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www.brambles.com.au
CONTENTS
Letter from the Chairman & the CEO
Operating & Financial Review
Strategy Scorecard
Board & Executive Leadership Team
Corporate Governance Statement
Directors’ Report – Remuneration Report
Directors’ Report – Other Information
2
3
14
16
19
33
51
Brambles Limited
ABN 89 118 896 021
Shareholder Information
Financial Report
Auditors’ Independence Declaration
Five-Year Financial Performance Summary
Glossary
Contact Information
55
58
124
125
126
128
Go to Brambles.com to review the Group’s
online annual review for 2014, including
an interactive strategy scorecard and
other features
Brambles Limited is a supply-chain logistics company
operating in more than 50 countries, primarily
through the CHEP and IFCO brands. Brambles is listed
on the Australian Securities Exchange (ASX) and has
its headquarters in Sydney, Australia.
The Group specialises in the pooling of unit-load
equipment and the provision of associated services,
focussing on the outsourced management of
returnable pallets, crates and containers. Brambles
predominantly serves the consumer goods, dry
grocery, fresh food, retail and general manufacturing
industries. In addition, the Group has specialist
businesses serving the automotive manufacturing,
aerospace and refining sectors.
FORWARD-LOOKING STATEMENTS
Certain statements made in this report are “forward-looking statements” – that is, statements
related to future, not past, events. Words such as “anticipates,” “expects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are not historical facts but rather are based on
Brambles’ current beliefs, assumptions, expectations, estimates and projections. Forward-looking
statements are not guarantees of future performance, as they address matters that are uncertain
and subject to known and unknown risks, uncertainties and other factors that are beyond the
control of Brambles, are difficult to predict and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements. Brambles cautions
shareholders and prospective shareholders not to place undue reliance on these forward-looking
statements, which reflect the views of Brambles only as of the date of this report. The
forward-looking statements made in this report relate only to events as of the date on which
the statements are made – Brambles will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events, circumstances
or events occurring after the date of this report, except as may be required by law or by any
appropriate regulatory authority.
Page 1 LETTER FROM THE CHAIRMAN & THE CEO
20 August 2014
The theme of Brambles’ 2014 Annual Report is One
Business, One Team. This reflects our journey from
an industrial conglomerate to becoming a logistics
services company focused on our leading global
positon as a pooler of unit-load equipment to some
of the world’s most important supply chains.
Over the past 15 years, this journey has included the merger with
the support services arm of GKN in 2001; the sale of Cleanaway,
Brambles Industrial Services and other non-core businesses over 2005
and 2006; the Unification of our dual-listed companies structure in
2006 and subsequent return of US$3.7 billion to shareholders; a
number of strategic acquisitions, most notable that of IFCO Systems
in 2011; and the demerger of the Recall information management
business in December 2013.
We have built unrivalled expertise and customer relationships in
equipment pooling since we acquired the Commonwealth Handling
Equipment Pool (CHEP) from the Australian Government in 1958.
Today, we are proud to own and operate more than 470 million
pallets, crates and containers on behalf of customers that include
some of the world’s leading companies, in more than 50 countries.
We believe we have a unique and sustainable advantage, from which
we can continue to pursue compelling growth opportunities, which
will continue to drive superior economic returns for shareholders.
2014 RESULT
Our 2014 result, on a constant-currency1 basis, comprised a 7%
increase in sales revenue to US$5.4 billion, a 6% increase in
Underlying Profit2 to US$960 million and Return on Capital Invested3
of 16.3%. Dividends for the year of 27.0 Australian cents per share
were in line with FY13, reflecting the Board’s stated intention not to
reduce dividends after the Recall demerger. (Full details of our
dividends are available on Page 5.)
Over the 2014 financial year (FY14), Brambles’ delivered total
shareholder return4 of 24%, compared with 20% for the benchmark
S&P/ASX200 Index and 19% for the S&P/ASX200 Industrials Index.
Over the five years to the end of FY14, Brambles’ total shareholder
return has been 122%, compared with 73% for the benchmark
S&P/ASX200 Index and 65% for the S&P/ASX200 Industrials Index.
STRATEGY & OBJECTIVES
Today – by focusing on our unique capabilities and acting as one
business, one team – we are seeking to optimise our position and
more effectively leverage our global scale and experience to drive
the next stage of growth and value creation. Our communication of
five-year financial performance objectives reflects our confidence in
the future. Subject to unforeseen circumstances5, we are targeting
annual sales revenue growth in the high single digits and consistent
incremental improvement in Return on Capital Invested to at least
20% by FY196. More detail of our strategy to achieve these
Brambles’ CEO Tom Gorman (L) and Chairman Graham Kraehe AO (R)
objectives, including our Strategy Scorecard, is set out in the
Operating & Financial Review on Pages 3 to 15.
To support these objectives, and in line with our One Business ethos,
is the One Better cost leadership program to reduce our annual
overhead costs by US$100 million by FY19. These savings will be
invested in serving our customers better, maintaining our
competitive position and improving returns for our shareholders. The
program emphasises being “better for the customer” through
improving our customer value proposition; “better for our business”
through optimising global functions; and “better buying” through
organising our procurement activities to reflect our global scale.
BOARD RENEWAL
Against the backdrop of our confidence in our strategy, Brambles
announced that Graham Kraehe will step down from the Board in
September 2014 after six years as Chairman, having first joined as a
Non-Executive Director in 2000. Following a considered succession
planning process, the Board has elected Stephen Johns as Graham’s
successor, an appointment that represents continuity and stability.
Stephen has exceptional experience and expertise. He is a former
Director of Westfield, with which he had a long and distinguished
career, and a former Chairman of Leighton Holdings and Spark
Infrastructure. He has been a Brambles Non-Executive Director for
10 years, over which time he has developed a deep knowledge of
the Group and made a major contribution to the Board.
Two new Directors were appointed in 2014: Christine Cross and Brian
Long, who replaced Luke Mayhew and Brian Schwartz, each of whom
retired having made extremely valuable contributions. Ms Cross and
Mr Long bring outstanding experience in retail and finance
respectively, in effect replacing the skills of Mr Mayhew and Mr
Schwartz – and ensuring the continuation of a strong Board skills
mix. Details of the skills matrix we use to assess Board composition
are set out in the Corporate Governance Statement on Page 22.
OUTLOOK
We are confident of delivering progress in line with our five-year
plan in FY15, with constant-currency percentage sales revenue
expected in the high single digits and a further improvement in
Return on Capital Invested. We have forecast Underlying Profit of
US$1,030 million to US$1,060 million, at 30 June 2014 foreign
exchange rates, representing growth of 7% to 10%.
We wish to thank our customers, our shareholders and Brambles’
14,000 employees – as well as the Company’s management team and
our fellow directors – as we look to the Year ahead.
Graham Kraehe AO
Chairman
Tom Gorman
Chief Executive Officer
1 Calculated by translating reported period results into US dollars at the
4 All data sourced from Bloomberg. Total shareholder return reflects share
actual monthly exchange rates applicable in the prior corresponding period.
2 Profit from continuing operations before finance costs, tax and
Significant Items.
3 Underlying Profit divided by Average Capital Invested.
price movements and reinvestment of dividends and continued ownership of
Recall shares from demerger.
5 See Disclaimer on Page 1.
6 Five-year performance objectives are provided on a constant-currency basis,
exclusive of the impact of merger, acquisition or divestment activity.
Page 2
OPERATING & FINANCIAL REVIEW
1. ABOUT BRAMBLES
1.1. OVERVIEW OF OPERATIONS
Brambles Limited is a supply-chain logistics company operating in
more than 50 countries, primarily through the CHEP and IFCO
brands. Brambles is listed on the Australian Securities Exchange
(ASX) and has its headquarters in Sydney, Australia.
The Group specialises in the pooling of unit-load equipment and the
provision of associated services, focussing on the outsourced
management of returnable pallets, crates and containers. Brambles
predominantly serves the consumer goods, dry grocery, fresh food,
retail and general manufacturing industries. In addition, the Group
has specialist businesses serving the automotive manufacturing,
aerospace and refining sectors.
At 30 June 2014, the Group employed more than 14,000 people and
owned approximately 470 million pallets, crates and containers
through a network of approximately 850 service centres.
The Group is managed through three operating segments:
- Pallets, primarily serving the fast-moving consumer goods,
grocery, food and general manufacturing industries and sub-
divided into three regions: Americas (comprising the CHEP pallet-
pooling operations in that region, the IFCO Pallet Management
Services business in the USA and the global LeanLogistics
business); Europe, Middle East & Africa (comprising the CHEP
pallet-pooling operations in those regions); and Asia-Pacific
(comprising the CHEP pallet-pooling operations in that regions);
- Reusable Produce Crates (RPCs), serving the fresh produce
industry and comprising the IFCO RPC pooling business worldwide
and the CHEP RPC pooling businesses in Australian, New Zealand
and South Africa; and
- Containers, comprising four business units: CHEP Pallecon
Solutions, primarily serving customers transporting raw materials
in the food and general manufacturing industries; CHEP
Automotive Solutions, serving the automotive manufacturing
industry; CHEP Aerospace Solutions, which rents containers and
pallets for the transportation of baggage and cargo to airlines, as
well as maintaining these and other equipment; and CHEP Catalyst
& Chemical Containers, which rents containers and provides
associated services in the refining sector.
Commentary on the performance of Brambles operating segments
during the Year, is included in Section 7.2 of this Operating &
Financial Review.
1.2. OPERATING MODEL
Brambles enhances supply chain performance for customers by
helping them transport goods through their supply chains more
efficiently, sustainably and safely.
Brambles provides standardised reusable pallets, crates and
containers to customers from its service centres, as and when
customers require. Customers use that equipment to transport
goods through their supply chains, then either arrange for its return
to Brambles or transfer it to another participant in the network for
that participant to use.
Customers eliminate the need to purchase and manage their own
pallets, crates and/or containers by participating in Brambles’
pooling system. Customers benefit from the scale efficiencies
generated by Brambles’ network and systems, as well as the Group’s
asset management knowledge and continuous development of
innovative solutions.
Brambles retains ownership of its equipment at all times, inspecting
and repairing it as required to maintain consistent levels of quality.
Brambles generates sales revenue predominantly from the rental
and other service fees that customers pay based on their usage of
the Group’s equipment.
1.3. SHARED VALUES
Brambles’ shared values are articulated in Brambles’ Code of
Conduct and are a core component of the Group’s culture:
- All things begin with the customer;
- We have a passion for success;
- We are committed to safety, diversity, people and teamwork;
- We believe in a culture of innovation; and
- We always act with integrity and respect for the communities in
which we operate and the environment.
1.4. STRATEGIC FOCUS AND THEMES
Brambles’ intention is to create superior and sustainable value for
its customers, shareholders and employees.
The Group implements its strategy under four key themes:
- Diversification: expanding into more customer segments,
broadening the range of products and services and growing
geographically;
- Cost leadership: delivering a low-cost business model that
leverages its global scale to create sustainable competitive
advantage;
- Go to market: strengthening its brand position and enhancing the
customer experience through continuously improving the quality
of its products and services; and
- People and leadership: attracting, developing and retaining the
right individuals and teams that can enhance its culture and bring
the required capability for sustainable success.
1.5. SHAREHOLDER VALUE
The service and value Brambles provides its customers, the quality
of its relationships and the scale of its networks and invested capital
base create the foundation of sustainable competitive advantage
that supports the Group’s value proposition to investors.
As a result of this value proposition, over the five years to 30 June
2014, Brambles consistently delivered profitable growth comprising
superior rates of sales revenue growth and high levels of return on
capital relative to the benchmark Australian share index, the
S&P/ASX200 Index. Based on data published by Bloomberg for the
five years ended 31 December 2013: Brambles’ compound average
growth rate in sales revenue was 9%, compared with (2)% for the
S&P/ASX200 Index; Brambles’ five-year average post-tax return on
capital was 14%, compared with 5% for the ASX200.The Group has
delivered superior total shareholder return over a one-year, three-
year and five-year period compared with both the benchmark index
and the relevant sector index, the S&P/ASX200 Industrials Index1.
1.6. BUSINESS STRATEGIES & FUTURE PROSPECTS
In December 2013, Brambles communicated the following five-year
objectives, reflecting the Group’s objective for the sustained
delivery of its value proposition to investors through continued
profitable growth:
- Annual percentage sales revenue growth in the high single digits
(i.e. on average, between 7% and 9%), at constant currency2; and
- Consistent incremental improvement in Return on Capital Invested
to at least 20% by the end of FY19.
The Group is committed to continuing to focus on and invest in the
aspects of its business that underpin its fundamental proposition to
all stakeholders, including product service and quality and the
efficient management and control of its assets.
In addition, as a result of the under-penetrated nature of equipment
pooling in many sectors and regions of the global economy, the
Group has access to a broad range of opportunities to continue to
1 Based on Bloomberg data, Brambles’ total shareholder return to 30 June
2014 (including the contribution of Recall Holdings Limited shares since the
demerger in December 2013) was: 24% over one year (compared with 20%
for the ASX200 and 19% for the ASX200 Industrials); 68% over three years
(35% for the ASX200; 28% for the ASX200 Industrials); and 122% over five
years (73% for the ASX200; 65% for the ASX200 Industrials).
2 Calculated by translating reported period results into US dollars at the
actual monthly exchange rates applicable in the prior corresponding period.
Page 3
OPERATING & FINANCIAL REVIEW – CONTINUED
pursue profitable growth through applying its intellectual property
to additional supply chains.
These opportunities include: increasing penetration with the
Group’s core products and services in existing markets; diversifying
the range of equipment pooling products and services; entering new
and adjacent parts of the supply chain in which asset pooling can be
applied; and expanding into new geographies.
The principal factors that define growth opportunities within which
the Group can create value for customers while supporting its
investment proposition for shareholders are:
- Multiple parties use a common asset (i.e. a pallet, crate or
container) to transport goods throughout the supply chain;
- Assets flow freely and at high velocity throughout the supply
chain, creating complexity that Brambles can manage more
effectively through a pooled environment than customers could
alone;
- Ownership of assets is not a source of competitive differentiation
to the asset user; and
- Pooling of assets can create a benefit in which all supply-chain
participants can share.
Brambles has identified the key external factors that influence its
assumptions and targets and create areas of opportunity and risk as:
- The macro-economic environment, with expectations for global
growth remaining challenging in the foreseeable future;
- Industry trends, in particular in the context of a dynamically
changing retailing landscape and the ongoing globalisation of
many supply chains; and
- Customer demand for sustainable outsourced supply-chain
solutions amid an intensifying competitive environment.
The Strategy Scorecard on Page 14 sets out the Group’s progress in
relation to delivering its business strategy in the context of its
objectives. This scorecard highlights short-term focus areas as well
as execution risks and associated mitigating actions. Further details
of Brambles’ risk management framework are provided under
Significant Risk & Uncertainties in Section 4.0 of this Operating &
Financial Review. Details in relation to how the Group uses its
Remuneration Policy to incentivise the Company’s leadership to
deliver profitable growth in the context of these factors are in the
Remuneration Report on Pages 33 to 50.
2. PERFORMANCE DRIVERS & METRICS
The Group monitors performance and value creation through non-
financial metrics (such as customer loyalty, safety performance and
employee engagement and enablement) and through financial
metrics (such as those covering sales revenue, profitability, return
on capital and shareholder returns).
There are three key drivers of Brambles’ sales revenue growth:
- General increases in sales volumes in line with economic or
industry trends (a relatively stable variable because the majority
of Brambles’ sales revenue comes from customers in the consumer
staples sector);
- The rate at which the group expands the penetration of its
operations (often described as “net new business wins3”); and
- Movements in pricing.
Brambles’ key profit metric is Underlying Profit4, which is adjusted
from statutory operating profit by removing Significant Items5. The
main drivers of Underlying Profit are:
- Transport, logistics and asset management costs (including
external factors such as fuel and freight prices, as well as labour
costs);
- Plant operations costs in relation to management of service centre
networks and the inspection and repair of assets (including labour
costs and raw materials costs);
- Other operational expenses (primarily overheads such as selling,
general and administrative expenses); and
- Depreciation, as well as provisioning for irrecoverable equipment.
Brambles calculates Return on Capital Invested6 by dividing
Underlying Profit by Average Capital Invested7. The main driver of
Average Capital Invested is capital expenditure on pooling
equipment. The main drivers of capital expenditure are the rate of
sales growth as well as asset efficiency factors: i.e. the amount of
pooling equipment not recoverable or repairable each year (and
therefore requiring replacement) and the frequency with which
customers return or exchange pooling equipment. Brambles’ main
capital cost exposures are for raw materials, primarily lumber and
plastic resin.
The Group also monitors Brambles Value Added, which measures
value generated over and above the cost of capital used to generate
that value. Brambles Value Added is calculated by subtracting from
Underlying Profit the product of Average Capital Invested multiplied
by 12% (a notional representation of pre-tax cost of capital).Details
of the Group’s performance relative to these metrics are included in
Section 7.0 of this Operating & Financial Review.
3. FINANCIAL POSITION
3.1. CAPITAL STRUCTURE
Brambles manages its capital structure to maintain a solid
investment grade credit rating. During the financial year
ended 30 June 2014, 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, varying the maturity profile of borrowings and
managing discretionary expenses.
3.2. 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 the treasury function to
arrange and implement lines of credit from financiers, select and
deal in approved financial derivatives for hedging purposes, and
generally execute Brambles’ financing 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 of the Financial Report on Pages
3 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.
4 Profit from continuing operations before finance costs, tax and Significant
Items.
5 Items of income or expense that are (either individually or in aggregate)
material to Brambles or to the relevant business segment and either outside
the ordinary course of business or part of the ordinary activities of the
business but unusual in size and nature.
6 Underlying Profit divided by Average Capital Invested.
7 A 12-month average of capital invested, calculated as net assets before tax
balances, cash and borrowings but after adjustment for accumulated pre-
tax Significant Items, actuarial gains and losses and net equity adjustments
for equity-settled share-based payments.
Page 4
OPERATING & FINANCIAL REVIEW – CONTINUED
101 to 110, including a sensitivity analysis (Page 105) with respect
to these financial instruments.
Net Debt & Key Ratios
US$M
June 2014 June 2013 Change
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 only transacts derivatives
with relationship banks. Individual credit limits are assigned to
those relationship banks, thereby limiting exposure to credit-related
losses in the event of non-performance by any counterparty.
