
its products, services and people. To meet that commitment
and to direct improvements, Brambles introduced the Net
Promoter program in 2010. This program includes: Net Promoter
Score (NPS) measurement; leadership practices that promote
customer-centricity; organisational strategies to ensure the
adoption and integration with core business processes of NPS; and
the gearing of operational systems to identify improvements in
customer experience.
Detailed questionnaires generate data about customers’ views on
processes and performance. This data is distilled into a single
indicator, known as the NPS, which measures the weighting of
people who use and recommend a company’s services or products,
compared with those who are unhappy. In 2012, Pallets EMEA and
Americas have achieved improvements in satisfaction and customer
participation scores, which are tracking in line with Group strategy.
The global rollout of relationship surveys for CHEP began in
April 2011 and, to date, feedback from 5,000 individual contacts
representing more than 1,500 companies has been collected through
Brambles’ annual customer survey, which measured performance in
areas such as account management, ordering, delivery and audit
and reconciliation. Following the implementation of the new Pooling
Solutions organisation structure, Brambles will roll out NPS programs
in the Containers segment in FY13. The program is providing
Brambles a snapshot of customers’ thoughts and the opportunity to
respond quickly to operational issues.
For example, previous surveys of customers in CHEP USA indicated
that pallet repair quality required further improvement. Through
the Better Everyday program, CHEP introduced a higher pallet
repair quality specification in the USA and committed to
ISO9001:2008 Quality Certification, an international standard for
quality management systems. Employee training in repairs is being
provided, along with a certification program to ensure standardised
inspection and repair processes. Process controls are being
implemented to ensure every facility is routinely tracked and
audited to control pallet repair quality. Brambles monitors these
results to detect trends and identify improvement opportunities.
Customers have also said CHEP can do more to provide value-add
services to better enable reductions in supply chain costs. CHEP is
dedicated to becoming a more strategic partner for its customers
(see Customer Solutions page 16).
Some examples of how CHEP acted on customer responses in the
2011 survey include:
– in one country, the survey indicated that some customers were
having difficulty checking invoices. All customers who had
expressed difficulty were provided examples on monitoring
monthly invoices more easily and an action plan. As a result, the
2012 survey showed an NPS improvement on this measure from
“neutral” to “satisfied”.
– 30% of customers surveyed in another country said on-time
collections were an issue, resulting in a “dissatisfied” rating.
Processes were reviewed and improved and in 2012 the survey
showed an improvement with the rating now “neutral”.
Brambles also uses NPS to initiate specific reviews. In 2011, CHEP
received questions on certain product attributes in one country.
Customers were interviewed to gather more details and
improvement projects were undertaken and monitored.
In the 2012 survey, the country improved in areas of question,
from “dissatisfied” to “neutral”.
Response to customer feedback is a high priority for IFCO, which
monitors customer satisfaction through visit reports and internal
Brambles Annual Report 2012 - Page 17
SUSTAINABILITY REVIEW – CONTINUED
complaint management. Complaints and customer feedback are
documented and handled through IFCO’s customer service, account
management and transport departments. Recall has a strong,
ongoing commitment to managing key satisfaction metrics through
its Perfect Order program and security breach reports.
CHEP, Recall and IFCO are unable to assess fully the safety risk of
customers using the company’s products on the customers’ own
sites, because of the many variables involved. All businesses engage
with customers and other organisations to promote health and
safety and responsible packaging solutions.
PRODUCT & SERVICE QUALITY & SAFETY
Brambles is committed to achieving Zero Harm and considers the
health, safety and environment impacts in all its decisions: from the
development of projects to the launch of new products and
services. Brambles is committed to continuously improving the
quality of its products and services.
CHEP’s Total Pallet Management programs on customer premises are
operated to CHEP Zero Harm standards.
CHEP's Innovation Center is a certified testing laboratory of the
International Safe Transit Association (ISTA) and is capable of
performing test methods included in ISTA’s rigorous global
packaging standards.
Safety management systems operate at every CHEP service centre
around the world. In addition, CHEP's Innovation Center assesses
health and safety impacts of each product in development.
As a result of the new management and organisation structure,
CHEP’s Global Quality Council was replaced with a Global Quality
team, which operates under the Global Operations function in
the Pallets segment. The Quality team is responsible for setting
product quality standards and audit conformance, translating
customer needs into pallet quality standards and responding to
customer complaints.
During the Year, the team conducted a detailed analysis of NPS
responses and additional customer feedback on pallet quality to
determine what the critical to quality (CTQ) aspects were in
customers’ processes. Interviews with customers in a variety of
industries and size were conducted to get a better understanding of
their feedback. The information was consolidated globally and the
CTQ feedback prioritised.
The top two CTQ issues were identified and CHEP now organises
regular visits with customers that report these issues to review the
quality of outputs. The Global Quality team is now focusing on
providing proactive processes to improve identified CTQ criteria for
CHEP customers globally.
Global product rejection and complaints by customers decreased
from 0.23% per issue in FY11 to 0.19% per issue in FY12. The Global
Quality team will continue to work on improving pallet quality
standards and measure and address customer satisfaction.
CHEP USA applies a Quality Management System (QMS) across its
supply chain. The system includes standard operating procedures to
certify and maintain the performance of all service centres,
corrective action for any customer complaint or rejection and a pest
control and cleanliness program to ensure all products are clean,
dry, odourless and free of pests or hazardous chemicals. Following
these procedures, customer product and service rejections have
reduced 61% since 2009 to less than 0.2% of issues. As a result, CHEP
USA began the process of achieving ISO9001:2008 certification in
November 2011. CHEP USA expects to complete this process in FY13.
Recall assists customers in the safe management of their document
storage requirements by clearly labelling its cartons with suggested
weight restrictions and correct handling techniques, specific to the
size of the carton (which varies from region to region) so that
neither customers nor employees put themselves at risk from strain
or injury of lifting heavy loads. Recall has stringent processes for
employees managing inbound cartons (for example, correct manual
handling techniques) to ensure adequate risk management.
IFCO has implemented a number of safety and quality management
processes, including hazard analysis critical control points (HACCP)
processes for food safety in all service centres globally, the
American Institute of Bakery (AIB) certification for all North
American service centres and the International Organization for
Standardization (ISO) certification for 70% of its European service
centres. This includes ISO 9001:2008, ISO22000:2005, ISO22001 and
ISO14001:2004. IFCO will implement Brambles Zero Harm processes
during FY13.
CUSTOMER PRIVACY
Recall establishes and adheres to stringent measures of physical and
operational security to protect customers’ information. It is
committed to securely housing, retrieving and delivering customers’
information when it is required.
Recall operates global standards in relation to the security, access
and protection of the information it manages for customers.
These standards are detailed on Brambles’ website. All Recall sites
are regularly measured and assessed for compliance with these
standards.
An internal measurement system, known as security breach or
security incident reporting, records any incident through which
there is a possibility that a customer’s information has gone outside
of Recall’s control. Any report of this nature is provided within one
day to the regional Recall President, who then passes it on to
Recall’s Group President & Chief Operating Officer.
Breaches and incidents are reviewed during regular business and
operational reviews with Recall’s senior leadership team as a key
performance metric and opportunity to implement corrective action
processes across Recall. Information security is a core component of
the foundation of the Recall business. All of the mechanisms listed
ensure a higher quality service to customers.
In the event when Recall’s security team determines that a breach
has occurred, it alerts the affected customer and works
cooperatively to resolve the matter (including a root-cause analysis
of the breach and corrective action plans) to the customer’s
satisfaction. Recall continues to make key investments in
information technology and systems.
ENVIRONMENT
Through innovative logistics and operations networks Brambles
minimises its environmental footprint in relation to the use of
resources, emissions and waste.
SUSTAINABLE LUMBER SOURCING
Brambles is committed to achieving Zero Harm and considers
environmental impacts in all decisions, including the sourcing of
lumber. CHEP has strict lumber sourcing policies and has a target of
achieving chain of custody certification for purchased lumber for
pallets by 2015, which will provide further assurance of responsible
and sustainable practices.
Volume of lumber (m3) for the Year
Pallets Americas
Pallets EMEA
Pallets Asia-Pacific
Total
2012
880,288
582,808
181,637
1,644,733
Brambles' sustainability strategy specifically addresses responsible
management of forest resources for Brambles, its suppliers,
customers and the wider community. Brambles engages with its
suppliers to assess whether their practices are in line with Brambles'
environmental principles and acts accordingly to help those
Brambles Annual Report 2012 - Page 18
SUSTAINABILITY REVIEW – CONTINUED
suppliers meet Brambles’ requirements and standards. CHEP
maintains strict lumber sourcing policies that support the
replenishment of natural resources by sourcing lumber in a
responsible and sustainable manner. CHEP does not source from
protected areas, parks or similar areas in which harvesting
operations do not promote responsible forestry management.
Under the new organisation structure for the Pooling Solutions
business, the sourcing of lumber will be controlled centrally by the
Pallets segment through the newly created global procurement
team, which is part of the Global Operations function.
During the Year, 94% of CHEP’s lumber came from certified sources,
up from 91% the previous year. The rise was due to Europe
increasing certification levels and Latin America purchasing from
more certified sources.
In the USA, CHEP is increasing its sourcing of lumber from domestic
suppliers. While sourcing this lumber in the USA at favourable prices
supports the local economy and reduces the environmental footprint
with regards to transport costs and emissions, finding suitable
supplies of chain of custody lumber is challenging as there is
currently low demand. As CHEP USA works towards the target of
chain of custody certification, it is partnering with its suppliers to
secure existing sources and develop new sources of chain of custody
lumber. Preference will be given to suppliers that can meet its
criteria for the responsible and sustainable management of forest
resources. In FY11, CHEP in Europe achieved PEFC and FSC chain of
custody certification for 100% of the lumber used in pallet repair
activities and 96% of lumber used in new pallets, which provides
assurance that the lumber used originates from sustainable sources.
In Europe all pallet suppliers are subject to an approval process and
are required to purchase either FSC or PEFC certified chain of
custody lumber.
During the Year, CHEP Europe commissioned a comprehensive life-
cycle analysis/assessment comparing its lumber pallet pooling
system with the use of non-pooled pallets. This was developed in
partnership with an independent third party, carried out under
ISO14040 standards and reviewed. The study considered lumber
sourcing, construction and maintenance, transportation and
recycling. CHEP Europe updated its environmental calculator
with the results of the assessment.
In FY10, CHEP achieved FSC accreditation for its wholly-owned tree
plantations in South Africa. During the Year, CHEP MEA worked with
13 suppliers in the region to improve its chain of custody
certification process.
In FY12, 471,060* cubic metres of chain of custody lumber was
purchase by CHEP in the form of lumber boards or finished pallets,
representing 28% of all lumber procured by CHEP during the Year.
All CHEP regions have now approved and submitted plans to work
towards the Brambles target of 100% chain of custody
certification for purchased lumber by 2015. These plans will be
provided to KPMG, who will provide an independent assessment of
CHEP’s progress, which will be reported by Brambles in future
Annual Reports.
CHEP has identified 58 species of tree that are in or could be in its
lumber supply as per the International Union for Conservation of
Nature (IUCN) Red List of Threatened Species. None of these species
are defined as “endangered”, “critically endangered”, “extinct in
the wild”, or “extinct”. Of the 58 species identified, two are
classified as “near threatened” and one as “vulnerable”.
The possible inclusion of Longleaf Pine (classified as “vulnerable”)
in CHEP USA’s lumber supply was identified in 2009, and the
possible inclusion of Virginia Pine and Sand Pine (both classified as
“near threatened”) was identified in 2010. USA lumber suppliers do
not always disclose the exact sub-specie of pine being supplied.
CHEP USA is committed to working closely with its suppliers and
continuing current supply chain auditing practices to better
understand and minimise the potential use of Longleaf Pine, Virginia
Pine and Sand Pine.
CHEP USA’s activities during the Year included:
– declining lumber offers from suppliers when use of these sub-
species is known; and
– partnering with the National Forest Foundation (NFF) to fund the
planting of Ponderosa Pine and Western Larch in an area of the
Nez-Perce National Forest that had been subjected to a bad
wildfire in 2007. The NFF also supports projects that replant
Longleaf Pine.
Lumber volume by forest source certification & segment
(%)
In Malaysia, CHEP Asia appointed a procurement manager during the
Year and made good progress in raising awareness of sustainable
lumber sourcing within CHEP’s Malaysian lumber supply base. All
Malaysian suppliers source 100% of CHEP lumber from state forests
with government transit documentation to ensure all lumber is
tracked, species-checked and verified that it was legally harvested.
EMISSIONS & ENERGY
Brambles is committed to achieving Zero Harm. It considers the
environment in all decisions concerning the development of
projects, the selection of commercial partners and suppliers and the
launch of new products and services. Brambles is committed to
using resources more efficiently and encouraging the sustainable use
of its products and services.
Brambles recorded a decline in Scope 1 and Scope 2 greenhouse gas
(GHG) emissions and energy use for the Year.4
While Brambles has a relatively light Scope 1 and 2 GHG emissions
footprint, the growing interest among customers to understand the
total cost of their supply chains has presented an opportunity to
develop better and more accurate ways to measure emissions and
energy (Scope 1, 2 and 3) that will demonstrate the environmental
benefits of its product and service offerings. Brambles is also
developing iCARE, a new online data collection system. All Pooling
Solutions segments and Recall will begin to use the new system in
FY13.
4 Scope 1 emissions come from direct purchases of fuel, for company owned
transport or heating. Scope 2 emissions are indirect purchases of energy, like
electricity. Scope 3 emissions are generated by a third party, e.g. a
transport company carrying a company’s freight.
* Figure assured by KPMG.
Brambles Annual Report 2012 - Page 19
SUSTAINABILITY REVIEW – CONTINUED
In FY11, Brambles reviewed its operations to determine the main
contributors to its Scope 3 emissions, namely:
Pallets (CHEP) FY12 CO2-e footprint estimate
including Scope 36
–(cid:3) supplier emissions — for leased and outsourced sites and
subcontracted transport carriers;
–(cid:3) purchased goods — harvesting of lumber purchased from suppliers
and other purchased goods and services, such as paper and
cardboard;
–(cid:3) capital goods — particularly CHEP pallets and containers;
–(cid:3) business travel — employee travel for business purposes; and
–(cid:3) employee commuting.
CHEP has an extensive network of service centres and outsources
many to third-party providers. This provides CHEP with a great deal
of flexibility to adjust its network to meet changing customer needs
or to reduce or optimise transport costs.
During the Year, for the first time, the Pallet segment (CHEP only,
excluding IFCO PMS and Paramount Pallet) assessed the two largest
third-party or supplier activities that generate greenhouse emissions
on CHEP’s behalf, to provide an overall picture of CHEP’s
environmental footprint.
They are:
–(cid:3) subcontracted transport carriers that move CHEP’s pallets through
its network; and
–(cid:3) leased and outsourced service centre sites that inspect and repair
CHEP’s pallets.
A specific module for CO2-e5 measurement of subcontracted
transport carriers was developed with LeanLogistics and
implemented in Europe and the USA. This system allows CHEP to
estimate a baseline to measure the impact of its collaborative
transportation, route and network optimisation, and Total Pallet
Management initiatives (see Transport Impacts on page 21).
The module will be rolled out globally and will also be available to
LeanLogistics customers. The Scope 3 transportation emissions in
regions other than Europe has been estimated through distance
measurement where available (Americas, Australia, MEA) and
through the quantity of product delivered (Asia).
CHEP used its data on pallet conditioning in its own service centres
to estimate energy consumption in leased and outsourced service
centres. This data was then extrapolated to the network of
subcontracted service centres, while applying country specific grid
emissions factors.
The graph at the top of the page represents the fundamental CO2-e
footprint of each Pallet region and their combined total.
The Pallets segment’s combined Scope 1 and 2 CO2-e emissions
decreased 6% in FY12 from FY11. This reduction can be attributed to
a number of activities in Europe and the Americas. In the Asia-
Pacific, Australian and New Zealand reduction activities offset the
expansion of CHEP businesses in India and China.
Recall also recorded a reduction in CO2-e emissions of 9% from
FY11, which can be attributed to in part, improved routing in all
service lines and the installation of motion-sensored and energy
efficient lighting in all new facilities and those being refurbished.
As part of Pallets EMEA’s Greenhouse gas reduction plan, CHEP Spain
has installed a biomass boiler in its Belpuig service centre, which is
expected to cut the site’s emissions by 36%. More examples of
emission and energy saving activities can be viewed in the
Sustainability section on CHEP’s website.
In the UK, CHEP’s reduction efforts were recognised by being
awarded the Carbon Trust Standard for measuring, managing and
reducing its carbon emissions by 7.6% in the last three years.
The Carbon Trust Standard recognises organisations for real carbon
reduction. Based on a rigorous, independent assessment, it certifies
that organisations have measured, managed and reduced their
carbon emissions across their own operations, and are committed to
reducing them year on year. CHEP UK achieved the award through a
comprehensive range of carbon reduction initiatives implemented as
part of its company-wide sustainability program, including:
–(cid:3) training of employees on energy waste reduction, which has
resulting in behavioural changes in the workplace;
–(cid:3) the optimisation of the compressed air system used in all sites and
the elimination of air leaks (see page 21);
–(cid:3) monitoring energy consumption on a weekly basis to identify
power and natural gas wastage. This involves measuring CO2-e
generation for each pallet processed in CHEP service centres;
–(cid:3) management of CHEP UK’s company car policy, including
enforcing a limit on emissions of 140 grams of CO2-e per kilometre
for new vehicles (the EU automotive fuel economy target); and
–(cid:3) changing office and plant facility lighting to more efficient
technologies.
CHEP UK & Ireland implemented a comprehensive Environmental
Management System (EMS) in FY12 and a team of dedicated energy
administrators has been put in place as part of this approach.
The EMS is being rolled out to the rest of Europe, with dedicated
energy administrators in place in all European sites. The continued
commitment and support of these energy administrators is key to
reducing CO2-e emissions across these sites.
CHEP USA is an ENERGY STAR®7 partner and is focused on analysing
and reducing its corporate environmental footprint through targeted
energy saving projects. CHEP USA continues to replace out-dated,
energy inefficient lighting with energy efficient T5 Fluorescent
lighting in 26 service centres. This project is estimated to reduce
annual energy consumption by 4.7 million kWh, equivalent to a
reduction of 3,800 tons of CO2-e. CHEP will also realise an operating
cost reduction benefit of over US$400,000 annually.
5 Carbon dioxide equivalent (CO2-e) is the universal unit of measurement to
indicate the full global warming potential (GWP) of a particular greenhouse
gas emission. It takes into account the GWP of each of the six Kyoto
greenhouse gases, and expresses them in terms of the equivalent units of
carbon dioxide. It is used for measuring and reporting different emissions
sources on a common basis. At the corporate level, CO2-e is typically
reported in kilotonnes (kt).
6 Includes sites that handle and condition CHEP RPCs and Containers. Retained
to provide like-for-like comparatives to CHEP’s reported energy and
emissions in FY11. In FY13 sites will be extracted and included in RPCs and
Containers segments when iCARE is rolled out.
7 A joint program of the US environmental protection agency and US
department of energy helping consumers and businesses to adopt energy
efficient products and practices.
Brambles Annual Report 2012 - Page 20
SUSTAINABILITY REVIEW – CONTINUED
Brambles’ global GHG emissions during the Year8
Brambles HQ
Recall
Pallets
Total
Scope 1
Scope 2
Total
kt CO2-e
TJ
kt CO2-e
-
-
0.12
-
0.12
-
-
-
-
0.51
-
0.51
30.34
-
32.13
-
62.47
-
TJ
-
462.33
-
242.08
-
kt CO2-e
24.72*
-
39.98*
-
64.70*
TJ
-
406.87
-
246.49
kt CO2-e
55.06
-
72.23
-
-
127.29
TJ
-
869.20
-
489.08
-
704.41
-
653.36
-
1,358.28
Air compressors that run the machinery used to sort, repair and
paint pallets are one of the largest consumers of energy in USA
service centres. Almost 15% to 20% of a compressor’s capacity may
be wasted due to air leaks. In FY12, CHEP worked to identify air
leaks and develop corrective action plans. This saves energy and
improves overall operational effectiveness.
Air compressor leakage was also a target area for CHEP UK &
Ireland. Every site in the UK has reduced its compressed air leaks
during the Year, saving approximately 250 tonnes of CO2-e
emissions. The next stage of the project in the UK was to optimise
the network and install new compressors where necessary, with an
expected further reduction of approximately 840 tonnes of CO2-e
emissions annually.
In Canada, CHEP is installing efficient ink-jet stencil equipment with
quick drying ink in most service centres. The removal of gas
powered radiant heat tunnels from the previous stamp pad
technology will use significantly less energy.
Kilotonnes (kt) of CO2-e
Terajoules (TJ) of energy
2012
2011
%
2012
2011
%
Pallets
Americas9
13.31
14.90
(11)
173.72
184.81
(6)
Pallets EMEA
25.49
27.81
(8)
280.50
303.57
(8)
Pallets
Asia-Pacific
Pallets
(Total)
Recall
25.90
26.38
(1)
199.14
200.07
-
64.70*
69.09
(6)
653.36
688.45
(5)
62.47
68.78
(9)
704.41
752.92
(6)
Brambles HQ
0.12
0.12
-
0.51
0.49
4
Total
127.29
137.99
(8)
1,358.28
1,441.86
(6)
Additionally, new T5 fluorescent lighting was installed in some of
the Canadian service centres, with a significant reduction in energy
use when compared to the previous metal halide lighting. The
remaining service centres are scheduled to be refit with T5 lighting
during 2012.
CHEP Australia achieved a 2.2% reduction on the 2010 baseline, a
total of 516 tonnes of CO2-e and conducted seven energy audits
across its network to identify more energy efficiency opportunities.
CHEP Australia was recognised by the New South Wales State
Government’s Sustainability Advantage program for its commitment
to sustainability, including these energy efficiency initiatives.
Recall in North America has worked with its fleet leasing company
to study its fuel economy and as a result, it will use more fuel
efficient vehicles that, for some of Recall’s DMS and DPS locations,
could reduce fuel consumption by 50%.
Recall is also encouraging the use of its DMS digital service to scan
and send an electronic image of a document or documents, rather
than physically sending the document or carton to a customer.
8 Excludes RPC and Containers segments, as well as very small CHEP pallet
sites and offices.
9 Excludes IFCO PMS and Paramount Pallet.
* Figure assured by KPMG.
In RPCs, IFCO replaced all conventional blow-dryers in the USA with
centrifugal dryers, reducing electricity consumption by more than
three million kWh. In Europe, IFCO replaced 75% of its conventional
blow-dryers with centrifugal dryers. It expects to replace the
remaining 25% within the next two years. All IFCO sites in South
America will have centrifugal dryers within four years. In FY13, IFCO
will investigate the use of micro heat/power plants for service
centres in Europe, beginning with the installation of a block heat
and power station in Germany.
