Annual Report 2016
www.brambles.com
Contact Information
Registered Office
Brambles’ global headquarters is at its registered office in Sydney, Australia:
Level 40, Gateway Building
1 Macquarie Place
Sydney NSW 2000
Australia
ACN 118 896 021
Telephone: +61 (0) 2 9256 5222
Facsimile: +61 (0) 2 9256 5299
Email:
info@brambles.com
Website: www.brambles.com
Investor & Analyst Queries
Telephone: +61 (0) 2 9256 5238
Email:
investorrelations@brambles.com
Share Registry
Access to shareholding information is available to investors through Link Market Services.
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000, Australia
Locked Bag A14, Sydney South NSW 1235, Australia
Telephone: 1300 883 073
Facsimile: +61 (0) 2 9287 0303
Email:
registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
Share Rights Registry
Employees or former employees of Brambles who have queries about the following interests:
- Performance share rights under the 2004 or 2006 share plans;
- Matching share rights under MyShare; or
- Shares acquired under MyShare or other share interests held through AET Structured Finance Services Pty Ltd,
may contact:
Boardroom Pty Limited
Attention: Brambles Employee Share Plans, GPO Box 3993, Sydney NSW 2001, Australia
Telephone: 1800 180 833 (within Australia)
+61 (0) 2 9290 9684 (from outside Australia)
Facsimile: 1300 653 459 (within Australia)
+61 (0) 2 9279 0664 (from outside Australia)
Email:
bramblesesp@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
Contents
Letter from the Chairman
Letter from the CEO
Strategy Scorecard
Operating & Financial Review
Board & Executive Leadership Team
Directors’ Report – Remuneration Report
Directors’ Report – Other Information
Brambles Limited
ABN 89 118 896 021
Shareholder Information
Financial Report
Independent Auditor’s Report
Auditor’s Independence Declaration
Five-Year Financial Performance Summary
Glossary
37
39
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83
84
85
1
2
3
4
14
17
32
Go to Brambles.com to review
the Group’s online annual review
for 2016, including an interactive
strategy scorecard and other features.
Forward-Looking Statements
Certain statements made in this Annual 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 release. The forward-looking statements made in this Annual 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 release, except as may be required by law or by any appropriate regulatory authority.
Letter from the Chairman
18 August 2016
Brambles’ Chairman Stephen Johns
Consistent with the theme of this year’s Annual Report,
Sustainable Value, we continue to focus on delivering
long-term value for shareholders, our customers, our
employees, and the communities in which we operate.
Our strong results this year are a testament to the
strength of our business model and the commitment of
our employees at every level in the organisation.
Notwithstanding the market uncertainties and economic challenges in
many of our markets around the world, our long-term growth strategy is
not only delivering strong financial results but also enabling us to develop
a more resilient and responsive company which is better positioned to
deal with a more competitive and volatile world.
Our strength lies in our diversity and the resilience of the customers we
serve in the fast moving consumer goods and fresh produce sectors. We
are present in over 60 countries and we are benefitting from strong
growth in emerging markets and improving stability in our established
markets.
During the Year we continued to invest for the long term to enhance our
strong network advantage and strengthen our relationships with
customers. We invested US$407 million of growth capital expenditure, the
majority of which is focussed in our business units serving the consumer
staples and fresh produce supply chains.
We remain focused on the role technology can play in improving our
business. During the Year we announced the creation of a Silicon Valley-
based company, BXB Digital, focused on developing opportunities in
relation to smart assets, data analytics and the Internet of Things.
We remain committed to the five-year targets we set in December 2013
and our ongoing business strategy. Our Strategy Scorecard on page 3 sets
out our progress relative to our key targets and objectives.
Looking at this Year’s results, in constant currency terms all the critical
measures of financial performance showed improvement on the previous
year; in particular sales, underlying profit, net debt to EBITDA and EBITDA
interest cover. And, very importantly, our safety performance was excellent
across all of our business units.
Dividend
Shareholders are seeing the benefits of Brambles continuing strong
performance with total dividends for the year of 29 Australian cents per
share, up one cent and 25% franked. Further details of the FY16 dividend
and the Dividend Reinvestment Plan are set out on page 8.
Sustainability
During the Year, we announced our sustainability goals for 2020 which are
linked to the United Nations' Sustainable Development Goals, released in
2015. Shareholders can read more about our sustainability strategy in the
Operating & Financial Review on page 6, and obtain further details about
our 2020 sustainability goals on our website. Our full Sustainability Review
for 2016 will be published in October.