3.3. FUNDING & LIQUIDITY
Brambles funded its operations during the 2014 financial year
primarily through retained cash flow and borrowings, with some
funding from employee share schemes. Brambles generally sources
borrowings from relationship banks and debt capital market
investors on a medium-to-long-term basis.
During the Year, Brambles continued to diversify and lengthen its
funding profile by issuing a new €500 million European medium-term
note at a coupon of 2.375% with a maturity of 10 years. The
proceeds were received in June 2014 and used to repay bank
indebtedness. The balance was retained as cash to pre-fund an
upcoming US private placement maturity.
Bank borrowing facilities were maintained and portions renewed
throughout the Year. These facilities are generally structured on a
multi-currency, revolving basis with maturities ranging to December
2018. Borrowings under the facilities are floating-rate, unsecured
obligations with covenants and undertakings typical for these types
of arrangements.
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 period.
Maturity Profile of Committed Borrowing Facilities & Outstanding
Bonds (% of total committed credit facilities)
1.5
1.0
B
$
S
U
0.5
10%
1%
-
22%
19%
17%
25%
14%
7%
< 1 yr
Bonds/notes
1-2 yrs
2-3 yrs
Bank borrowings
3-4 yrs
> 5 yrs
4-5 yrs
Undrawn bank facilities
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 2014, the Group was in
compliance with the policy.
Current debt
497.8
156.9
340.9
Non-current debt
2,086.2
2,686.4
(600.2)
Gross debt
Less cash
Net debt
KEY RATIOS
2,584.0
2,843.3
(259.3)
(222.3)
(128.9)
(93.4)
2,361.7
2,714.4
(352.7)
FY148
FY139
Net debt to EBITDA
1.59x
1.68x
EBITDA interest cover
13.2x
14.6x
Brambles’ financial policy is to target a net debt to EBITDA ratio of
less than 1.75 times. Key financial ratios continue to reflect the
Group’s strong balance sheet position and remain well within the
financial covenants included in Brambles’ major financing
agreements, with net debt to EBITDA at 1.59 times (2013: 1.68
times) and EBITDA interest cover at 13.2 times (2013: 14.6 times).
Net debt was US$2,361.7 million at 30 June 2014, down
US$352.7 million from 30 June 2013, reflecting the net proceeds
from the Recall demerger.
At 30 June 2014, Brambles had committed credit facilities including
bonds and notes totalling US$4,665.2 million. Undrawn committed
borrowing capacity totalled US$2,125.2 million, an increase of
US$901.0 million from June 2013, as bank borrowings were repaid
from proceeds of the Recall demerger and the European medium-
term note issue. The average term to maturity of Brambles’
committed credit facilities at 30 June 2014 was 4.1 years (2013: 3.6
years). In addition to these facilities, Brambles enters into operating
leases for office and operational locations and certain plant and
equipment to achieve flexibility in the use of certain assets. The
rental periods vary according to business requirements.
3.4. DIVIDEND POLICY & PAYMENT
Brambles has a progressive dividend policy. Under this policy, the
Group seeks to maintain or increase dividends per share each year,
in Australian cents, subject to its financial performance and cash
requirements. The Board has declared a final dividend for 2014 of
13.5 Australian cents per share, in line with the previous interim
and final dividends. The 2014 final dividend is payable on 9 October
2014 to shareholders on the Brambles register at 5pm on
12 September 2014. The final dividend is 30% franked. The ex-
dividend date is 10 September 2014. 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. Total dividends for the
Year were 27.0 Australian cents per share, reflecting the Board’s
commitment not to decrease the dividend following the demerger of
the Recall business in December 2013. Brambles paid an interim
dividend of 13.5 Australian cents per share on 10 April 2014,
franked at 30%.
3.5. 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,
sometimes using interest rate derivatives. 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; 10% to
50% for debt maturities of two to three years; and 0% to 50% for
debt maturities extending beyond three years. At 30 June 2014,
8 For FY14, based on continuing operations only.
9 For prior year comparatives, based on continuing and discontinued
operations.
Page 5
OPERATING & FINANCIAL REVIEW – CONTINUED
Brambles had 50% of its weighted average interest-bearing debt over
the next 12 months at fixed interest rates (2013: 50%). Beyond 12
months, the proportion of fixed rate debt in the range of one to two
years was 54% (2013: 47%), 50% for two to three years (2013: 48%)
and 40% for three to four years (2013: 46%). The weighted average
maturity period was 3.9 years (2013: 4.4 years). The fair value of all
interest rate swap instruments was US$13.8 million net gain (2013:
US$19.0 million net gain).
3.6. FOREIGN EXCHANGE RISK
Brambles manages its foreign exchange exposures from the
perspective of reducing volatility in the value of foreign currency
cash flows and assets. Exposures generally arise in either:
- 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 that Brambles both generates income and
incurs expenses in its local currencies of operation, these exposures
are not significant. Brambles generally mitigates translation
exposures 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, broadly to match its euro-
denominated assets. At the end of the Year, the fair value of foreign
exchange instruments was US$0.2 million net loss (2013:
US$8.3 million net loss).
4. SIGNIFICANT RISKS & UNCERTAINTIES
Brambles has adopted a risk management framework that sets out
the processes for the identification and management of risk
throughout the Group. Full details of the objectives of the
framework and the strategies and processes applied to manage
these risks are described under Principle 7 of the Corporate
Governance Statement on Pages 27 and 28.
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 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.
- Business model: changing supply chain dynamics and customer
needs could render Brambles’ existing service offerings and
business models 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 Brambles’ 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 execute effectively 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 Brambles’ customers may
fluctuate with the customers’ perceived views of equipment
quality which, in turn, is influenced by the effectiveness of the
quality standards that Brambles employs in its equipment pools.
Brambles is subject to the risk that it may not optimise these
standards, thereby adversely affecting customer satisfaction with
its service offering and/or the operating and capital costs of the
equipment pools.
- Mergers and acquisitions: Brambles is subject to the risk of
failing to successfully execute acquisitions and disposals, as well
as the risk of failing to successfully integrate acquisitions. If the
integration of newly acquired businesses is not effective, this
could result in the failure to realise the anticipated benefits and
synergies.
- 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 Brambles’ 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.
5. SAFETY
Brambles’ Zero Harm Charter states that everyone has the right to
be safe at work and to return home as healthy as when they started
the day. Each person is expected to think first of Zero Harm.
Brambles seeks to apply best practice in occupational health, safety
and environment for employees, contractors, customers and the
communities in which it operates.
Brambles Injury Frequency Rate (BIFR) is the primary measure of
safety performance across the Group. BIFR is recorded at a rate per
million hours worked and provides a comprehensive view of
employee safety. It includes:
- Work-related fatalities;
- Loss of a full work shift due to injury;
- Modified duties for a full work shift following an injury; and
- Incidents that require external medical treatment.
Page 6
OPERATING & FINANCIAL REVIEW – CONTINUED
During the Year, Brambles10 continued to focus on improving
segregation of pedestrians from vehicles and machinery, which is
Brambles’ greatest risk for potentially fatal or life changing injuries.
A pedestrian segregation assessment tool was created and rolled out
across Pallets and shared with the RPCs and Containers segments. In
addition, the Pallets segment focused on the development of global
safety standards in machinery and forklifts. The machinery safety
standards will enable standardisation and improved procurement of
new machinery. For forklifts, minimum safety standards have been
established for legacy and temporary hire equipment and
requirements for new purchase and leases have been expanded.
During FY14, Brambles’ business units10 conducted an awareness
campaign on the importance of reporting near misses11 and very
minor injuries. The information provided by this type of reporting
helps minimise the risk of serious injuries materialising. Better
reporting of minor first-aid injuries will provide a baseline for the
introduction of a total injury frequency rate metric in some business
units in FY16.
The FY14 BIFR result of 15.612,15 is a 19% improvement on the
previous year. Brambles is committed to continue to target year-
on-year improvements, after taking into account the impact of
any acquisitions.
Brambles Injury Frequency Rate
FY14 FY13 Change Reasons for change
Pallets -
Americas
Pallets -
EMEA
31.8
38.9
18%
3.1
3.8
18%
Improved safety focus
in IFCO PMS and
CHEP Canada
Improved safety
engagement in Middle
East & Africa
Pallets -
Asia-Pacific
6.4
10.0
36%
Implementation of robust
safety management system
in Asia
Pallets13
16.6 20.5
19%
RPCs
7.7
11.0
30%
Containers14 13.6
17.7
23%
Improvements in safety in
relation to wash machines
and better investigations
Implementation of
Containers Safety Council
and near miss reporting
Brambles15
15.6 19.3
19%
A detailed report on Brambles’ safety performance will be available
in the 2014 Sustainability Review, which will be published on
Brambles’ website in October 2014.
6. SUSTAINABILITY
Building sustainable business practices is fundamentally important
to the future of Brambles and to the communities in which it
operates. Brambles’ approach to Sustainability is consistent with
its strategy and Shared Values and is designed to enhance, among
other things:
- Efficiency and productivity in Brambles’ use of finite resources;
- Value creation for customers and shareholders;
- Employee engagement;
- Clarity of communication with customers and other
stakeholders; and
- Brambles’ ability to grow over the long term without causing harm
to the environment or the health and safety of its employees.
The fundamental principles on which Brambles’ business is built are
inherently sustainable. The Group is committed to being the global
leader in responsible and sustainable pooling solutions in the supply
chains it serves. It is focused on building a long-term, sustainable
business that serves its customers, employees and shareholders and
the communities in which they live.
Brambles is applying best-practice standards throughout its
operations, and is continuously vigilant in reducing asset losses,
cycle times and damage to generate more sustainable use of
physical and financial resources. Fundamental to these efficiency
efforts are the principles of recover, reuse, reduce and recycle.
The repeated use of higher quality equipment such as those
Brambles provides compared with alternative disposable or limited-
use platforms reduces material and energy requirements. Brambles
retains ownership of its assets at all times, enabling the company to
control end-of-life management and improve continuously its
recovery, reuse, reduction and recycling efforts.
6.1. SUSTAINABILITY STRATEGY
Since 2009, Brambles’ Sustainability Committee has been
responsible for the strategies and activities adopted by Brambles
with regard to the environment, its employees, ethics and the
community, consistent with the Group’s Shared Values.
In 2010, Brambles launched its sustainability strategy and outlined
its strategic objectives and initiatives to 2015. Brambles set a
number of targets to measure efforts to improve continuously,
demonstrate the inherent sustainability value in the business model
for Brambles and its stakeholders and deliver more efficient, safer
and environmentally sustainable supply chains. The strategy and
targets were grouped into four areas: Customer, Environment,
People and Community.
In 2014, to reflect recent developments in the regulatory reporting
framework and the demerger of Recall, the Sustainability
Committee developed a new framework to focus its efforts across
the Group. Brambles efforts to address sustainability risks and
opportunities will be reported in three areas:
1. Better Planet: We minimise our impact on the environment, by
continuous improvement in our everyday activities and
throughout our supply chains. Within this area are the individual
aspects of emissions, materials sourcing, waste and water.
2. Better Business: Sustainable practices and commercial success
go hand in hand. We provide safe, efficient and sustainable
solutions for our customers’ supply chains, based on the
principles of the circular economy – recover, reuse and reduce –
while we take advantage of the benefits of recycling. We focus
on the pooling business model and its inherently sustainable
characteristics, supply chain collaboration with our customers
10 Acquisitions made and new operations started in FY14 were not included in
the safety results for the Year but will be incorporated in FY15.
Solutions, CHEP Aerospace Solutions and CHEP Catalyst & Chemical
Containers operations) and South Africa.
11 A near miss is an event that did not result in injury, illness or damage but
14 For the purposes of safety reporting, the Containers segment includes the
had the potential to do so.
12 BIFR may be subject to minor adjustments as investigations on a number of
incidents were not closed at the time of publication. The final number will
be published in the 2014 Sustainability Review in October.
13 For the purpose of safety reporting, the Pallets segment includes the CHEP
RPCs and Containers operations in Asia-Pacific (excluding CHEP Pallecon
CHEP Automotive & Industrial Solutions operations in Europe and the
Americas, CHEP Pallecon Solutions in the Americas, CHEP Aerospace
Solutions and CHEP Catalyst & Chemical Containers
15 Brambles BIFR shown from continuing operations only, excluding Recall.
Page 7
OPERATING & FINANCIAL REVIEW – CONTINUED
and suppliers, and providing our people with an engaging, safe,
tolerant and diverse work environment. This will help us attract
and retain employees capable of delivering exceptional value to
customers and appropriate returns to investors.
3. Better Communities: We contribute positively to the
communities in which we work, both as a corporation (through
investing in environment, education and food waste initiatives)
and by our individual employees (through participation in local
community initiatives).
Targets and details on progress to date are included in the table on
this page. A full update on the targets will be provided in the
Sustainability Review to be published on Brambles’ website in
October 2014.
Brambles is aware that it must have the right risk and
governance foundations and appropriate structures in place and
lists its governance commitments in the Sustainability section of
its website.
6.2. KEY SUSTAINABILITY TOPICS
In FY11, Brambles established a process to determine key
sustainability topics it considers important to its stakeholders. A
third-party provider conducted the analysis using the AccountAbility
Principles Standards AA1000 five-part test as a guide.
In FY14, Brambles conducted a review of its current approach and
commissioned an independent review of its sustainability issues
in determining material exposure to sustainability risks in
recognition of:
- The ASX Corporate Governance Principles and Recommendations,
particularly Recommendation 7.4 concerning the disclosure of any
material exposure to economic, environmental and social
sustainability risks and, if any, how these risks are managed; and
- The Global Reporting Initiative’s G4 reporting framework for
delivering content and quality.
The results and recommendations from this review will be
published in the 2014 Sustainability Review on Brambles’ website
in October 2014.
6.3. KEY SUSTAINABILITY ACTIVITIES DURING THE YEAR
Brambles undertook the following key sustainability activities during
the Year:
- Reviewed and developed a new framework to articulate the
inherent sustainability value within the equipment pooling model
to its stakeholders;
- Expanded and updated its anti-corruption and bribery policy; and
- Completed the first stage of a global supplier policy rollout.
Progress against Sustainability Targets
Measure
Target
Progress
Better Planet
Lumber sourcing
Greenhouse gas
emissions
Lumber waste
Solid waste
Chain of custody certification
by 2015
20% reduction on 2010 levels
by 2015
Zero lumber waste to landfill
by 2015
Year-on-year recycling
improvements
Water management
Target to be set in 2014
Better Business
Employee diversity
Safety
Employee engagement
survey
30% female representation on
Board and Executive Leadership
Team by 2015 and within all
management positions by 2018
25% reduction in BIFR on 2012
levels by 2017 with year-on-
year improvement on BIFR
Brambles Employee Survey
participation at minimum of
90% by 2015
Employee engagement
score
Brambles Employee Survey
target of 73% by 2015
Education, training and
development
Supplier policy
Customer loyalty
Customer engagement
25% increase in education,
training and development days
on 2012 levels by 2015
Develop and introduce global
policy by end of 2013
Introduction of Net Promoter
Score in every country and
year-on-year improvements
Increased participation in
industry forums and customer
advocacy panels
Better Communities
Volunteer time for
employees
“Give as you earn”
policies
Target achieved
● Progressing
At least one volunteer hour per
employee during working hours
by 2015
Introduced in all businesses
where allowed by legislation
by 2015
●
●
●
●
●
●
✔
✔
●
●
✔
●
✔
●
●
Page 8
OPERATING & FINANCIAL REVIEW - CONTINUED
7. FINANCIAL REVIEW
7.1. GROUP OVERVIEW
7.1.1. Summary: key metrics
US$M
(Continuing operations)
FY14
FY13
Change
Actual
FX
Constant
FX
Sales revenue
5,404.5 5,082.9
Operating profit
929.5
887.1
6%
5%
7%
5%
Significant Items
30.6
25.9
Underlying Profit
960.1
913.0
5%
6%
Underlying Profit margin
17.8%
18.0% (0.2)pts
(0.2)pts
Average Capital Invested
5,889.6 5,576.9
6%
Return on Capital
Invested
16.3%
16.4% (0.1)pts
-
Brambles Value Added16
266.5
246.8
19.7
Cash Flow from
Operations
828.2
697.3
130.9
Brambles’ Group financial results from continuing operations in the
12 months ended 30 June 2014 reflected solid sales revenue growth
from continued execution of the Group’s growth strategy coupled
with improved underlying economic conditions.
There was a slight decline in the Underlying Profit margin, primarily
reflecting higher direct costs in the Pallets and RPCs segments, as
well as some one-off costs in the RPCs segment.
The broadly flat Return on Capital Invested compared with FY13
reflected the decline in RPCs profitability, although there were
improvements in Pallets and Containers. Brambles Value Added, the
Group’s principal metric for measuring economic profit, increased
by US$19.7 million.
The increase in Cash Flow from Operations reflected higher earnings
and a positive working capital movement.
The remainder of Section 7.1 of this Operating & Financial Review
provides a more detailed analysis of these key drivers. Detailed
segmental and business unit commentary is provided in Section 7.2.
7.1.2. Group sales revenue
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Pallets – Americas
2,301.9
2,205.8
Pallets – EMEA
1,447.3
1,346.8
4%
7%
Pallets – Asia-Pacific
374.2
391.8
(4)%
Total Pallets
4,123.4 3,944.4
RPCs
Containers
Total continuing
operations
895.8
812.8
385.3
325.7
5,404.5 5,082.9
5%
10%
18%
6%
6%
5%
4%
5%
9%
19%
7%
Sales revenue from continuing operations was US$5,404.5 million,
up 6% (7% at constant currency). The principal contributors to sales
revenue growth in FY14 were: organic volumes, price and new
business growth in the Americas and Europe Middle East & Africa
regions of the Pallets segment; continued expansion in the RPCs
segment; and the Pallecon acquisition in Containers.
Five-year trend: group sales revenue17 (US$M)
5,083
5,405
4,780
3,407
3,857
FY10
FY11
Pallets
FY12
RPCs
FY13
FY14
Containers
7.1.3. Group operating profit
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
419.0
330.1
73.0
822.1
124.3
35.9
(52.8)
414.6
268.2
77.2
760.0
1%
23%
(5)%
8%
3%
21%
3%
9%
138.4
(10)%
(10)%
28.0
28%
34%
(39.3)
(34)%
(64)%
929.5
887.1
5%
5%
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
Total Pallets
RPCs
Containers
Corporate
Total continuing
operations
Operating profit from continuing operations was US$929.5 million,
up 5%. The result reflected sales growth, efficiency gains in Pallets
and improved margins in Containers, as well as the negative impact
of higher direct costs in Pallets and RPCs and some one-off costs in
RPCs. The increase in Corporate costs predominantly reflected
higher restructuring costs recognised as Significant Items (see
Section 7.1.5).