Brambles greenhouse gas generation by source
in the Year (%)
COMPLIANCE
In Australia, Brambles and its CHEP and Recall operations were
required to report their FY11 greenhouse gas emissions under the
Australian Government’s National Greenhouse & Energy Reporting
System (NGERS) as its energy usage was above the reporting
threshold of 200 terajoules of energy.
In the UK, the Carbon Reduction Commitment Energy Efficiency
Scheme legislation came into force in April 2010. Brambles UK
registered and submitted its footprint report to the UK Environment
Agency in July 2011 and 2012. This Year, Brambles was required to
purchase allowances for the tonnes of CO-2-e it generated.
TRANSPORT IMPACTS
Brambles works to reduce its environmental footprint by using its
logistics knowhow to minimise the footprint of its customers and the
supply chain through network optimisation, which reduces transport
distances and associated emissions.
CHEP’s Total Pallet Management program, available to major
manufacturers and retailers, allows CHEP to manage all of a
customer’s pallet needs onsite and supply CHEP pallets without the
need for additional transport. Customers’ use of Total Pallet
Management helps optimise the network and reduces the energy
requirements associated with the pallet pool. Network optimisation
focuses on the number and location of service centres based on
sourcing requirements and locations, location of manufacturers,
transport costs and plant capacity.
In the RPCs segment, the CHEP and IFCO service centre networks
were consolidated in Europe during FY12. This also involved
amalgamating service centres by closing some down where they
were located close together.
Brambles Annual Report 2012 - Page 21
WASTE MANAGEMENT
Brambles is committed to using resources more efficiently and
minimising waste. CHEP's pallet pooling system operates on the
principles of reduce, reuse and recycle. Brambles is committed to
improving its performance continuously to meet customers' and
stakeholders' sustainability expectations.
CHEP and Recall have processes to collect data on waste streams
and have committed to improving their recycling rates each year.
CHEP manages all waste streams related to pallet pooling activities
including lumber, corrugate, steel and plastic. When CHEP repairs
its pallets, lumber that is in good condition is reused to repair other
pallets.
LUMBER WASTE & RECYCLING
Compared with disposable pallets, pallet pooling significantly
reduces the use of lumber resources and waste.
Unlike CHEP's pallet pooling system, many other types of lumber
pallets (without a clear system of ownership and accountability) end
up in landfill. By maintaining ownership of its assets and enforcing a
system of controls, CHEP can maximise its ability to reuse or recycle
materials at the end of the pallets’ useful lives.
CHEP reclaimed at least 50,170 cubic metres of lumber for use in
the repair and manufacture of pallets.
In line with its target of zero lumber waste to landfill by 2015, CHEP
is implementing a number of programs. For example, CHEP USA
performed waste stream optimisation in FY12, which improves the
recycling of lumber waste. Over 80% of CHEP USA’s lumber waste is
now recycled and used in various products such as heating fuel and
energy production.
In Europe, lumber reclaiming has been improved in sites to include
up to 23 usable elements per pallet. CHEP is continuously improving
its timber reclaim capability with network projects to look at better
technologies to dismantle pallets efficiently.
In Australia, lumber cut-offs and lumber from damaged pallets are
reused at CHEP service centres. Sound lumber boards are removed
from damaged pallets and used for repair work; around 85% of this
“waste” lumber is used for repairs or to manufacture new CHEP
pallets, which means less raw lumber is required.
Lower quality scrap lumber not suitable for repair is mulched and
used for landscaping, garden projects, making compost or energy
generation. For example, a steam-driven engineering company in
Australia uses CHEP lumber mulch to help power their operations.
CHEP is actively seeking alternative uses for lumber mulch through
two Australian state government initiatives; New South Wales’
Sustainability Advantage and Queensland’s EcoBiz.
SUSTAINABILITY REVIEW – CONTINUED
IFCO monitors and analyses its service centre network to reduce the
transportation distance per round trip. For example, during the
Year, IFCO optimised its network in the USA by adding a new service
centre in Portland, Oregon, reducing the annual overall
transportation distance by 1.3 million kilometres annually, leading
to a reduction of 836 tonnes of CO2-e emissions.
IFCO analyses the impact of its RPCs using an environmental
calculator for fruit and vegetable transport based on the results of a
life-cycle analysis/assessment (LCA) on packaging systems in 2007
(updated in 2009). The assessment was commissioned by SIM, an
independent foundation that promotes the use of environmentally
friendly packaging, and carried out by the Department Life Cycle
Engineering (GaBi) at the University of Stuttgart and PE
International. Applying this calculator to the RPC usage of IFCO's
customers in Europe demonstrates emission savings for FY12 of
21,863 tonnes of CO2-e.
CHEP and LeanLogistics are both Environmental Protection Agency
(EPA) SmartWay partners in the USA. SmartWay is a collaboration
between the US EPA and the freight transportation industry that
helps freight shippers, carriers and logistics companies improve
fuel efficiency and save money. CHEP has joined the Green Freight
Europe (formerly called the SmartWay Europe Initiative) to
participate in the development of a standard recognised
methodology for transport emissions measurement and
reduction in Europe.
In the USA, CHEP’s GreenLanes™ program helps customers increase
productivity and eliminate unnecessary empty return truck trips by
working with third-party transport companies to fill empty space on
customers’ trucks, or that of a transportation provider. Since FY11,
CHEP USA has collaborated with customers on more than 11,000
individual movements through GreenLanes, resulting in the
elimination of an estimated 6.7 million kilometres of transportation
and production of 2.9 million kilograms of CO2-e emissions.
The CHEP USA pallet business is seasonal, which drives the need for
temporary pallet storage during certain times of the year. During
the 2011-12 Northern Hemisphere winter, CHEP USA sent 240,000
pallets to temporary storage under a new customer storage
program. This program reimburses the customer for storing pallets
on-site using seasonally available space and eliminates additional
pallet handling and transportation to and from third party storage
locations. The program generates revenue for customers and savings
for CHEP, by eliminating over 250,000 truck-miles and reducing
pallet handling and damage.
CHEP continued the rollout of its transportation collaboration
program in Europe and now has 25 customers participating.
The program allows participants to benefit from logistics synergies
by reducing empty miles and associated costs, increasing shared
transportation or moving to using different transport solutions such
as rail and road. This equates to the elimination of approximately
1.6 million kilometres of empty load trips per annum and the
reduction of 1,600 tonnes of CO2-e emissions.
Since 2008, CHEP in Europe has been working on multimodal (train,
sea and road) solutions to reduce CHEP’s dependence on roads for
moving its pallets. For the Year, CHEP’s use of rail, when compared
to moving pallets by road, saved the equivalent of 9,800 tonnes of
CO2-e emissions and a total of 15.3 million kilometres in road trips.
Recall is also optimising its transport operations to deliver the most
efficient, error-free solutions to customers. This results in a reduced
number of vehicle trips and reduced energy expenditure.
Additionally, Recall’s Image on Request solution for urgent
deliveries transmits documents digitally to a customer rather than
transporting an entire physical carton. This delivers the same net
result to the customer for less carbon expenditure.
Brambles Annual Report 2012 - Page 22
WATER
Brambles recognises that water is a precious resource and in many
areas of its operations water supply is crucial for the environment
and the community. Brambles believes it has a responsibility to use
water wisely. CHEP and Recall have processes to collect data on
water usage and waste.
The RPC segment is the largest user of water in the Group. In the
USA and Europe, IFCO has installed centrifugal dryers, which use
high-speed rotation to pump final rinse-water back to the washing
line for reuse (see Emissions & Energy page 19).
In Europe and South America, currently up to 50,000 cubic metres of
water can be collected with the centrifuges, saving up to 50% of
rinse-water. In addition, in the USA, Europe and South America,
IFCO implements other water recycling devices.
For example, in the USA, IFCO developed a water recycling
prototype unit in its Atlanta, Georgia service centre in conjunction
with a filtration expert. The unit captures wastewater via an inline
filtering plant, removing solids and bacteria and enabling it to be
reused. Previously this wastewater would have passed direct to
waste drains. It is estimated approximately 30% of wastewater will
be recycled by this system. The finalised design has been installed
in the newly opened Portland, Oregon service centre and IFCO’s
remaining North American plants will have the system installed
during FY13.
Water recycling units are also planned for IFCO’s service centres in
Germany in FY13. All IFCO service centres are fully compliant with
local wastewater regulations.
While water data is available for IFCO’s European facilities, this will
be reported after it is entered into iCARE, Brambles new data
collection system. Once this is done, Brambles will set a water
target in consultation with IFCO.
CHEP Australia uses water recycling at several of its plants. In FY12,
it commissioned a new recycling plant in South Australia, which will
save four million litres of water each year.
Some Recall sites collect rainwater. Water discharges from CHEP
and Recall facilities are equivalent to sanitary wastewater and are
not considered material.
SUSTAINABILITY REVIEW – CONTINUED
OTHER WASTE & RECYCLING
Where possible in office locations, segregation and recycling
programs are in place for recyclable items such as paper, bottles,
cans, newspapers, magazines and ink cartridges. CHEP complies
with local and federal regulations pertaining to waste handling,
recycling, storage and disposal.
General solid waste (for example office/sanitation) is handled by
local solid waste management or recycling facilities. Universal
waste and used oil (both generated in limited quantities) as well as
cardboard, plastic and metals are generally reused or recycled
where facilities are available.
CHEP USA’s waste stream optimisation in FY12 meant that
approximately 80% of CHEP’s corrugate and metal wastes were
diverted from landfill.
In Europe, CHEP’s Belpuig service centre changed waste providers to
expand its plastic recycling to include plastic layers, banding and
film. This increases plastic recycling by 54 tonnes a year.
CHEP Australia increased general recycling (plastic and cardboard)
by 4%, a total of 108 less tonnes of waste to landfill, and
expanded recycling in its Head Office to include lunchroom plastics
and cardboard.
IFCO recycles 100% of its RPCs. IFCO regrinds all damaged containers
and reprocesses the granulate for use in new RPCs.
During the Year, Recall collected, shredded and sent for recycling
more than 168,000 tonnes of paper.
Recall assists its customers in managing their physical and digital
documents throughout their life cycle, from creation to secure
destruction. Recall believes that it benefits the environment by
assisting customers to reduce material usage by providing space-
and paper-efficient document archival and retrieval solutions. All
the material used in the production of Recall's cartons is recyclable.
During the Year, Brambles began collecting data on solid waste
streams and has committed to improving its recycling rates on an
annual basis.
CHEP Catalyst & Chemical Containers (CCC) provides packaging
systems, on-site management and logistics support for the storage
and shipment of catalysts used in the petroleum refining, gas
processing and petrochemicals manufacturing industries.
In FY12, CCC handled hazardous wastes on behalf of its customers,
including solid NOS (chlorine, sulphur), a class 9 waste, resulting
from cleaning residue from its intermediate bulk container catalyst
bins used in the packaging of petrochemical refining products.
CCC uses a third party to dispose of its hazardous waste, where it is
used as a fuel source, replacing coal and natural gas in cement
kilns. This is a safe and effective method of recovering energy from
waste and conserving natural resources. Waste is normally
processed and destroyed within five to six days of receipt,
confirmed by a certificate of disposal. The empty metal containers
used to transport the waste are processed through container
decontamination, with a certificate of recycling issued to CCC for
the containers or volume of metal recycled.
CCC is considered a large quantity generator and reports waste
summaries to relevant environmental departments as required.
Brambles had no significant spills during the Year.
Brambles Annual Report 2012 - Page 23
SUSTAINABILITY REVIEW – CONTINUED
PEOPLE
Brambles believes an engaging, safe, tolerant and diverse work
environment brings out the best in its people.
Employees by segment10
Segment
Pallets Americas
Pallets EMEA
Pallets Asia-Pacific
Pallets (Total)
RPCs
Containers
Recall
Brambles HQ
Total
Employees
5,238
2,791
1,421
9,450
1,026
795
4,581
278
16,130
SAFETY & WELLBEING
Brambles' Zero Harm Charter states that everyone has the right to
be safe at work and to return home to their family and friends as
healthy as when they started the day. Each and every person is
expected to work safely. Brambles seeks to apply best occupational
health, safety and environment practice for employees, contractors,
customers and local communities.
Brambles will update its Zero Harm Charter in FY13 to provide
renewed focus on the importance of safety throughout the Group.
The Zero Harm Charter will be rolled out to all IFCO sites.
Details on Brambles’ Health & Safety Policy and the Zero Harm
Charter are in the Directors’ Report — Other Information on
page 65.
In 2010, Brambles rolled out a new scorecard that is based on the
standard practice of total recordable incident reporting of Brambles
Injury Frequency Rate (BIFR) and takes a comprehensive view of
safety. BIFR records fatalities and three types of injury, each at a
rate of injury per million hours worked:
– work-related fatalities;
– loss of a full work shift due to injury;
– modified duties following an injury; and
– incidents that require medical treatment.
BRAMBLES INJURY FREQUENCY RATE
BIFR is the primary measure of safety performance across the
Group.
It is with great sadness that Brambles reports two employee
fatalities that occurred in the USA during the Year.
In October 2011, Alfredo Ruiz, a warehouse assistant in the CHEP
Catalyst & Chemical Container business in Houston, Texas, suffered
a serious injury while at work. Sadly, he did not recover from his
injury and passed away in June 2012.
Brambles also suffered the loss of Roland Haggins, an employee, as
a result of structural damage at a Recall-operated facility in
Landover, Maryland, in June 2012. These events are unacceptable
and in line with its Zero Harm policy, Brambles will continue to seek
to drive improvements in its overall safety performance.
In FY12, the combined performance of CHEP in the three Pallet
segment regions was a BIFR of 8.4 events per million hours worked.
This was a significant reduction on rates in the previous year, with
the Americas down 47%, Australia & New Zealand rates decreased by
40% and EMEA was down 33%.
10 Snapshot of permanent employees as at 30 June 2012.
In the Year, the Group achieved a BIFR of 9.3 events and baseline
BIFR exercises were carried by the recently acquired businesses.
The improvement in FY12 BIFR rates can be attributed to a focus on
risk reduction activities, the adoption of leading indicators such as
active near-miss reporting, sharing of best practice between
members of the newly formed Global Safety team in the Pallets
segment and a greater emphasis on learning and preventing
reoccurrence of incidents throughout the network.
A new BIFR reduction target was set by the ELT during the Year.
Brambles has set BIFR targets for new businesses for FY13 and these
will be reported in FY13.
The Zero Harm strategy developed in 2010 and associated internal
structures and performance measurement processes are aimed
specifically at the BIFR to create breakthrough performance by
addressing the underlying cause of injury.
Recall is currently midway through its current three-year strategic
safety program focused on key areas such as: manual handling, fire
safety, correct use of energised equipment (i.e. forklifts, pallet
jacks), use of restricted-access vehicles and cranes, and motor
vehicle and driver awareness. Each year, a Zero Harm stand down
event is held globally, where all staff receive co-ordinated and
consistent safety messages.
During the summer months, CHEP UK & Ireland employees were
encouraged to participate in its Cool Commuter initiative to travel
to and from work, promoting sustainable commuter transport and
healthy lifestyles. Employees walked for 1,667 miles and cycled for
7,218 miles, as well as utilising public transport. The initiative also
raised money for charity.
During the Year, CHEP Australia employees attended information
sessions that dealt with general issues such as physical activity
and nutrition, followed by one-on-one health assessments. Almost
600 CHEP employees undertook a health assessment. Over 80 per
cent agreed that the seminar series was worthwhile and that they
would use the information to improve and maintain their health
and wellbeing.
ATTRACTING & RETAINING TALENT: LEADERSHIP
Brambles is committed to providing a safe, rewarding and
challenging environment to help employees reach their potential.
Brambles operates a competency framework which allows
employees to understand the skills and competencies required to do
their job, and which ones need to be developed for career
progression. This framework is at the core of Brambles’
performance appraisal systems. Every employee has an annual
appraisal with their manager.
During the Year, Brambles focused on aligning the talent
management strategy with its business strategy to achieve its
objectives. A key element of this was to determine future
organisational capability requirements compared to current and
develop plans to address the gaps.
As a result, Foundation 15, a three-year talent acquisition and
development program sponsored by Brambles’ CEO, has been
launched. The major focus of Foundation 15 will be to address the
gaps in the leadership pipeline by targeting specific populations
with focused development and going outside the organisation where
necessary, to acquire the talent to fill any gaps that cannot be filled
through internal development. An integral part of this program was
a global development centre for 14 high potential leaders, all of
whom now have coaching and development plans in place to
prepare them for their next career step. Since the program, one of
the participants has been promoted and five have changed roles for
development purposes.
Brambles Annual Report 2012 - Page 24
SUSTAINABILITY REVIEW – CONTINUED
Two development centres were run for managers in the Pallets
businesses in Australia and in Asia, with a total of 26 participants.
Development plans are currently being put into action for these
managers as part of the strategy to build the leadership pipeline.
Foundation 15 focuses on Brambles specific functions and markets
and a highly interactive and practical workshop was run for all the
leaders of countries in emerging markets. The workshop was
conducted in partnership with CEDEP (the European Centre for
Executive Development), on the INSEAD campus in Fontainebleau,
France with which Brambles has had a strategic relationship since
2009. The outputs of this program have been channelled into
specific work streams, with program participants taking ownership
of turning ideas into action. Brambles also has partnerships with
business schools in Shanghai (CEIBS) and Singapore (INSEAD). This
allows Brambles to widen its search for management talent.
Brambles’ CEO and his team will monitor and measure the success
of Foundation 15 on a quarterly basis, using a talent dashboard that
will include targets for: internal promotions versus external hires;
depth of succession into senior roles; and the number of females in
leadership roles at all levels in the organisation.
Brambles continues to recruit high-potential master’s degree
graduates to build its leadership pipeline, matching the profiles of
potential recruits to the future capabilities required in the different
markets in which Brambles operates.
Brambles’ succession and talent review enabled the introduction
of a process with a greater focus on differentiated development
plans for leaders at all levels, including very specific ownership
by the Brambles ELT of development plans for all senior leaders
in the organisation. This common business approach to defining
performance and potential is being cascaded to all levels of
the Group.
EMPLOYEE ENGAGEMENT
Brambles recognises that people are its most important asset and is
committed to providing a safe, rewarding and challenging
environment for its employees. Ensuring its employees are engaged
means listening to employee feedback and treating employees with
integrity and respect.
Employee engagement is monitored through the Brambles Employee
Survey (BES). This is extended to all employees and is confidential.
It surveys employees’ perceptions of their workplace. The data is
used to track progress from previous surveys, to measure Brambles
against internal and external best practice and to identify key
actions for improvement.
Over the past few years, Brambles employees have demonstrated
a willingness to provide feedback and suggest where Brambles
can improve.
For the 2012 survey, four new questions relating to the customer
and one question on work life balance were added to the
questionnaire. For the first time, the 2012 survey included recently
acquired businesses and participation rates continued to be world
class, with 86% of employees responding. As Brambles was seeking
to divest Recall at the time the survey was held, Recall employees
did not participate. Brambles donated US$2 for each completed
survey to UNICEF, a total of US$18,100.
Overall, Brambles’ employee engagement index score was 67%11. In
comparison to FY11 (excluding the newly acquired businesses and
Recall), overall employee engagement increased from 64% to 69%.
11 Engagement is a combination of perceptions that positively impact
behaviour. These perceptions include satisfaction, pride, loyalty and a
willingness to be an advocate for the organisation; engagement results are
an average of these four items and measure to what extent employees agree
or disagree with the statement. Those employees who agree or strongly
agree are the most engaged.
At the Group level, there were a number of areas where employee
engagement levels have increased. Their understanding of the
company’s direction and goals have strengthened, and they have a
clear understanding of what is expected in their roles. An increasing
number of employees have had the results of the previous survey
shared with them.
Overall, career growth and development and opportunities are key
areas where employees would like Brambles to remain focused.
All areas of the business are now addressing the results with action
plans focused on the engagement priorities at a local level. These
plans will be regularly reviewed and followed up by both the
businesses and Brambles leadership teams. Employee engagement
will remain an on-going item in internal communications across
the Group.
Brambles is committed to conducting the BES annually, where
previously it was every 18 months. The next survey will be carried
out in April 2013.
As foreshadowed in last year’s report, Brambles has reset its targets
for employee engagement to include IFCO.
TRAINING & DEVELOPMENT
To meet ongoing and future needs, Brambles is committed to
developing the skills of its people.
One of the areas of focus for Brambles’ sustainability strategy is its
people and the education, training and development opportunities
available to them. Brambles is committed to ensuring that its
people are fully trained and equipped to do their job.
This Year, Brambles’ business units reported a total of 32,415
employee training days in the Year. The target of 25% increase in
ETD days will be rebased on number of training days recorded in
the Year.
A large number of training courses are available to employees
through proprietary web-based systems, which enables Brambles to
monitor the number of training days and their effectiveness.
DIVERSITY & INCLUSION
Brambles is committed to selecting, recruiting, developing and
supporting people solely on the basis of their professional capability
and qualifications, irrespective of gender and other diversity
factors. Brambles selects, retains and develops the best people for
the job on the basis of merit and job related competencies.
In FY11 Brambles introduced a diversity policy that deals with
diversity across a range of measures. This policy is available on
Brambles’ website. Details of the policy are shown in section 3.2 of
the Corporate Governance Statement on page 37.
Training days for the Year
Per
Per male
Per female
Per
Per mgt
employee
employee
employee
non-mgt
employee
employee
3.77
3.94
2.58
3.83
3.43
1.32
0.90
2.29
1.19
2.03
2.88
2.54
4.44
2.66
4.01
1.20
1.72
3.68
0.12
2.91
1.16
1.46
3.31
0.08
2.83
1.26
2.43
4.42
0.22
3.16
1.02
1.82
3.86
0.10
2.99
2.70
1.33
1.79
0.13
2.46
Pallets
Americas
Pallets
EMEA
Pallets Asia-
Pacific
RPCs
Containers
Recall
Brambles HQ
Group
Brambles Annual Report 2012 - Page 25
SUSTAINABILITY REVIEW – CONTINUED
Of the 16,130 Brambles employees, 24.3%* are female. The
reorganisation of the Pooling Solutions businesses and incorporation
of data from the recently acquired businesses have resulted in some
changes to the gender splits that were reported last year. For
example, due to the incorporation of IFCO’s PMS business into the
Pallets Americas segment, the female population is now 12%,
compared to CHEP Americas’ population of 24% in FY11. The
movement of Information Technology and Legal teams into Brambles
HQ is also the explanation for Brambles gender split changes when
compared to last year, with the female population now around 34%,
compared to last year’s population of almost 47%.