Corporate Governance
Brambles Corporate Governance Statement for 2016 has been posted on
the Brambles website. The Statement sets out the key components of our
governance framework in place during the Year. The Board believes that
Brambles has met or exceeded all the requirements of the ASX Corporate
Governance Principles and Recommendations.
Board Composition
In January this year, George El Zoghbi, joined the Board. George is an
Australian executive who has had a highly successful international career in
the food industry. George is Chief Operating Officer of US commercial
businesses for Kraft Heinz Company, in Chicago, USA, and brings an
invaluable customer perspective to the Board.
CEO Succession
On 18 August, we announced the retirement of our CEO, Tom Gorman,
and the appointment of his successor, Graham Chipchase. Tom will retire
as CEO and a Director of the Company effective 28 February 2017 and
retire from the Brambles Group effective 30 June 2017.
Graham will commence with Brambles as CEO designate on 1 January 2017
and work closely with Tom in the two-month transitional period until he
takes over as CEO on 1 March, 2017. Tom will be available to assist
Graham until the end of June 2017.
Tom was appointed CEO in October 2009 and he has worked tirelessly to
re-focus our Company and deliver value for our customers, our employees
and our shareholders. Total shareholder return from the date Tom was
announced as CEO until 12 August 2016, was 145%1. He will leave
Brambles in a strong financial and market position with a clear focus on
delivering on commitments. On behalf of the Board and all Brambles
employees, I thank Tom for his outstanding contribution to our Company.
Until June this year Mr. Chipchase, 53, was Chief Executive Officer of
Rexam plc, one of the world’s largest consumer packaging companies with
56 plants in 26 countries. He joined Rexam in 2003 as Finance Director and
successfully managed the company’s plastics division until his
appointment as CEO in 2010. During his tenure as CEO, Mr Chipchase
refocused the company’s strategy on core operations and strengthening
customer relationships. He also improved the financial position of the
business and delivered significant economic value to shareholders. Mr.
Chipchase left Rexam in June 2016, following the acquisition of the
company by US based Ball Corporation.
After completing an extensive CEO succession process that considered
internal and external candidates, the Brambles Board is delighted to have
found a candidate with Graham Chipchase’s ability and experience to take
Brambles forward and build on the Company’s strategy of customer focus,
disciplined capital allocation, and profitable growth. Graham has extensive
and successful management experience leading a large FTSE listed
company in a global business with similar characteristics to Brambles. He
brings an impressive track record of success to the Brambles CEO role.
On behalf of all shareholders I thank our 14,500 staff for the dedication
and hard work that delivered the results you see in this report.
Stephen Johns
Chairman
1 Total shareholder return calculated for the period 6 October 2009 to 12 August 2016 and includes the impact of the Recall demerger.
1
Letter from the CEO
18 August 2016
Brambles’ CEO Tom Gorman
Brambles' strong financial performance during the Year is
a testament to the strength of our business model, the
quality of our people, our network advantage and our
commitment to delivering sustainable value for customers
and shareholders.
Customers
During the Year, we continued to add a significant number of new
customers across our portfolio of businesses.
In line with our strategic imperative to be closer to the customer we
continue to focus on delivering high quality, strategic solutions which
make our customers' supply chains more efficient and sustainable.
I am pleased to report that our focus on the customer continues to pay off,
with improved customer satisfaction scores during the Year.
Outlook
Subject to there being no material change in underlying economic
conditions, in FY17 we expect to deliver constant-currency growth in sales
revenue in the range of between 7% and 9% and Underlying Profit growth
in the range of between 9% to 11%. We have forecast Underlying Profit to
be between US$1,055 million and US$1,075 million, at 30 June 2016
foreign exchange rates.
We remain committed to delivering the five-year targets we set out in
December 2013 which were to deliver annual constant-currency sales
revenue growth in the high single digits, with Underlying Profit growth
exceeding sales revenue growth, and achieving Return on Capital Invested
of 20%4 by the end of the 2019 financial year.
My retirement
On 18 August, I announced my retirement as Chief Executive Officer and a
Director of the Company with effect from 28 February 2017 and from the
Brambles Group with effect from 30 June 2017.
It has been both a pleasure and an honour to work with so many great
people at Brambles. I am extremely proud of what our people have been
able to accomplish during my tenure as CEO and am proud of the strong
foundation for continued profitable growth I have helped establish. My
decision to retire was not easy but I believe this is the right time for me to
leave. Brambles is in great shape, our strategy is sound, and our team is
aligned and committed. I wish my successor, Graham Chipchase, every
success. I look to working with him as he transitions into his new role and
to my future away from full-time executive life.