16 Calculated at 30 June 2013 FX rates.
17 Data shown excludes the contribution of the Recall business demerged in
December 2013.
Page 9
OPERATING & FINANCIAL REVIEW – CONTINUED
7.1.4. Profit after tax
US$M
Change
7.1.5. Group Underlying Profit (reconciliation to
operating profit from continuing operations)
FY14
FY13
Actual
FX
Constant
FX
US$M
FY14
FY13
Change
Actual
FX
Constant
FX
Operating profit from
continuing operations
929.5
887.1
5%
5%
Net finance costs
(113.0)
(110.8)
Tax expense
(232.0)
(220.0)
Profit after tax from
continuing operations
584.5
556.3
(2)%
(5)%
5%
(2)%
(8)%
4%
Profit after tax from
discontinued
operations
683.2
84.3
Profit after tax
1,267.7
640.6
98%
114%
Weighted average
number of shares (M)
Basic EPS (US cents)
Basic EPS from
continuing operations
(US cents)
1,560.7
1,555.7
81.2
37.5
41.2
35.8
Profit after tax from continuing operations was US$584.5 million,
up 5% (4% at constant currency), reflecting the higher operating
profit, a modest increase in net finance costs and a proportionate
increase in tax expense.
Net finance costs were US$113.0 million, up 2%, as a reduction in
net debt following the Recall demerger offset the impacts of higher
average interest rates in emerging markets and higher debt
associated with acquisitions. Tax expense was US$232.0 million, up
5%. The effective tax rate on operating profit was 28%, the same as
the prior year.
Basic earnings per share of 81.2 US cents reflected the contribution
to profit after tax of profit from discontinued operations. This
profit, of US$683.2 million, comprised the contribution of the Recall
business until the demerger of that business in December 2013, and
the accounting profit on the demerger. Basic earnings per share
from continuing operations of 37.5 US cents was up 5% (4% at
constant currency).
97%
113%
SIGNIFICANT ITEMS
5%
4%
UNDERLYING PROFIT
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
435.0
328.9
73.6
419.1
282.4
78.8
Total Pallets
837.5
780.3
4%
16%
(7)%
7%
6%
14%
2%
9%
RPCs
Containers
Corporate
Total Underlying
Profit
124.3
138.7
(10)%
(10)%
38.0
28.4
34%
39%
(39.7)
(34.4)
(15)%
(32)%
960.1
913.0
5%
6%
Acquisition-related
costs
Restructuring &
integration costs
Total Significant
Items
(1.0)
(4.6)
(29.6)
(21.3)
(30.6)
(25.9)
Operating profit
929.5
887.1
5%
5%
Underlying Profit, which excludes Significant Items, was
US$960.1 million, up 5% (6% at constant currency), reflecting the
same trends as for operating profit.
Significant Items were US$(30.6) million, up from US$(25.9) million,
reflecting increased restructuring and integration costs, including
the rollout of the Global Finance Services project, the integration of
acquired businesses and evaluation costs for the One Better
overheads reduction project. Acquisition-related costs incurred in
the Year were for the Transpac and Airworld acquisitions.
Five-year trend: Underlying Profit17 (US$M)
609
712
836
913
960
FY10
FY11
FY12
FY13
FY14
Page 10
OPERATING & FINANCIAL REVIEW – CONTINUED
7.1.6. Return on Capital Invested
Change
7.1.8. Capital expenditure on property, plant and
equipment (accruals basis)
FY14
FY13
Actual
FX
Constant
FX
Pallets – Americas
US$M
FY14
FY13
Change
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
19.3%
25.3%
18.2%
19.2%
0.1pts
0.2pts
Pallets – EMEA
22.8%
2.5pts
2.4pts
Pallets – Asia-Pacific
18.8%
(0.6)pts
(0.2)pts
Total Pallets
Total Pallets
21.2%
20.4%
0.8pts
0.8pts
7.9%
8.8%
9.5%
(1.6)pts
(1.4)pts
8.3%
0.5pts
0.9pts
RPCs
Containers
Corporate
RPCs
Containers
Total continuing
operations (inc.
Corporate)
Return on Capital Invested was down 0.1 percentage points to 16.3%
(flat at constant currency), compared with the Group’s FY19 target
of at least 20%. Although there was an improvement in the rate of
Underlying Profit growth relative to growth in Average Capital
Invested in the Americas and EMEA regions of the Pallets segment
and the Containers segment, these were not sufficient to offset the
impact in the Year of lower Underlying Profit in RPCs.
Five-year trend: Return on Capital Invested17 (%)
16.3%
16.4%
(0.1)pts
-
Total continuing operations
908.0
865.7
343.6
262.7
67.0
673.3
180.4
54.1
0.2
330.1
233.7
72.5
636.3
196.0
32.2
1.2
13.5
29.0
(5.5)
37.0
(15.6)
21.9
(1.0)
42.3
Capital expenditure on property, plant and equipment (accruals
basis) from continuing operations was US$908.0 million, up
US$42.3 million, as the Group invested to support growth. The
largest increases were to support expansion in Pallets with new
customers and to support growth in the Automotive and CHEP
Catalyst & Chemical Containers business units in Containers. This
was offset to some degree by a reduced need for new crates in the
European region of the RPCs operation. The proportion of capital
expenditure on pooling equipment to replace irrecoverable assets
and scraps, as opposed to investing in growth, was approximately
70%, broadly consistent with FY13, compared with the target of 60%
by FY19.
7.1.9. Reconciliation of cash flow
US$M
FY14
FY13
Change
EBITDA
1,488.4
1,408.7
79.7
Capital expenditure (cash basis)
(854.3)
(846.0)
(8.3)
Proceeds from sale of PP&E
Working capital movement
IPEP expense
Other
77.6
10.6
88.3
17.6
99.7
(22.1)
(49.4)
60.0
101.5
(13.2)
(17.2)
34.8
Cash Flow from Operations
828.2
697.3
130.9
Significant Items
(20.9)
(42.0)
21.1
Discontinued operations
(46.0)
160.1
(206.1)
Financing costs and tax
(330.4)
(306.8)
(23.6)
Free Cash Flow
430.9
508.6
(77.7)
17.9
17.5
15.7
16.4
16.3
Depreciation and amortisation
Underlying Profit
960.1
528.3
913.0
495.7
47.1
32.6
FY10
FY11
FY12
FY13
FY14
7.1.7. Brambles Value Added
US$M, fixed June 2013 FX
FY14
FY13
Change
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
183.4
165.1
24.3
171.4
128.7
24.5
12.0
36.4
(0.2)
Total Pallets
372.8
324.6
48.2
Dividends paid
(394.2)
(425.5)
31.3
RPCs
Containers
Corporate
(62.9)
(39.5)
(23.4)
(12.1)
(13.6)
1.5
(31.3)
(24.7)
(6.6)
Total continuing operations
266.5
246.8
19.7
Brambles Value Added was US$266.5 million, up US$19.7 million, as
the improved profit and capital efficiency in the Pallets segment
more than offset the decline in RPCs and Corporate.
Free Cash Flow after dividends
36.7
83.1
(46.4)
Cash Flow from Operations was US$828.2 million, up
US$130.9 million, primarily reflecting increased earnings and a
positive working capital movement. The reduction in the
Irrecoverable Pooling Equipment Provision expense and proceeds
from disposals primarily reflected tighter asset control. Free Cash
Flow after dividends was US$36.7 million, down US$46.4 million,
primarily reflecting the impact, in discontinued operations, of the
Recall demerger in December 2013.
Page 11
OPERATING & FINANCIAL REVIEW – CONTINUED
Operating profit was US$419.0 million, up 1% (3% at constant
currency), reflecting the impact of US$16.0 million of Significant
Items. Underlying Profit was US$435.0 million, up 4% (6% at constant
currency), in line with sales revenue growth. Pricing and mix
improvements, operational efficiencies and a reduction in the
Irrecoverable Pooling Equipment Provision expense (due to higher
asset recoveries) offset higher direct costs. These higher costs were
primarily related to the impact on pallet repair intensity and
transport costs of higher asset recoveries.
Return on Capital Invested was 19.3%, up 0.1 percentage points (0.2
percentage points at constant currency), reflecting a modest benefit
from capital efficiencies.
7.2.3. Pallets – EMEA
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
1,447.3 1,346.8
Operating profit
330.1
268.2
Significant Items
(1.2)
14.2
7%
23%
5%
21%
Underlying Profit
328.9
282.4
16%
14%
Average Capital Invested
1,298.4 1,237.4
5%
Return on Capital
Invested
25.3%
22.8% 2.5pts
2.4pts
Sales revenue in Pallets EMEA was US$1,447.3 million, up 7% (5% at
constant currency), reflecting: an improvement in pricing and
volume in key European markets and continued expansion of the
CHEP system with under-penetrated German retailers; strong growth
in Central & Eastern Europe; and the continued strength of the
Middle East & Africa operations. Net new business wins were
US$20 million, as the stronger operating conditions continued to
enable a more selective approach to the pursuit of business wins
and renewals and to drive the more efficient deployment of pallets,
in particular in the UK.
- Europe sales revenue was US$1,313.2 million, up 9% (4% at
constant currency), within which: Mid Europe (comprising
Germany, Italy, Benelux, Scandinavia, Switzerland and Austria)
was US$406.4 million , up 11% (6% at constant currency);
UK & Ireland was US$376.3 million, up 5% (flat at constant
currency); Iberia was US$256.1 million, up 6% (1% at constant
currency); France was US$176.9 million, up 8% (3% at constant
currency); and Central & Eastern Europe was US$97.5 million,
up 24%.
- Middle East & Africa sales revenue was US$134.1 million, down 2%
(up 12% at constant currency), with organic volume growth in
South Africa the greatest driver.
Operating profit was US$330.1 million, up 23% (21% at constant
currency). Underlying Profit was US$328.9 million, up 16% (14% at
constant currency), reflecting improvements in pricing and
mix from more selective asset deployment, as well as
operational efficiencies.
Return on Capital Invested was 25.3%, up 2.5 percentage points (2.4
percentage points at constant currency), reflecting the strong profit
growth and asset efficiency programs.
7.2. SEGMENT ANALYSIS
7.2.1. Pallets
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
4,123.4 3,944.4
Operating profit
822.1
760.0
Significant Items
15.4
20.3
Underlying Profit
837.5
780.3
Average Capital Invested
3,953.3 3,833.6
5%
8%
7%
3%
5%
9%
9%
Return on Capital
Invested
21.2%
20.4% 0.8pts
0.8pts
Sales revenue in the Pallets segment was US$4,123.4 million, up 5%,
driven primarily by new business wins and improved underlying
conditions in the Americas and EMEA regions. Net new business wins
across the segment were US$72 million, contributing constant-
currency sales revenue growth of 2%. Sales revenue from the
emerging markets regions (Asia, Central & Eastern Europe, Latin
America and Middle East & Africa) of the Pallets segment was
US$557.2 million, up 6% (14% at constant currency).
Operating profit in the Pallets segment was US$822.1 million,
up 8% (9% at constant currency). Underlying Profit was
US$837.5 million, up 7% (9% at constant currency).The Pallets
segment delivered an additional US$25 million in savings from Pallet
Management Services integration and global operations and logistics
efficiencies. Combined with pricing and sales mix improvements,
these efficiencies were sufficient to offset the impact of higher
direct costs and drive an improved profit margin in the segment.
The 0.8 percentage point improvement in Return on Capital Invested
to 21.2% was driven mainly by the EMEA region (see Section 7.2.3).
7.2.2. Pallets – Americas
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
2,301.9 2,205.8
Operating profit
419.0
414.6
Significant Items
16.0
4.5
Underlying Profit
435.0
419.1
Average Capital Invested
2,251.1 2,177.7
4%
1%
4%
3%
6%
3%
6%
Return on Capital
Invested
19.3%
19.2% 0.1pts
0.2pts
Sales revenue in Pallets Americas was US$2,301.9 million, up 4%,
(6% at constant currency), reflecting broadly equal contributions
from pricing and mix growth, improved organic volumes and net new
business wins. The contribution from net new business wins was
US$53 million.
- North America sales revenue was US$2,008.9 million, up 4% (5% at
constant currency), with the greatest contribution coming from
the rollover benefit of net new business won in FY13 in CHEP USA
and CHEP Canada, as well as pricing improvements and net new
business wins during FY14. Following a severely weather-affected
third quarter, there was a solid return to growth in organic
volumes in the fourth quarter.
- Latin America sales revenue was US$270.9 million, up 5% (13% at
constant currency), with a strong contribution from organic
volume increases with existing customers as well as net new
business and pricing gains.
- LeanLogistics sales revenue was US$22.1 million, up 2%, reflecting
new business growth.
Page 12
- Australia & New Zealand sales revenue was US$319.5 million,
Underlying Profit
OPERATING & FINANCIAL REVIEW – CONTINUED
7.2.4. Pallets – Asia-Pacific
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
Operating profit
Significant Items
Underlying Profit
374.2 391.8
73.0 77.2
0.6
1.6
73.6 78.8
Average Capital Invested
403.8 418.5
(4)%
(5)%
(7)%
(4)%
4%
3%
2%
Return on Capital Invested
18.2% 18.8% (0.6)pts
(0.2)pts
Sales revenue in Pallets Asia-Pacific was US$374.2 million, down 4%.
Constant-currency sales revenue was up 4%, reflecting modest
pricing gains in Australia and organic volume growth in all countries.
Net new business wins were flat.
down 6% (up 4% at constant currency).
- Asia sales revenue was US$54.7 million, up 6% (10% at
constant currency).
Operating profit was US$73.0 million, down 5%. Constant-currency
growth of 3% reflected sales revenue growth as pricing, mix and
efficiency improvements were sufficient to offset a modest increase
in direct costs. Underlying Profit was US$73.6 million, down 7% (up
2% at constant currency).
Return on Capital Invested was 18.2%, down 0.6 percentage points
(0.2 percentage points at constant currency), primarily reflecting
the reduction in Underlying Profit.
7.2.5. RPCs
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
895.8 812.8
10%
9%
Operating profit
124.3 138.4
(10)%
(10)%
Significant Items
-
0.3
Underlying Profit
124.3 138.7
(10)%
(10)%
Average Capital Invested
1,573.2 1,465.5
7%
Return on Capital Invested
7.9%
9.5% (1.6)pts
(1.4)pts
Sales revenue in RPCs was US$895.8 million, up 10% (9% at
constant currency), primarily reflecting solid organic volume
growth, continued penetration with existing retail partners in
Europe and Australia and improved second-half growth momentum
in North America.
- Europe sales revenue was US$581.4 million, up 14% (9% at
constant currency). Retail partners extending the use of RPCs in
their supply chains and a strong summer growing season were the
primary contributors to the growth;
- North America sales revenue was US$173.8 million, up 7%,
reflecting an improved second-half performance and continued
development of RPC volumes at major retail partners following
the implementation of an improved marketing strategy;
- Australia, New Zealand and South Africa sales revenue was
US$118.7 million, up 1% (12% at constant currency), mostly
reflecting continued penetration increases in Australia; and
- South America sales revenue was flat at US$21.9 million (up 23%
at constant currency). Constant-currency growth primarily
reflected expansion with Walmart in Brazil and the impact of
higher prices, in line with inflation.
Both operating profit and Underlying Profit were down 10% to
U$124.3 million. The profit decline reflected the impact of higher
depreciation and marketing costs, and pricing and mix impacts in
North America. One-off costs in the first half associated with the
retirement of former members of IFCO’s executive team and the
impairment of some equipment in South America were not repeated
in the second half.
Return on Capital Invested of 7.9%, down 1.6 percentage points (1.4
percentage points at constant currency), reflected the reduction
in profit.
7.2.6. Containers
US$M
Change
FY14
FY13
Actual
FX
Constant
FX
Sales revenue
385.3 325.7
Operating profit
Significant Items
35.9 28.0
2.1
0.4
38.0 28.4
19%
34%
39%
18%
28%
34%
26%
Average Capital Invested
431.2 341.8
Return on Capital Invested
8.8%
8.3% 0.5pts
0.9pts
Sales revenue in the Containers segment was US$385.3 million,
up 18% (19% at constant currency), reflecting the first full-year
contribution of the Pallecon operations acquired in December 2012.
Excluding acquisitions, constant-currency sales revenue growth
was 7%. This primarily reflected growth in the Automotive
operations in Europe and in CHEP Catalyst & Chemical Containers.
By business line, Containers’ sales revenue was as follows:
- Automotive sales revenue was US$162.3 million, up 8%, as
improved organic volumes in Europe and new business growth in
Europe and China more than offset the ongoing impact of the
decline in automotive manufacturing on Australian volumes.
- CHEP Pallecon Solutions sales revenue was US$116.2 million, up
48% (52% at constant currency), reflecting a full-year contribution
from the Pallecon business acquired in December 2012 and
continued new business growth in North America;
- CHEP Aerospace Solutions sales revenue was US$65.4 million,
up 10% (9% at constant currency), as the acquisition in February
2014 of Airworld, a business carrying out maintenance at UK
airports, and modest new business wins in the maintenance and
repair operations offset reduced volumes in existing customers
due to cost pressures and the introduction of new equipment
requiring fewer near-term repairs; and
- CHEP Catalyst & Chemical Containers sales revenue
was US$41.4 million up 9% (up 11% at constant currency), driven
by stronger customer rental activity.
Operating profit was US$35.9 million, up 28% (34% at constant
currency). Underlying Profit was US$38.0 million, up 34% (39% at
constant currency), as overheads increased less than sales revenue
throughout the segment.
The improved profit drove a 0.5 percentage point (0.9 percentage
points at constant currency) increase in Return on Capital Invested
to 8.8%, offset in part by continued investment in growth.
Page 13
OPERATING & FINANCIAL REVIEW – CONTINUED
8.0 STRATEGY SCORECARD
Investment Proposition
1
Our customer value
proposition enables a
strong and
sustainable
competitive advantage...