The Group's remuneration policy is to set pay around the median
level of remuneration but to provide upper quartile total potential
rewards for outstanding capability and performance (further details
on the Remuneration Policy and structure can be found on pages 47
to 49). Brambles rewards performance on the basis of merit and job
related competencies without discrimination. As required by the
ASX Corporate Governance Council Corporate Governance Principles
& Recommendations (Principle 8), the Remuneration Committee has
responsibility for reviewing and making recommendations to the
Board on remuneration by gender. Brambles expects that its target
of increasing the number of female employees in management will
reduce the disparity in male:female salary ratios at the
management level.
Permanent employees by gender (total and management) as at 30 June 2012 (%)
Male:female salary ratios
Age distribution of employees as at 30 June 2012 (%)
Group
Non-management
Management
Male
1.01
1.01
1.06
Female
1.00
1.00
1.00
Brambles is committed to supporting employees throughout their
working life and to tracking and reporting parental leave data.
Group employees
taking parental leave
during the Year (%)
Group employees returning
to work after parental
leave during the Year (%)
Group
Male
Female
2.46
1.28
6.13
Voluntary Turnover
Group
Pallets Americas
Pallets EMEA
Pallets Asia-Pacific
RPCs
Containers
Recall
Brambles HQ
* Figure assured by KPMG.
1.75
1.20
3.47
(%)
15.0
21.9
12.2
6.8
10.7
11.8
15.0
3.2
For the Year, voluntary turnover of employees for the Group was
15%. The reorganisation of the Pooling Solutions businesses and
incorporation of data from the recently acquired businesses have
resulted in some large changes to data that was reported last year.
For example, the incorporation of IFCO PMS business, which has a
high turnover of personnel at its service centres, into the Pallets
Americas segment, is almost double the voluntary turnover number
CHEP Americas reported in FY11.
Brambles Annual Report 2012 - Page 26
SUSTAINABILITY REVIEW – CONTINUED
COMMUNITY
Brambles supports and enriches communities through responsible
procurement, employment practices and collaborative partnerships
that connects its people to customers and suppliers.
SUPPLIER SUSTAINABILITY
Brambles expects its suppliers’ practices to be in line with its
principles. Brambles is committed to driving efficiency and
environmental sustainability in the supply chains it serves.
Brambles has robust management systems for maintaining
relationships with suppliers. Responsibility for managing
relationships with suppliers resides with the Group Presidents of
each Brambles segment. Brambles’ policy is incorporated in the
Code of Conduct, the expectations of which it communicates clearly
to suppliers. For example, CHEP’s European purchasing contracts
refer to the Code of Conduct, which is passed on to suppliers. The
majority of CHEP’s European purchases are under such contracts.
Elements of the Code of Conduct are also included in material
purchasing contracts with suppliers in CHEP Asia-Pacific. CHEP
Americas’ contracts for service providers in its plant network specify
compliance with relevant local requirements governing labour,
health, safety and environment.
Brambles monitors relationships with suppliers. Brambles is
committed to assessing supplier environmental and social standards.
Major suppliers in sectors with a high environmental impact are
required to provide evidence of their systems for ensuring good
environmental performance.
Brambles recognises that its business units need to collaborate
closely with their third-party operators and suppliers to meet
customers’ growing interest in understanding their environmental
impact and in turn to demonstrate the benefits of using Brambles’
products and services. IFCO, for example, prefers vendors with high
sustainability standards. Major suppliers can provide feedback to
IFCO in regular meetings with management. Meetings with major
suppliers occur every quarter. Issues are discussed and resolved
during the meetings.
CHEP Americas and CHEP EMEA have joined the international
Supplier Ethical Data Exchange (Sedex). Sedex connects businesses
and their suppliers in the sharing of data to measure and improve
ethical and responsible business practices. By the end of 2012 all
CHEP sites in Europe will report information through Sedex.
CHEP USA applies its Quality Management System across the supply
chain. The system has in place a number of controls for raw
materials (particularly lumber), compliance with import and export
regulations, nails, paint and new pallet manufacturing. This has led
to a 114% reduction in non-compliance claims for raw materials
since 2009.
By working in partnership with suppliers, Brambles’ business units
will be able to gather credible and consistent quality data and
develop better, more sustainable and mutually beneficial outcomes.
In the 2011 Sustainability Review, Brambles indicated it would
develop a supplier policy that draws on best practice across the
business units in FY12. With the creation of the Pallets’
procurement and operations global functions, Brambles has delayed
the rollout of a global supplier policy so it can properly develop and
implement a policy and supporting framework in consultation with
its businesses and engagement with suppliers. This policy will be
completed and communicated in FY13.
Brambles’ Zero Harm Council is evaluating appropriate actions to
assess whether providers are focusing on safety. In 2011, the Zero
Harm Council assessed the most appropriate methodology to apply
and how the information could be collected and evaluated and
developed an evaluation tool broadly based on OSHAS18000
methodology. In FY12, 125 third party operators have completed
self-assessments and Brambles has engaged an external supplier to
review and validate the assessments in FY13.
COMMUNITY INVESTMENT
One of Brambles' shared values is to always act with integrity and
respect for the community and the environment. Brambles' business
units are part of the communities in which they operate. Brambles’
operating businesses recognise their responsibility in making a
positive contribution to these communities in the areas of
environment sustainability and education.
Brambles provides financial and other forms of support to charitable
and community organisations around the world.
This support is provided in four ways:
– contributions by Brambles’ businesses to a range of local and
national charities;
– personal contributions by Brambles’ employees around the world
to a range of fundraising events and activities;
– a volunteering policy that provides Brambles’ employees with
three days of paid volunteer leave per year; and
– monetary donations provided by Brambles’ business units to
support employee volunteer efforts.
During the Year, Brambles and its businesses provided almost
US$880,000 in donations, and sponsorship to global, regional and
local charities and causes. This included providing US$100,000 to
support Thai flood relief efforts.
For the first time, Brambles asked its businesses to provide details
on the in-kind donations of equipment to charity organisations and
causes during the Year and report a financial value for these efforts,
which amounted to US$848,000. In the UK, CHEP works with
FareShare, a national charitable organisation that works with the
food industry to take surplus food that is fit for purpose but would
otherwise be going to landfill. CHEP UK supports FareShare across a
wide number of initiatives, and one area is to open all of the 17
FareShare depots to accept CHEP pallets.
A focus of IFCO’s Worldwide Responsibility program is sharing its
expertise in collecting and transporting fruit and vegetables with
Foodbanks around the world. Since the program’s inception, IFCO
has donated over 55,000 RPCs to more than 50 Foodbank sites in
Europe, North America and South America. It has also helped co-
finance 28 refrigerated vehicles to keep fruit and vegetables fresh
within the Foodbank network.
In Australia, CHEP provides Foodbank warehouses with pallets,
crates and bins to help move stock throughout the Foodbank
networks. After a recent stock-take of its assets, CHEP Australia
conservatively estimated it provides in-kind support of A$100,000
per annum to Foodbank.
Recall’s Secure Destruction Services sites hold “shredder days”,
where members of the local community can deposit sensitive
documents, such as bank statements, medical records or other
personal documents, knowing Recall will securely destroy them.
Brambles has an employee volunteering policy, which provides
employees with three days of paid volunteer leave per year during
usual contracted hours to provide volunteer services to community-
based not-for-profit, educational, or environmental organisations.
During the Year, 330 employees volunteered a combined total of
3,813 hours.
Last year in the UK, CHEP signed an innovative sponsorship deal with
the National Forest Company, which is leading a regeneration
project to create a wooded landscape over 200 square miles of
central England. The agreement will result in the planting of more
than 12,000 new trees in a six-hectare area at Normanton,
Leicestershire, over three years. Over 70 CHEP UK & Ireland
employees volunteered to participate in the first two tree-planting
sessions as part of the business’ sustainability program and
volunteering efforts.
Brambles Annual Report 2012 - Page 27
MERGERS AND ACQUISITIONS
Brambles' mission is to create superior shareholder value through its
people and their enterprising spirit. Brambles will work with the
businesses it acquires to identify and adopt the better practice.
Brambles will see that these practices are shared across the Group
and adopted in a considered and consistent manner.
Brambles has a number of areas of strategic focus to pursue
opportunities that target sustainable profitable growth for
stakeholders. Details on Brambles’ growth strategy are outlined in
the Letter from the Chairman & The CEO on page 1.
When assessing potential acquisitions and mergers, Brambles
undertakes a due diligence process that includes the identification
of material risks, including risks related to sustainability.
Brambles acquired IFCO on 31 March 2011 and Brambles and IFCO
executives continue to work on integrating its operations into the
Group. This includes reviewing sustainability strategies and targets,
systems, process and the culture of each business. Brambles’ risk
management processes were implemented in IFCO in FY12. In FY13 a
new safety and sustainability management system called iCARE will
be rolled out to all businesses. The RPC segment, including IFCO and
CHEP operations, will enter its energy, waste and water data for
FY12 and FY13 into the new system.
IFCO’s Pallet Management Services now reports to the Americas
region of the Pallets segment. It operates 43 service centres, a fleet
of 240 trucks and a fleet of over 5,000 trailers.
It focuses on the retrieval, reconditioning, and resupplying of non-
pooled “white” wood pallets in the USA.
Since Brambles acquired IFCO in March 2011, CHEP and IFCO PMS
have been working together and a strategy is in place to optimise
and deliver an integrated service centre network.
CHEP service centres have begun to process white wood pallets and
IFCO PMS have begun to process CHEP pallets, with a total of 16
centres now capable of processing both platforms.
In FY13, Brambles will begin collecting IFCO PMS energy, waste and
water data and in the process, record and measure the energy
efficiencies that result from the optimisation of the networks.
SUSTAINABILITY REVIEW – CONTINUED
CHEP USA’s CHEP Cares program has implemented a number of
initiatives to encourage employees to get involved with their
communities. These include:
– an online system that tracks employee volunteering hours and a
calendar of events that helps employees find and sign up for
events in their local community;
– a matching gifts program, which provides all employees the ability
to double their donations to recognised charitable organisations
up to an amount of US$1,000; and
– a voluntary “give as you earn” program, under which employees
can donate direct from their payroll to one or a number of CHEP
USA’s core charitable organisations and CHEP USA then matches
these donations.
Through CHEP Australia’s Helping Hand program, employees
donated A$50,000 to 27 local charity and community organisations
across Australia and volunteering hours increased by 20 times when
compared to FY11.
In October 2011, CHEP Australia joined forces with The Smith Family
to host a career day for disadvantaged teenagers from a local high
school. Sixteen students attended along with teachers, volunteers
from CHEP and staff from The Smith Family Learning for Life
program. Students met with CHEP staff from across the business,
participated in workshop activities to learn about education, career
paths and job interview skills and gain an insight into corporate life.
Students also visited the plant floor and watched pallet repairs.
Feedback from The Smith Family and attending students was very
positive.
GOVERNANCE
Brambles is conscious that it must have the right risk and
governance foundations and appropriate structures in place to
manage all impacts responsibly. Its sustainability strategy recognises
that sustainability must be embedded into its corporate risk
management framework. Brambles uses corporate governance
practices and processes to oversee its performance, including its
sustainability performance.
The CEO, who is also a member of the Board, has operational
responsibility for sustainability issues. The Board receives
updates on sustainability issues, including information on
operational activities, objectives and external feedback on
Brambles’ performance.
Sustainability is overseen by the Sustainability Committee, which is
a management committee. Details of the Sustainability Committee
members and its Charter are available on Brambles’ website. The
Sustainability Committee meets at least three times a year.
Brambles’ Executive Leadership Team (ELT) has oversight of
sustainability policies and is responsible for implementing
sustainability policies across the organisation. Further details on the
Board and ELT are located on pages 29 to 32 and in section 1.1 of
the Corporate Governance Statement on page 33.
Brambles’ Code of Conduct provides an ethical and legal framework
for all employees in the conduct of Brambles’ business. The Code of
Conduct defines how Brambles relates to its shareholders,
employees, customers, suppliers and the community. Brambles
implements its Code of Conduct through a variety of training and
induction programs. It is regularly reviewed by the Board and
updated as necessary. Further details on the Code of Conduct are in
section 3.1 of the Corporate Governance Statement on pages 36 to
37. A copy of the Code of Conduct is available on Brambles’
website.
Senior managers are required to either sign off on compliance with
the Code of Conduct every six months, or to identify any exceptions.
The sign-offs may be subject to audit testing by Internal Audit.
Brambles Annual Report 2012 - Page 28
BOARD & EXECUTIVE LEADERSHIP TEAM
BOARD OF DIRECTORS AT 30 JUNE 2012
DOUG DUNCAN NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Audit Committee
Joined Brambles as a Non-executive Director in January 2012. He is a Non-executive Director and member of
the Audit Committee of JB Hunt Transport and Benchmark Electronics. Doug’s career in the transport and
logistics industry spans over 30 years. From 2001 until his retirement in 2010, he was President and CEO of
FedEx Freight. Prior to that, he spent more than 20 years with the company that ultimately became Viking
Freight, where he held senior executive roles including President & CEO from 1998 to 2001, when FedEx
acquired Viking. Doug holds a Bachelor of Science degree in Business Administration from Christopher
Newport University, Virginia. Age: 61.
TONY FROGGATT NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Audit Committee, Remuneration Committee and Nominations Committee
Joined Brambles as a Non-executive Director in June 2006. He is a Non-executive Director of Billabong
International and Coca-Cola Amatil. Previously, Tony was a Non-executive Director of AXA Asia Pacific
Holdings and was CEO of Scottish & Newcastle plc from May 2003 to October 2007. He 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 a Master of Business Administration degree
from Columbia Business School, New York. Age: 64.
TOM GORMAN CHIEF EXECUTIVE OFFICER
Chairman of Executive Leadership Team
Joined Brambles as Group President, CHEP EMEA in March 2008 and became CEO in November 2009.
Previously, Tom had a long career with the Ford Motor Company, and served as President, Ford Australia from
March 2004 until January 2008. Before joining Ford, he worked for the Bank of Boston. Tom holds a Bachelor
of Arts degree in Economics & International Relations from Tufts University, Massachusetts and a Master of
Business Administration degree with distinction from Harvard Business School, Massachusetts. Age: 52.
DAVID GOSNELL NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Audit Committee
Re-joined Brambles as a Non-executive Director in December 2011. He is Managing Director of Global Supply
& 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 sterling procurement budget. David was a Non-
executive Director of Brambles from June 2006 until March 2010, when he retired due to his other
commitments at that time. Prior to joining Diageo, David 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
& Electronic Engineering from Middlesex University, England. Age: 55.
TAHIRA HASSAN NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Remuneration Committee
Joined Brambles as a Non-executive Director in December 2011. Tahira is based in Toronto, Canada and had a
long career with Nestlé. From 2003 to 2006, she was Senior Vice President & Head of Global Supply Chain.
Based in Switzerland, this was a new role created to lead the reshaping of Nestlé’s global approach to supply
chain management. Her other roles included Senior Vice President & Global Business Head for Nescafé Ready
To Drink from 2006 to 2009, and Vice President, Deputy Operations, Zone Americas from 2001 to 2003.
Previously, Tahira held various leadership positions in Nestlé Canada including President, Ice Cream and
Executive Vice President, Consumer Demand Chain and Information Services. Tahira is a Fellow of the
Chartered Institute of Management Accountants, UK and a Certified Member of the Society of Management
Accountants of Canada. Age: 59.
Brambles Annual Report 2012 - Page 29
BOARD & EXECUTIVE LEADERSHIP TEAM – CONTINUED
GREG HAYES CHIEF FINANCIAL OFFICER
Joined Brambles as Chief Financial Officer in November 2009. Previously Greg was CEO & Group Managing
Director of Tenix Pty Limited, and prior to that Chief Financial Officer and later, Interim CEO of The
Australian Gas Light Company (AGL). He has also had senior executive roles at Westfield Holdings Limited and
Southcorp Limited. Greg holds a Master of Applied Finance degree from Macquarie University and a Graduate
Diploma in Accounting and Bachelor of Arts degree from Flinders University. Greg is a member of the Institute
of Chartered Accountants in Australia and has attended the Advanced Management Programme at Harvard
Business School, Massachusetts. Greg will retire from Brambles in March 2013. Age: 54.
STEPHEN JOHNS NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Chairman of Audit Committee and member of Nominations Committee
Joined Brambles as a Non-executive Director in August 2004. He is Chairman and a Non-executive Director of
Leighton Holdings Limited and a Non-executive Director of Westfield Group and Leighton Holdings subsidiary
John Holland Group. Previously Stephen had a long executive career with Westfield where he held a number
of senior 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
and a Fellow of the Australian Institute of Company Directors. Age: 65.
CAROLYN KAY NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Audit Committee
Joined Brambles as a Non-executive Director in June 2006. She is a Non-executive Director of Commonwealth
Bank of Australia, Infrastructure NSW and The Sydney Institute and an External Board Member of Allens.
Carolyn has more than 25 years’ experience in the finance sector and worked as an executive 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 Australian Graduate School of Management. Carolyn is a Fellow of
the Australian Institute of Company Directors, a member of Chief Executive Women and Women Corporate
Directors and has a Centenary Medal for services to Australian society in business leadership. Age: 51.
GRAHAM KRAEHE AO NON-EXECUTIVE CHAIRMAN (INDEPENDENT)
Chairman of Nominations Committee and member of Remuneration Committee
Re-joined the Board in December 2005, was appointed Deputy Chairman in October 2007 and Chairman in
February 2008. He is Chairman and a Non-executive Director 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 because of commitments in his past role as Chairman of National Australia
Bank Limited. He has also been the CEO of Pacific BBA and Southcorp Limited, a member of the Board of the
Reserve Bank of Australia 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: 69.
LUKE MAYHEW NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Chairman of Remuneration Committee
Joined Brambles as a Non-executive Director in August 2005. Luke is a Non-executive Director of
InterContinental Hotels Group. He was a Non-executive Director of WH Smith until August 2010, Chairman of
Pets at Home Group Limited until March 2010 and Chairman of the British Retail Consortium between 2009
and 2011. Luke was a director of John Lewis Partnership from 1992 to 2004. He previously held senior
positions at Thomas Cook, 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. He is a Trustee of BBC Children in Need. Age: 59.
BRIAN SCHWARTZ AM NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of Remuneration Committee
Joined Brambles as a Non-executive Director in March 2009. He is Chairman and a Non-executive Director of
Insurance Australia Group Limited and Deputy Chairman and a Non-executive Director of Westfield Group and
Football Federation Australia. In March 2009, he retired as CEO of Investec Bank (Australia) Limited. 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 and a Fellow of the Australian Institute of Company Directors. He is a
Member of the Order of Australia. Age: 59.
Brambles Annual Report 2012 - Page 30
BOARD & EXECUTIVE LEADERSHIP TEAM – CONTINUED
EXECUTIVE LEADERSHIP TEAM AT 30 JUNE 2012
TOM GORMAN CHIEF EXECUTIVE OFFICER
Chairman of Executive Leadership Team
Joined Brambles as Group President, CHEP EMEA in March 2008 and became CEO in November 2009.
Previously, Tom had a long career with the Ford Motor Company, and served as President, Ford Australia from
March 2004 until January 2008. Before joining Ford, he worked for the Bank of Boston. Tom holds a Bachelor
of Arts degree in Economics & International Relations from Tufts University, Massachusetts and a Master of
Business Administration degree with distinction from Harvard Business School, Massachusetts. Age: 52.
GREG HAYES CHIEF FINANCIAL OFFICER
Joined Brambles as Chief Financial Officer in November 2009. Previously Greg was CEO & Group Managing
Director of Tenix Pty Limited, and prior to that Chief Financial Officer and later, Interim CEO of The
Australian Gas Light Company (AGL). He has also had senior executive roles at Westfield Holdings Limited and
Southcorp Limited. Greg holds a Master of Applied Finance degree from Macquarie University and a Graduate
Diploma in Accounting and Bachelor of Arts degree from Flinders University. Greg is a member of the Institute
of Chartered Accountants in Australia and has attended the Advanced Management Programme at Harvard
Business School, Massachusetts. Greg will retire from Brambles in March 2013. Age: 54.
JEAN HOLLEY CHIEF INFORMATION OFFICER
Joined Brambles in September 2011 from telecommunications services company Tellabs, Inc, where she was
Executive Vice President & Chief Information Officer. Previously, Jean held roles including Vice President &
Chief Information Officer at building materials group USG Corporation and senior information technology and
information systems roles at environmental services company Waste Management Inc. Jean is also a member
of the Board of Directors for VASCO Data Security International, Inc. She has a Master of Science degree in
Computer Science & Engineering from the Illinois Institute of Technology and a Bachelor of Science degree in
Computer Science & Electrical Engineering from the Missouri University of Science & Technology. Age: 53.
PETER MACKIE GROUP PRESIDENT, PALLETS, AMERICAS
Became Group President, Pallets, Americas in October 2011, having been Group President, CHEP Asia-Pacific
since May 2010 and Acting Group President, CHEP Europe, Middle East & Africa from November 2009 to April
2010. Previously, Peter held the positions of President, CHEP Europe; Senior Vice President, Customer
Service, CHEP Europe; Vice President, Strategy, CHEP Europe; and Managing Director, CHEP UK & Ireland.
Before joining CHEP in 2001, Peter held senior roles with Boots and The BOC Group. Peter is a qualified
chartered engineer and has a Master in Business Administration degree from London Business School. Age: 46.
KARL POHLER GROUP PRESIDENT, RPCS
Became Group President, RPCs in October 2011, having been CEO, IFCO Systems, which Brambles acquired in
March 2011, since August 2005. Karl was an executive member and CEO of the Board of Directors of IFCO
from December 2000. Prior to joining IFCO, he was Chairman of the Board of Management of Computer 2000
AG, and, at the same time, European president of Computer 2000/Tech Data Corp. From 1997 to 1999, he
served as CEO of Sony Deutschland GmbH. From 1993 to 1996, he chaired the Board of Management of
Computer 2000 Deutschland GmbH. From 1980 to 1992, he was active in executive management functions for
Digital Equipment GmbH. Age: 58.
Brambles Annual Report 2012 - Page 31
BOARD & EXECUTIVE LEADERSHIP TEAM – CONTINUED
ELTON POTTS GROUP PRESIDENT & CHIEF OPERATING OFFICER, RECALL
Became President & Chief Operating Officer of Recall in April 2007, having been appointed Chief Operating
Officer of Recall in December 2006. He joined Brambles in 2002 as Vice President, Controller for CHEP USA,
becoming Vice President, Asset Management for CHEP USA in the same year and Senior Vice President, Asset
Management for CHEP USA in 2003. Before joining Brambles, Elton held various operations and finance roles
with Owens-Corning and Newell Rubbermaid. He holds a Bachelor in Financial Management degree from
Clemson University, South Carolina, and a Master in Business Administration degree from Capital University,
Ohio. Age: 48.