2
...which drives
superior rates of
economic returns
(high quality
of opportunity)...
3
...and positions
us uniquely to
deliver superior
levels of growth
(high quantity
of opportunity)...
Five-Year Plan
1
Get the basics right:
Drive business growth:
2
3
>20% 7-9%
Invest in product
& service quality
Invest in asset
management
Invest in business
development
to support
diversification
Consistently improve
Group Return on
Capital Invested to at
least 20% by FY19
Deliver annual
constant-currency
percentage sales
growth in the high
single digits
Go to Brambles’ website for a full interactive version of the Strategy Scorecard and other online features.
Page 14 FY14 Progress
1
2
3
2%
16.3%
7%
Strong progress in
asset management
efforts in Pallets
operations
Continued roll-out
of new products
and new market
expansion
Net new business
wins contribute 2%
constant-currency
sales revenue growth
Flat ROCI outcome
in FY14 but on track
for FY19 target of at
least 20%
7% constant-currency
sales revenue growth
FY15 Expectations
1
2
3
One Better program
to begin to enable
overhead reduction
for reinvestment in
growth initiatives
Asset management
improvements in
CHEP Pallets business
to drive ongoing
capital efficiencies
Continued expansion
of under-penetrated
opportunities in
developed markets,
new products and
emerging market
expansion to drive
sales growth
Underlying Profit
growth forecast
at 7-10% (30 June
2014 foreign
exchange rates) and
improvements in
Return on Capital
Invested
FY15 execution risks and associated mitigating actions
7-9%
Constant-currency
sales revenue
expected to be in line
with five-year plan
Outlook for muted growth in major
economies
Focus on driving growth from diversification by
product, supply chain and geography
Cost pressures throughout the supply chain
One Better program driving actions on overheads
Rapidly evolving retail supply chains
Emphasis on innovation and customer collaboration
Dynamic competitive environment
Reinvigorated sustainability strategy and investment
in value proposition
Page 15 BOARD & EXECUTIVE LEADERSHIP TEAM
BOARD OF DIRECTORS
CHRISTINE CROSS NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in January 2014. Christine is a food scientist by background,
having lectured at Edinburgh and Bath Universities for 15 years, prior to joining Tesco. From 1989 to 2003, she
held a variety of Director-level roles at Tesco, focusing on own brand, non-food and global sourcing, and
international and small format expansion. Christine left Tesco in 2003 and now runs a retail advisory business
providing international best practice in customer-led business planning and value chain management. She has
previously served on the Boards of Next, Empire Canada, Fairmont Hotel Group Canada and Taylor Wimpey and
as Chief Retail Advisor for PricewaterhouseCoopers. Christine currently retains the title of Visiting Professor at
Belfast and Hull University Business Schools and holds Non-Executive Directorships with Sonae Group,
Woolworths, Kathmandu and Plantasgen. She has a Bachelor of Education, Master of Science in Food Science
and a Diploma in Management. Age: 63.
DOUG DUNCAN NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the 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 Chief
Executive Officer 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 & Chief Executive Officer from
1998 to 2001, when FedEx acquired Viking. Doug holds a Bachelor of Science degree in Business Administration
from Christopher Newport University, Virginia. Age: 63.
TONY FROGGATT NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Chairman of the Remuneration Committee and Member of the Nominations Committee
Joined Brambles as a Non-Executive Director in June 2006. He is a Non-Executive Director of Coca-Cola Amatil.
Previously, Tony was a Non-Executive Director of AXA Asia Pacific Holdings and Billabong International and was
Chief Executive Officer 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: 66.
TOM GORMAN CHIEF EXECUTIVE OFFICER
Chairman of the Executive Leadership Team
Joined Brambles as Group President, CHEP EMEA in March 2008 and became Chief Executive Officer 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: 54.
DAVID GOSNELL NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the Audit Committee
Re-joined Brambles as a Non-Executive Director in December 2011. He retired from his role as President of
Global Supply & Procurement for Diageo plc on 1 July 2014, during which he led 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 will leave Diageo on 31 December 2014. 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. David will become a member of the Nominations Committee on 30 September
2014. Age: 57.
Page 16
BOARD & EXECUTIVE LEADERSHIP TEAM – CONTINUED
TAHIRA HASSAN NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in December 2011. Tahira is a Non-Executive Director of Recall
Holdings Limited and is based in Toronto, Canada. She had a distinguished 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: 61.
STEPHEN JOHNS NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Chairman of the Audit Committee and member of the Nominations Committee
Joined Brambles as a Non-Executive Director in August 2004. He is former Chairman and a Non-Executive
Director of Leighton Holdings Limited and Spark Infrastructure Group, and a former Executive and Non-
Executive Director of Westfield Group. 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. On 30 September 2014, Stephen will
become Chairman of the Board and the Nominations Committee and a member of the Remuneration Committee
and retire as Chairman and member of the Audit Committee. Age: 67.
CAROLYN KAY NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the Audit Committee
Joined Brambles as a Non-Executive Director in June 2006. She is a Non-Executive Director of Commonwealth
Bank of Australia, John Swire & Sons Pty Ltd and The Sydney Institute and an External Board Member of Allens.
She was also a Non-Executive Director of Infrastructure NSW, Symbion Limited, Mayne Group Limited, Pacific
Dunlop Limited, Treasury Corporation of Victoria and Victoria Funds Management Corporation. Carolyn has more
than 25 years’ experience in the finance sector and worked as an executive in finance at Morgan Stanley in
London and Melbourne, JP Morgan in New York and Melbourne and Linklaters & Paines in London. She holds
Bachelor of Law and Arts degrees 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: 53.
GRAHAM KRAEHE AO NON-EXECUTIVE CHAIRMAN (INDEPENDENT)
Chairman of the Nominations Committee and member of the 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 Chief Executive Officer 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. Graham will
retire as Chairman of the Board and the Nominations Committee and as a member of the Board, Nominations
Committee and Remuneration Committee on 30 September 2014. Age: 71.
BRIAN LONG NON-EXECUTIVE DIRECTOR (INDEPENDENT)
Member of the Audit Committee
Joined Brambles as a Non-Executive Director on 1 July 2014. Brian is a Non-Executive Director of
Commonwealth Bank of Australia, at which he is Chairman of the Audit Committee, and Ten Network Holdings
limited, at which he is Deputy Chairman. He was formerly Ernst & Young’s most senior audit partner, retiring in
2010 after 29 years with that firm, at which he was Chairman of both the Global Advisory Council and the
Oceania Area Advisory Council (respectively, its worldwide and regional partner governing bodies). Brian is a
Fellow of the Institute of Chartered Accountants in Australia and has been a member since 1972. Brian will
become Chairman of the Audit Committee on 30 September 2014. Age: 68.
Page 17
BOARD & EXECUTIVE LEADERSHIP TEAM – CONTINUED
EXECUTIVE LEADERSHIP TEAM
TOM GORMAN CHIEF EXECUTIVE OFFICER
Chairman of the Executive Leadership Team
(See biography on Page 16.)
ZLATKO TODORCEVSKI CHIEF FINANCIAL OFFICER
Joined Brambles as Chief Financial Officer in October 2012. Previously, Zlatko was Chief Financial Officer of oil
and gas exploration and production company Oil Search Limited. Prior to that, he had a long international
career with BHP and BHP Billiton including as Chief Financial Officer, Energy. Zlatko is a Fellow of CPA Australia
and Fellow of Chartered Secretaries Australia. He holds a Master of Business Administration degree and a
Bachelor of Commerce degree from the University of Wollongong, Australia. Age: 46.
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: 55.
PETER MACKIE GROUP PRESIDENT, PALLETS
Became Group President, Pallets in March 2013, having previously held the following Executive Leadership
Team positions: Group President, Pallets Americas and Group President, CHEP Asia-Pacific. Previously, Peter
held the positions of: Acting Group President, CHEP Europe, Middle East & Africa; 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 of Business Administration degree from London
Business School. Age: 48.
WOLFGANG ORGELDINGER GROUP PRESIDENT, RPCs
Became Group President, RPCs in August 2013, having first joined Brambles in March 2011, following the
acquisition of IFCO Systems. Wolfgang served as Chief Operating Officer of IFCO from January 2002 to August
2011 and Chief Information Officer, with responsibility for e-logistics and IT, from December 2000 to January
2002. Before joining IFCO, Wolfgang was a member of the Executive Board at Computer 2000, a European IT
distributor, and held various executive roles. Prior to that, he worked for nine years in management positions
at Digital Equipment. He holds an MBA from the University of Bayreuth, Germany. Age: 57
JASON RABBINO GROUP PRESIDENT, CONTAINERS AND HEAD, GROUP STRATEGY
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. Jason was appointed as Head, Group Strategy on 1 June 2014. Age: 45.
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 of Business Administration degree. Age: 53.
Page 18
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
Brambles is a global provider of pooling solutions 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 (Statement) outlines the key
components of Brambles’ governance framework in place during the
year ended 30 June 2014 (Year), by reference to the Australian
Securities Exchange Corporate Governance Council (Council)
Corporate Governance Principles and 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
at 31 July 2014.
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.
On 27 March 2014, the Council issued the third edition of the
Corporate Governance Principles and Recommendations (3CGPR).
For Brambles, the 3CGPR take effect for the financial year ending
30 June 2015. During the balance of the Year, the Board adopted
various changes to its corporate governance practices, which took
effect from 1 July 2014, to take into account the provisions of
the 3CGPR. Where applicable, these changes are referred to in
this report.
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 on
Brambles’ website, 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 and, from 30 September 2014,
Stephen Johns, 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).
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
Page 18.
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:
- 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 the Chief Executive Officer and Chief
Financial Officer;
- The Group’s Diversity Policy; and
- The Board skills matrix.
Having regard to the 3CGPR, amendments to the schedule of
matters reserved to the Board were approved by the Board and took
effect on 1 July 2014 and include:
- The formalisation of its current practice of conducting a bi-annual
review of the effectiveness of the Group’s risk management
framework including by determining that it is properly identifying
risks, their materiality and mitigation steps for them;
- Where appropriate, ratifying the appointment and termination of
other senior executives; and
- Overseeing the integrity of the Group’s reporting systems for the
Directors’, corporate governance, sustainability and remuneration
reports and other significant statements to the press, stock
exchange and/or shareholders relating to those reports.
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.
Page 19
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Details of the Board Committees are set out in Sections 2.4, 4.1 and
8.1 and the Committee charters can be found on Brambles’ website.
From time to time, the Board establishes Special Committees to
consider and approve specific matters. The Board is supported by
the ELT (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 on Brambles’ website.
Senior executives have employment contracts setting out, among
other things, their term of office, rights, responsibilities and
entitlements on termination, and job descriptions setting out
their duties.
1.2 PERFORMANCE EVALUATION OF SENIOR EXECUTIVES
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’
strategic objectives and its 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 the Chief
Executive Officer 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 10 members, with one Executive Director (the Chief Executive
Officer) and nine Non-Executive Directors. On 30 June 2014, Brian
Schwartz and Luke Mayhew retired as Non-Executive Directors.
Graham Kraehe will retire as Chairman and a Non-Executive Director
on 30 September 2014.
The biographies for each of the current Directors, shown on Pages
16 and 17, indicate the breadth of their business, financial and
international experience. This gives the Board the range of skills,
knowledge and experience essential to govern Brambles, including
an understanding of the health, safety, environmental and
community-related issues it faces. The Board considers that its
current composition, and its composition after Mr Kraehe’s
retirement from the Board on 30 September 2014, reflects an
appropriate balance of Executive and Non-Executive Directors. The
table on Page 21 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 2014 Annual General
Meeting (AGM), and when they are next due for re-election.
2.1 INDEPENDENT DIRECTORS
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 they 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 matters set out in Box 2.1 of the CGPR
and also to the additional matters referred to in Box 2.3 of the
3CGPR. It noted that three of those matters exist.
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.
Substantial Shareholder
Carolyn Kay and Brian Long are directors of the Commonwealth Bank
of Australia (CBA), which, during the Year, was a substantial
shareholder of Brambles holding between 5.03% and 6.35% of its
issued share capital. The Board does not consider that Carolyn Kay’s
or Brian Long’s relationship with CBA gives rise to any actual or
perceived loss of independence on their part because of the number
of shares held by CBA and the manner in which CBA’s relevant
interests in Brambles shares are held, namely principally by related
bodies corporate of CBA which are either: 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.
Tenure
Stephen Johns has served as a director for 10 years, having been
appointed in April 2004. The Board believes that the interests of all
stakeholders are best served if its composition includes a blend of
experience and tenure among Directors. This is particularly the case
with Brambles due to its geographic spread, its complex business
models and the accounting issues to which these give rise.
The Board is of the view that throughout his tenure Mr Johns has
made a significant contribution to the general work of the Board, as
Chairman of the Audit Committee and as a member of the
Nominations Committee. The Board believes that his deep
knowledge of the Group’s businesses, his broad international
business experience and public company director skills will continue
to add value to the Board, particularly as he takes up the role as
Chairman from 30 September 2014.
The Board considers that Mr Johns has always maintained absolute
independence as a Non-Executive Director of Brambles, that he will
continue to do so as Chairman and that he has not formed
associations with the Group’s management or businesses that might
compromise his ability to exercise independent judgment or to act
in the best interest of the Group as a whole. The Board does not
believe, therefore, that Mr Johns’ length of service on the Board
will materially interfere with his ability to exercise independent
judgment or to act in the best interests of the Group.
Page 20
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Name
C Cross
D Duncan
T Froggatt
T Gorman
D Gosnell
T Hassan
S Johns
C Kay
G Kraehe
B Long
Year appointed1
Year last elected
Executive or Non-
Executive
Independent
Seeking election/
re-election at
2014 AGM2
2014
2012
2006
2009
20115
2011
2004
2006
20056
2014
N/A
2012
2013
2010
2013
2012
2012
2012
2012
N/A
Non-Executive
Non-Executive
Non-Executive
Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
Yes
Yes
No
No
Yes
Next due for
re-election2
N/A3
2015
2016
N/A4
2016
2014
2014
2015
N/A7
N/A3
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 that may conflict with their office as a Director of Brambles
or the interests of Brambles, Directors are required to disclose the
character and extent of that conflict 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 Australian Securities
Exchange 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 current Chairman is independent
and that his other positions do not prevent him from devoting
sufficient time to perform the role effectively. The Board also
believes that the Chairman elect, Mr Johns, will also be
independent (see Section 2.1.2) and that his other positions will not
prevent him from devoting sufficient time to perform that role
effectively. As both the current Chairman and the Chairman elect
are 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 on Brambles’ website.
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. Mr
Kraehe will retire as Chairman and a member of the Nominations
Committee on 30 September 2013 (when he retires from the Board).
Mr Johns will become Chairman and David Gosnell will become a
member of the Nominations Committee on 30 September 2014.
Details of Nominations Committee meetings held during the Year,
and attendance at those meetings, is set out in the Directors’
Report – Other Information on Page 52.
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
1 For the purposes of this table, the year appointed is the year the relevant Director was appointed to the Boards of Brambles or BIL and BIP.
2 See section 2.4.5 for an explanation of the determination of the years when Non-Executive Directors are due for re-election.
3 Appointed to the Board since the last shareholders’ meeting. Will stand for election for the first time at the 2014 AGM and, if elected, will be due for re-
election at the 2017 AGM.
4 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.
5 David Gosnell served as a Director from 2006 to 2010, and was re-appointed to the Board in 2011.
6 Graham Kraehe served as a Director from 2000 to 2004, and was re-appointed to the Board in 2005.
7 Graham Kraehe will retire as a Director on 30 September 2014.
Page 21
CORPORATE GOVERNANCE STATEMENT – CONTINUED
of Brambles, both executive and non-executive, with a view to
ensuring the continued ability of Brambles to compete effectively;
- 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.
Having regard to the 3CGPR, the Nominations Committee Charter
was amended with effect from 1 July 2014 to include within the
Board selection process a requirement for the Committee to cause
appropriate checks to be carried out on Director candidates and for
the checks to include the candidate’s character, experience,
education, criminal record and bankruptcy history.
2.4.5. Selection and appointment process and re-election
of Directors
The Board is conscious of the need to ensure 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 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. During the Year, the
Nominations Committee carried out a review of the Board skills
matrix and recommended to the Board that no changes were
required. The Board subsequently reviewed the matrix and adopted
the Nominations Committee’s recommendation.
The appointment of two new Directors (Christine Cross and Brian
Long) during the Year balanced the retirements of Brian Schwartz
and Luke Mayhew on 30 June 2014. The Board considers that, having
regard to the Board skills matrix, the current composition of the
Board is, and will after Mr Kraehe’s retirement on 30 September
2014, contain 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 that may impact 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, including attendance at
those meetings by each of the Directors and Committee members,
are set out in the Directors’ Report – Other Information on Page 52.
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. This process
was carried out for those Directors standing for re-election at the
2014 AGM.
At the 2012 AGM, seven Non-Executive Directors were elected or re-
elected to the Board. As a result, they would all be eligible to
stand for re-election at the 2015 AGM. To enable a more even
number of Non-Executive Directors to be eligible to stand for re-
election at the next three AGMs, the Board decided that the year in
which they would be eligible to stand for re-election would be
determined by lot. With the exception of Doug Duncan, the result of
that lot, and the order in which Non-Executive Directors will be
eligible to stand for re-election, are set out in the table in Section
2.1.2 on Page 21. Because the two new Directors appointed during
the Year will stand for election at the 2014 AGM, to maintain an
even number of Non-Executive Directors standing for re-election at
the next three AGMs, the eligibility of Doug Duncan to stand for re-
election was deferred to the 2015 AGM, being three years since his
most recent election.
The Non-Executive Directors’ formal letters of appointment confirm
that the Non-Executive Directors have no right to compensation on
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.
The outcomes 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.
An internal evaluation of the performance of the Directors standing
for re-election at the 2014 AGM was carried out. Having regard to
the results of those reviews, the Board unanimously resolved to
recommend the election or re-election, as the case may be, of each
Page 22
CORPORATE GOVERNANCE STATEMENT – CONTINUED
Non-Executive Director standing for election or re-election at the
2014 AGM. Details of those Directors standing for election or re-
election are set out in the table in Section 2.1.2 on Page 21.
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 local staff and
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 52.
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;
- Health & Safety Policy;
- Diversity Policy;
- Securities Trading Policy;
- Anti-Bribery and Corruption Policy;
- Supplier Policy;
- Risk Management;
- Guidelines for Document Management; and
- Social Media Policy.
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
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
Brambles’ website.
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 communities
in which it operates. 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 20 languages. This
means that all Brambles’ employees can read the Code in their first
language. 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 a Diversity Policy, which forms part of Brambles’
Code of Conduct. 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, among 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;
Page 23
CORPORATE GOVERNANCE STATEMENT – CONTINUED
- Where appropriate, Brambles will engage external agencies to
assist it in the identification, selection and assessment of
candidates;
- 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 includes the
following as Board responsibilities:
- Determining measurable objectives for achieving gender diversity
and annually assessing both the objectives and the progress
towards achieving them; and
- Annually reviewing and reporting 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 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 monitored through the bi-
annual talent management process.
- Gender – Brambles believes 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 2014, women comprise 30% of Brambles’ Board and 25%
of its management (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 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 Pallet and
CHEP Aerospace Solutions 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
result, during the 2012 financial year, the measurable objective of
having women represent 30% of management positions was 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 2014 was as follows:
2018
Objective8
% Females at
31 July 20149
% Females at
31 July
2013910
Board
Executive
Leadership Team
Senior Vice
President
Vice President
Director
30%
30%
30%
30%
30%
30%
20%
14.3%
12.5%
25%
10.9%
21.6%
15.6%
11.7%
21.3%
Manager
Further information on diversity is included in the Diversity & Inclusion section
of the 2014 Sustainability Review, which will be available on Brambles’
website in late October 2014.
26.8%
25.7%
30%
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 on
8 The objective of having women represent 30% of Board and ELT positions by
30 June 2015 remains unchanged.
9 The percentages for senior vice president, vice president, director and
manager exclude the employees of IFCO Latin America which has not yet
completed the banding classification process into those categories. This is
expected to be completed during the FY15 year.
10 The percentages for senior vice president, vice president, director and
manager include Recall but exclude the employees of IFCO RPCs and
Paramount Pallets which had not yet completed the banding classification
process into those.
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CORPORATE GOVERNANCE STATEMENT – CONTINUED
Brambles’ website), 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 steps to be taken.
Having regard to the 3CGPR, the Audit Committee Charter was
amended with effect from 1 July 2014 to include as one of its
objectives the review of the effectiveness of the management of
the Group’s material risks.
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. Mr Johns will retire as the
Chairman and a member of the Audit Committee on 30 September
2014, when he takes up the role of Board Chairman. Brian Long will
become Chairman of the Audit Committee on 30 September 2014.
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 Brambles.
The members of the Audit Committee as at 31 July 2014, 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 former Chairman of Leighton
Holdings Limited and Spark Infrastructure Group and a former
Executive and Non-Executive Director of the Westfield Group. 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. Stephen was a member of the Committee throughout
the Year and will retire as the Chairman and a member of the
Committee on 30 September 2014, when he takes up the role of
Chairman of the Board.
- 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, he was President and
Chief Executive Officer 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 & Chief Executive Officer from 1998 to 2001, when
FedEx acquired Viking. He holds a Bachelor of Science degree in
Business Administration from Christopher Newport University,
Virginia. He was a member of the Committee throughout the Year.
- David Gosnell was President of Global Supply & Procurement for
Diageo plc until 1 July 2014, 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. Prior
to joining Diageo, he 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. He was a member of the
Committee throughout the Year.
- Carolyn Kay is a Non-Executive Director and a member of the
Audit Committee of Commonwealth Bank of Australia,
Infrastructure NSW and an External Board Member of Allens. She
has more than 25 years’ experience in the finance sector and
worked as an executive in 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. 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. She is a Fellow of the Australian
Institute of Company Directors. She was a member of the
Committee throughout the Year.
- Brian Long is a Non-Executive Director of Commonwealth Bank of
Australia and the Chairman of its Audit Committee. He is a Non-
Executive Director and Deputy Chairman of Ten Network Holdings
Limited and member of both its Audit and Remuneration
Committees. Brian had a longstanding international career with
Ernst & Young where he was a partner from 1981 to 2010 and was
the firm’s most senior audit partner for many years. He is a Fellow
of the Institute of Chartered Accountants in Australia and a past
member of the Canadian Institute of Chartered Accountants. Brian
became a member of the Committee on 1 July 2014 and will
become its Chairman on 30 September 2014.
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 and 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 on Brambles’ website.
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
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CORPORATE GOVERNANCE STATEMENT – CONTINUED
services and internal audit services must not be performed by the
external auditors.
The Audit Committee is responsible for monitoring the Brambles
Speaking Up Policy, that it is communicated properly and complied
with throughout Brambles, and monitoring that appropriate
protection against victimisation and dismissal is given to employees
who make certain disclosures in the public interest.
Having regard to the 3CGPR, the Audit Committee Charter was
amended with effect from 1 July 2014 to include as one of its
responsibilities the review of the effectiveness of the management
of the Group’s material risks by reviewing regular risk reports on the
implementation and effectiveness of risk mitigation steps and by
assessing whether internal audit plans are addressing material risks.
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 52. Audit Committee
papers are provided to all Directors and minutes of meetings are
included in the papers for subsequent Board meetings. There is an
open invitation for all Directors to attend Audit Committee
meetings. Directors who are not members of the Audit Committee
receive a specific invitation for Committee meetings at which the
half and full-year financial statements are considered and
significant accounting issues are reviewed including the
Irrecoverable Pooling Equipment Provision.
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 auditor to Brambles since the 2002 financial year. Under
the terms of engagement, the Australian audit engagement partners
rotate every five years. Paul Bendall was appointed as lead audit
engagement partner in the 2012 financial year.
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 all steps within its power to enable trading in its securities to
occur 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 its website;
- Brambles conducts investor and analyst briefings as a part of its
investor relations program. 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 its website; and
- Brambles’ website 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 on Brambles’ website.
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 3 to 15. Brambles makes presentations, which are reviewed
and approved by the Board in accordance with the Company’s
continuous disclosure procedures, 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 its website.
5.1.2. Eliminating surprise on termination entitlements
Details of the termination entitlements of Brambles’ Chief Executive
Officer, Chief Financial Officer and other Key Management
Personnel are disclosed on Page 40 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 on Brambles’ website.
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 its
website. On release, significant announcements are highlighted in
the Latest News area on the website’s homepage.
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CORPORATE GOVERNANCE STATEMENT – CONTINUED
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 Brambles’ website after
release. General meetings and, where possible, briefings are
webcast live on Brambles’ website. All of the ASX regulatory
releases and notices of meetings Brambles Limited has published
since it was listed in December 2006, as well as all webcasts since
that time, are available on Brambles’ website.
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 Brambles’
website, 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 on the homepage of
Brambles’ website. Users of the email alerts service may customise
the types of announcements 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 its website.
Brambles’ website contains the financial results for the Year as well
as more detailed information about Brambles’ business operations.
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
During the Year, the Board was responsible for approving and
reviewing the effectiveness of the Group’s system of internal
control and risk management. 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.
The Board has implemented some changes to the manner in
which it oversees risk having regard to the 3CGPR. With effect
from 1 July 2014:
- The Board will maintain responsibility for approving and reviewing
the effectiveness of the Group’s system of internal control and
risk management;
- The Board’s bi-annual review of the effectiveness of the Group’s
risk management framework will include determining that it is
properly identifying risks, their materiality and mitigation steps
for them; and
- The Audit Committee will be responsible for reviewing the
effectiveness of the management of the Group’s material risks by
reviewing regular risk reports on the implementation and
effectiveness of risk mitigation steps and by assessing whether
internal audit plans are addressing material risks.
Unless otherwise specified, the discussion in Section 7 reflects the
policies, practices and procedures for the Year.
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 for the
Year and from 1 July 2014 are described above and in Section 4.3.2
of this Statement.
The Board has adopted a risk management framework, the
objectives of which are as follows:
- 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 and
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 its 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 on a
regular basis of the risk profile of the relevant business unit, or of
Headquarters, as the case may be. 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. (From 2 September 2014, a new role, Group Vice
President Risk & Assurance, will commence at Brambles and will be
responsible for the risk management function.) The ELT, through
the Chief Executive Officer, prepares a risk report to the Board
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CORPORATE GOVERNANCE STATEMENT – CONTINUED
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. Having regard to the 3CGPR, with
effect from 1 July 2014, the RCCs will also assess the economic,
social and environmental sustainability risks within their respective
areas of responsibility.
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;
- Enable decisions to be based on a comprehensive view of the
reward-to-risk balance;
- Provide greater certainty of the delivery of objectives; and
- Satisfy the Group’s corporate governance requirements.
These systems are designed to limit the risk of failure to achieve
business objectives. It must be recognised, however, that internal
control and risk management systems can provide only reasonable,
and not absolute, assurance against the risk of material loss.
Key elements of Brambles’ internal control systems include:
- A Code of Conduct that sets out an ethical and legal framework
for all employees in the conduct of Brambles’ business;
- Financial systems to provide timely, relevant and reliable
information to management and to the Board;
- Appropriate formalised delegations and limits of authority
consistent with Brambles’ objectives;
- Biannual management declarations at country, regional and global
levels confirming, among other matters, the adequacy of internal
control procedures, the effectiveness of risk management systems
and compliance with the Code of Conduct and all regulatory and
statutory requirements;
- An internal audit function, described in Section 7.2.2;
- A risk management function;
- RCCs for each of Brambles Headquarters and Brambles’ business
units; and
- 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 periodically reviewed by internal audit
as part of the FY14 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
business;
- Reviewing detailed monthly reports on business performance
and trends;
- Setting limits on delegated authority;
- Receiving regular reports on Brambles’ treasury activities, and
reviewing treasury guidelines, limits and controls;
- 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
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.
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CORPORATE GOVERNANCE STATEMENT – CONTINUED
reviewing and making recommendations to the Board on
remuneration by gender.
8.1.4. Remuneration policy
In discharging its responsibilities, the Remuneration Committee
applies Brambles’ Remuneration Policy, which requires that
remuneration is structured to be consistent with Brambles’ strategic
business objectives. Brambles’ Remuneration Policy can be found in
the Directors’ Report – Remuneration Report on Pages 34, 35 and 45.
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.
8.2 STRUCTURE OF THE REMUNERATION COMMITTEE
The Remuneration Committee is comprised entirely of
Non-Executive Directors, all of whom are independent. Tony
Froggatt, Luke Mayhew, Tahira Hassan, Graham Kraehe and Brian
Schwartz were members of the Remuneration Committee
throughout the Year. Christine Cross was a member of the
Remuneration Committee from 1 April 2014. Brian Schwartz retired
as a member of the Committee on 30 June 2014 (when he retired
from the Board). Mr Kraehe will retire as a member of the
Remuneration Committee on 30 September 2014 (when he retires
from the Board). Mr Johns will become a member of the
Remuneration Committee on 30 September 2014.
Mr Mayhew retired as Chairman of the Remuneration Committee
with effect from the end of the 2013 AGM and retired from the
Committee (and the Board) on 30 June 2014. Mr Froggatt replaced
Mr Mayhew as Chairman. 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 52.
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 34, 35 and 45.
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 that:
- 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 and 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 on Brambles’ website.
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 Director(s) 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 Director(s) 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 that allow awards at other times;
approving total proposed awards under each plan; approving
awards to Executive Director(s); 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
Page 29
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 16 to 18.
- 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 52.
- 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”,
“Nominations Committee Charter”
Page 30
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
www.brambles.com
See “Corporate Governance”
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:
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 52.
- 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”,
“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”,
“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”,
“Brambles Code of Conduct” (which
incorporates the Continuous Disclosure
& Communications Policy as
Schedule 3).
Page 31
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 34, 35 and 55.
- 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 52.
- 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”,
“Charters & Related Documents”.
www.brambles.com
See “Corporate Governance”,
“Brambles Code of Conduct”
(which incorporates the Securities
Trading Policy as Schedule 9).
Page 32
DIRECTORS’ REPORT - REMUNERATION REPORT
REMUNERATON COMMITTEE CHAIRMAN’S NOTE
In May 2014, I took the opportunity to meet with a number of our
largest domestic and international institutional shareholders, the
Group’s three largest superannuation fund investors and the four
leading proxy advisory firms. It was pleasing that the overall
feedback was that investors and corporate governance firms are
supportive of Brambles’ remuneration policy. There is also an
appreciation for the strong alignment of incentive structures with
business strategy.
Remuneration for senior executives in FY14 reflected another year
of strong Brambles results, as shown below:
Financial measure
7%
Sales revenue
5%
Operating profit
Profit after tax
4%
Total shareholder return (3 years to 30 June 2014): 58.5%1
FY14 result
(US$M)
5,404.5
929.5
584.5
Change from FY13
(constant FX)
Where roles remained unchanged, salary increases in the Year for
the ELT were between 0% and 3%, with the exception of one
executive, who received a 5% increase. Annual Short-Term Incentive
(STI) cash awards for continuing Executive Leadership Team (ELT)
executives ranged from 50% to 60% of base salary. These STI
outcomes were driven by Brambles’ financial performance and by
executives’ achievement of specific personal objectives. Brambles’
performance over the three years to FY14 triggered 51.6% of Long
Term Incentive (LTI) awards granted in FY12 to vest.
Although total salaries and benefits remained largely constant year
on year, there was an increase in the number of share awards that
vested in FY14. The reasons for this were as follows:
– There was a change in the vesting period for deferred STI share
awards from three years to two years as approved by Brambles’
shareholders at the 2011 annual general meeting (AGM). This
resulted in a one-off situation whereby the STI share awards
granted during FY11 and FY12 both vested during FY14.
– Shares granted to IFCO senior executives at the time of the
acquisition of IFCO in FY11 vested on 30 June 2014.
– Two tranches of sign-on share rights granted to Chief Financial
Officer Zlatko Todorcevski vested during FY14.
– A higher level of share vesting of LTI share rights for other
executives reflected the Brambles’ relative total shareholder
return (TSR) over the three-year period. Over the same three-year
period, Brambles’ share price increased from $6.75 to $9.63.
There were some changes to the ELT in 2014. Following completion
of the Recall demerger in December 2013, Group President, Recall,
Doug Pertz, was no longer employed by Brambles. Karl Pohler,
Group President, RPCs retired in September 2013 and was replaced
by Wolfgang Orgeldinger, the former Chief Operating Officer of
RPCs. On 1 June 2014, Jason Rabbino’s role expanded to include
responsibility for Group Strategy. His new role is Group President,
Containers and Head, Group Strategy. His salary was reviewed with
effect from 1 June 2014 to reflect his additional responsibilities.
The Board Chairman’s fee and other Non-Executive Director base
fees increased by 3% as a result of an annual fee review conducted
in January 2014. There was no increase to Committee fees for the
Audit and Remuneration Committees and no changes to travel
allowances in the Year.
During the Year, the Remuneration Committee carried out its annual
review of the Brambles’ remuneration strategy, structure and policy
including share-based incentive plans. The Committee concluded
that the current approach continues to strongly align executives’
interests with those of the Company and its shareholders.
Therefore, no changes to Brambles’ remuneration policy are
proposed in the coming year.
Tony Froggatt
Non-Executive Director & Chairman of the Remuneration Committee
CONTENTS
1. Background
2. Remuneration Committee
3. Remuneration Policy & Structure
4. Performance of Brambles & At Risk Remuneration
5. Employee Share Plan
6. Executive Directors & 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 remuneration information about
Brambles’ Key Management Personnel. Brambles’ Key Management
Personnel are:
Its Non-Executive Directors;
Its Executive Directors; and
a)
b)
c) Other Group executives who have authority and responsibility
for planning, directing and controlling the Group’s activities.
This has been defined as those who, for some or all of the year
ended 30 June 2014 (the Year), were members of the ELT.
In this report, executives coming within paragraphs 1(b) and 1(c)
above are called Disclosable Executives.
This report includes all disclosures required by the Corporations
Act 2001 (Cth) (the Act), regulations made under the 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
Limited and the Group.
2. REMUNERATION COMMITTEE
The Remuneration Committee (the 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 Disclosable
Executives and the Company Secretary; and
– Reviewing the remuneration policy and individual arrangements
for other senior executives.
During the Year, members of the Committee were Luke Mayhew
(Committee Chairman until the 2013 AGM), Tony Froggatt
(Committee Chairman from the 2013 AGM), Graham Kraehe, Tahira
Hassan and Brian Schwartz, with Christine Cross joining the
Committee on 1 April 2014. Other individuals are invited to attend
Committee meetings as required by the Committee. This includes
members of Brambles’ management team including the CEO, Group
Senior Vice President of Human Resources, Group Company
Secretary and Group Vice President of Remuneration & Benefits, as
well as Brambles’ external remuneration advisor, Ernst & Young.
During the Year, the Committee held six meetings. Details of
the Committee’s Charter and the rules of Brambles’ executive
and employee share plans can be found under Charters & Related
Documents in the Corporate Governance section of
Brambles’ website.
1 For the purposes of remuneration, Brambles uses Orient Capital, an independent third party, to calculate total shareholder return. Orient Capital makes
adjustments to take account of changes to capital structure during a performance period. In FY14, these adjustments served to ensure that Brambles’ Key
Management Personnel were not remunerated on the basis of the performance of Recall Holdings Limited after the demerger in December 2013.
Page 33
DIRECTORS’ REPORT – REMUNERATION REPORT - CONTINUED
3. REMUNERATION POLICY & STRUCTURE
The Board has adopted a remuneration policy for the Group. This
policy requires remuneration to be consistent with Brambles’
strategic business objectives, attract and retain high-calibre
executives, align executive rewards with the creation of shareholder
value, and motivate executives to achieve challenging performance
targets. During FY14, the Committee reviewed the remuneration
policy against these objectives and concluded that it remained
effective and appropriate.
When setting and reviewing remuneration levels for Disclosable
Executives, the Committee considers the experience,
responsibilities and performance of the individual while also taking
into account data relevant to the individual’s role and location as
well as Brambles’ size, geographic scale and complexity. The
Group’s remuneration policy is to set pay around the median level
of remuneration (of the peer group referred to in Section 3.1) but
with upper-quartile total potential rewards for outstanding
performance and proven capability.
FIXED & AT RISK REMUNERATION
Remuneration is divided into those components not directly linked
to performance (Fixed Remuneration) and those components which
are variable and directly linked to Brambles’ financial performance
and the delivery of personal strategic objectives (At Risk
Remuneration).