JASON RABBINO GROUP PRESIDENT, CONTAINERS
Joined Brambles in May 2012 from diversified industrial company Tyco International, where he was Senior
Vice President of Enterprise Solutions. Previously, Jason held a number of senior executive roles in Tyco’s
ADT electronic security solutions business, managed services company Aramark Corporation and management
consultancy McKinsey & Company. Before entering the corporate world, he was an officer and aviator in the
United States Navy. He has a Master of Business Administration degree from the Wharton School of the
University of Pennsylvania. Age: 43.
NICK SMITH GROUP SENIOR VICE PRESIDENT, HUMAN RESOURCES
Joined Brambles in November 2007. Previously, he was Group Human Resources Director for Inchcape, the
international automotive retail group. Prior to this, Nick spent a number of years in the telecommunications
industry, firstly with British Telecom and then with Cable & Wireless. 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, has a Bachelor of Science
(Economics) degree in International Politics and a Master in Business Administration degree. Age: 51.
DOLPH WESTERBOS GROUP PRESIDENT, PALLETS, EMEA & ASIA-PACIFIC
Became Group President, Pallets, EMEA & Asia-Pacific in October 2011 having joined Brambles in April 2010
as Group President, CHEP EMEA. Prior to joining Brambles, Dolph held executive positions at Dell, most
recently as Vice President, Solutions & Services, EMEA, which included responsibility for Dell’s services,
software and data centre business across more than 50 countries. Before joining Dell, Dolph was President,
EMEA and Senior Vice President, Asia, for ModusLink, a global provider of supply chain, IT and business
process outsourcing services to technology companies. He has a Master in Management degree from the
Graduate School of Business at Stanford University, California. Age: 48.
Brambles Annual Report 2012 - Page 32
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
Brambles is a global provider of pallet and container pooling and
supply chain services and information management services and
operates in more than 50 countries. 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. 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 in place during the year ended
30 June 2012 (Year), by reference to the Australian Securities
Exchange Corporate Governance Council Corporate Governance
Principles & Recommendations, Second Edition (CGPR). During the
Year, the Board believes Brambles met or exceeded all the
requirements of the CGPR. The information provided in this
Corporate Governance Statement is current as at 31 July 2012.
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.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
1.1. ROLE OF THE BOARD AND EXECUTIVE MANAGEMENT
1.1.1. Role of the Board and executive management
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, Tom
Gorman, 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 Brambles’ Executive Leadership Team (ELT)
and the USA and Asian Advisory Boards.
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.
The structure of the Board ensures that no individual or group
of individuals dominates the Board’s decision-making process.
The ELT, a management committee, assists in implementing
Brambles’ strategic direction, and ensuring its resources are well
managed. The ELT 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, development of strategy,
risk management, communications and post-investment project
reviews;
- leading initiatives which may from time to time vary, but include
Zero Harm and innovation; and
- leading the implementation of change processes.
Biographical details for the members of the ELT are shown on pages
31 and 32.
The function of the USA and Asian Advisory Boards, which are
equivalent to management committees, are to assist management
to develop Brambles’ strategic direction in the USA and Asia
respectively, and to strengthen Brambles’ stakeholder relationships
in those regions. The Chief Executive Officer is a member of both
advisory boards. The other members comprise external persons with
relevant business and industry experience in, and senior executives
of Brambles with operating or functional responsibility for, the
applicable region. The Advisory Boards meet four times a year.
1.1.2. Responsibilities of the Board
The Board is responsible for approving 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.
The schedule of matters reserved to the Board for approval
includes, among other matters:
- the Group’s overall strategic direction and strategic plans for its
major business units;
- acquisitions or disposals of assets which exceed the authority
limits delegated to the Chief Executive Officer and Chief Financial
Officer;
- budgets, financial objectives and policies, and significant capital
expenditure;
- Brambles’ financial statements and published reports;
- the Group’s systems of internal control and risk management
processes, and the annual review of their effectiveness;
- changes to the Group’s capital structure (other than changes
resulting from established employee share plans);
- the appointment of key senior executives;
- the Group’s Diversity Policy; and
- the Board skills matrix.
The Board has delegated some of its functions to the Audit,
Nominations and Remuneration committees, although overall
responsibility for those functions remains with the Board. 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. Details of the Board committees are set out in sections
2.4, 4.1 and 8.1 and the committee charters can be found at
www.brambles.com. The Board is also supported by the ELT and the
USA and Asian Advisory Boards (see section 1.1.1.).
1.1.3. Allocation of individual responsibilities
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, amongst
other things, their term of office, rights, responsibilities and
entitlements on termination, and job descriptions setting out their
duties.
Brambles Annual Report 2012 - Page 33
CORPORATE GOVERNANCE STATEMENT – CONTINUED
1.2. PERFORMANCE EVALUATION OF SENIOR EXECUTIVES
2.1. INDEPENDENT DIRECTORS
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
ELT) all participate in this process, which is overseen by the
Remuneration Committee.
Performance evaluations for senior executives, including Executive
Directors and the ELT, were carried out during the Year in
accordance with this process.
1.2.1. Induction of senior executives
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.
PRINCIPLE 2: STRUCTURE THE BOARD
TO ADD VALUE
At the date of the Directors’ Report, the Board consists of eleven
members, with two Executive Directors (the Chief Executive Officer
and the Chief Financial Officer) and nine Non-executive Directors.
The Chief Financial Officer, Greg Hayes, will retire from the Board
on 1 October 2012. The biographies for each of the current
Directors, shown on pages 29 and 30, 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 (and its composition
after the retirement of Greg Hayes) reflects (and will reflect) 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 years of their appointment and,
where applicable, their most recent election by shareholders, their
status as Executive or Non-executive Directors, whether they will
retire and seek election or re-election at the 2012 Annual General
Meeting (AGM), and when they are next due for re-election.
2.1.1. Independent decision-making
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.
2.1.2. Independent Directors
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, at various times during the Year, was a substantial
shareholder of Brambles. The Board noted that, except for
2,228,025 shares (being 0.14% 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 accounted for more than 2% of the
supplier’s consolidated gross revenue.
Name
D G Duncan
A G Froggatt
T J Gorman
D P Gosnell
T Hassan
G J Hayes
S P Johns
S C H Kay
G J Kraehe AO
C L Mayhew
B M Schwartz AM
Year
appointed1
Year last
elected
Executive or
Non-executive
Independent
Seeking election/seeking
re-election in 2012
Next due for
re-election
2012
2006
2009
20114
2011
2009
2004
2006
20056
2005
2009
N/A
2011
2010
N/A
N/A
2010
2009
2009
2009
2010
2009
Non-executive
Non-executive
Executive
Non-executive
Non-executive
Executive
Non-executive
Non-executive
Non-executive
Non-executive
Non-executive
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
No
Yes
Yes
Yes
No
Yes
N/A2
2014
N/A3
N/A2
N/A2
N/A5
2012
2012
2012
2013
2012
1 For the purposes of this table, the year appointed is the year the relevant Director was first elected to the Boards of Brambles or BIL and BIP, as the case may be.
2 Appointed to the Board since the last shareholders meeting. Will stand for election for the first time at the 2012 AGM, and if elected, will be due for re-
election at the 2015 AGM.
3 Following an amendment to Brambles’ constitution which was approved by shareholders at the 2010 AGM, it is no longer necessary for the managing director of
Brambles to stand for re-election. Tom Gorman holds the role of managing director, but is referred to by the title of Chief Executive Officer.
4 David Gosnell also served as a Director from 2006 to 2010, and re-joined the Board in 2011.
5 Greg Hayes will retire from the Board on 1 October 2012, prior to that time he would otherwise have been due for re-election at the 2013 AGM.
6 Graham Kraehe also served as a Director from 2000 to 2004 and re-joined the Board in 2005.
Brambles Annual Report 2012 - Page 34
CORPORATE GOVERNANCE STATEMENT – CONTINUED
2.1.3. Regular assessments
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.
2.2. INDEPENDENT CHAIRMAN
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.
2.3. ROLES OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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.
2.4. NOMINATIONS COMMITTEE
2.4.1. Purpose of the Nominations Committee
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.
2.4.2. Charter
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.
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 64.
2.4.4. Responsibilities
The Nominations Committee discharges its responsibilities by
meeting regularly throughout the year and, among other matters:
- assessing periodically the Board skills matrix to determine that it
includes the skills required to discharge competently the Board’s
duties, having regard to the strategic direction of the Group, and
making recommendations to the Board on any changes which
should be made to that matrix;
- having regard to the Board skills matrix, 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 mix
of skills, experience, expertise and diversity having regard to the
Board skills matrix) 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, capabilities and skills required
for any Board appointment (Role Specification), identifying
suitable candidates to fill Board vacancies, and nominating
candidates for the approval of the Board;
- in identifying suitable candidates for a Board appointment, if
necessary, causing:
> a search to be undertaken by an appropriately qualified
independent third party acting on a brief prepared by the
Nominations Committee, which includes the Role Specification;
> the search to be international, extending to those countries in
which candidates with the necessary skills would ordinarily
be expected to be found; and
> the pool of candidates to include qualified persons who would
fill an existing diversity gap having regard to the Board skills
matrix, Brambles’ Diversity Policy (see section 3.2) and the
diversity objectives adopted by the Board from time to time;
- 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
re-appointment, 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 whether succession plans are in place
to maintain an appropriate mix of skills, experience, expertise
and diversity on the Board, and 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.
2.4.5. Selection and appointment process and re-election
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. As set out
in section 2.4.4., the Nominations Committee assists the Board in
the Board selection process, which involves the use of a Board skills
matrix.
The Nominations Committee has adopted a Board skills matrix. The
matrix incorporates the following elements: function (finance,
accounting, operations); international management (Americas,
Europe, Asia); industry (logistics, retail, fast moving consumer
goods); diversity (male/female, international residency,
regional/cultural background); and customer perspectives. In
adopting the matrix, the Nominations Committee noted that it was
an iterative document and would be reviewed and revised from time
to time to meet Brambles’ ongoing needs.
Brambles Annual Report 2012 - Page 35
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Having regard to the Board skills matrix, the Board recognised the
need for the appointment of new Non-executive Directors with
substantial international business experience (particularly in Europe
and the Americas) and/or knowledge of the transport and logistics
industries. The Board commenced a search, using external
consultants, to identify potential candidates meeting these criteria
and, in so doing, requested that they have regard to Brambles’
diversity objectives (see section 3.3). As result of this search, during
the Year the Board appointed three new Directors (Doug Duncan,
David Gosnell and Tahira Hassan) to the Board to fill casual
vacancies. Biographies of the new Directors are on page 29. As
required by the Company’s Constitution Mr Duncan, Mr Gosnell and
Ms Hassan will stand for election at the Company’s 2012 Annual
General Meeting. With these appointments the Board considers
that, having regard to the Board skills matrix, the current
composition of the Board is an appropriate balance of skills and
experience.
Each Non-executive Director receives a Non-executive Director’s
formal letter of appointment (see section 1.1.3.) which 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. Any
Non-executive Directors who are standing for election or re-election
at the next AGM are asked to consider their other significant
commitments and specifically acknowledge 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 64.
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 (other than the Chief
Executive Officer) 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 and the Board’s skills matrix.
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.
2.5. PROCESS FOR EVALUATING THE PERFORMANCE OF
THE BOARD, ITS 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 internal evaluation of its
performance as a whole and the performance of each of its
committees.
The review involved the completion of a detailed questionnaire by
each of the Directors and selected Brambles executives and Board
advisors on matters relevant to the Board and Committees’
performance.
of the elevation and unanimously resolved to recommend each Non-
executive Director’s election or re-election as applicable.
Details of those Directors standing for election or re-election, is set
out in the table in section 2.1.2 on page 34.
2.5.1. Induction and education
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 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, significant accounting
matters, operational site visits and meetings with major customers.
2.5.2. Access to information
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.
2.5.3. The Board and the Company Secretary
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 64.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE
DECISION-MAKING
3.1. ESTABLISH A CODE OF CONDUCT
Brambles has a Code of Conduct, which provides an ethical and legal
framework for all employees in the conduct of Brambles’ business.
Brambles’ Code of Conduct includes the following schedules:
- Corporate Social Responsibility Policy;
- Speaking Up Policy;
- Continuous Disclosure & Communications Policy;
- Group Guidelines for Serious Incident Reporting;
- Environmental Policy;
- Competition Compliance Policy;
The outcome of the questionnaires were collated and the results
were reported to the Board and each Committee by
PricewaterhouseCoopers. These findings were reviewed and
discussed by the Board and Committees, and key issues arising from
the evaluations were identified for further action.
- Health & Safety Policy;
- Diversity Policy;
- Securities Trading Policy;
- Risk Management; and
An internal evaluation of the performance of each of the Non-
executive Directors standing for re-election or election at the 2012
AGM, was also conducted. The Chairman reviewed the results of the
performance evaluations with each Director and the Chairman of
the Audit Committee reviewed the results of the Chairman’s
performance evaluation with him. The Board also reviewed the
results of that evaluation, in the absence of the Director the subject
- 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. At each meeting, the Audit Committee receives
a report on investigations into any matters raised under that policy
relating to financial control issues. A report on all matters raised
Brambles Annual Report 2012 - Page 36
CORPORATE GOVERNANCE STATEMENT – CONTINUED
under the Speaking Up Policy is provided to the Board at each of its
meetings. A copy of the Code of Conduct is available on
www.brambles.com.
- where appropriate, Brambles will engage external agencies to
assist it in the identification, selection and assessment of
candidates;
3.1.1. Purpose of the Code of Conduct
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.
3.1.2. Application of the Code of Conduct
The Code of Conduct has been translated into 17 languages. This
means that the majority of Brambles’ employees can read the Code
in their first language. Further translations are currently under
consideration as Brambles continues to develop and grow its
business. The Code of Conduct can also 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 & Communications Policy.
3.2. ESTABLISH A DIVERSITY POLICY
The Board has adopted a Diversity Policy which forms part of
Brambles Code of Conduct. (Previously, many aspects of the
Diversity Policy were covered under the Group’s employment and
equal opportunity policies.) When adopting the policy, the Board
believed that it should deal with diversity across a range of issues
and not be solely limited to gender.
Brambles’ vision statement for diversity, set out in the policy, is:
Brambles is committed to creating and maintaining a culture
which delivers outstanding performance and results.
Diversity is essential to Brambles’ long term success. Brambles
values and fosters diversity because it allows:
- customers’ needs, both today and in the future, to be
recognised and addressed;
- all employees to feel valued and able to perform to their best;
and
- Brambles to have access to the widest possible talent pool.
The Diversity Policy provides, amongst other things, that:
- Brambles is committed to selecting, recruiting, developing and
supporting people solely on the basis of their professional
capability and qualifications, irrespective of gender, ethnicity,
nationality, class, colour, age, sexual identity, disability, religion,
marital status or political opinion;
- Brambles selects, retains and develops the best people for the job
on the basis of merit and job related competencies – without
discrimination;
- Brambles will continue to develop talent management programs
such as:
> development programs for senior executives;
> development programs for next generation leaders; and
> mentoring programs; and
- on an annual basis, the Board will review and report on the:
> relative proportion of women and men in the workforce at all
levels;
> statistics and trends in the age, nationality and professional
backgrounds of Brambles’ executive population;
> measurable objectives for achieving gender and nationality
diversity; and
> progress towards achieving those objectives.
3.3. GENDER DIVERSITY OBJECTIVES
The schedule of matters reserved to the Board was amended in 2011
to add the following Board responsibilities:
- determining measurable objectives for achieving gender diversity
and annually assessing both the objectives and the progress
towards achieving them
- annually review and report on the relative proportion of women
and men in the workforce at all levels of the Group.
Brambles had previously committed to establishing diversity targets
during 2011 in its 2010 Sustainability Report. In considering the
measurable objectives for achieving diversity, the Company
considered a number of areas that it believed were important to
both demonstrate and achieve a diverse workforce. These included:
- nationality – Brambles believes that it is essential that its
employees represent the communities in which they operate. The
Company already has a high representation of different
nationalities in its employee population. The general managers
and executive teams in each of the countries in which Brambles
operates are made up almost entirely of people of that
nationality. Brambles monitors this through its bi-annual talent
management process with a view to continuing the process and
expanding the access of differing nationalities to its global
operations.
- professional background - Brambles also believes that its
employees should be able to relate to the Company’s customers.
It therefore recruits extensively from the sectors in which it
operates, to ensure that the Company has the right blend of skills
and experience. This aspect of diversity is also monitored through
the bi-annual talent management process.
- gender – Brambles believes that its executive population should
reflect the overall balance of employees in its organisation. This
is the best measure for Brambles, as it has a large proportion of
employment activities in heavy manual duties, and therefore an
overall workforce that is predominantly male.
As at 31 July 2012, Brambles’ overall employee population was
75.9% male and 24.1% female. Women comprise 18.2% of its Board
and 26.5% of its management (which is defined as the manager,
director, vice president and senior vice president grades). In
calculating these percentages, Brambles included each permanent
employee on the payroll, but excluded casual employees and
contractors.
During 2011, Brambles adopted a measurable objective for women
to represent 30% of its Board and across the ELT and management
positions by 30 June 2015. At the time these targets were set, the
integration into the Group of the recently acquired IFCO, Paramount
Pallets and the CHEP Aerospace businesses was taking place and a
complete analysis of the gender diversity within those businesses
had not yet occurred. It has since become apparent that Brambles
will need additional time to meet the targets set in 2011. As a
Brambles Annual Report 2012 - Page 37
CORPORATE GOVERNANCE STATEMENT – CONTINUED
result, the measurable objective of having women represent 30% of
its management positions has been revised to 30 June 2018. The
objective of having women represent 30% of Board and ELT positions
by 30 June 2015 remains unchanged.
3.4. GENDER DIVERSITY REPORTING
Each year, Brambles will publish the composition of its executive
population by grade against this target, showing progress year on
year.
The position at 31 July 2012 is as follows:
2015
Objective
% Females at
31 July 20127
% Females at
30 June 20117
Board
Executive
Leadership Team
Senior Vice
President
Vice President
Director
Manager
30%
30%
30%
30%
30%
30%
18.2%
11.1%
21.8%
10.7%
21.8%
28.3%
12.5%
-
15.2%
17.7%
21.3%
27.8%
Further information on diversity is included in the Diversity &
Inclusion section of the Sustainability Review, on pages 25 and 26.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL
REPORTING
4.1. ESTABLISH AN AUDIT COMMITTEE
Brambles confirms that, in accordance with ASX Listing Rule 12.7,
it has had an Audit Committee throughout the Year.
4.1.1. Purpose of the Audit Committee
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 relating to the
above in respect of which it considers that action or improvement
is needed and making recommendations as to the steps to be
taken.
7 The percentages for senior vice president, vice president, director and
manager exclude the employees of IFCO RPCs, IFCO PMS, Paramount Pallets
and CHEP Aerospace which, as recent acquisitions, have not yet completed
the banding classification process into senior vice president, vice president,
director and manager categories.
4.2. STRUCTURE OF THE AUDIT COMMITTEE
4.2.1. Composition of the Audit Committee
The Audit Committee has five members and is chaired by Stephen
Johns, an independent Director.
4.2.2. Importance of independence
The Audit Committee is comprised entirely of Non-executive
Directors, all of whom the Board considers to be independent.
4.2.3. Technical expertise
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 as at 31 July 2012, including
details of their relevant qualifications, are as follows:
- Stephen Johns had a long executive career with Westfield where
he held a number of senior positions including that of Finance
Director from 1985 to 2002. He is the Chairman of Leighton
Holdings Limited and a Non-executive Director of John Holland
Group and the Westfield Group. He holds a Bachelor of Economics
degree from the University of Sydney and is a Fellow of the
Institute of Chartered Accountants in Australia and a Fellow of the
Australian Institute of Company Directors.
- Doug Duncan is a Non-executive Director and a member of the
Audit Committee of JB Hunt Transport and Benchmark
Electronics. From 2001 until his retirement in 2010, Doug was
President and CEO of FedEx Freight and prior to that he spent
more than 20 years with the company that ultimately became
Viking Freight, where he held senior executive roles including
President & CEO from 1998 to 2001, when FedEx acquired Viking.
Doug holds a Bachelor of Science degree in Business
Administration from Christopher Newport University, Virginia.
- Tony Froggatt is a Non-executive Director and a member of the
Audit Committee of Billabong International and Coca-Cola Amatil.
Previously, he was a Non-executive Director of AXA Asia Pacific
Holdings and 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 a Master of Business Administration degree
from Columbia Business School, New York.
- David Gosnell is Managing Director of Global Supply &
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 sterling procurement budget.
David was a Non-executive Director of Brambles from June 2006
until March 2010, when he retired due to his other commitments
at that time. Prior to joining Diageo, David 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.
- Carolyn Kay is a Non-executive Director and a member of the
Audit Committee of Commonwealth Bank of Australia,
Infrastructure New South Wales and an External Board Member of
Allens. She has more than 25 years experience in the finance
sector and worked as an executive in international finance at
Morgan Stanley in London and Melbourne, JP Morgan in New York
and Melbourne and as a finance lawyer at Linklaters & Paines in
London. Carolyn holds Bachelor degrees in Law and Arts from the
University of Melbourne and a Graduate Diploma in Management
from the Australian Graduate School of Management. She is a
Fellow of the Australian Institute of Company Directors.
Stephen Johns and Carolyn Kay were members of the Audit
Committee throughout the Year. Doug Duncan, Tony Froggatt and
David Gosnell, independent Non-executive Directors, became
Brambles Annual Report 2012 - Page 38
CORPORATE GOVERNANCE STATEMENT – CONTINUED
members of the Audit Committee on 1 March 2012. Brian Schwartz
was a member of the Audit Committee during the Year until 1 March
2012 at which point he joined the Remuneration Committee to
replace Tony Froggatt.
4.3. AUDIT COMMITTEE CHARTER
4.3.1. Charter
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.
4.3.2. Responsibilities
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, for which
its approval is 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.
4.3.3. Meetings
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 64. Audit Committee
papers are provided to all Directors and minutes of meetings are
included in the papers for subsequent Board meetings. There is also
an open invitation for all Directors to attend Audit Committee
meetings. Directors who are not members of the Audit Committee
regularly attend its meetings. From the 2013 financial year, all
Directors will be required to attend the Audit Committee meetings
at which the half and full-year financial statements are considered.
4.3.4. Reporting
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.
4.4. EXTERNAL AUDITOR
PricewaterhouseCoopers has been engaged by the Board to act as
external auditors to Brambles since the 2002 financial year. Under
the terms of engagement, the Australian audit engagement partners
will rotate every five years. Mr Mark Johnson retired as Brambles’
lead audit engagement partner at the conclusion of the FY11 full
year results period. Mr Paul Bendall was appointed as the new lead
audit engagement partner upon Mr Johnson’s retirement.
The Audit Committee is responsible for making recommendations to
the Board on the selection, appointment, evaluation and removal of
external auditors, setting fees and ensuring that the external
auditors’ engagement partners are rotated at appropriate intervals.