Fixed Remuneration generally consists of base salary and benefits
and superannuation contributions. Fixed Remuneration for most
Disclosable Executives increased by 0% to 3% during the Year.
Brambles’ remuneration framework is underpinned by its banding
structure. This classifies roles into specific bands, each
incorporating roles with 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. Where benchmarking was needed, the comparative
companies considered were major listed companies in the USA,
Australia, UK and Germany, with sales revenue and market
capitalisation between 50% and 200% of Brambles’ 12-month average
at 30 June 2014. This approach provides a sound basis for delivering
a non-discriminatory pay structure for all Group employees.
Given the global scope of its operations, Brambles operates an
international mobility policy, which can include the provision of
housing, payment of relocation costs and other location adjustment
expenses where appropriate.
A significant element of Disclosable Executives’ total potential
reward is required to be At Risk.
This means an individual will achieve maximum potential
remuneration only when they meet challenging objectives in terms
of Brambles’ overall financial performance, returns for shareholders
and strategic objectives. The proportion of Disclosable Executives'
comprising At Risk Remuneration is illustrated in Section 3.3.
3.1.1. Features of Fixed & At Risk Remuneration
Brambles’ At Risk Remuneration is provided by way of three types of
annual incentive awards: an STI cash award, an STI share award (the
number of shares in which is determined by the size of the STI cash
award) and an LTI share award. The market value at the date of
grant of all STI and LTI share awards made to any person in any
financial year should not normally exceed two times their base
salary. The remuneration structure and the key features of Fixed
and At Risk Remuneration are summarised in Diagram 3.1 below.
The application of the At Risk element of remuneration is further
described in Section 4.
REMUNERATION & THE LINK TO BUSINESS STRATEGY
Brambles’ business strategy is to set out in the Operating &
Financial Review on Pages 3 and 4. The remuneration policy
supports the delivery of this strategy by:
– Focusing business performance on profitable growth, the
efficient use of capital and the generation of cash: Profitable
growth is emphasised 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 revenue targets
with BVA hurdles as the performance conditions that must be
satisfied for half of all 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.
– Recruiting and retaining 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
key executives.
– Setting goals linked to implementation of the growth strategy:
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.
– Achieving sustainable returns for shareholders: 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 share awards
granted are subject.
Full details of the link between senior executives’ remuneration and
Brambles’ performance in terms of financial outcome, creation of
shareholder value and the delivery of the Group’s strategy are set
out in Section 4.
Definitions of BVA, TSR and CAGR measurements and the methods
by which they are calculated are included in the Glossary beginning
on Page 126.
FIXED REMUNERATION
AT RISK REMUNERATION
LTI SHARE AWARD
Fixed remuneration consists of
base salary, superannuation and
benefits.
Size of grant calculated as percentage of salary and
based on:
– TSR performance against the ASX100 median-ranked
company. (Vesting starts at median with full vesting
for outperformance of median by 25%); and
– Sales revenue compound annual growth rate with
BVA hurdle.
Awards subject to performance testing at end of three
years (see Section 4.2 for details).
STI CASH AWARD
STI SHARE AWARD
Size determined by performance against Key
Performance Indicators including BVA, cash
flow and Strategic Personal Objectives (see
Section 4.1 for details).
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).
Page 34
DIRECTORS’ REPORT – REMUNERATION REPORT - CONTINUED
REMUNERATION MIX FOR DISCLOSABLE EXECUTIVES
SECURITIES TRADING POLICY & INCENTIVE AWARDS
Brambles’ executive remuneration mix is strongly linked to
performance. At Risk Remuneration represents 71% to 76% of
Disclosable Executives’ maximum potential remuneration.
Chart 3.3.1 below illustrates the level of actual remuneration
received by Disclosable Executives compared with maximum
potential remuneration. Maximum potential remuneration is the
Disclosable Executive’s base salary plus his or her STI cash and STI
share awards assuming the maximum level of performance (see
Section 4.1) and full vesting of all LTI share awards.
The respective columns of Chart 3.3.1 labelled Actual comprise:
– Base salary: this is fixed remuneration for FY14;
– STI cash: this represents the STI cash award received in respect to
FY14 performance (see Section 4.1);
– STI shares: this is the STI share award earned in respect to FY14
performance, the vesting of which is deferred until FY16 (see
Section 4.1); and
– LTI shares: this shows the proportion of the FY12-FY14 LTI share
awards that will vest in respect to the 3-year LTI performance
period to 30 June 2014 (see Section 4.2).
The Potential column represents the maximum value of each
element of remuneration for FY14 that could have been received in
each case by the individual Disclosable Executive.
Brambles' Securities Trading Policy applies to awards granted under
the incentive arrangements described above. That policy prohibits
designated persons (including all Disclosable Executives) from
acquiring financial products or entering into arrangements that 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
executives have complied with all policies.
Sections 9.2 and 9.3 summarise all the incentive plans under which
awards to Disclosable Executives are still to vest or be exercised.
CLAW-BACK
The rules of Brambles’ 2006 Performance Share Plan (2006 Share
Plan) include a clawback provision. Under this provision, the Board
may cancel any Award that has been granted but which has not
vested, if the Board reasonably considers that the participant has
engaged or participated in conduct that adversely affects, or is
likely to adversely affect, the Company’s financial position or
reputation. Such conduct includes, but is not limited to, any
misrepresentation, material misstatements of the Company’s
financial position as a result of error or omission, and negligence.
3.3.1 Actual vs. Potential Remuneration
Page 35
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
4. PERFORMANCE OF BRAMBLES & AT RISK
REMUNERATION
Brambles’ remuneration policy is directly linked to the Company’s
financial performance, the creation of shareholder wealth and the
delivery of 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 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 shows the
level of vesting of LTI share awards triggered by performance
over those periods.
STI KEY PERFORMANCE INDICATORS
As outlined in Section 3.1, Disclosable Executives have the
opportunity to receive annual STI cash and share awards based on
performance against KPIs. Fifty per cent of overall STI incentives are
STI share awards, which vest two years after the award is made.
Disclosable Executives’ KPIs comprise both financial and non-
financial KPIs.
4.1.1. Financial KPIs
Financial KPIs are chosen to link executives’ rewards with the
financial performance of the Group, the pursuit of profitable growth
and the efficient use of capital and generation of cash.
A focus on BVA helps ensure efficient use of capital within
Brambles. PAT captures interest and tax charges not directly
incorporated in BVA. Cash Flow from Operations is used as a
measure to ensure a strong focus on the generation of cash.
STI financial KPIs chosen for the Year were BVA and Cash Flow from
Operations plus for the Chief Executive Officer and Chief Financial
Officer, profit after tax (PAT). For the Group President, Pallets, the
Group President, RPCs (appointed in October 2013), KPIs were
Brambles’ and the respective operating segment’s BVA and Cash
Flow from Operations. The Group President, Containers, had the
same KPIs except that Containers’ sales revenue growth replaced
that segment’s BVA. The STI incentives for the former Group
President, RPCs, Karl Pohler, were based on the IFCO STI plan in
place at the time Brambles acquired IFCO. This provided 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). He did not participate in Brambles’ STI share award
incentives. The Group President, Recall, did not participate in
Brambles’ STI or LTI share awards for the Year. His STI plan was
based on EBITDA (55% of total STI opportunity) and Cash Flow (25%
of total STI opportunity). The remaining 20% of his total STI
opportunity was based on Non-financial KPIs including Safety and
Customer metrics.
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 (when performance targets have been met); and
- Maximum (when targets have been significantly exceeded and the
related rewards have reached their upper limit).
The actual levels of performance achieved for the Year against the
financial KPIs are summarised in the following table:
KPIs2
Level of performance achieved
during the Year3
Brambles BVA
Achieved Target
Brambles PAT
Achieved Target
Brambles Cash Flow from
Operations
Achieved Target
Pallets BVA
Achieved Target
Pallets Cash Flow from
Operations
Achieved Target
Containers Sales
Between Threshold and Target
Containers Cash Flow from
Operations
Achieved Target
IFCO BVA
Below Threshold
IFCO Cash Flow from Operations Achieved Target
4.1.2. Non-financial KPIs
Non-financial KPIs are set to link Disclosable Executives’
performance to Brambles’ overall strategic objectives. These
include personal objectives in areas such as safety, business strategy
and growth objectives, customer satisfaction and retention, and
people and talent management.
- Brambles’ safety is measured by Brambles Injury Frequency Rate
(BIFR)4. BIFR targets for each operating segment 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, as the leaders of the Company, the
ELT has Group-wide oversight of the Zero Harm policy. If a fatality
occurs, then the CEO, Group Senior Vice President, Human
Resources and relevant Group President(s) will have any incentive
related to BIFR outcomes reduced to zero.
- Business strategy and growth objectives include the
implementation of clearly specified initiatives allocated to
individual ELT members: for example, new business acquisitions,
product and service expansion and entry into new geographies.
- Customer satisfaction and retention are mainly measured using
Net Promoter Score5, for which targets are set and performance is
measured each year.
- People and talent management metrics relate to the development
of future leaders in Brambles as well as succession planning for
critical roles.
2 Definitions of BVA, PAT, Cash flow from Operations and EBITDA
measurements and the methods by which they are calculated are included
in the Glossary beginning on Page 126.
4 A definition of BIFR is included in the Glossary on Page 126. Reporting of the
Group’s BIFR performance is included in the Safety section of the Operating
& Financial Review on Page 6.
3 Financial targets set for FY15 under Brambles’ incentive plans will not
5 An explanation of the Group’s use of Net Promoter Score is included in the
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.
2014 Sustainability Review, which will be published on Brambles’ website in
October 2014.
Page 36
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
LTI SHARE AWARDS
As outlined in Section 3.1, Disclosable Executives have the
opportunity to receive equity in the form of LTI share awards.
Vesting occurs three years from the date of award and is subject to
satisfaction of performance conditions (explained in Section 4.2.1)
over a three-year performance period (Performance Period). If
awards vest, they are exercisable for up to six years from the date
of grant.
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.
Details of the LTI share awards granted to Disclosable Executives
and the performance hurdles that apply to each of the awards are
set out in Sections 9.2 and 9.3.
The awards are governed by the 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 Share Plan rules. Under the “good leaver” provisions
of those rules, there is no accelerated vesting in the case of
terminations (except where a portion is deemed to vest early to
satisfy a tax liability on share awards which arises as a consequence
of termination) 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 both to align executive
remuneration with the creation of shareholder value and to
support Brambles’ objective of creating and sustaining profitable
growth. To allow a focus on shareholder value and profitable
growth, LTI share awards 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.
The following table summarises the components and weighting of
KPIs for STI cash awards for Disclosable Executives other than
former Group President, RPCs, Karl Pohler, and former Group
President of Recall, Doug Pertz:
Disclosable
Executive
Financial KPIs
Group
BVA
Segment
BVA/
sales
Group
PAT
Group
cash
flow
Segment
cash
flow
CEO, CFO
30%
-
20%
20%
-
25%
25%
-
-
20%
Non-
Financial
KPIs
30%
30%
Group
Presidents:
Pallets,
RPCs,
Containers
Other
Disclosable
Executives
50%
-
-
20%
-
30%
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:
4.1.3. Actual STI Cash Payable & Forfeited for FY14
Name
% of maximum STI
cash payable
% of maximum STI
cash forfeited
DISCLOSABLE EXECUTIVES
T Gorman
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino
N Smith
67%
66%
66%
65%
59%
64%
66%
FORMER DISCLOSABLE EXECUTIVES
D Pertz
K Pohler6
N/A
8%
33%
34%
34%
35%
41%
36%
34%
N/A
92%
6 Karl Pohler’s remuneration mix and bonus calculations reflect his existing
incentive arrangements from IFCO.
Page 37
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Profitable growth
Half of the LTI share award incentivises both long-term sales
revenue and BVA growth. Vesting is based on achievement of sales
revenue targets 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.
This allows the Board to set targets for each LTI share award that
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. It should be noted that the LTI
performance matrix shown encompasses the entire Brambles Group,
excluding Recall, which was demerged on 18 December 2013.
As indicated in Brambles’ 2013 Remuneration Report, the
Committee has restated the FY14-FY16 LTI performance matrix by
excluding sales revenue and BVA performance targets ascribed to
Recall in establishing the original LTI performance matrix.
As a policy principle, the Committee takes into account major
acquisitions or divestments during a Performance Period in
determining the final outcome of the CAGR/BVA matrix for that
period. Where there are acquisitions or divestments that are not
material to the overall outcome, these are excluded from any
performance assessment.
4.2.2. CAGR/BVA LTI performance matrix for
FY14 to FY16
Vesting %
Cumulative three-year BVA at fixed
30 June 2013 FX rates (US$M)
Sales revenue CAGR7
800
1,000
1,200
4%
5%
6%
7%
8%
9%
–
20%
40%
60%
80%
20%
40%
60%
80%
40%
60%
80%
100%
100%
100%
100%
100%
100%
The sales revenue CAGR provides for half-point vesting between the
percentages shown if the sales revenue outcome is more than
halfway between the vesting levels. For example, a sales revenue
CAGR of 6.7% and a BVA outcome of US$1,000 million would provide
vesting of 70%. There is no half point vesting scale between the
respective BVA hurdles.
4.2.3. Performance of LTI Share Awards under
the 2006 Share Plan
The tables on the next page detail actual performance against the
applicable performance condition for LTI share awards made during
the five financial years indicated.
As outlined in Section 4.2.1 LTI share awards have two sets of
performance conditions, each with equal weighting. The tables on
the next page show the level of performance and vesting for each of
the two components, which each comprise half of the LTI Award.
7 Three-year CAGR over base year is used.
Page 38
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Level of vesting of LTI share awards based on TSR performance
Awards made
during
Performance condition
Start of
performance
period
Out-performance of median
company’s TSR8
Vesting triggered (% of original award):
period prior to 30 June 2013
FY10
FY11
FY12
Relative TSR
1 July 2009
6.3 percentage points
55.1% LTI TSR Award
Relative TSR
1 July 2010
30.3 percentage points
100% LTI TSR Award
Relative TSR
1 July 2011
18.0 percentage points
83.3% LTI TSR Award
The following table provides similar details for awards that have yet to be tested. The proportion of these shares which vest, if any, will
depend on Brambles’ TSR performance for the applicable performance period:
Awards made
during
Performance condition
Start of
performance
period
Out-performance of
median company’s TSR8 (%)
Period to 30 June 2014: vesting if
current performance is maintained until
earliest testing date
(% of original award)
FY13
FY14
Relative TSR
1 July 2012
14.9 percentage points
75.83% LTI TSR awards
Relative TSR
1 July 2013
3.0 percentage points
47.25% LTI TSR awards
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 2010 and 2011 that have been tested.
Awards made
during
Performance condition
FY10
Sales revenue CAGR/BVA
Start of
performance
period
Vesting triggered (% of original
award): prior period and period
to 30 June 2013
Vesting triggered (% of original award):
period to 30 June 2014
1 July 2009 30.0% LTI sales revenue CAGR/BVA
awards
FY11
Sales revenue CAGR/BVA
1 July 2010 30.0% LTI sales revenue CAGR/BVA
awards
N/A
N/A
FY12
Sales revenue CAGR/BVA
1 July 2011
N/A
20.0% of LTI sales revenue CAGR/BVA
awards
The following table provides similar details for LTI share awards the performance period of which has not yet expired. The proportion of
these shares which vest, if any, will depend on Brambles’ CAGR and BVA performance for the applicable performance period:
Awards made
during
Performance condition
Start of
performance
period
Period to 30 June 2014 vesting if current performance is maintained until
earliest testing date (% of original award)
FY13
FY14
Sales revenue CAGR/BVA
1 July 2012
30.0% LTI sales revenue CAGR/BVA awards
Sales revenue CAGR/BVA
1 July 2013
40.0% LTI sales revenue CAGR/BVA awards
Total level of vesting of LTI share awards
The combined vesting of the two LTI components for 2012, 2013 and 2014 is shown below.
Awards made
during
FY10
FY11
FY12
Start of performance period
End of performance period
Total vesting (TSR and sales revenue
CAGR/BVA combined)
1 July 2009
1 July 2010
1 July 2011
30 June 2012
30 June 2013
30 June 2014
42.6%
65.0%
51.6%
8 Percentage out-performance of the median company’s TSR against the S&P/ASX100 Index.
Page 39
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
5. EMPLOYEE SHARE PLAN
MyShare was launched in October 2008 and was developed as a
vehicle to encourage share ownership and retention across the
Group. Employees may buy up to A$5,000 of shares each year, which
the Company matches on a one for one basis after a two-year
qualifying period (Matching Awards).
Total share ownership of Brambles by over 3,000 MyShare
participants is now 2,462,205 shares which represents 0.16% of
Brambles’ total share capital.
Disclosable Executives are eligible to participate in MyShare.
Acquired Shares, Dividend Shares and vested Matching Awards
obtained by Disclosable Executives through MyShare are included in
Section 6.6. Matching Awards allocated but not yet vested are
shown in Sections 6.5 and 6.7.
6. EXECUTIVE DIRECTORS & DISCLOSABLE
EXECUTIVES
All terminations during the Year were in accordance with the terms
and conditions of individual employees’ contracts.
Under his employment contract, Zlatko Todorcevski, who
commenced employment on 8 October 2012, received a sign-on
grant of 214,213 Brambles share rights. This was an amount equal in
value to the share rights he forfeited on leaving his former
employer. These rights vest in five tranches between January 2013
and January 2015. During the Year, 95,750 of those rights vested.
Vesting of these share rights is subject to Mr Todorcevski’s
continuing employment with Brambles.
On 30 June 2014, Mr Orgeldinger’s Brambles share grant of 195,389
shares vested. These shares were granted to him in March 2011 as
part of the IFCO acquisition.
6.3.1. Contract Terms for Disclosable Executives
Name and role(s)
Base salary at 30 June
2014 unless indicated
EXECUTIVE DIRECTOR CHANGES
DISCLOSABLE EXECUTIVES
There was no change to Brambles’ Executive Directors during the
Year.
OTHER DISCLOSABLE EXECUTIVE CHHANGES
Following the completion of the demerger of Recall on 18 December
2013, Doug Pertz, Group President, Recall, ceased to be employed
by the Group. Karl Pohler, Group President, RPCs, retired on
30 September 2013. He was replaced on 1 October 2013 by Wolfgang
Orgeldinger, formerly Chief Operating Officer, RPCs. On 1 July 2014,
Jason Rabbino’s role expanded to include responsibility for Group
strategy. His new title is Group President, Containers and Head,
Group Strategy.
SERVICE CONTRACTS
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. These
standard service contracts state that any termination payments
made would be reduced by any value to be received under any new
employment.
Other than Peter Mackie9, executives remunerated on a base salary
approach receive pension contributions of 15% of base salary.
Pension amounts in excess of the tax threshold can be taken as a
cash allowance which is reported under ‘Cash/Salary/Fees’ in
Table 6.4.
T Gorman, CEO
Z Todorcevski, CFO
A$2,122,000
A$1,081,500
J Holley, Chief Information Officer
US$450,000
P Mackie, Group President, Pallets
£437,750
W Orgeldinger, Group President,
RPCs (from 1 October 2013)
J Rabbino, Group President,
Containers and Head, Group
Strategy
N Smith, Group Senior Vice
President, Human Resources
FORMER DISCLOSABLE EXECUTIVES
D Pertz, Group President, Recall
(until 18 December 2013)
K Pohler, Group President, RPCs
(until 30 September 2013)
€630,000
US$675,000
A$654,050
US$900,000
€850,000
9 Mr Mackie received employer superannuation (pension) contributions of 21%
of base salary for income up to £153,700 and 15% of base salary for income
above that amount.
Page 40
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
TOTAL REMUNERATION & BENEFITS FOR THE YEAR
The purpose of the table below is to enable shareholders to understand the actual remuneration received by Disclosable Executives. The
table provides a summary of the actual remuneration, before equity, received or receivable by the Disclosable Executives for the Year,
together with prior year comparatives. Income derived from the vesting of shares during the Year has been included below as “Actual share
income”. The value shown is the market value at the time the income became available to the executive. These awards were granted in
prior financial years. The values shown relate to LTI share awards made in FY11 and STI awards made in FY11 and FY12. (Theoretical
accounting values for unvested share awards are shown in Section 9.4; those values are a statutory disclosure requirement. Unvested share
awards may result in “Actual share income” in future years and, if so, the income will be reported in the table below in the Remuneration
Report for the relevant year).
(US$'000)
Short-term employee benefits
Post-
employment
benefits
Name
Year
EXECUTIVE DIRECTORS
Cash/
salary/
fees
Cash
bonus
Non-
monetary
benefits10
Super-
annuation
Other
Termination/
sign-on
payments/
retirement
benefits Other
T Gorman11
FY14
2,322
1,167
FY13
2,322
1,210
DISCLOSABLE EXECUTIVES
Z Todorcevski11
FY14
1,156
J Holley
P Mackie11
W Orgeldinger11
J Rabbino
N Smith11
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
955
468
454
811
761
642
-
594
563
711
778
FORMER DISCLOSABLE EXECUTIVES
D Pertz11
K Pohler11
FY14
FY13
FY14
FY13
464
253
289
1,100
586
503
223
216
420
349
452
-
387
268
297
303
624
333
239
219
Totals
FY14
7,457
4,395
FY13
7,185
3,402
140
180
14
10
-
152
-
52
31
-
-
-
-
-
15
-
9
35
209
429
-
-
23
26
60
59
42
21
7
-
75
53
23
26
10
-
2
9
242
192
-
-
-
306
-
-
-
-
-
-
-
-
-
-
-
-
583
-
583
306
16
18
4
-
16
17
28
25
5
-
16
15
2
-
-
1
3
5
90
82
Actual share income
Total
before
equity
STI/LTI
awards
Total
3,645
4,11212
3,730
1,101
7,757
4,831
1,783
1,800
767
898
807
674
279
204
1,301
1,47212
1,208
193
2,590
2,474
1,046
1,102
2,773
1,401
1,137
1,685
2,822
-
1,072
899
-
-
-
1,033
1,34612
1,107
359
1,113
587
-
-
1,125
2,378
1,368
-
-
1,072
899
2,379
1,466
1,113
587
3,503
1,368
12,976
12,079
25,055
11,597
2,530
14,127
10 Non-monetary benefits include car parking, motor vehicles, personal/spouse travel, club membership and fringe benefit tax.
11 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$1.0212 and €1=US$1.2939 and £1=US$1.5667 for
FY13 to A$1=US$0.9142, €1=US$1.3587 and £1=US$1.6331 respectively for FY14.
12 At the 2011 AGM, shareholders approved a change in the vesting period for STI share awards from three years to two years. This resulted in a one-off situation
whereby STI awards granted during FY11 and FY12 both vested during FY14. Therefore, the amounts shown include STI awards made in both FY11 and FY12.
Page 41
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
EQUITY-BASED AWARDS
The following table shows details of equity-based awards made to Disclosable Executives during the Year. STI and LTI share awards were
made under the 2006 Share Plan, the terms and conditions of which are set out in Sections 9.2 and 9.3 (see plan numbers 21 to 23). Matching
Awards were made under MyShare, the terms and conditions of which are also set out in Sections 9.2 and 9.3 (plan numbers 40 to 52). In
accordance with the rules of the 2006 Share Plan and the MyShare Plan, the number of unvested or vested but unexercised awards granted
under those plans as at the date of the demerger of the Recall business were adjusted to reflect the diminution in value of Brambles’ shares
as a result of the demerger of the Recall business. These are referred to as “Demerger adjusted” in the table below.
Name
Type of award
Number
Value at grant (US$’000)13
DISCLOSABLE EXECUTIVES
T Gorman
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino
N Smith
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
STI
LTI
MyShare Matching
Demerger adjusted
Total
FORMER DISCLOSABLE EXECUTIVES
D Pertz
K Pohler
STI
LTI
Total
STI
LTI
Demerger adjusted
Total
132,151
298,776
610
135,868
567,405
52,136
152,288
539
53,266
258,229
25,782
51,832
652
22,187
100,453
42,668
105,838
658
43,095
192,259
-
50,748
662
22,839
74,249
31,963
82,874
196
21,225
136,258
33,155
70,844
610
32,354
136,963
-
-
-
-
-
25,164
25,164
1,109
2,507
5
-
3,621
438
1,278
5
-
1,721
216
435
5
-
656
358
888
5
-
1,251
-
426
5
-
431
268
695
2
-
965
278
595
5
-
878
-
-
-
-
-
-
-
13 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. 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.
Page 42
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
SHAREHOLDINGS
The following table 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 their base
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), under Brambles’ Securities Trading Policy.
Ordinary shares
Balance at the start of the Year Net changes during the Year
Balance at the end of the
Year14
DISCLOSABLE EXECUTIVES
T Gorman
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino17
N Smith
FORMER DISCLOSABLE EXECUTIVES
D Pertz
K Pohler
209,148
78,591
24,825
15,055
836
19
75,491
-
-
58,006
96,289
22,902
70,853
991
197
267,15415
174,8801516
47,72717
85,90817
1,82717
21617
(4,687)
70,8041518
-
276,801
-
276,801
14 On 31 July 2014, the following Disclosable Executives acquired ordinary shares under MyShare, which are held by AET Structured Finance Services Pty Limited:
Tom Gorman (45), Zlatko Todorcevski (45), Jean Holley (41), Peter Mackie (48), Wolfgang Orgeldinger (45), Jason Rabbino (35) and Nick Smith (45).
15 Of which AET Structured Finance Services Pty Limited holds 2,233 shares for Tom Gorman, 724 shares for Zlatko Todorcevski and 804 shares for Nick Smith.
16 Of which 77,906 shares were held by Zlatko Todorcevski and Robert Todorcevski, 96,250 shares were held by Tentwentyfive Pty Ltd and 724 are held by AET
Structured Finance Services Pty Limited.
17 All of these shares are held by AET Structured Finance Services Pty Limited.
18 Of which 70,000 held by Lisa Smith.
Page 43
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
INTERESTS IN SHARE RIGHTS19
The following table shows details of rights over Brambles Limited ordinary shares in which the Disclosable Executives held relevant interests:
share rights, being awards made on 24 November 2010, 31 March 2011, 6 September 2011, 25 September 2012, 12 October 2012 and 25
September 2013 under the 2006 Share Plan; and Matching Awards, being conditional rights awarded during the Year under MyShare. In
November 2011 Brambles’ shareholders approved a change in the vesting period for Brambles’ STI shares from three years to two years. This
resulted in a one-off situation whereby both the FY11 and FY12 STI shares vested in FY14.
Balance at the
start of the
Year
Granted
during
the Year
Value at
grant
Exercised
during
the Year20
Lapsed
during
the Year
Balance at the
end of the
year21
Vested and
exercisable at the
end of the year
Value at
exercise
US$’000 Number
Value at
lapse23
US$’000
Number
Number
Number Number22
US$’000 Number
DISCLOSABLE EXECUTIVES
T Gorman
1,525,383 567,405
3,621 482,435
4,112 115,115
971
1,495,238
Z Todorcevski
328,392 258,229
1,721
95,750
807
177,427 100,453
656
33,069
279
-
-
-
-
490,871
244,811
493,483 192,259
1,251 172,658
1,472
38,309
323
474,775
J Holley
P Mackie
W Orgeldinger
178,446
74,249
431
697
1,685
J Rabbino
97,419 136,258
965
-
-
-
-
-
-
233,677
251,998
195,389
N Smith
410,068 136,963
878 157,845
1,346
29,748
263
359,438
FORMER DISCLOSABLE EXECUTIVES
D Pertz
K Pohler
-
-
-
-
-
251,637
25,164
- 276,801
2,378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 Of the awards detailed in Section 9.3, the following plan numbers are relevant to Disclosable Executives: Tom Gorman, Peter Mackie and Nick Smith (3 to 5, 8
to 10, 13 to 15, 21 to 23 and 24 to 52); Zlatko Todorcevski (16 to 23 and 24 to 52); Jean Holley (7, 9 to 10, 13 to 15, 21 to 23 and 24 to 52); Wolfgang
Orgeldinger (6, 22 to 23 and 24 to 52); Jason Rabbino (14 to 15, 21 to 23 and 24 to 52). Lapses occurred for Tom Gorman, Peter Mackie and Nick Smith (4 and
5). Exercises occurred for Tom Gorman, Peter Mackie and Nick Smith (3 to 5, 8, and 24 to 35); Zlatko Todorcevski (16 to 17); and Jean Holley (7 and 24 to 35).
20 Of the 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.
21 On 31 July 2014, the following Disclosable Executives received Matching Awards under MyShare: Tom Gorman (45), Zlatko Todorcevski (45), Jean Holley (41),
Peter Mackie (48), Wolfgang Orgeldinger (45), Nick Smith (45) and Jason Rabbino (35).
22 During the Year, 3,378,872 performance share rights were granted under the 2006 Share Plan, of which 566,795 were granted to Tom Gorman and 257,690
were granted to Zlatko Todorcevski. 817,442 Matching Awards were granted under MyShare during the Year, of which 610 were granted to Tom Gorman and
539 were granted to Zlatko Todorcevski. Approval for Tom Gorman’s issues of securities was obtained under ASX Listing Rule 10.14 at the AGM held on 10
November 2011.
23 “Lapse” in this context means that the Award was forfeited due to either the applicable service or performance conditions not being met.
Page 44
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
7. NON-EXECUTIVE DIRECTORS’ DISCLOSURES
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 Director. 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.
Brambles’ base fees for Non-Executive Directors are set with
reference to the peer group referred to in Section 3.1, which is
consistent with Brambles’ policy on executive pay.
A review of Non-Executive Director and Board Chairman fees was
undertaken in FY14 to ensure the fees remained in line with the
Australian market practice, resulting in an increase of 3%.
The review established the following fees for the Chairman and Non-
Executive Directors:
- Chairman: A$623,000; and
- Non-Executive Directors: A$199,000.
NON-EXECUTIVE DIRECTORS’ REMUNERATION FOR
THE YEAR
Fees and other benefits provided to Non-Executive Directors during
the Year and the prior year are set out in Table 7.3 on Page 46 in US
dollars. 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.
As Brian Long’s appointment as a Non-Executive Director took effect
on 1 July 2014, he did not receive any remuneration for the Year.
Any contributions to personal superannuation or pension funds on
behalf of the Non-Executive Directors are deducted from their
overall fee entitlements.
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 Non-Executive Directors held relevant interests,
being issued shares held by them and their related parties:
The following travel allowances and Committee membership fees
were not increased during the Year:
Ordinary
shares
Balance at
start of Year
Changes
during Year
Balance at
end of Year
- Supplement for Audit Committee Chairman: A$50,000;
- Supplement for Remuneration Committee Chairman: A$40,000;
- Supplement for Audit and Remuneration Committee
membership: A$10,000;
(The above supplemental Committee fees do not apply to the Board
Chairman.)
- Travel allowance per long-haul flight: A$5,000.
The next fee review will take effect from 1 January 2015.
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 21
and 22).
Letters of appointment for Non-Executive Directors, which are
contracts for service but not contracts of employment, have been
put in place. These letters confirm that 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.
Non-Executive Directors do not participate in Brambles’ 2006 Share
Plan or MyShare plan.
CURRENT NON-EXECUTIVE DIRECTORS
C Cross
D Duncan
T Froggatt
D Gosnell
T Hassan
S Johns
C Kay
G Kraehe AO
B Long30
-
-
14,890
22,910
8,000
47,500
14,877
66,965
-
-
-
-
-
-
-
-
-
-
14,89024
22,91025
8,00026
47,50027
14,87728
66,96529
-
4,000
4,00031
FORMER NON-EXECUTIVE DIRECTORS
L Mayhew
B Schwartz AM
16,500
21,681
-
-
16,50032
21,68133
24 Of which 7,000 shares were held by Christine Joanne Froggatt and 7,890
30 On 1 July 2014, Brian was appointed to be a Brambles Non-Executive
shares were held by Anthony Grant Froggatt.
Director.
25 Held by Charles Stanley & Co Australia in the name of Susan Gosnell.
31 Held by BJ & VG Long Investments Pty Limited ATF BJ Long Super Fund A/C.
26 Held by RBC Dexia Custodian on behalf of Tahira Hassan.
32 Held by HSBC Bank of Australia Limited on behalf of Luke Mayhew.
27 Of which 27,500 shares were held by Canzak Pty Ltd, and 20,000 shares
33 Held by Brian Martin Schwartz & Arlene Schwartz as trustee for the
were held by Caran Pty Limited.
Schwartz Superannuation Fund.
28 Of which 9,977 held by the Carolyn Kay Superannuation Fund.
29 Held by Invia Custodians as trustee for the Graham John Kraehe Self-
Managed Superannuation Fund.
Page 45
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Table 7.3: Non-Executive Directors’ Remuneration for the Year
(US$'000)
Name
CONTINUING NON-EXECUTIVE DIRECTORS
C Cross
D Duncan
T Froggatt36
D Gosnell
T Hassan
S Johns36
C Kay36
G Kraehe AO36
FORMER NON-EXECUTIVE DIRECTORS
L Mayhew36
B Schwartz AM36
Totals
Year
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
Short-term employee benefits Post-employment benefits
Directors’ fees
Superannuation
Other34
Total35
82
-
209
207
202
190
206
181
199
209
218
238
185
190
525
611
216
212
185
190
2,227
2,228
4
-
9
9
19
17
9
8
9
9
20
8
17
17
32
26
10
10
17
17
146
121
-
-
2
7
-
16
2
2
7
5
-
28
-
17
18
35
2
4
-
33
30
147
86
-
220
223
221
223
217
191
215
223
238
274
202
224
575
672
228
226
202
240
2,404
2,496
8. REMUNERATION ADVISOR
The Committee has appointed Ernst & Young as Brambles’
remuneration advisor to assist the Company with Non-Executive
Director and executive remuneration matters. In performing its role,
the Committee directly requests and receives information and
advice from Ernst & Young.
During the Year, no remuneration recommendations, as defined by
the Act (Recommendations), were provided by Ernst & Young.
Ernst & Young also provided taxation, internal audit, share rights
valuation and project-related services, as well as general employee
advice services, to Brambles during the Year. These services did not
include a Recommendation.
During the Year, the Committee reviewed the arrangement relating
to the engagement of its independent, external advisor. As a result,
Brambles has made 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
contains 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 excludes Recommendations;
- Any requests to Ernst & Young from Brambles management that
might constitute a Recommendation are to be referred by Ernst &
Young to the Committee for its consideration and direction;
- Ernst & Young is not permitted to provide Recommendations to
Brambles’ management;
- If Ernst & Young provides a Recommendation, it would include
with it a declaration that it has not been unduly influenced by the
Disclosable Executive subject to the Recommendation;
- Representatives of Ernst & Young attend all Committee meetings;
- Except for the CEO and Group Senior Vice President, Human
Resources, Disclosable Executives do not attend Committee
meetings;
- The CEO and Group Senior Vice President, Human Resources do
not attend those parts of any Committee meeting 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 Executives’ remuneration which are not appropriate
to discuss with management present, may be discussed.
34 “Other” includes personal/spouse travel, meals and fringe benefits tax.
35 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.
36 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$1.0212 and €1=US$1.2939 and £1=US$1.5667 for
FY13 to A$1=US$0.9142, €1=US$1.3587 and £1=US$1.6331 respectively for FY14.
Page 46
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
9. APPENDICES
BASIS OF VALUATION OF EQUITY-BASED AWARDS
Unless otherwise specified, the fair values of the options and share rights included in the tables in this report have 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 of the Financial Report on Pages 98 and 99.
SUMMARY OF 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 that 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
Nature of
award
Size of award
2006 Share Plan
(STI)
Share
rights
2006 Share Plan
(TSR LTI)
Share
rights
Up to 100% of
size of STI cash
award
% of salary/TFR
2006 Share Plan
(FY12-FY14
BVA LTI)
Share
rights
% of salary/TFR
2006 Share Plan
(FY13-FY15
BVA LTI)
Share
rights
% of salary/TFR
2006 Share Plan
(FY14-FY16 BVA
LTI)
Share
rights
% of salary/TFR
Vesting
condition
Time only
Vesting schedule
Performance/vesting
period
Life of award
100% vesting based on continuous
employment.
Two years
Maximum six years
Time and
relative TSR
hurdle
40% vesting if TSR is equal to the
median ranked company.
100% vesting if 25% above the
median ranked company.
Time and sales
revenue CAGR
and BVA
performance
Time and sales
revenue CAGR
and BVA
performance
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.