PRINCIPLE 5: MAKE TIMELY AND BALANCED
DISCLOSURE
5.1. ESTABLISH A CONTINUOUS DISCLOSURE POLICY
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 grow, it must 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 & Communications
Policy to:
- reinforce Brambles’ commitment to the continuous disclosure
obligations imposed by law and to describe the processes
Brambles implements 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.
To achieve the above objectives and satisfy regulatory
requirements, the Board provides information to shareholders and
other market participants in several ways:
- Brambles releases significant announcements directly via the ASX
and immediately places copies 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
previously or is simultaneously released to the market. Brambles
posts all presentation materials on www.brambles.com; and
- www.brambles.com contains further information about Brambles
and its activities, including copies of recent interim and annual
reports and recordings and slides of recent presentations
to analysts.
The Continuous Disclosure & Communications Policy takes into
account the matters listed in Box 5.1 of the CGPR. A copy can be
found at www.brambles.com.
Brambles Annual Report 2012 - Page 39
CORPORATE GOVERNANCE STATEMENT – CONTINUED
5.1.1. Commentary on financial results
The Audit Committee Charter requires the Committee to review the
clarity of financial reports.
A review of operations and activities for the Year is included on
pages 4 to 11. Brambles makes presentations of the full and half
year results to the investment community immediately after the
public release of those results. Brambles webcasts these
presentations live and posts copies of the associated presentation
materials on www.brambles.com.
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 53 of the Directors’ Report –
Remuneration Report.
PRINCIPLE 6: RESPECT THE RIGHTS OF
SHAREHOLDERS
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. The Chief Executive Officer,
Chief Financial Officer and other senior executives regularly meet
investors and other market participants to understand their issues
and concerns and discuss Company performance and strategy. No
new material or price sensitive information is provided at such
meetings. Other Non-executive Directors may attend meetings with
major investors 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.
Executive management provides information on shareholder activity
and trading to the Board, along with shareholder feedback and
copies of analysts’ reports.
6.1. ESTABLISH A COMMUNICATIONS POLICY
As disclosed in section 5.1, the Board has adopted a Continuous
Disclosure & 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.
6.1.1. Electronic communication
Brambles takes all of the measures outlined in Box 6.1 of the CGPR
to make effective use of electronic communication with
stakeholders.
Brambles posts a copy of all announcements made to the ASX on
www.brambles.com. On release, significant announcements are
highlighted in the “Latest News” area on the home page of
www.brambles.com.
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 ASX regulatory releases and notices
of meetings that Brambles Limited has published since it was listed
in December 2006 are available on www.brambles.com.
Shareholders are encouraged to provide an email address to
Brambles’ share registry so that they can be sent an electronic
notification when a communication is available on
www.brambles.com, rather than a hard copy. 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. Shareholders
who do not specify a preferred method of communication are posted
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, or have the option of lodging direct votes.
6.1.2. Meetings
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.
6.1.3. Communication with beneficial owners
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.
6.1.4. Website
As noted in sections 6.1.1. and 6.1.3., Brambles communicates with
shareholders via electronic methods, including via
www.brambles.com. Brambles also has a shareholder results micro-
site, which contains the financial results for the Year as well as
more detailed information about Brambles’ business operations. The
micro-site can be accessed directly at
www.brambles.com/2012review.
6.1.5. Briefings
Brambles follows a calendar of regular disclosure of its financial and
operational results. The calendar, which is posted on the website,
includes advance notice of the dates for the release of half year and
full year results, other financial information, shareholder meetings,
major analyst and investor briefings and Brambles’ involvement in
major investment conferences. Where possible, Brambles webcasts
these significant briefings.
When Brambles conducts analyst and investor briefings, a record of
the briefings is maintained for internal use. This record includes a
summary of the issues discussed, a record of those present (names
or numbers where appropriate) and the time and place of the
meeting.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
7.1. ESTABLISH POLICIES FOR THE OVERSIGHT AND
MANAGEMENT OF MATERIAL BUSINESS RISKS
7.1.1. Risk management policies
The Board is responsible for approving and reviewing the
effectiveness of the Group’s system of internal control and risk
management. During the Year, the Board was supported in this role
by management, in particular by the Chief Executive Officer, the
Audit Committee (in relation to financial reporting risks) and the
Group’s internal audit function. To strengthen the relationship
between risk management and strategic and operational planning,
the Chief Executive Officer, through the ELT (see section 1.1.1.),
has principal responsibility for risk management. The Audit
Committee’s responsibilities are described in section 4.3.2. of this
Statement.
The Board has adopted a risk management framework, the
objectives of which are as follows:
Brambles Annual Report 2012 - Page 40
CORPORATE GOVERNANCE STATEMENT – CONTINUED
- to incorporate effective risk management as part of Brambles’
strategic planning process;
- to require business operating plans to address the effective
management of key risks;
- to develop internal audit plans to concentrate efforts on providing
assurance on the viability and value of risk
mitigation/management processes;
- to embed a stronger risk management culture;
- to improve allocation of capital to reflect business risks;
- to seek competitive advantage through increased certainty of
achieving agreed organisational and business objectives; and
- to continue to fulfil governance requirements for risk
management.
Brambles Headquarters and each of the business units have a risk
and control committee (RCC). The Brambles Headquarters RCC is
chaired by the Chief Financial Officer and its members include key
functional heads. Each RCC conducts an in-depth review of the
relevant business unit’s or corporate, as the case maybe, risk profile
on a regular basis. The Group Presidents review the risk profile and
accompanying mitigation plans of their respective business units
before they are consolidated into the Group-level risk profile. The
risk profiles and mitigation plans for Brambles Headquarters, the
business units and the Group as a whole are evaluated by the ELT,
with support from the Group Vice President, Taxation & Risk. The
ELT, through the Chief Executive Officer, prepares a risk report to
the Board twice yearly, which includes a review of the Group’s risk
profile, mitigation factors and emerging risks (see section 7.2).
Legal obligations and the reasonable expectations of stakeholders,
such as shareholders, customers, employees, subcontractors,
suppliers and the community in general are taken into account when
preparing and updating mitigation plans.
7.2. REPORTING ON EFFECTIVE MANAGEMENT OF
MATERIAL BUSINESS RISKS
7.2.1. Risk management and internal control system
Management is responsible for the development, implementation
and management of systems that:
- identify, assess and manage risks in an effective and efficient
manner;
- other sources of independent assurance, such as environmental
audits, occupational health and safety audits and reports from
the external auditors.
The biannual management declarations are collected through a
web-based system, to enable the questionnaires to be completed
more easily and to facilitate rigorous tracking across periods.
The key elements of Brambles’ business risk management systems
during the Year are set out below:
Risk control – risks to the achievement of business objectives were
identified through a process of examination between the ELT,
Brambles’ risk management team, the business unit Group
Presidents, RCCs and functional process owners. Key business risks
were also identified and analysed during regular management
reporting and discussions. The identified risks were 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 were 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 formed part of the Board’s annual review of the
effectiveness of the risk management system and systems of
internal control.
Risk monitoring – there was 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
ELT and Brambles’ risk management team, risks and controls were
reassessed by the RCCs on a regular basis. The outcome of those
assessments and details of progress in implementing risk
improvement programs were signed off by Group Presidents and
reported to the Group Vice President, Taxation & Risk. In addition,
a report on the effectiveness of the management of business risks
was provided to the ELT and the Board. The effectiveness of specific
business risk controls and risk improvement programs was also
periodically reviewed by internal audit as part of the FY12 internal
audit program, and the results reported to the Audit Committee
(see section 7.2.2).
The Board reviews the effectiveness of the internal control and risk
management systems on an ongoing basis by:
- considering and approving the budget and forward plan of each
- enable decisions to be based on a comprehensive view of the
business;
reward-to-risk balance;
- reviewing detailed monthly reports on business performance
- provide greater certainty of the delivery of objectives; and
and trends;
- satisfy the Group’s corporate governance requirements.
- setting limits on delegated authority;
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.;
- a risk management function;
- RCCs for each of Brambles Headquarters and Brambles’ business
units; and
- receiving regular reports on Brambles’ treasury activities,
and reviewing treasury guidelines, limits and controls;
- receiving twice-yearly reports from the ELT 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; and
- receiving reports from the Audit Committee, which has a
responsibility to assist the Board in reviewing internal financial
controls.
7.2.2. Internal audit function
The internal audit function is independent of the external auditor.
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 head of internal audit has direct access to the Chairman of the
Audit Committee. Both the Audit Committee and the internal audit
Brambles Annual Report 2012 - Page 41
CORPORATE GOVERNANCE STATEMENT – CONTINUED
team have unrestricted access to management and the right to seek
information and explanations.
7.2.3. Risk Management Committee
The roles of the Board, ELT and the RCCs in Brambles’ risk
management framework are described in section 7.1.1.
7.3. CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER DECLARATION
The Board receives written assurances from the Chief Executive
Officer and Chief Financial Officer that the declaration provided
under section 295A of the Corporations Act 2001 (Cth)(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 received these
assurances in advance of approving both the annual and interim
financial statements for the Year.
PRINCIPLE 8: REMUNERATE FAIRLY AND
RESPONSIBLY
8.1. ESTABLISH A REMUNERATION COMMITTEE
8.1.1. Purpose of the Remuneration Committee
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.
8.1.2. Charter
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, which is reviewed annually, can
be found at www.brambles.com.
8.1.3. Responsibilities of the Remuneration Committee
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 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, 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, reviewing and making
recommendations to the Board on remuneration by gender 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;
- selecting, appointing and setting the terms of reference for
external remuneration consultants who advise the Committee or
Brambles in respect of the remuneration of the Executive
Directors and other key management personnel as outlined in the
Remuneration Report; and
- monitoring the Group’s policy of equal remuneration for equal
work value, regardless of gender, by receiving an annual report on
remuneration by gender across the Group, and otherwise
reviewing and making recommendations to the Board on
remuneration by gender.
8.1.4. Remuneration policy
Details of Brambles’ remuneration policy can be found in the
Directors’ Report – Remuneration Report on pages 47 to 49 and 57.
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,
following consultation with the Chairman of Brambles, 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.
In 2011 the Remuneration Committee and the Board monitored the
progress of legislative changes to the Act concerning director and
executive remuneration, and, where not already in place, made
preparations to comply with the new rules on voting, disclosure,
engagement of remuneration consultants and hedging of
remuneration which took effect in FY12.
8.2. STRUCTURE OF THE REMUNERATION COMMITTEE
The Remuneration Committee is comprised entirely of
Non-executive Directors, all of whom are independent. Luke
Mayhew (Committee Chairman), Tony Froggatt and Graham Kraehe
were members of the Remuneration Committee throughout the
Year; Tahira Hassan and Brian Schwartz, independent Non-executive
Directors became members of the Remuneration Committee on 1
March 2012. Tony Froggatt retired from the Committee on 1 August
2012 due his appointment to the Audit Committee earlier in the
Year. 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 64.
The Remuneration Committee may seek input from certain members
of executive management on remuneration, but no members of
executive management are directly involved in deciding their own
remuneration.
8.3. COMPARISON OF REMUNERATION STRUCTURES
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 47 to 49 and 57.
Brambles Annual Report 2012 - Page 42
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
Corporate Governance Statement: 1.1
Recommendation 1.2 Performance evaluation of senior executives
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”,
“Charters & Related Documents”
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Recommendation 2.1
Independent directors
Recommendation 2.2
Independent chairman
Corporate Governance Statement: 2.1
Corporate Governance Statement: 2.2
Recommendation 2.3 Roles of chairman and chief executive officer
Corporate Governance Statement: 2.3
Recommendation 2.4 Nomination committee
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
Corporate Governance Statement:
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
2 and Board and Executive Leadership
Team, pages 29 to 32.
- the names of the directors considered by the board to constitute independent
2.1.2.
directors and the company’s materiality thresholds
- the existence of any of the relationships listed in Box 2.1 and an explanation
2.1.2.
of why the board considers a director to be independent, notwithstanding the
existence of those relationships
- a statement as to whether there is a procedure agreed by the board for directors
2.1.1.
to take independent professional advice at the expense of the company
- a statement as to the mix of skills and diversity for which the board of directors is
2.4.5.
looking to achieve in membership of the board
- the period of office held by each director in office at the date of the annual report 2.1.2.
- 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 64.
- whether a performance evaluation for the board, its committees and directors
2.5
has taken place in the reporting period and whether it was in accordance with the
process disclosed
- an explanation of any departures from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5
Not applicable
or 2.6
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”,
“Charters & Related Documents”.
www.brambles.com
See “Corporate Governance” and
“Charters & Related Documents”.
Brambles Annual Report 2012 - Page 43
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Principle/Recommendation
Reference
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
Recommendation 3.1 Establish a code of conduct
Recommendation 3.2 Establish a diversity policy
Recommendation 3.3 Gender diversity objectives
Recommendation 3.4 Gender diversity reporting
Corporate Governance Statement: 3.1
Corporate Governance Statement: 3.2
Corporate Governance Statement: 3.3
Corporate Governance Statement: 3.4
Recommendation 3.5 An explanation of any departures from Recommendations 3.1, 3.2. 3.3, 3.4 or 3.5
should be included in the corporate governance statement
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 diversity policy or a summary of its main provisions
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” and
“Charters & Related Documents”.
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
Corporate Governance Statement:
4.2.3 and Directors’ Report – Other
Information, page 64.
- the number of meetings of the audit committee
- 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:
- information on procedures for the selection and appointment of the external
auditor, and for the rotation of external audit engagement partners
- the audit committee charter
Corporate Governance Statement: 4.4
and www.brambles.com
See “Corporate Governance” and
“Charters & Related Documents”.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
Recommendation 5.1 Establish a continuous disclosure policy
Corporate Governance Statement: 5.1
Recommendation 5.2 An explanation of any departures from Recommendations 5.1 or 5.2 should be
Not applicable
included in the corporate governance statement
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”,
“Charters & Related Documents”,
“Brambles Code of Conduct (which
incorporates the Continuous Disclosure
& Communications Policy as
Schedule 3).
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
Recommendation 6.1 Establish a communications policy
Corporate Governance Statement: 6.1
Recommendation 6.2 An explanation of any departures from Recommendations 6.1 or 6.2 should be
Not applicable
included in the corporate governance statement
The company should describe how it will communicate with its shareholders publicly,
ideally by posting the information on the company’s website in a clearly marked
corporate governance section
www.brambles.com
See “Corporate Governance”,
“Charters & Related Documents”,
“Brambles Code of Conduct” (which
incorporates the Continuous Disclosure
& Communications Policy as
Schedule 3).
Brambles Annual Report 2012 - Page 44
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Principle/Recommendation
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Reference
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, 7.3 or 7.4
Not applicable
- whether the board has received the report from management under
Corporate Governance Statement: 7.2
Recommendation 7.2
- whether the board has received assurance from the chief executive officer (or
Corporate Governance Statement: 7.3
equivalent) and the chief financial officer (or equivalent) under Recommendation
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
Structure of the remuneration committee
Recommendation 8.3 Comparison of remuneration structures
Recommendation 8.4 Companies should provide the following information in the corporate governance
statement or a clear cross reference to the location of the material:
www.brambles.com
See “Corporate Governance”,
“Risk Management”.
Corporate Governance Statement: 8.1
Corporate Governance Statement: 8.2
Corporate Governance Statements: 8.3
and Directors’ Report – Remuneration
Report pages 47 to 49 and 57.
- 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: 8.2
and Directors’ Report – Other
Information, page 64.
- the existence and terms of any schemes for retirement benefits, other than
Not applicable
superannuation, for Non-executive Directors
- an explanation of any departures from Recommendations 8.1, 8.2, 8.3 or 8.4
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 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” and
“Charters & Related Documents”.
www.brambles.com
See “Corporate Governance” and
“Charters & Related Documents”,
“Brambles Code of Conduct”
(which incorporates the Securities
Trading Policy as Schedule 9).
Brambles Annual Report 2012 - Page 45
DIRECTORS’ REPORT – REMUNERATION REPORT
Despite the ongoing challenges of global economic conditions
during FY12, Brambles delivered sales revenue and Underlying
profit growth in line with the forecasts the Company made in
August 2011. As a consequence:
- Short Term Incentive bonuses were around target level; and
- 2009 Long Term Incentive awards will partially vest.
Brambles continued to manage salaries and Non-executive
Directors’ fees closely in FY12.
- Base salary increases across the Group, including for the
Executive Leadership Team (ELT), have generally been modest
at around 3% to 4%. Early in the financial year, the Chief
Executive Officer (CEO) received a significant one-off increase
to his base salary following the Board’s assessment both of his
performance and contribution during his first year in that role
and external benchmarks. He had received only a modest
increase to his base salary as Group President of CHEP EMEA on
his appointment as CEO. The increase in his base salary for FY13
will fall back in line with the average increases for senior
executives across the Group; and
- A market rate increase of 4% was applied to Non-executive
Directors’ fees, including the Chairman’s fees.
The Company will be seeking shareholder approval at the 2012
Annual General Meeting to increase the maximum annual
aggregate remuneration that may be paid to Non-executive
Directors (the Non-executive Directors’ fee pool). This was last set
in August 2006. The proposed increase from US$2.30 million to
US$2.75 million will enable Brambles, if appropriate, to consider
the appointment of an additional Director and to allow for market
rate increases to Non–executive Directors fees over the next
several years.
There were some changes to the ELT during the Year, largely as a
result of a major reorganisation of the Group’s pallet, crate and
container pooling businesses; Jean Holley (Group Chief
Information Officer) and Jason Rabbino (Group President,
Containers) joined the ELT and three members of the ELT, Jim
Ritchie (Group President, CHEP Americas), Jasper Judd (Group
Senior Vice President & Head of Innovation) and Kevin Shuba
(Group Senior Vice President, Containers Americas), left the
Group.
During June 2012, Brambles announced the retirement of Chief
Financial Officer (CFO) Greg Hayes and the appointment of Zlatko
Todorcevski as the new CFO. Mr Hayes will continue with the Group
until March 2013.
All departures have been managed under the provisions of the
relevant executives’ employment contracts and within the existing
executive termination legislation.
After deciding to place its global Recall information management
business for sale early in the Year, Brambles announced during June
2012 that, following an extensive process, it would not be divesting
the business as the offers from bidders did not reflect its value or
provide sufficient certainty that a sale could be completed. As a
result retention arrangements have been put in place for a select
number of senior Recall executives.
Each year, we aim to improve the clarity and transparency of the
Remuneration Report. In this year’s Remuneration Report we have
included changes that are required under Corporations Act, together
with some best practice additions based on guidance from ASIC. We
have also introduced a clearer explanation of the link between our
remuneration plans and business strategy and we have refined the
graph in Section 3.3 showing the proportion of total remuneration in
the Year against the maximum potential remuneration for key senior
executives.
In implementing Brambles’ remuneration policy, the Committee’s
primary focus has been to align executive remuneration with
business performance and the creation of shareholder value. The
Company also seeks to remunerate all employees within the
Brambles Group fairly; we see equal remuneration for equal work
value, regardless of gender, as being a key principle of our global
remuneration policy.
We remain confident that our approach to remuneration continues to
be in line with the Company’s policy, business strategy and
shareholder interests. We are not proposing or planning any changes
to the Share Plan Rules. However, each year we do set new stretch
targets that executives need to achieve to obtain maximum
potential remuneration.
Luke Mayhew
Non-executive Director & Chairman of the Remuneration Committee
Brambles Annual Report 2012 - Page 46
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
CONTENTS
1. Background
2. Remuneration Committee
3. Remuneration policy and structure
4. Performance of Brambles and At Risk Remuneration
5. Employee Share Plan
6. Executive Directors and Disclosable Executives
7. Non-executive Directors’ Disclosures
8. Remuneration Advisors
9. Appendices
1. BACKGROUND
The Remuneration Report provides information on Brambles’
remuneration policy, the link between that policy and the
performance of Brambles and the remuneration information on
Brambles’ Key Management Personnel.
Brambles’ Key Management Personnel are:
(a) its Non-executive Directors;
(b) its Executive Directors; and
(c) other Group executives who have authority and responsibility
for planning, directing and controlling the activities of the
Group. The Remuneration Committee has determined that
executives coming within this category comprise those who,
for some or all of the year ending 30 June 2012 (Year), were
members of the Executive Leadership Team (ELT) of Brambles.
In this report, executives coming within paragraph 1(b) and (c)
above are called Disclosable Executives.
This report includes all disclosures required by the Corporations Act
2001 (Cth) (Act), regulations made under that Act and Australian
Accounting Standard AASB 124: Related Party Disclosures. The
disclosures required by section 300A of the Act have been audited.
Disclosures required by the Act cover both Brambles and the Group.
2. REMUNERATION COMMITTEE
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 Disclosable Executives and the Company Secretary and
reviewing the remuneration policy and individual arrangements for
other executives.
During the Year, the members of the Remuneration Committee were
Luke Mayhew (Committee Chairman), Tony Froggatt, Graham
Kraehe, Tahira Hassan (from 1 March 2012) and Brian Schwartz
(from 1 March 2012) 1.
Details of the Committee’s Charter, and the rules of Brambles’
executive and employee share plans can be found on
www.brambles.com under “Corporate Governance”, “Charters &
Related Documents”.
3. REMUNERATION POLICY AND STRUCTURE
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 targets.
When setting and reviewing remuneration levels for Disclosable
Executives, 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 set pay around the median level
of remuneration but to provide upper quartile total potential
rewards for outstanding capability and performance.
3.1 FIXED AND AT RISK REMUNERATION
Remuneration is divided into those components which are not
directly linked to 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 strategic
objectives (that is, they are “At Risk”).
Fixed remuneration generally consists of base salary and benefits.
The benchmarks used for setting fixed remuneration for the Year
were major listed companies in the US, Australia and Europe, whose
market capitalisation and revenue levels were between 50% and
200% of Brambles’ 12 month average market capitalisation and
revenue as of 30 June 2011. Based on these benchmarks, Fixed
remuneration for most Disclosable Executives increased by between
3% and 4% during the Year.
Early in the Year, following his first 12 months as CEO, Mr Gorman
received an increase in his base salary to A$2,000,000 per annum, a
superannuation allowance of 15% of base salary, and a A$30,000 car
allowance. In total, this represented a 21% increase on his previous
fixed remuneration of A$1,926,000 per annum.
Mr Hayes received a 10.7% increase in his base salary.
Brambles’ remuneration framework is underpinned by its banding
structure. This classifies roles into specific bands; each band
incorporating roles which have broadly equivalent work value.
Pay ranges for each band are determined under the same
framework globally and are based on the local market rates for the
roles falling within each band. This provides a sound basis for
delivering a non-discriminatory pay structure for all Group
employees. From FY12, the Committee receives an annual report on
remuneration by gender to enable it to monitor remuneration equity
across the Group.
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.
In addition to Fixed remuneration, a significant element of
Disclosable Executives’ total potential reward is required to be
At Risk.
This means that an individual’s maximum potential remuneration
will be achieved only in circumstances where they have met
challenging objectives in terms of Brambles’ overall financial
performance, returns for all shareholders and strategic objectives.
The proportion of Disclosable Executives' remuneration packages At
Risk is illustrated in section 3.3.
Brambles’ At Risk remuneration is provided by way of three types of
annual incentive awards: a Short Term Incentive (STI) cash award,
an STI share award and a Long Term Incentive (LTI) share award.
The remuneration structure and the key features of Fixed and At
Risk remuneration are summarised in the chart below. The
application of the At Risk element of remuneration is further
described in in section 4.
1 Each of them is an independent Non-executive Director (see section 2.1.2 of
the Corporate Governance Statement on page 34. Mr Froggatt retired from
the Committee on 1 August 2012.
Brambles Annual Report 2012 - Page 47
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
REMUNERATION STRUCTURE
FIXED REMUNERATION
AT RISK REMUNERATION
Fixed remuneration consists of
base salary and benefits.
STI CASH AWARD
Size determined by performance
against Key Performance Indicators
including BVA, cash flow and Strategic
Personal Objectives (see section 4.1
for details).
LTI SHARE AWARD
Size of grant calculated as percentage of
salary.
•
TSR – Outperformance of median-
ranked company. Full vesting for
outperformance of 25%
•
•
Sales revenue CAGR with BVA hurdle
Awards subject to performance
testing at end of three years
(see section 4.2 for details).
STI SHARE AWARD
Size derived from size of STI cash award.
Awards vest subject to continued
employment at second anniversary of
grant (see section 4.1 for details).
3.2 REMUNERATION AND THE LINK TO BUSINESS STRATEGY
Brambles has adopted a growth strategy of strengthening its global
equipment pooling and information management services
businesses. This strategy is underpinned by:
– business performance being focused on profitable growth, the
efficient use of capital and the generation of cash;
– the recruitment and retention of high calibre executives;
– the setting of goals to implement the growth strategy; and
– achieving sustainable returns for Brambles shareholders.
The implementation of Brambles remuneration policy, which is
summarised in the chart above, is directly linked to the above
strategy and objectives in the following manner.
• Business performance – profitable growth is emphasized by both
the use of Brambles Value Added (BVA) as a key performance
condition in STI cash awards and the use of compound annual
growth rate (CAGR) sales targets (with BVA hurdles) as one of the
two key performance conditions which must be satisfied for LTI
share awards to vest. The generation of cash and the effective use
of capital are reinforced through the setting of cash flow targets
for STI cash awards.
• High calibre executives – remuneration packages for executives
are designed to be competitive to assist Brambles in attracting
talented managers and to reward strong performance. The award
of a significant proportion of executives’ STI awards as shares
which do not vest for two years helps retain good performers.
• Strategic goals – each year, a part of an executive’s STI cash
award is subject to the achievement of specific personal
objectives. These include objectives focussed on the delivery of
Brambles’ strategy such as safety performance, development of
new markets, customer satisfaction, product and service
innovation, employee engagement, productivity improvements
and development of future potential senior executives.
• Sustainable shareholder returns – each of the above three
elements support the delivery of sustainable returns to
shareholders. In addition, there is a direct alignment of executive
rewards to the creation of shareholder value through the use of
relative total shareholder return (TSR) performance conditions,
to which the vesting of half of all LTI awards granted since 2010
are subject.
Full details of the link between Brambles performance in terms of
financial outcome, creation of shareholder value and the delivery of
the Group’s strategy is set out in section 4.
Definitions of the BVA, TSR and CAGR measurements and the
methods by which they are calculated are included in the Glossary
on pages 139 and 140.
3.3 REMUNERATION MIX FOR DISCLOSABLE EXECUTIVES
Brambles’ executive remuneration mix is heavily tied to
performance. At Risk remuneration represents approximately 71% to
76% of the Disclosable Executive’s remuneration package (based on
maximum performance for STI cash awards and using the fair
market value for STI and LTI share awards).
The graph on page 49 illustrates the level of actual remuneration
received by Disclosable Executives compared with their maximum
potential remuneration. Maximum potential remuneration is the
Disclosable Executive’s base salary plus his or her STI cash award
and STI share award assuming maximum level of performance (see
section 4.1) and full vesting of all LTI share awards.
In relation to the actual column:
– Base salary – this is fixed remuneration for FY12;
– STI cash – this represents the STI cash award received in respect
to FY12 performance (see section 4.1);
– STI shares – this is the deferred STI share award earned and
deferred in respect to FY12 performance (see section 4.1); and
– LTI – this shows the proportion of the 2009-2012 LTI share award
which will vest in FY13 (see section 4.2).
The Potential column represents the maximum value of each
element of remuneration that could have been received in each
case by the individual executive for FY12. Jason Rabbino did not
participate in any incentive plans in 2012 as he commenced in the
last quarter of the year making him ineligible to participate. His
remuneration mix for FY12 was therefore 100% fixed remuneration.
Brambles Annual Report 2012 - Page 48
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
2
2
2
3.4 SECURITIES TRADING POLICY AND INCENTIVE AWARDS
4.1 STI KEY PERFORMANCE INDICATORS
Brambles' Securities Trading Policy applies to awards granted
under the incentive arrangements described above. That policy
prohibits designated persons (which include all the Disclosable
Executives) 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). Management declarations are obtained twice
yearly and include a statement that all policies have been
complied with.
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 base salary. All the
incentive plans under which awards to Disclosable Executives
are still to vest or be exercised are summarised in sections 9.2
and 9.3.
4. PERFORMANCE OF BRAMBLES AND AT RISK REMUNERATION
Brambles’ remuneration policy is directly linked to its
performance in terms of financial outcome, the creation of
shareholder wealth and delivery of the Group’s strategy. 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 LTI
share awards; and
- by requiring those KPIs or performance 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. The tables in section 4.2.2 show
the level of vesting of awards triggered by performance over
those periods.
As outlined in section 3.1, Disclosable Executives have the
opportunity to receive annual STI cash and share awards based on
performance against KPIs. A significant proportion of overall STI
incentives are STI share awards, which currently vest two years
after the award is made. Disclosable Executives’ KPIs comprise
both financial and non-financial KPIs.
Financial KPIs
Financial KPIs are chosen to link executive rewards with the
financial performance of the Group, the pursuit of profitable
growth and the efficient use of capital and generation of cash.
The STI financial KPIs chosen for the Year were BVA and cash
flow from operations (Cash Flow), plus (for the CEO and the CFO)
profit after tax (PAT). For Pallets, Containers and Recall Group
Presidents, KPIs were Brambles BVA and their respective business
unit’s BVA and Cash Flow. A definition of BVA, PAT and Cash Flow
and how they are calculated is included in the Glossary on pages
139 to 140.
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. Cash Flow is used as a measure to
ensure a strong focus on the generation of cash for the Group.
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 significantly exceeded,
and the related rewards have reached their upper limit).
The STI incentives for Karl Pohler, Group President, RPCs, are
based on the existing IFCO STI plan at the time Brambles
acquired IFCO. This provides him with the opportunity to obtain
an STI cash award based on performance against the following
KPIs: IFCO’s EBITDA (70% of total STI opportunity); and IFCO’s
free cash flow (30% of the total STI opportunity). Mr Pohler does
not participate in the STI share award incentives.
The actual levels of performance achieved for the Year against
the financial KPIs are summarised in the following table.
2 Jean Holley and Dolph Westerbos commenced after the allocation of Long Term Incentives in 2009 and as such did not receive any LTI payment in respect to
2009-2012. The maximum figure shown includes the LTI Award that they would have received if they had been employed when the award was granted.
Brambles Annual Report 2012 - Page 49
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Performance against financial KPIs in 2012
Financial KPIs
KPIs3
Brambles BVA
Brambles PAT
Level of performance achieved
during the Year4
Between Threshold and Target
Between Threshold and Target
Brambles Cash Flow
Achieved Target
Disclosable
Executive
Group
BVA
Business
Unit
BVA
Group
PAT
Group
Cash
Flow
Business
Unit
Cash
Flow
Non-
Financial
KPIs
CHEP Americas BVA
Between Target and Maximum
CEO, CFO
30%
-
20%
20%
-
30%
CHEP Americas Cash Flow
Achieved Target
CHEP EMEA APAC BVA
Between Threshold and Target
CHEP EMEA APAC Cash Flow
Below Threshold at mid-year but
achieved Year-end Target
Recall BVA
Recall Cash Flow
IFCO EBITDA
IFCO Cash Flow
Below Threshold
Below Threshold
Below Threshold
Below Threshold
Group
Presidents:
Pallets
EMEA/Asia-
Pacific and
Americas,
Recall
Other
Disclosable
Executives
25%
25%
-
-
20%
30%
40%
-
-
20%
-
40%
Non-financial KPIs
Non-financial KPIs are set to link Disclosable Executives’
performance to Brambles overall strategic objectives. These
include personal strategic objectives in areas such as safety,
business strategy, new markets, customer satisfaction and
retention, and people and talent management.
- Brambles safety is measured by Brambles Injury Frequency Rate
(BIFR)5. BIFR targets for each business unit and the Group as a
whole are set each Year and incorporated into Disclosable
Executives non-financial KPIs. Brambles regards the safety of
its people as a major priority and the ELT has Group-wide
oversight of the Zero Harm environment. This means that all
ELT members will lose STI entitlement under their safety
objective if a fatality occurs anywhere in the Brambles Group.
- Business strategy and growth includes the implementation of
clearly specified strategic initiatives allocated to individual ELT
members, for example further new business acquisitions.
- Customer satisfaction and retention are mainly measured using
the Net Promoter Score (NPS)6 system. NPS targets are set for
each year and performance measured against the achievement
of those targets.
- People and talent management metrics relate to the
development of future leaders in Brambles as well as
succession planning for critical roles.
A summary of the components and weighting of KPIs for STI cash
awards for Disclosable Executives, other than Karl Pohler is in the
table following.
3 Definitions of BVA, PAT, Cash flow from operations and EBITDA
measurements and the methods by which they are calculated are
included in the Glossary on pages 139 and 140.
4 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 11.
5 A definition of BIFR is included in the Glossary on page 139 and reporting
of the Group’s BIFR performance is included in the Sustainability Review
on page 24.
6 An explanation of the Group’s use of NPS is included in the Sustainability
Review on page 17.
Details of the STI cash award payable to Disclosable Executives
and the STI cash award forfeited, as a percentage of the
maximum potential STI cash award in respect to performance
during the Year, are shown for each Disclosable Executive in the
following table.
Actual STI cash payable and forfeited for year
ended 30 June 2012
Name
% of maximum STI
% of maximum STI
cash payable for
cash forfeited for
year ended
year ended
30 June 2012
30 June 2012
DISCLOSABLE EXECUTIVES
T J Gorman
G J Hayes
J K Holley
P S Mackie
K Pohler7
E E Potts
J D Rabbino
N P Smith
R J Westerbos
56%
52%
60%
64%
0%
29%
N/A
54%
47%
FORMER DISCLOSABLE EXECUTIVES
J R A Judd
J D Ritchie
K J Shuba
58%
0%
38%
44%
48%
40%
36%
100%
71%
N/A
46%
53%
42%
100%
62%
7 Karl Pohler’s remuneration mix and bonus calculations reflect his
existing incentive arrangements from IFCO.
Brambles Annual Report 2012 - Page 50
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
4.2 LTI SHARE AWARDS
As outlined in section 3.1, Disclosable Executives also have the
opportunity to receive equity awards in the form of LTI share
awards. Vesting only occurs three years from the date of award
and is subject to satisfaction of performance conditions (which
are explained in section 4.2.1 below) over a three year
performance period (Performance Period). If awards vest, they
are exercisable for up to six years from the date of grant.
Details of the LTI share awards granted to Disclosable Executives
and the performance hurdles which apply to each of the awards
are set out in section 9.2 and 9.3. The table in section 4.2.2
illustrates the relationship between Brambles’ remuneration
policy and performance, showing the level of vesting of LTI share
awards during the Year and the previous four financial years.
LTI Share awards only vest to the extent that performance
conditions are met. The awards are governed by the Brambles
2006 Performance Share Plan (2006 Share Plan) rules, which have
been approved by shareholders. Any Board discretion, such as
vesting in the event of a change of control, is clearly prescribed
under the 2006 Plan rules. Under the “good leaver” provisions,
there is no accelerated vesting in the case of terminations and all
unvested LTI share awards are forfeited in the case of
resignations or terminations for cause.
4.2.1 LTI SHARE AWARD PERFORMANCE CONDITIONS
LTI performance conditions are set to both align executive
remuneration with the creation of shareholder value and
Brambles’ financial objective of creating and sustaining
profitable growth.
For LTI share awards granted during and prior to the 2009
financial year, the performance measure was Brambles’ TSR
ranking relative to the ASX 100 over the applicable Performance
Period.
To allow a greater focus on profitable growth whilst retaining a
shareholder value metric, LTI share awards granted from the
2009 financial year onwards, have two sets of performance
conditions, each with equal weighting.
Creation of Shareholder Value: Half of the LTI share awards are
measured by the following relative TSR condition: 40% of LTI
share awards will vest if the Company's relative TSR performance
over the Performance Period equals the TSR of the median
ranked ASX100 company; 100% will vest for out-performance of
the TSR of the median ranked ASX100 company by 25% over the
Performance Period; and if Brambles’ TSR performance is
between these two levels, vesting will be on a pro-rata straight
line basis.
TSR measures the returns that a company has provided for its
shareholders, reflecting share price movements and reinvestment
of dividends over a specific period. 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 of time.
Profitable growth: Half of the LTI share award incentivises
both long-term revenue and BVA growth. Vesting is based
on achievement of sales revenue with three year performance
targets set on a CAGR basis. The sales revenue growth targets are
underpinned by BVA hurdles. This is designed to drive profitable
business growth, to ensure quality of earnings is maintained at a
strong level and to deliver increased shareholder value. Both
sales revenue CAGR and BVA are measured in constant currency.
Each year, a sales revenue CAGR/BVA matrix is set by the
Committee and approved by the Board for each LTI share award.
The matrix is published in the subsequent Remuneration
Report and Financial Statements. This allows the Board to set
targets for each LTI share award which reward strong
performance in the light of the prevailing and forecast economic
and trading conditions.
The table below is the sales revenue CAGR/BVA matrix for LTI
share awards made during the Year.
LTI performance matrix for financial years 2012 to 2014
Vesting %
Cumulative three year BVA
US$M at fixed June 2011 FX rates
Sales revenue CAGR*
850
1,050
1,250
5%
6%
7%
8%
9%
–
20%
40%
60%
80%
20%
40%
60%
80%
100%
10%
100%
100%
*Three year CAGR over base year
40%
60%
80%
100%
100%
100%
4.2.2 PERFORMANCE OF LTI SHARE AWARDS UNDER THE 2006
PERFORMANCE SHARE PLAN
The following tables detail actual performance against the
applicable performance condition for LTI share awards made
during the five financial years indicated. The first table also
contains data on the level of vesting of “Enhanced STI share
awards”, which were STI share awards granted under the 2006
Share Plan prior to its amendment in November 2008 and were
subject to a relative TSR performance condition.
Brambles Annual Report 2012 - Page 51
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Level of vesting of LTI and Enhanced STI share awards based on TSR performance
Period to 30 June 2011 Period to 30 June 2012
Awards
made during
financial year
Performance
condition
Start of
Performance
Period
Ranking (out of 100)/
Out-performance of
median company’s TSR
return (%)
Vesting
triggered
(% of original award)
Vesting
triggered
(% of original award)
20088
Relative TSR9
1 July 2007
689
200910
201010
Relative TSR11
1 July 2008
Relative TSR11
1 July 2009
6.3011
6.2911
0% Enhanced STI awards
0% LTI awards
N/A
57.8% LTI awards
N/A
N/A
55.1% LTI Award
The following table provides similar details for awards which have yet to be tested.
Awards
made during
financial year
Performance
condition
Start of
Performance
Period
Out-performance of
median company’s TSR
return (%)
Vesting if current performance
is maintained until earliest testing date
(% of original award)
201110
201210
Relative TSR11
1 July 2010
Relative TSR11
1 July 2011
9.0111
4.2511
61.6% LTI Awards
50.2% LTI Awards
Period to 30 June 2012
Level of vesting of LTI share awards based on sales revenue CAGR and BVA performance
The following table provides details for the actual performance of LTI share awards against the applicable sales revenue CAGR/BVA matrix
for those awards granted in 2009 and 2010 and which have been tested.
Awards
made during
financial year
Performance
condition
Start of
Performance
Period
Period to 30 June 2011
Vesting triggered
(% of original award)
Period to 30 June 2012
Vesting triggered
(% of original award)
200910
201010
Sales CAGR/BVA 1 July 2008
0.00% LTI awards
N/A
Sales CAGR/BVA 1 July 2009
N/A
30.00% LTI Award
The following table provides similar details for LTI share awards the performance period of which has not yet expired.
Awards
made during
financial year
Performance
condition
Start of
Performance
Period
Period to 30 June 2012
Vesting if current performance is maintained until
earliest testing date (% of original award)
201110
201210
Sales CAGR/BVA 1 July 2010
50% LTI Awards
Sales CAGR/BVA 1 July 2011
60% LTI Awards
The changes to the Company’s structure over the 2009-2012 performance period has required the Board Remuneration Committee to
consider a range of issues including the performance of the new businesses when determining the outcome in terms of LTI share awards.
Over the course of the 3-year performance period from 1 July 2009 to 30 June 2012, the Company has undergone major structural change,
including the acquisition of IFCO and a number of smaller businesses. The Committee has determined that overall a threshold level of
performance was achieved, and accordingly that LTI share awards under this element of the LTI plan would vest at 30%.
8 These performance share rights were granted under the 2006 Share Plan prior to its amendment in November 2008. 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.
9 The average ranking of the Company’s TSR against the S&P/ASX100 Index.
10 These performance share rights were granted under the 2006 Share Plan. Rights under this Plan vest on the third anniversary of their grant date. 50% of the
award will vest subject to meeting a relative TSR performance condition. The balance of the award will vest subject to three year sales revenue CAGR and BVA
performance. The vesting matrix for this component of the award made during the 2012 financial year is detailed at section 4.2.1.
11 Percentage out-performance of the median company’s TSR return against the S&P/ASX100 Index.
Brambles Annual Report 2012 - Page 52
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
4.3 CHANGES TO EXECUTIVE AND EMPLOYEE SHARE PLAN
RULES
STI and LTI share awards are granted under the 2006 Share Plan.
At the 2011 AGM, shareholders approved the following changes to
the 2006 Share Plan rules.
Other than Peter Mackie12, executives remunerated on a base salary
approach receive pension contributions of 15% of base salary.
During the Year, Jim Ritchie, Jasper Judd and Kevin Shuba ceased
employment in accordance with the terms and conditions of their
contracts.
1. Previously, the 2006 Share Plan rules provided that 50% of
Disclosable Executives’ STI cash awards were deferred into
STI share awards that vested three years after they were
granted. While the level of deferral remains at 50%, the
vesting period for STI share awards granted during August
2011 and thereafter is two years from the date of grant.
2. Participants in the 2006 Share Plan (including Disclosable
Executives) are treated as “good leavers” unless they
voluntarily resign or are terminated for poor performance
or misconduct.
3. The Board was granted discretion under the 2006 Share
Plan rules to “clawback” unvested share awards in the
event of serious misconduct by management which
undermines materially the Group’s performance, financial
soundness and reputation. These events include
misrepresentations or material misstatements due to
errors, omissions or negligence.
5. EMPLOYEE SHARE PLAN
At the 2008 AGM, shareholders gave approval to an all employee
share plan (MyShare), which was implemented in January 2009.
Since the initial launch, more than 3,000 Brambles employees
from around 40 countries have elected to participate in MyShare.
MyShare employee participants as a group are now our 25th
largest shareholder. The number of shares purchased by
employees (Acquired Shares) as at 30 June 2012 was 818,638,
excluding shares received under the Dividend Share Program
(Dividend Shares). At the end of March 2012, Brambles issued
447,889 shares to employees, being a matching number of shares
(Matching Shares) to those purchased and held by employees for
the two year period.
In 2012, MyShare was offered for the first time to employees
in newly acquired businesses including Driessen and JMI. In
2013, the offer will be extended to include Paramount
Pallet’s employees.
Disclosable Executives are eligible to participate in MyShare.
Acquired Shares, Dividend Shares and Matching Shares obtained
by Disclosable Executives through MyShare are included in section
6.5 and 6.6. Matching share rights allocated, but not yet vested
as Matching Shares (Matching Awards), are shown in section 6.4.
6. EXECUTIVE DIRECTORS AND DISCLOSABLE EXECUTIVES
6.1 EXECUTIVE DIRECTOR CHANGES
During the Year there were no changes to Brambles’ Executive
Directors. On 4 June 2012, however, the Company announced the
retirement of Greg Hayes, CFO as an Executive Director. He will
retire from the Brambles Board effective 1 October 2012 but will
remain a Brambles employee until 1 March 2013.
6.2 SERVICE CONTRACTS
Current Disclosable Executives are on continuing contracts which
may be terminated without cause by the employer giving 12
months’ notice, or by the employee giving six months’ notice,
with payments in lieu of notice calculated by reference to annual
base salary. The termination provisions for Jim Ritchie, Kevin
Shuba and Jasper Judd include payments in lieu of notice
calculated by reference to annual base salary and health
insurance benefits. These standard service contracts state that
any termination payments made would be reduced by any value
to be received under any new employment.
Contract terms for executives
Name and role(s)
DISCLOSABLE EXECUTIVES
T J Gorman
CEO
G J Hayes13
CFO
J K Holley
Group Chief Information Officer
from 6 September 2011
P S Mackie
Group President, Pallets, Americas
K Pohler
Group President, RPCS
E E Potts
Group President & Chief Operating
Officer, Recall
J D Rabbino
Group President, Containers
from 21 May 2012
N P Smith
Group Senior Vice President,
Human Resources
R J Westerbos
Group President, Pallets, EMEA & Asia-
Pacific
FORMER DISCLOSABLE EXECUTIVES
J R A Judd
Group Senior Vice President & Head of
Innovation until 10 February 2012
J D Ritchie
Group President, CHEP Americas
until 31 August 2011
K J Shuba
Group Senior Vice President & Customer
Development Officer until
30 September 2011, when he ceased to
be a member of the ELT, and
thereafter Senior Vice President North
American Containers until 30 June 2012
Salary as at 30 June
2012 unless indicated
Base salary of
A$2,000,000
Base salary of
A$1,550,000
Base salary of
US$425,000
Base salary of
US$638,000
Base salary of
€850,000
Base salary of
US$566,000
Base salary of
US$525,000
Base salary of
A$618,000
Base salary of
€442,000
Base salary of
A$515,000
Base salary of
US$550,000
Base salary of
US$530,000
12 Mr Mackie received employer superannuation (pension) contributions of 21%
of base salary for income up to £153,700 and 15% of base salary for any
amount above £153,700 for the period 1 July to 30 September 2011.