20% vesting occurs if CAGR is 5%
and BVA is US$950M over three-
year period.
100% vesting occurs if CAGR is 7%
and BVA is US$1,350M over three-
year period.
20% vesting occurs if CAGR is 5%
and BVA is US$800M over three-
year period.
100% vesting occurs if CAGR is 7%
and BVA is US$1,200M over three-
year period.
Three years
Maximum six years
Three years
Maximum six years
Three years
Maximum six years
Three years
Maximum 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
Page 47
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
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 do not have an exercise price and carry no dividend or voting rights.
Plan
Plan number Grant date
Expiry date
Value at grant
Status/vesting date
2006 Share Plan
1
12 April 2010
12 April 2016
A$6.48
30% exercisable from 25 November 2013,
remainder lapsed
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
12 April 2010
12 April 2016
A$4.26
100% vested at 25 November 2013
24 November 201037
24 November 201638
A$6.01
100% vested at 25 November 2013
24 November 201039
24 November 201638
A$3.78
100% vested at 25 November 2013
24 November 201040
24 November 201638
A$6.01
30% exercisable from 25 November 2013,
remainder lapsed
31 March 2011
30 June 2017
A$6.35
100% vested at 30 June 2014
6 September 2011
1 August 201338
A$5.92
100% vested at 1 July 2013
6 September 201141
6 September 201738
A$5.92
100% vested at 6 September 2013
6 September 201139
6 September 201738
A$3.46
6 September 2014
6 September 201140
6 September 2017 38
A$5.68
6 September 2014
7 June 2012
7 June 2018
A$6.56
100% vested at 7 June 2014
16 July 2012
1 September 2014
A$6.09
100% vested at 30 August 2013
25 September 201241
25 September 201838
A$6.31
25 September 2014
25 September 201239
25 September 201838
A$3.41
25 September 2015
25 September 201240
25 September 201838
A$6.07
25 September 2015
12 October 2012
12 October 2018
A$6.48
100% vested at 31 January 2014
12 October 2012
12 October 2018
A$6.48
100% vested at 31 May 2014
12 October 2012
12 October 2018
A$6.48
31 January 2015
12 October 2012
25 September 2018
A$3.50
25 September 2015
12 October 2012
25 September 2018
A$6.23
25 September 2015
25 September 201341
25 September 201938
A$8.45
25 September 2015
25 September 201339
25 September 201938
A$4.19
25 September 2016
25 September 201340
25 September 201938
A$8.16
25 September 2016
37 STI awards vest on the third anniversary of their grant date, subject to continued employment.
38 Awards granted to Jean Holley and Jason Rabbino expire three years earlier than the date shown, or immediately after vesting, if earlier.
39 These LTI awards vest on the third anniversary of their grant date, subject to continued employment and meeting a TSR performance condition.
40 These LTI awards vest on the third anniversary of their grant date, subject to continued employment and meeting a sales revenue CAGR and BVA performance
condition.
41 STI awards vest on the second anniversary of their grant date, subject to continued employment.
Page 48
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
Plan
Plan number Grant date
Expiry date
Value at grant
Status/vesting date
MyShare plan
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
49
50
51
52
30 March 201242
1 April 2014
30 April 201242
1 April 2014
31 May 201242
1 April 2014
29 June 201242
1 April 2014
31 July 201242
1 April 2014
31 August 201242
1 April 2014
28 September 201242
1 April 2014
31 October 201242
1 April 2014
30 November 201242
1 April 2014
28 December 201242
1 April 2014
31 January 201342
1 April 2014
28 February 201342
1 April 2014
29 March 201343
1 April 2015
30 April 201343
1 April 2015
31 May 201343
1 April 2015
28 June 201343
1 April 2015
31 July 201343
1 April 2015
30 August 201343
1 April 2015
30 September 201343
1 April 2015
31 October 201343
1 April 2015
29 November 201343
1 April 2015
31 December 201343
1 April 2015
31 January 201443
1 April 2015
28 February 201443
1 April 2015
31 March 201444
1 April 2016
30 April 201444
1 April 2016
30 May 201444
1 April 2016
30 June 201444
1 April 2016
31 July 201444
1 April 2016
A$6.73
A$6.97
A$6.26
A$5.80
A$5.93
A$6.55
A$6.57
A$6.93
A$6.94
A$7.17
A$7.74
A$8.27
A$8.08
A$8.31
A$8.86
A$8.92
A$8.74
A$8.39
A$8.70
A$8.84
A$9.11
A$8.71
A$8.63
A$8.95
A$8.86
A$8.94
A$9.19
A$8.74
A$8.87
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
100% vested on 31 March 2014
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2016
31 March 2016
31 March 2016
31 March 2016
31 March 2016
42 These Matching Awards granted under MyShare vest on 31 March 2014, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
43 These Matching Awards granted under MyShare vest on 31 March 2015, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
44 These Matching Awards granted under MyShare vest on 31 March 2016, subject to continuing employment and the retention of the associated Acquired Shares.
On vesting they are automatically exercised.
Page 49
DIRECTORS’ REPORT – REMUNERATION REPORT – CONTINUED
SHARE-BASED PAYMENTS: FUTURE POTENTIAL
The table below provides annual accounting values for shares granted during years 2010-2012, which have been amortised over three years.
These share awards are subject to the conditions set out in Section 9.2. Remuneration will normally not be received as a result of the
underlying share awards vesting until the conditions have been met.
(US$’000)
Name
EXECUTIVE DIRECTORS
T Gorman
CURRENT DISCLOSABLE EXECUTIVES
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino
N Smith
FORMER DISCLOSABLE EXECUTIVES
D Pertz45
K Pohler
Totals
Share based payment
Year
Total before
equity
Awards
Share of FY14
total remuneration
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
FY14
FY13
3,645
3,730
1,783
1,800
767
898
1,301
1,208
1,137
-
1,072
899
1,033
1,107
1,113
587
1,125
1,368
12,976
11,597
2,546
1,624
980
1,054
369
335
842
538
444
-
299
79
656
485
2,235
1,134
565
512
8,936
5,761
41%
30%
35%
37%
32%
27%
39%
31%
28%
-
22%
8%
39%
30%
67%
66%
33%
27%
-
-
Total
6,191
5,354
2,763
2,854
1,136
1,233
2,143
1,746
1,581
-
1,371
978
1,689
1,592
3,348
1,721
1,690
1,880
21,912
17,358
45 This represents the Recall Award described in Section 6.3 of Brambles’ 2013 Annual Report.
Page 50
DIRECTORS’ REPORT – OTHER INFORMATION
MATTERS SINCE THE END OF THE FINANCIAL YEAR
The Directors are not aware of any matter or circumstance that has
arisen since 30 June 2014 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 in the Letter from
the Chairman & the CEO at Page 2 and in the Operating & Financial
Review on Pages 3 to 15. 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
13.5 Australian cents per share, which will be 30% franked. The
dividend will be paid on 9 October 2014 to shareholders on the
register on 12 September 2014.
On 10 April 2014, an interim dividend for the Year was paid, which
was 13.5 Australian cents per share and 30% franked. On 10 October
2013, a final dividend for the year ended 30 June 2013 was paid,
which was 13.5 Australian cents per share and 30% 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.
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 16 to 17.
Christine Cross
28 January 2014 to date
Douglas Gordon Duncan
1 July 2013 to date
Anthony Grant Froggatt
1 July 2013 to date
Thomas Joseph Gorman
1 July 2013 to date
David Peter Gosnell
1 July 2013 to date
Tahira Hassan
1 July 2013 to date
Stephen Paul Johns
1 July 2013 to date
Sarah Carolyn Hailes Kay
1 July 2013 to date
Graham John Kraehe AO
1 July 2013 to date45
Brian James Long
1 July 2014 to date
Christopher Luke Mayhew
1 July 2013 to 30 June 2014
Brian Martin Schwartz AM
1 July 2013 to 30 June 2014
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 2014 (Year).
PRINCIPAL ACTIVITIES
The principal activities of the Group during the Year were:
- The provision of pooling solutions services, of which Brambles
is a leading global provider; and
- Up to 18 December 2013, information management services.
The Group’s pooling solutions services comprised three operating
business segments: Pallets, RPCs and Containers.
The Pallets business, carried out under the name CHEP, focusses on
the outsourced management of returnable pallets, 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, Pallets
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 RPC business, carried out under the name IFCO in Europe, North
and South America and CHEP in Australia, New Zealand and South
Africa, focusses on the outsourced management 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.
The information management services business, carried out under
the name of Recall, is a global business and comprises the
management of information, providing secure storage, digitisation,
retrieval and destruction of information in multiple media formats.
Recall was demerged from the Group with effect from 18 December
2013 (see the Significant Changes in State of Affairs section below).
Other than the demerger of the Recall business, 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 Page 2 and the Operating & Financial Review on
Pages 3 to 15.
Information about the financial position of the Group is included in
the Operating & Financial Review on Pages 3 to 15 and in the Five-
Year Financial Performance Summary on Page 125.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 2 July 2013, Brambles announced the intention to demerge its
information management business, Recall, by listing a new holding
company, Recall Holdings Limited, on the ASX. The demerger of the
Recall business was completed on 18 December 2013 and Brambles
does not retain any shareholding in Recall Holdings Limited.
On 5 June 2014, Brambles announced the pricing and allocation of
€500 million European medium-term note maturing in 10 years, with
settlement occurring on 12 June 2014.
Other than the above, there were no significant changes to the
state of affairs of the Group for the Year.
45 Graham Kraehe will retire as a Director on 30 September 2014.
Page 51
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
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 of Brambles Limited
are detailed in Note 36 of the Financial Report on Page 119.
Insurance policies are in place to cover Directors and executive
officers, however, the terms of the policies prohibit disclosure of
the details of the insurance cover and the premiums paid.
ENVIRONMENT
Brambles’ Environmental Policy is set by the Board. It applies in all
countries where Brambles operates. 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 contained in Brambles’ 2014
Sustainability Review which will be available on the Brambles’
website in October 2014. 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 has adopted a Zero Harm Charter, which sets out the
vision, values and behaviours and commitment required to work
safely and ensure human rights and environmental compliance is
provided to all employees and, together with the complete Health
and Safety Policy, is on the Brambles website www.brambles.com.
The Chief Executive Officer together with the Group Presidents of
the Pallets, RPCs and Containers business segments, are responsible
for policy implementation and safety performance. The Chief
Executive Officer together with the Group President of Recall was
responsible for policy implementation and safety performance in
relation to the Recall business segment up until completion of the
demerger of the Recall business in December 2013.
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 will be
shown in the 2014 Sustainability Review, which will be available on
Brambles’ website in October 2014.
EMPLOYEES
The 2014 Sustainability Review, available on Brambles’ website
in October 2014, will contain details of Brambles’ performance as
an employer.
DIRECTORS’ MEETINGS
Details of the Board committee memberships are given in the Corporate Governance Statement on Pages 21, 25 and 29. 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)
C Cross
D G Duncan
A G Froggatt
T J Gorman
D P Gosnell
T Hassan
S P Johns
S C H Kay
G J Kraehe AO
C L Mayhew
4
10
11
11
11
10
11
11
11
9
B M Schwartz AM 11
5
11
11
11
11
11
11
11
11
11
11
-
2
2
2
2
2
2
2
2
1
2
-
2
2
2
2
2
2
2
2
2
2
-
-
2
4
1
-
5
1
5
-
2
-
-
2
4
1
-
5
1
5
-
2
4
5
5
5
5
5
5
5
1
5
1
5
4
5
5
5
5
5
5
5
5
5
5
5
5
5
(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.
Page 52
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 2011.
Director
C Cross
Listed company
Kathmandu Holdings Limited
Next plc
Sonae Group plc
Woolworths Limited
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 NV (de-listed in October 2011)
D P Gosnell
None
T Hassan
Recall Holdings Limited
S P Johns
Leighton Holdings Limited
Spark Infrastructure Group
Westfield Group:
Westfield Holdings Limited
Period directorship held
2012 to current
2005 to May 2014
2009 to current
2012 to current
2010 to current
2006 to current
2008 to 2011
2008 to 2013
2010 to current
2011 to July 2014
-
2013 to current
2009 to March 2013
2005 to 2011
1985 to May 2013
Westfield America Management Limited (as responsible entity for Westfield America Trust)
1996 to May 2013
Westfield Management Limited (as responsible entity for Westfield Trust and Carindale Property
Trust)
1985 to May 2013
S C H Kay
Commonwealth Bank of Australia
G J Kraehe AO
Bluescope Steel Limited
Djerriwarrh Investments Limited
B J Long
Commonwealth Bank of Australia
Ten Network Holdings Limited
C L Mayhew
InterContinental Hotels Group plc
B M Schwartz AM Insurance Australia Group Limited
IAG Finance (New Zealand) Limited
Scentre Group:
2003 to current
2002 to current
2002 to current
2010 to current
2010 to current
2011 to current
2005 to current
2008 to current
Scentre Group Limited (formerly Westfield Holdings Limited)
2009 to current
Scentre Management Limited (formerly Westfield Management Limited) (as responsible entity for
Scentre Group Trust 1 (formerly Westfield Trust) and Carindale Property Trust)
2009 to current
RE1 Limited (as responsible entity for Scentre Group Trust 2)
RE2 Limited (as responsible entity for Scentre Group Trust 3)
Westfield Corporation:
Westfield Corporation Limited
2014 to current
2014 to current
2014 to current
Westfield America Management Limited (as responsible entity for Westfield America Trust and as
responsible entity for WFD Trust)
2009 to current
Page 53
DIRECTORS’ REPORT – OTHER INFORMATION – CONTINUED
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 reviewed and funded a significant
number of early-stage new business ideas. Brambles carries out
research and development activities in relation to its Pooled
Solutions business and carried out research and development
activities in relation to the Recall business up until to completion of
the demerger of the Recall business in December 2013. 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 Group’s operations 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.
The Group’s operations are subject to numerous environmental
laws and regulations in the other countries in which it operates.
There were no material beaches of these laws or regulations during
the Year.
INTERESTS IN SECURITIES
Pages 43, 44 and 46 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 of the Financial Report on
Pages 97 to 99.
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 47 and 48 of the Remuneration Report:
- 498,672 exercises resulting in the issue of fully paid ordinary
shares: 5,332 under the 2013 MyShare offer, including an
adjustment in relation to the demerger of the Recall business
(plan numbers 36 to 47); 1,884 under the 2014 MyShare offer (plan
numbers 48 to 52); 472,190 under plan 6; 3,300 under plan 3 and
15,966 under plan 11; and
- 1,168,120 lapses: 8,702 under the 2013 MyShare offer (plan
numbers 36 to 47); 5,272 under the 2014 MyShare offer (plan
numbers 48 to 52); 948,401 under plan 9 and 205,745 under
plan 10.
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 Operating & Financial Review on Page 6
and Section 7 of the Corporate Governance Statement on Page 29.
TREASURY POLICIES
A discussion of the implementation of treasury policies and
mitigation of treasury risks can be found in the Operating &
Financial Review on Pages 4 and 5.
NON-AUDIT SERVICES AND AUDITOR INDEPENDENCE
The amount of US$1.2 million 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 acquisitions and the demerger of Recall,
compliance tracking system, forensic accounting services and tax
consulting advice. The Audit Committee has reviewed the provision
of non-audit services by PricewaterhouseCoopers and its related
practices and provided the Directors with formal written advice of a
resolution passed by the Audit Committee. Consistent with this
advice, the Directors are satisfied that the provision of non-audit
services by PricewaterhouseCoopers and its related practices did not
compromise the auditor independence requirements of the Act for
the following reasons: the nature of the non-audit services provided
during the Year; the quantum of non-audit fees compared to overall
audit fees; and the pre-approval, monitoring and ongoing review
requirements under the Audit Committee Charter and the Charter of
Audit Independence in relation to non-audit work. The auditors have
also provided the Audit Committee with a letter confirming that, in
their professional judgement, as at 7 August 2014 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 124.
ANNUAL GENERAL MEETING
The AGM will be held at 2.00pm (AEDT) on 6 November 2014 at
The Grand Ballroom, Sofitel Melbourne on Collins, 25 Collins Street,
Melbourne, Victoria 3000. This Directors’ Report is made in
accordance with a resolution of the Board.
G J Kraehe AO T J Gorman
Chairman Chief Executive Officer
- 60,368 grants under the 2014 MyShare offer (plan numbers
20 August 2014
48 to 52);
Page 54
SHAREHOLDER INFORMATION
DIRECTORS
G J Kraehe AO
(Non-Executive Chairman)
C Cross
(Non-Executive Director)
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)
S P Johns
(Non-Executive Director)
S C H Kay
(Non-Executive Director)
B J Long
(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.
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 2013 AGM will be held at 2.00pm (AEDT)
on 6 November 2014 at The Grand Ballroom, Sofitel Melbourne on
Collins, 25 Collins Street, Melbourne, Victoria 3000.
FINANCIAL CALENDAR
FINAL DIVIDEND 2014
Ex-dividend date – Wednesday, 10 September 2014
Record date – Friday, 12 September 2014
Payment date – Thursday, 9 October 2014
2015 (PROVISIONAL)
Announcement of interim results – mid February 2015
Interim dividend – mid April 2015
Announcement of final results – mid August 2015
Final dividend – mid October 2015
AGM – November 2015
Page 55
SHAREHOLDER INFORMATION – CONTINUED
ANALYSIS OF HOLDERS OF EQUITY SECURITIES AS AT 31 JULY 2014
SUBSTANTIAL SHAREHOLDERS
Brambles has been notified of the following substantial shareholdings:
Holder
Commonwealth Bank of Australia
(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
Number of ordinary
shares
% of issued ordinary
share capital(1)
99,124,053
6.35
Holders
27,378
28,784
5,397
3,197
146
Shares
13,114,493
67,726,511
37,802,648
66,031,570
1,378,749,768
64,902
1,563,424,990
The number of members holding less than a marketable parcel of 54 ordinary shares (based on a market price of A$9.43 on 31 July 2014) is
984 and they hold a total of 17,501 ordinary shares. The voting rights of ordinary shares are described on Page 57.
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 57.
Holders
2,500
31
13
76
23
2,643
Share rights
822,492
107,379
101,913
2,404,515
5,809,448
9,245,747
Page 56
SHAREHOLDER INFORMATION – CONTINUED
TWENTY LARGEST ORDINARY SHAREHOLDERS
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
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