13 Mr Hayes will retire from the Brambles Group on 1 March 2013. A summary
of his retirement entitlements was announced to the ASX on 4 June 2012.
Brambles Annual Report 2012 - Page 53
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
6.3 TOTAL REMUNERATION AND BENEFITS FOR THE YEAR
The table below provides a summary of the actual remuneration received by the Disclosable Executives for the Year, together with prior year
comparatives. The purpose of this table is to enable shareholders to better understand the actual remuneration received by Disclosable
Executives. Income derived from the vesting of shares during the year has been included below as “Actual share income”. The value shown is
the market value at the time the income became available to the executive. These awards were granted in prior financial years. The values
shown relate to STI and LTI share awards made in 2009. (Theoretical accounting values for unvested share awards are shown in section 9.4;
those values are a statutory disclosure requirement. Unvested share awards may result in “Actual share income” in future years and, if so,
the income will be reported in the table below in the Annual Report for the relevant year).
Short term employee benefits
Post-
employment
benefits
Name
Year
EXECUTIVE DIRECTORS
Cash/
salary/
fees
US$'000
Non-
Cash monetary
benefits14
US$'000
bonus
US$'000
T J Gorman15
2012
2,430
1,043
G J Hayes15
2011
1,730
1,000
2012
1,691
2011
1,339
746
993
Totals
2012
4,121
1,789
2011
3,069
1,993
CURRENT DISCLOSABLE EXECUTIVES
J K Holley16
P S Mackie
2012
2011
2012
2011
408
-
749
749
K Pohler15
2012
1,133
E E Potts
J D Rabbino16
N P Smith15
R J Westerbos15
2011
2012
2011
2012
2011
2012
2011
2012
2011
292
613
566
64
-
691
624
582
575
FORMER DISCLOSABLE EXECUTIVES
J R A Judd15
J D Ritchie
K J Shuba
2012
2011
2012
2011
2012
2011
367
603
95
566
588
562
158
-
370
394
-
254
148
249
-
-
260
326
248
268
143
266
-
248
183
255
Totals
2012
5,290
1,510
2011
4,537
2,260
296
238
42
5
338
243
75
-
146
142
37
10
-
-
-
-
-
2
108
87
10
6
-
6
-
141
376
394
Other
Termination/
sign-on
payments/
Actual
share
income
Total
Super-
retirement
before
STI/LTI
annuation
US$'000
benefits
US$'000
Other
US$'000
equity
US$'000
awards
US$'000
Total
US$'000
-
-
52
204
52
204
24
-
17
114
9
2
71
77
-
-
52
89
84
81
27
76
32
80
74
73
390
592
-
-
-
-
-
-
133
-
-
-
-
-
-
-
-
-
-
-
330
400
906
-
616
-
602
-
2,587
400
21
19
-
-
21
19
11
-
20
10
6
1
15
18
-
-
-
-
-
-
3,790
2,987
2,531
2,541
6,321
5,528
809
-
1,302
1,409
1,185
559
847
910
64
-
1,003
1,041
1,352
1,411
661
260
-
-
661
260
4,451
3,247
2,531
2,541
6,982
5,788
-
-
809
-
171
1,473
54
1,463
-
-
1,185
559
261
1,108
59
-
-
969
64
-
339
1,342
6
-
-
1,047
1,352
1,411
-
1,453
329
1,782
-
4
17
19
18
75
64
951
747
917
1,466
1,049
88
-
208
416
78
1,039
747
1,125
1,882
1,127
10,228
1,516
11,744
8,247
493
8,740
14 Non-monetary benefits include car parking, personal/spouse travel, club membership, motor vehicles, relocation and storage costs and fringe benefits tax.
15 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.9973 and EUR=US$1.3746 for 2011 to
A$1=US$1.0304 and EUR=US$1.3325 respectively for 2012.
16 These executives were appointed to their current role during the Year, as such the 2012 comparator represents part year only.
Brambles Annual Report 2012 - Page 54
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
6.4 EQUITY-BASED AWARDS
6.5 SHAREHOLDINGS
The following table shows details of equity-based awards made to
the Disclosable Executives during the Year. STI and LTI share awards
were made under the 2006 Share Plan, the terms and conditions of
which are available in sections 9.2 and 9.3 (see plan numbers
15 to 19). Matching Awards were made under MyShare, the terms
and conditions of which are available in sections 9.2 and 9.3 (plan
numbers 36 to 48).
Type of aw ard
Name
DISCLOSABLE EX ECUTIV ES
T J Gorman
G J Hayes
J K Holley
P S Mackie
K Pohler
E E Potts
J D Rabbino
N P Smith
J D Ritchie
K J Shuba
STI
LTI
MyShare Matching
Total
STI
LTI
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
Total
STI
LTI
MyShare Matching
Total
STI
LTI
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
R J Westerbos STI
LTI
Total
FORMER DISCLOSABLE EX ECUTIV ES
J R A Judd
Equity-based aw ards
V alue at grant
Number
US$'00017
151,305
392,268
730
544,303
150,221
274,588
424,809
64,610
61,020
229
125,859
54,192
111,208
693
166,093
-
-
-
34,335
102,658
702
137,695
-
-
-
49,262
90,522
730
140,514
39,544
108,114
147,658
1,048
2,718
5
3,771
1,041
1,902
2,943
448
423
2
873
375
770
5
1,150
-
-
-
238
711
5
954
-
-
-
341
627
5
973
274
749
1,023
40,263
77,698
483
118,444
-
-
192
192
36,617
98,924
702
136,243
279
538
3
820
-
-
1
1
254
685
5
944
The table below shows details of Brambles Limited ordinary shares
in which the Disclosable Executives held relevant interests, being
issued shares held by them and their related parties.
Under recently updated guidelines, members of Brambles’ ELT
are encouraged, over the five year period commencing from the
date they joined the ELT, to achieve and maintain a shareholding
equal to 100% of salary before tax. In circumstances where
executives wish to sell shares, they will require the approval of the
Chairman (in the case of the CEO) or the CEO (in the case of all
other ELT members).
Balanc e at the
Changes
Balanc e at
Ordinary
shares
start of the
during the
the end of
Y ear
Y ear
the Y ear18
DISCLOSABLE EX ECUTIV ES
T J Gorman
G J Hayes
J K Holley
P S Mackie
K Pohler
E E Potts
J D Rabbino
N P Smith
40,967
87,815
128,78219
-
-
961
-
-
229
-
22920
1,204
2,16520
-
-
66,607
26,452
93,05919
-
-
-
2,630
1,502
4,13220
R J Westerbos
101,495
-
101,495
FORMER DISCLOSABLE EX ECUTIV ES
J R A Judd
J D Ritchie
K J Shuba
18 19 20 21
79,436
-15,066
64,37021
60,324
-60,302
2221
57,766
42,020
99,78619
17 The total value of the relevant equity award(s) is valued as at the date of
grant using the methodology set out in section 9.1. The minimum possible
future value of all awards yet to vest is zero, and is based on the
performance/service conditions not being met. The maximum possible
future value of awards yet to vest is equal to the value at grant.
18 On 31 July 2012, the following Disclosable Executives acquired ordinary
shares under MyShare, which are held by AET Structured Finance Services
Pty Limited: Tom Gorman (67), Jean Holley (91), Peter Mackie (91), Elton
Potts (91) and Nick Smith (67).
19 Of which AET Structured Finance Services Pty Limited holds 127,344
shares for Tom Gorman, 35,905 shares for Elton Potts and 1,522 shares for
Kevin Shuba.
20 Held by AET Structured Finance Services Pty Limited.
21 Balance at the end of the Year is at cessation of employment for Jasper
Judd, who ceased employment on 10 February 2012; Jim Ritchie, who
ceased employment on 31 August 2011.
Brambles Annual Report 2012 - Page 55
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
6.6 INTERESTS IN SHARE RIGHTS22 2324
The table below shows details of rights over Brambles Limited ordinary shares in which the Disclosable Executives held relevant interests:
- Share rights, being awards made on 27 August 2008, 25 November 2009, 24 November 2010 and 6 September 2011 under the 2006 Share
Plan; and
- Matching Awards, being conditional rights awarded during the Year under MyShare.
Balanc e at
the start
of the
Y ear
Granted
during
the Y ear
Exerc ised
during
the Y ear23
Lapsed
during
the Y ear
V alue at
V alue at
V ested and
Balanc e at
exerc iseable
the end of
at the end of
the Y ear24
the Y ear
Name
Number
Number25
V alue at grant
Number
exerc ise
Number
lapse26
Number
Number
US$'000
US$'000
US$'000
DISCLOSABLE EX ECUTIV ES
T J Gorman
955,882
544,303
G J Hayes
735,011
424,809
J K Holley
-
125,859
3,771
2,943
873
94,220
666
89,629
673
1,316,336
-
-
-
-
-
-
P S Mackie
272,237
166,093
1,150
24,894
176
37,990
K Pohler
251,637
-
E E Potts
346,488
137,695
J D Rabbino
-
-
N P Smith
334,360
140,514
-
954
-
973
-
-
-
37,668
266
53,719
-
-
-
48,682
344
49,261
R J Westerbos
116,434
147,658
1,023
-
-
-
FORMER DISCLOSABLE EX ECUTIV ES
J R A Judd
296,916
118,444
J D Ritchie
200,658
192
K J Shuba
379,094
136,243
820
1
944
48,090
341
153,712
1,179
213,558
1,103
8
84,948
60,508
427
175,775
604
1202
114,799
279,054
-
-
285
-
403
-
370
-
1,159,820
125,859
375,446
251,637
392,796
-
376,931
264,092
-
-
-
-
-
-
-
-
-
-
-
-
22 Of the awards detailed in section 9.3 the following plan numbers are relevant to Disclosable Executives: Tom Gorman (6-14 and 17-48); Greg Hayes (10-14 and
17-19); (6-14 and 14-48) for Peter Mackie, Elton Potts and Nick Smith; Jasper Judd (6-14 and 17-43); Jim Ritchie (10-14 and 20-38); Kevin Shuba (6-8, 10-14,
and 17-48); Jean Holley (15-16 and 18-19); Dolph Westerbos (12-14 and 17-19) and Karl Pohler (12). Lapses occurred for Tom Gorman, Peter Mackie, Elton
Potts and Nick Smith (7 and 8). Exercises occurred for Tom Gorman, Peter Mackie, Elton Potts and Nick Smith (6-7 and 20-31); Jasper Judd (6-7 and 20-43) and
Jim Ritchie (20-38).
23 Of the options/rights exercised during the Year, no monies were paid or payable on exercise. The shares issued on exercise of share rights are fully paid up. All
of the share rights exercised during the Year vested during the Year.
24 On 31 July 2012, the following Disclosable Executives received Matching Awards under MyShare: Tom Gorman (67), Jean Holley (91), Peter Mackie (91), Elton
Potts (91) and Nick Smith (67).
25 During the Year 4,571,280 performance share rights were granted under the 2006 Share Plan, of which 543,573 were granted to Tom Gorman and 424,809 were
granted to Greg Hayes. 714,705 Matching Awards were granted under MyShare during the Year, of which 730 were granted to Tom Gorman. Approval for these
issues of securities was obtained under ASX Listing Rule 10.14 at the AGM held on 10 November 2011.
26 “Lapse” in this context means that the award was forfeited due to either the applicable service or performance conditions not being met.
Brambles Annual Report 2012 - Page 56
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
7.2 NON-EXECUTIVE DIRECTORS’ APPOINTMENT LETTERS
Directors are appointed for an unspecified term but are subject to
election by shareholders at the first AGM after their initial
appointment by the Board. The Corporate Governance Statement
contains details of the process for appointing and re-electing
Non-executive Directors and of the years in which the Non-
executive Directors are next due for re-election by shareholders
(see pages 34, 35 and 36).
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’ STI or
LTI plans.
7.3 NON-EXECUTIVE DIRECTORS’ REMUNERATION FOR THE YEAR
The fees and other benefits provided to Non-executive Directors
during the Year and during the prior year are set out in the table
below in US$. The full names of the Non-executive Directors and the
dates of any changes in Non-executive Directors are shown in the
Directors’ Report – Other Information. Non-executive Directors do
not receive any share-based payment.
Any contributions to personal superannuation or pension funds on
behalf of the Non-executive Directors are deducted from their
overall fee entitlements.
7. NON-EXECUTIVE DIRECTORS’ DISCLOSURES
7.1 NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The Chairman’s fees are determined by the Remuneration
Committee and the other Non-executive Directors’ fees are
determined by the Chairman and Executive Directors. In setting the
fees, advice is sought from external remuneration advisors 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. Fees are paid in the currency in
the country of domicile.
A review of Non-executive Director and Board Chairman fees was
undertaken in 2012 to ensure the fees remained in line with market
practice, resulting in an increase of 4%.
The review established the following fee structure:
Chairman
Australia-based Non-executive Directors
UK-based Non-executive Directors27
Canada-based Non-executive Director28
USA-based Non-executive Director29
A$587,000
A$187,000
£86,500
C$194,500
US$191,500
Fee supplement for Audit Committee Chairman30
A$36,000
Fee supplement for Remuneration Committee
Chairman 30
£22,000
Travel allowance for Canada-based Director
C$16,000
Travel allowance for UK-based Directors
£10,000
Travel allowance for USA-based Director
US$16,000
The next fee review will be undertaken during January 2013.
The Company will be seeking shareholder approval to increase the
maximum annual aggregate remuneration of Non-executive
Directors (the Non-executive Directors’ fee pool) at the 2012 Annual
General Meeting. The Non-executive Directors’ fee pool was last set
in August 2006. The proposed increase from US$2.30 million to
US$2.75 million will enable Brambles to consider the appointment of
an additional director if appropriate and to allow for market rate
increases, if appropriate, to Non-executive Directors fees over the
next several years.
27 David Gosnell and Luke Mayhew are UK based Non-executive Directors.
28 Tahira Hassan is the only Canada based Non-executive Director.
29 Doug Duncan is the only USA based Non-executive Director.
30 The fee supplement is only payable to a Committee Chairman who is not
also the Board Chairman.
Brambles Annual Report 2012 - Page 57
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Table 7.3 Non-executive Directors’ remuneration for the Year
Name
Year
CURRENT NON-EXECUTIVE DIRECTORS
Short term employee benefits
Post-employment benefits
Directors’ fees
US$'000
Superannuation
US$'000
Other31
US$'000
Total32
US$'000
D G Duncan
A G Froggatt33
D P Gosnell
T Hassan
S P Johns33
S C H Kay33
G J Kraehe AO33
C L Mayhew33
B M Schwartz AM33
Totals
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
88
-
176
164
81
-
109
-
214
211
173
161
579
533
178
167
173
161
1,771
1,397
4
-
13
12
3
-
5
-
12
16
16
15
22
14
6
6
16
15
97
78
17
-
8
-
3
-
8
-
12
1
6
-
53
20
9
3
56
-
109
-
197
176
87
-
122
-
238
228
195
176
654
567
193
176
245
176
172
24
2,040
1,499
7.4 NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS
As a guideline, Non-executive Directors are encouraged 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
ordinary 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
CURRENT NON-EXECUTIVE DIRECTORS
D G Duncan
A G Froggatt
D P Gosnell
T Hassan
S P Johns
S C H Kay
G J Kraehe AO
C L Mayhew
B M Schwartz AM
-
24,890
14,450
-
47,500
14,877
63,776
16,500
13,029
-
-
-
8,000
-
-
-
-
-
-
24,89034
14,45035
8,00036
47,50037
14,87738
63,77639
16,50040
13,02941
31 “Other” includes personal/spouse travel, meals and fringe benefits tax.
32 None of the Non-executive Directors received rights/awards over Brambles Limited shares during the Year, so there are no relevant share-based payment
amounts for disclosure.
33 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.9973 and GBP1=US$1.5941 for 2011 to
A$1=US$1.0304 and GBP1=US$1.5834 for 2012.
34 Of which 7,000 shares were held by Christine Joanne Froggatt and 10,000 shares were held by Bond Street Custodians as nominee for Jessie Elizabeth Froggatt
(under a power of attorney).
35 Held by Susan Gosnell.
36 Held by RBC Dexia Custodian on behalf of Tahira Hassan.
37 Of which 27,500 shares were held by Canzak Pty Ltd, and 20,000 shares were held by Caran Pty Limited.
38 Of which 9,977 held by the Carolyn Kay Superannuation Fund.
39 Held by Invia Custodians as trustee for the Graham John Kraehe Self Managed Superannuation Fund.
40 Held by Roy Nominees on behalf C L Mayhew.
41 Held by Brian Martin Schwartz & Arlene Schwartz as trustee for the Schwartz Superannuation Fund.
Brambles Annual Report 2012 - Page 58
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
8. REMUNERATION ADVISORS
The Committee have appointed Ernst & Young as Brambles’
remuneration adviser to assist the Company with non-executive
director and executive remuneration matters. In performing its role,
the Remuneration Committee directly request and receive
information and advice from Ernst & Young.
During the financial year no remuneration recommendations, as
defined by the Act (Recommendations), were provided by Ernst &
Young. Ernst & Young also provided taxation, internal audit, option
valuation and project related services together with general
employee advice services to Brambles during the Year. These
services did not include a Recommendation.
In 2012 the Committee reviewed the arrangement relating to the
engagement of its independent, external advisor. As a result,
Brambles has made the following arrangements to ensure that the
making of any Recommendations would be free from undue
influence by the Disclosable Executives to whom a Recommendation
may relate.
- The engagement letter entered into by Brambles and Ernst &
Young contained an agreed set of engagement protocols which
apply to the provision of Recommendations to Brambles. These
include:
• An agreed set of pre-approved services Ernst & Young may
provide Brambles management, which services excluded
Recommendations;
• Any requests to Ernst & Young from Brambles management
which might constitute a Recommendation are to be
referred by Ernst & Young to the Committee for its
consideration and direction;
• Ernst & Young are not permitted to provide Recommendations to
Brambles’ management; and
• Ernst & Young include with their Recommendation(s) a
declaration that they have not been unduly influenced by the
Disclosable Executive the subject of the Recommendation;
- Representatives of Ernst & Young attend all Committee meetings;
- Except for Mr Gorman and Mr Smith, the Disclosable Executives do
not attend Committee meetings;
- Mr Gorman and Mr Smith do not attend Committee meetings when
their remuneration is being reviewed or discussed; and
- The Committee meets with Ernst & Young without management
being present, during which time any issues or questions relating
to Disclosable Executive's remuneration which are not appropriate
to discuss with management present, may be discussed.
9. APPENDICES
9.1 BASIS OF VALUATION OF EQUITY-BASED AWARDS
Unless otherwise specified, the fair value of the options and share
rights included in the tables in this report, has been estimated by
Ernst & Young Transaction Advisory Services in accordance with the
requirements of AASB 2: Share-based Payments, using a binomial
model. Assumptions used in the evaluations are outlined in Note 28,
pages 109 and 110 of the financial accounts.
9.2 SUMMARY OF 2006 PLANS
The table below contains details of the 2006 Share Plan and MyShare
Plan under which former or current Disclosable Executives have
unvested and/or unexercised awards which could affect
remuneration in this or future reporting periods. The plans in bold
relate to the Plans and targets which were relevant to vesting
during the Year.
Plan
2006 Share Plan
(STI)
2006 Share Plan
(TSR LTI)
Nature of
award
Share rights
Size of award
Up to 100% of size
of STI cash award
Share rights % of salary/TFR
2006 Share Plan
(FY10-FY12
BVA LTI)
Share rights % of salary/TFR
2006 Share Plan
(FY11-FY13
BVA LTI)
2006 Share Plan
(FY12-FY14
BVA LTI)
Share rights
% of salary/TFR
Share rights
% of salary/TFR
Vesting
condition
Time only.
Time and
relative TSR
hurdle.
Time and sales
revenue CAGR
and BVA
performance.
Vesting schedule
100% vesting based on continuous
employment.
40% vesting if TSR is equal to the
median ranked company. 100%
vesting if 25% above the median
ranked company.
30% vesting occurs if CAGR is 4%
and BVA is US$800M over three
year period. 100% vesting occurs
if CAGR is 6% and BVA is
US$1,200M over three year
period.
Time and sales
revenue CAGR
and BVA
performance.
30% vesting occurs if CAGR is 5%
and BVA is US$900M over three year
period. 100% vesting occurs if CAGR
is 7% and BVA is US$1,300M over
three year period.
Time and sales
revenue CAGR
and BVA
performance.
20% vesting occurs if CAGR is 6%
and BVA is US$850M over three year
period. 100% vesting occurs if CAGR
is 8% and BVA is US$1,250M over
three year period.
Performance/
vesting period
Life of award
Three years.
Maximum of six years.
Three years. Maximum of six
years.
Three years. Maximum of six
years.
Three years.
Maximum of six years.
Three years.
Maximum of six years.
MyShare
Matching
Awards
1:1 Matching
Awards for
every Acquired
Share purchased
Time and
retention of
Acquired
Shares.
N/A
Two years
from first
acquisition.
Automatic exercise
on second
anniversary of first
acquisition.
Brambles Annual Report 2012 - Page 59
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
9.3 SHARE RIGHTS
The terms and conditions of each grant of share rights affecting remuneration in this or future reporting periods are outlined in the table
below. Share rights granted under the plans carry no dividend or voting rights.
Plan
Plan
number
Grant date
Expiry date
Exercise
price
Value at grant
Status/vesting date
2006 Share Plans
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
19 January 200742 43 31 August 2012
29 August 200742
30 August 201344
29 August 200745
30 August 201344
29 August 200746
30 August 201344
28 April 200842
29 April 201444
27 August 200842
27 August 201444
27 August 200846
27 August 201444
27 August 200847
27 August 201444
25 November 200942 25 November 201544
25 November 200946 25 November 201544
25 November 200947 25 November 201544
24 November 201048 24 November 201644
24 November 201046 24 November 201644
24 November 201047 24 November 201644
6 September 2011
1 August 201244
6 September 2011
1 August 201344
6 September 201148 6 September 201744
6 September 201146 6 September 201744
6 September 201147 6 September 201744
–
–
–
–
–
–
–
–
–
–
–
-
-
-
-
-
-
-
-
A$12.60
A$12.64
A$6.75
A$8.11
A$8.01
A$6.53
A$5.99
A$4.67
A$5.85
A$5.85
A$3.84
A$6.01
A$6.01
A$3.78
A$6.17
A$5.92
A$5.92
A$5.68
A$3.46
100% vested at 19 January 2010
100% vested at 29 August 2010
100% lapsed at 29 August 2010
100% lapsed at 29 August 2010
100% vested at 28 April 2011
100% vested at 27 August 2011
57.8% exercisable from 27 August
2011, remainder lapsed
100% lapsed at 27 August 2011
25 November 2012
25 November 2012
25 November 2012
25 November 2012
25 November 2013
25 November 2013
1 July 2012
1 July 2013
6 September 2013
6 September 2014
6 September 2014
42 STI awards vest on the third anniversary of their grant date, subject to continued employment.
43 Awards granted on 19 January 2007 were, for pricing and vesting purposes, taken to have been granted on 30 August 2006.
44 Awards granted to Elton Potts, Tom Gorman, Kevin Shuba, Jean Holley, Peter Mackie and Jim Ritchie expire three years earlier than the date shown, or
immediately after vesting, if earlier.
45 Enhanced STI awards vest on the third anniversary of their grant date, subject to continued employment and meeting a TSR performance condition.
46 These LTI awards vest on the third anniversary of their grant date, subject to continued employment and meeting a TSR performance condition.
47 These LTI awards vest on the third anniversary of their grant date, subject to continuing employment and meeting a sales revenue CAGR and BVA
performance condition.
48 STI awards vest on the second anniversary of their grant date, subject to continued employment.
Brambles Annual Report 2012 - Page 60
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Plan
MyShare
Plan
number
Grant date
Expiry date
Exercise
price
Value at grant
Status/vesting date
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
31 March 201049
1 April 2012
30 April 201049
1 April 2012
31 May 201049
1 April 2012
30 June 201049
1 April 2012
30 July 201049
1 April 2012
31 August 201049
1 April 2012
30 September 201049 1 April 2012
29 October 201049
1 April 2012
30 November 201049 1 April 2012
31 December 201049 1 April 2012
31 January 201149
1 April 2012
28 February 201149
1 April 2012
31 March 201150
1 April 2013
29 April 201150
1 April 2013
31 May 201150
1 April 2013
30 June 201150
1 April 2013
29 July 201150
1 April 2013
31 August 201150
1 April 2013
30 September 201150 1 April 2013
31 October 201150
1 April 2013
30 November 201150 1 April 2013
30 December 201150 1 April 2013
31 January 201250
1 April 2013
29 February 201250
1 April 2013
30 March 201251
1 April 2014
30 April 201251
1 April 2014
31 May 201251
1 April 2014
29 June 201251
1 April 2014
31 July 201251
1 April 2014
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
A$7.00
A$6.92
A$6.31
A$5.13
A$5.18
A$5.60
A$5.91
A$6.00
A$6.47
A$6.74
A$6.80
A$6.68
A$6.73
A$6.48
A$6.94
A$6.76
A$6.58
A$6.30
A$6.05
A$6.37
A$6.73
A$6.80
A$6.94
A$6.77
A$6.73
A$6.97
A$6.26
A$5.80
A$6.24
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
100% vested on 31 March 2012
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2013
31 March 2014
31 March 2014
31 March 2014
31 March 2014
31 March 2014
49 These Matching Awards granted under MyShare vest on 31 March 2012, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
50 These Matching Awards granted under MyShare vest on 31 March 2013, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
51 These Matching Awards granted under MyShare vest on 31 March 2014, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
Brambles Annual Report 2012 - Page 61
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
9.4 SHARE BASED PAYMENTS – FUTURE POTENTIAL
The table below provides annual accounting values for shares granted during years 2009-2011 which have been amortised over three years.
These share awards are subject to conditions set out in section 9.2. Remuneration will normally not be received as a result of the underlying
share awards vesting until the conditions have been met.
Name
Year
Total before equity52
EXECUTIVE DIRECTORS
T J Gorman
G J Hayes
Totals
2012
2011
2012
2011
2012
2011
CURRENT DISCLOSABLE EXECUTIVES
J K Holley
P S Mackie
K Pohler
E E Potts
J D Rabbino
N P Smith
R J Westerbos
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
FORMER DISCLOSABLE EXECUTIVES
J R A Judd
J D Ritchie
K J Shuba
Totals
2012
2011
2012
2011
2012
2011
2012
2011
US$'000
3,790
2,987
2,531
2,541
6,321
5,528
809
-
1,302
1,409
1,185
559
847
910
64
-
1,003
1,041
1,352
1,411
1,453
951
747
917
1,466
1,049
10,228
8,247
Share-based payment
Awards
US$'000
As % of 2012
total remuneration
Total
US$'000
1,546
823
1,306
500
2,852
1,323
194
-
469
217
465
109
463
300
-
-
481
279
301
80
690
269
230
394
440
304
3,733
1,952
29%
22%
34%
16%
-
-
19%
-
26%
13%
28%
16%
35%
25%
0%
-
32%
21%
18%
5%
32%
22%
24%
30%
23%
22%
-
-
5,336
3,810
3,837
3,041
9,173
6,851
1,003
-
1,771
1,626
1,650
668
1,310
1,210
64
-
1,484
1,320
1,653
1,491
2,143
1,220
977
1,311
1,906
1,353
13,961
10,199
Luke Mayhew
Non-executive Director & Chairman of the Remuneration Committee
16 August 2012
52 As per table 6.3 on page 54.
Brambles Annual Report 2012 - Page 62
DIRECTORS’ REPORT – OTHER INFORMATION
On 4 June 2012, as a consequence of the decision to retain Recall,
Brambles also announced that it would undertake a fully
underwritten 1-for-20 pro rata accelerated renounceable
entitlement offer to raise gross proceeds of A$448 million at an
underwritten price of A$6.05 per share.
The offer comprised an institutional and a retail component. Under
the institutional component, 55.0 million Brambles ordinary shares
were issued on 18 June 2012, raising proceeds of approximately
A$332.8 million. Under the retail component, 19.1 million Brambles
ordinary shares were issued on 10 July 2012, raising proceeds of
approximately A$115.3 million.
MATTERS SINCE THE END OF THE FINANCIAL YEAR
On 10 July, 2012, Brambles issued 19.1 million ordinary shares,
raising proceeds of approximately A$115.3 million under the retail
component of the pro-rata accelerated renounceable entitlement
offer referred to in the Significant Changes in State of Affairs
section of this report.
Other than this, the Directors are not aware of any matter or
circumstance that has arisen since 30 June 2012 up to the date of
this Report 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.
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 Letter from the
Chairman & the CEO on pages 1 and 3 and in the Operational &
Financial Review on pages 4 to 11. 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 for the Year of 13.0
Australian cents per share, which will be 30% franked. The dividend
will be paid on 11 October 2012 to shareholders on the register on
21 September 2012. On 12 April 2012, an interim dividend for the
Year was paid, which was 13.0 Australian cents per share and 20%
franked. On 13 October 2011, a final dividend for the year ended
30 June 2011 was paid, which was 13.0 Australian cents per share
and 20% franked. The unfranked component of each dividend paid
during the Year was conduit foreign income. This means that no
Australian dividend withholding tax was payable on the dividends
that Brambles paid to non-resident shareholders.
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 2012 (Year).
PRINCIPAL ACTIVITIES
The principal activities of the Group during the Year were the
provision of pallet and container pooling and supply chain services
and information management services. Brambles is a leading global
provider of these services.
The Group’s principal operations comprised four business segments:
Pallets, RPCs, Containers and Recall. Pallets, RPCs and Containers
are collectively known as the Pooling Solutions businesses.
The Pallets business, carried out under the name CHEP, owns a pool
of pallets and containers, which it issues, collects and reissues
through a network of service centres in multiple countries.
Manufacturers, producers, distributors and retailers use these
pallets and containers to transport their products safely and
efficiently through the supply chain. In addition, CHEP provides
supply chain optimisation and transport management services and,
in the USA provides a national network of pallet management
services, to sort, repair and reissue pallets. The Pallets segment
comprises three geographic business units: Americas; Europe, Middle
East & Africa; and Asia-Pacific.
The RPC business, carried out under the name IFCO, operates a pool
of reusable plastic containers globally, which are used primarily to
transport fresh produce from producers to grocery retailers.
The Containers business provides intermediate bulk, automotive and
chemical and catalyst containers to its customers. It also operates
an airline container pooling and repair business and a non-flight
critical aviation equipment maintenance and repair business called
CHEP Aerospace.
Recall is a global business and comprises the management of
information, providing secure storage, digitisation, retrieval and
destruction of information in multiple media formats.
There were no significant changes in the nature of the Group’s
principal activities during the Year.
REVIEW OF OPERATIONS AND RESULTS
A review of the Group’s operations and a review of the results of
those operations are given in the Letter from the Chairman & the
CEO on pages 1 to 3, the Operational & Financial Review on pages 4
to 11 and in the Treasury & Risk Review on pages 12 to 13.
Information about the financial position of the Group is included in
the Operational & Financial Review on pages 4 to 11 and in the Five-
Year Financial Performance Summary on page 138.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 17 August 2011, Brambles announced that following the
completion of a strategic planning process, it had decided to focus
on building its global Pooling Solutions business and to divest Recall.
To deliver the strategy of focussing on its global Pooling Solutions
business and to optimise on efficiencies, on 17 August 2011
Brambles also announced a new management and organisation
structure. The new organisation structure of three segments for the
Pooling Solutions business: Pallets, RPCs and Containers took effect
on 1 October 2011.
Further details of these segments are set out in the Principal
Activities section of this report.
On 4 June 2012, Brambles announced that, following an extensive
process, it had decided not to divest Recall and would instead retain
it as the offers from bidders for Recall did not reflect its value or
offer sufficient certainty that a sale could be completed.
Brambles Annual Report 2012 - Page 63
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
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 during the Year, is set out below.
The qualifications, experience and special responsibilities for
Directors are set out on pages 29 to 30.
Douglas Gordon Duncan
24 January 2012 to date
Anthony Grant Froggatt
1 July 2011 to date
Thomas Joseph Gorman
1 July 2011 to date
David Peter Gosnell
14 December 2011 to date
Tahira Hassan
14 December 2011 to date
Gregory John Hayes
1 July 2011 to date
Stephen Paul Johns
1 July 2011 to date
Sarah Carolyn Hailes Kay
1 July 2011 to date
Graham John Kraehe AO
1 July 2011 to date
Christopher Luke Mayhew
1 July 2011 to date
Brian Martin Schwartz AM
1 July 2011 to date
SECRETARY
Details of the qualifications and the experience of the Company
Secretary of Brambles Limited are as follows: Robert Nies 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.
INDEMNITIES
Indemnities provided to Directors and officers in accordance with
the constitution of Brambles Limited are detailed in Note 36 on
page 132. 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.
DIRECTORS’ MEETINGS
Details of the Board committee memberships are given in the Corporate Governance Statement on pages 35, 38 and 42. 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
Special
Committees
Audit Committee
meetings
Remuneration
Committee
meetings
Nominations
Committee
meetings
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
D G Duncan
A G Froggatt
T J Gorman
D P Gosnell
T Hassan
G J Hayes
S P Johns
S C H Kay
G J Kraehe AO
C L Mayhew
5
12
12
6
6
12
12
12
12
12
B M Schwartz AM 12
5
12
12
6
6
12
12
12
12
12
12
4
4
4
3
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
-
-
6
-
-
6
5
-
6
-
-
-
-
6
-
-
6
5
-
6
-
-
2
2
-
2
-
-
6
7
-
-
5
2
2
-
2
-
-
7
7
-
-
5
-
5
-
-
2
-
-
-
5
5
2
-
5
-
-
2
-
-
-
5
5
2
-
4
-
-
-
-
4
-
4
-
-
-
4
-
-
-
-
4
-
4
-
-
(a) 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.
(b) The number of meetings held while the Director was a member of the Board or relevant committee which the Director was eligible to attend.
Brambles Annual Report 2012 - Page 64
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
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 2009.
Director
Listed company
D G Duncan
J.B. Hunt Transport Services, Inc.
Benchmark Electronics, Inc.
A G Froggatt
AXA Asia Pacific Holdings Limited
Billabong International Limited
Coca-Cola Amatil Limited
T J Gorman
IFCO Systems N.V.
D P Gosnell
None
T Hassan
G J Hayes
None
None
S P Johns
Leighton Holdings Limited
Spark Infrastructure Group
Westfield Group:
Westfield Holdings Limited
Period directorship held
2010 to current
2006 to current
2008 to 2011
2008 to current
2010 to current
2011 to current
-
-
-
2009 to current
2005 to 2011
1985 to current
Westfield America Trust (director of responsible entity, Westfield America Management Limited) 1996 to current
Westfield Trust and Carindale Property Trust (director of responsible entity, Westfield
Management Limited)
S C H Kay
Commonwealth Bank of Australia
G J Kraehe AO
Bluescope Steel Limited
Djerriwarrh Investments Limited
C L Mayhew
WH Smith plc
InterContinental Hotels Group plc
B M Schwartz AM Insurance Australia Group Limited
IAG Finance (New Zealand) Limited
Westfield Group:
Westfield Holdings Limited
1985 to current
2003 to current
2002 to current
2002 to current
2006 to 2010
2011 to current
2005 to current
2008 to current
2009 to current
Westfield America Trust (director of responsible entity, Westfield America Management Limited) 2009 to current
Westfield Trust and Carindale Property Trust (director of responsible entity, Westfield
Management Limited)
2009 to current
ENVIRONMENT
Brambles’ Environmental Policy is set by the Board. It applies in all
countries where Brambles operates and was rolled out to IFCO
during the Year as part of the integration of IFCO into the Group.
The Environmental Policy provides that Brambles will act with
integrity and respect for the community and the environment and
be committed to sound environmental practice in its daily
operations. It is a minimum requirement that all Brambles
operations comply with all relevant environmental laws and
regulations. Additionally, employees are expected to care for the
environment by adopting a specified set of environmental
principles. Every business unit must ensure that those principles are
adhered to, including in countries that may not yet have enacted
laws for the protection of the environment.
Brambles has set environmental performance targets. Reporting of
performance against those targets is shown on pages 18 to 23 of the
Sustainability Review. A copy of the complete Environmental Policy
is set out in Brambles’ Code of Conduct, which is available at
www.brambles.com.
OCCUPATIONAL HEALTH AND SAFETY
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. 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 Charter and policy was rolled out to IFCO
during the Year as part of the integration of IFCO into the Group.
The Chief Executive Officer together with the Group Presidents of
the Pallets, Containers, RPC and Recall business segments 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. Reporting on health and safety performance is shown
in the Safety & Wellbeing section of the Sustainability Review on
page 24.
Brambles Annual Report 2012 - Page 65
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
During the Year there were, sadly, two work related fatalities in the
Group, details of which are in Letter from the Chairman & the CEO
on pages 1 to 3.
EMPLOYEES
Pages 24 to 26 of the Sustainability Review contain details of
Brambles’ performance as an employer - see the Attracting &
Retaining Talent: Leadership, Employee Engagement, Training &
Development and Diversity & Inclusion sections.
INNOVATION, RESEARCH AND DEVELOPMENT
Innovation, whether of an incremental or step-change nature, is
integral to Brambles’ growth strategy.
Brambles is focusing on three key areas: innovating to address
customers’ current and future needs; accelerating tomorrow’s
growth opportunities; and fostering and driving a culture of
innovation.
In 2011, Brambles launched an Innovation Fund, which has already
reviewed and funded a significant number of early-stage new
business ideas.
Brambles carries out research and development activities in relation
to both its Pooled Solutions and Recall businesses. These activities
comprise:
- continuously testing its pallets, containers and other platforms to
make them more durable, sustainable and safer for use in the
supply chain;
- enhancing existing, and developing new designs of pallets,
containers and other supply chain platforms, for both new and
existing markets;
- improving pallet and container repair processes and equipment;
- testing and developing unique identifier technologies, including
radio frequency identification; and
- research into and development of new service offerings,
information technology and software solutions, and information
and document management processes.
-
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.
INTERESTS IN SECURITIES
Pages 55, 56 and 58 of the Directors’ Report - Remuneration Report
include details of the relevant interests of Directors, and other
Group Executives whose details are required to be disclosed, in
shares and other securities of Brambles Limited.
SHARE CAPITAL, OPTIONS AND SHARE RIGHTS
Details of the changes in the issued share capital of Brambles
Limited and share rights and MyShare matching share rights
outstanding over Brambles Limited ordinary shares at the Year end
are given in Notes 27 and 28 on pages 108 to 110. No options, share
rights or MyShare matching share 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 end of the Year to the date of this Report, the following
grants, exercises and forfeits in options, performance share rights
and MyShare matching share rights over Brambles Limited ordinary
shares have taken place, broken down by reference to the plan
numbers shown on pages 60 to 61 of the Remuneration Report:
- 80,381 grants under the 2012 MyShare offer (plan number 48);
- 59,716 exercises: resulting in the issue of fully paid ordinary
shares: 3,870 under the 2011 MyShare offer (plan numbers 32 to
43), 1,368 under the 2012 MyShare offer (plan numbers 44 to 48),
15,000 under plan 1, 5,000 under plan 2, 2,173 under plan 7 and
32,305 under plan 15; and
- 192,599 lapses: 10,933 under the 2011 MyShare offer (plan
numbers 32. to 43), 6,972 under the 2012 MyShare offer (plan
numbers 44 to 48), 213 under plan 10, 213 under plan 11, 29,756
under plan 13, 29,756 under plan 14, 57,378 under plan 18, and
57,378 under plan 19.
SHARE BUY-BACKS
No ordinary shares were bought-back and cancelled during the Year.
There is no current on-market buy-back in operation.
RISK MANAGEMENT
A discussion of Brambles’ risk profile, management and mitigation of
risks can be found in the Treasury & Risk Review on pages 12 and 13
and the Corporate Governance Statement on pages 40 to 42.
TREASURY POLICIES
A discussion of the implementation of treasury policies and
mitigation of treasury risks can be found in the Treasury & Risk
Review on pages 12 and 13.
NON-AUDIT SERVICES
The amount of US$2,754,000 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 financial
due diligence for the sale of Recall, services related to the pro rata
accelerated renounceable entitlement offer, compliance services,
regulatory reporting and tax advisory services. 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.
Brambles Annual Report 2012 - Page 66
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
The auditors have also provided the Audit Committee with a letter
confirming that, in their professional judgement, as at 8 August
2012 they have maintained their independence in accordance with
their firm’s requirements, with the provisions of APES 110 – Code of
Ethics for Professional Accountants and the applicable provisions of
the Act. On the same basis, they also confirmed that the objectivity
of the audit engagement partners and the audit staff is not
impaired.
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration as required under
section 307C of the Act is set out on page 137.
ANNUAL GENERAL MEETING
The AGM will be held at 2.00pm (AEDT) on 11 October 2012 at
The Wesley Theatre, Wesley Conference Centre, 220 Pitt Street,
Sydney NSW 2000.
This Directors’ Report is made in accordance with a resolution of
the Board.
G J Kraehe AO Chairman
T J Gorman CEO
16 August 2012
Brambles Annual Report 2012 - Page 67
SHAREHOLDER INFORMATION – CONTINUED
SHARE SALE FACILITY
Ordinarily, Issuer Sponsored shareholders must establish a
relationship with a broker in order to sell their shares. However,
Brambles’ share registry provides Issuer Sponsored shareholders with
an alternative to traditional share sale services. If you would like to
take advantage of this service to sell your entire Brambles
shareholding, please contact Link Market Services at the address set
out in Contact Information on the back cover of the Annual Report.
Please note that under anti-money laundering regulations, Link
Market Services may require shareholders to complete an
identification information form.
If you are a Broker Sponsored shareholder, please contact your
broker if you wish to sell your Brambles shares.
DIVIDEND
Shareholders may elect to receive dividend payments in Australian
dollars or Pounds sterling, by contacting Link Market Services at the
address set out in Contact Information on the back cover of the
Annual Report.
ANNUAL GENERAL MEETING
The Brambles Limited 2012 AGM will be held at 2.00pm (AEDT)
on 11 October 2012 at The Wesley Theatre, Wesley Conference
Centre, 220 Pitt Street, Sydney NSW 2000.
FINANCIAL CALENDAR
Final dividend 2012
Ex dividend date – Monday, 17 September 2012
Record date – Friday, 21 September 2012
Payment date – Thursday, 11 October 2012
2013 (Provisional)
Announcement of interim results – mid February 2013
Interim dividend – mid April 2013
Announcement of final results – mid August 2013
Final dividend – mid October 2013
AGM – October 2013
DIRECTORS
G J Kraehe AO
(Non-executive Chairman)
D G Duncan
(Non-executive Director)
A G Froggatt
(Non-executive Director)
T J Gorman
(Chief Executive Officer)
D P Gosnell
(Non-executive Director)
T Hassan
(Non-executive Director)
G J Hayes
(Chief Financial 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
STOCK EXCHANGE LISTING
Brambles’ ordinary shares are listed on the Australian Securities
Exchange and are traded under the stock code “BXB”.
UNCERTIFICATED FORMS OF SHAREHOLDING
Brambles’ ordinary shares are held in uncertificated form. There are
two types of uncertificated holdings:
Issuer Sponsored Holdings: This type of holding is recorded on a
subregister of the Brambles share register, maintained by Brambles.
If your holding is recorded on the issuer sponsored subregister, you
will be allocated a Securityholder Reference Number or SRN, which
is a unique number used to identify your holding of ordinary shares
in Brambles.
Broker Sponsored Holdings: This type of holding is recorded on the
main Brambles share register. Shareholders who are sponsored by an
ASX market participant broker will be allocated a Holder
Identification Number or HIN. One HIN can relate to an investor’s
shareholdings in multiple companies. For example, a shareholder
with a portfolio of holdings which are managed by a broker would
have the same HIN for each shareholding.
Brambles Annual Report 2012 - Page 68
SHAREHOLDER INFORMATION – CONTINUED
ANALYSIS OF HOLDERS OF EQUITY SECURITIES AS AT 7 AUGUST 2012
Substantial shareholders
Brambles has been notified of the following substantial shareholdings:
Holder
Baillie Gifford
Commonwealth Bank of Australia
Number of ordinary
shares
% of issued ordinary
share capital(1)
92,229,027
78,659,986
5.93%
5.06%
(1) 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
Holders
26,819
27,407
5,179
3,174
173
Shares
13,086,323
64,665,618
36,440,630
67,025,529
1,373,951,762
62,752
1,555,169,862
The number of members holding less than a marketable parcel of 79 ordinary shares (based on a market price of A$6.34 on 7 August 2012) is
1,603 and they hold a total of 65,298 ordinary shares. The voting rights of ordinary shares are described on page 70.
Number of share 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
The voting rights of performance share rights and MyShare Matching Awards are described on page 70.
Holders
Share rights
2,177
175
14
82
34
693,235
359,589
103,611
3,852,666
8,271,713
2,482
13,280,814
Brambles Annual Report 2012 - Page 69
SHAREHOLDER INFORMATION – CONTINUED
Twenty largest ordinary shareholders
Name
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
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