Tom Gorman
Chief Executive Officer
People and Safety
As we do in every management review across our Company, I will start my
review of the Year with an update on safety.
I am pleased to report that we were able to deliver another year of
improvement in the Brambles Injury Frequency Rate, with no fatalities
occurring across our operations in more than 60 countries.
I would like to thank all Brambles employees, the senior management
team and my fellow Directors for their contribution to another successful
year.
2016 Performance
Our performance during the Year reflected the continued execution of our
growth strategy and our focus on driving direct and indirect cost
efficiencies across our operations. At constant-currency, sales revenue
increased 8% as we delivered strong growth with new and existing
customers in both developed and emerging market businesses. At
constant currency2, operating profit was US$915 million, up 5%, and
Underlying Profit3 was US$993 million, up 9%. Return on Capital Invested
was 15.3%. A full analysis of our financial results in the Operating &
Financial Review on pages 4 to 13.
Strategic Actions
Over the course of the 2016 calendar year, we undertook several strategic
actions aimed at allocating capital more effectively and better positioning
certain businesses within our portfolio to generate sustainable profit
growth and long term value creation.
In May, we announced the sale of the LeanLogistics transport management
software business for US$115 million. We derived significant value from
this business over the eight years it formed part of our portfolio however,
the size and specialised nature of its operations provided limited
opportunity for us to deliver further growth and value under our
ownership.
In August, we entered into an agreement to form Hoover-Ferguson Group
(HFG), an independent joint venture comprising our Oil & Gas container
business unit and leading containers solution provider, Hoover Container
Solutions. HFG will be 50% owned by Brambles and 50% owned by Hoover
shareholders. This transaction provides us with long-term optionality in
relation to the scale of, and allocation of capital to, the Group’s Oil & Gas
containers investment.
There were two small acquisitions completed during the year, in support of
expanding our geographic footprint in the fresh food crate business, of
IFCO Japan and Empacotecnia in Colombia.
As a result of our evolving portfolio of businesses, and in addition to the
portfolio actions we have taken during the Year, we continue to review the
structure of our businesses with a focus on delivering efficiencies and
overhead cost reductions across our operations.
2 Calculated by translating reported period results into US dollars at the actual monthly exchange rates applicable in the prior corresponding period.
3 Profit from continuing operations before finance costs, tax and Significant Items.
4 FY19 targets were set exclusive of the impact of merger and acquisition activity and in line with certain assumptions in relation to macro-economic and operational
risks (see Section 4.1).
2
Strategy
Scorecard
2016
Investing in network
advantage
Driving operational
and organisational
efficiency
Disciplined capital
allocation for
long-term growth
FY16 key achievements
FY16 key achievements
FY16 key achievements
(cid:31)
(cid:31)
US$407 million growth capital
expenditure in support of growth with
customers and geographic expansion
Launch of BXB Digital to address
opportunities in relation to smart
assets, data analytics and the
Internet of Things
FY17 focus areas
(cid:30)
Further US$400 million growth
capex anticipated to support CHEP
and IFCO expansion
(cid:30)
Initial US$10 million funding for
BXB Digital
(cid:31)
(cid:31)
(cid:30)
(cid:30)
Operational efficiencies largely
offsetting direct cost pressures
US$23 million indirect cost savings
delivered under One Better
business improvement program
FY17 focus areas
Continued focus on operational
efficiencies to offset direct cost
pressures
Continued focus on delivery of
One Better business improvement
program
(cid:31)
(cid:31)
(cid:30)
(cid:30)
(cid:30)
Divestment of LeanLogistics
Bolt-on acquisitions to support RPCs
growth: IFCO Japan, Empacotecnia
FY17 focus areas
Complete formation of Oil & Gas
Containers Joint Venture
Continued capex allocation to well
established businesses
Focus on addressing businesses facing
market and/or structural challenges
FY19 Targets1
FY19 Targets1
FY19 Targets1
Deliver annual percentage sales
growth in the high single digits
Deliver indirect and direct cost
efficiencies to ensure profitable
growth
Consistently improve Group
Return on Capital Invested to at
least 20% by FY19
Our customer value
proposition enables a strong
and sustainable competitive
advantage…
…which drives superior rates
of economic returns
… and positions us uniquely
to deliver superior levels of
growth
1 FY19 Targets are provided on a constant-currency basis, exclusive of the impact of acquisitions since December 2013.
3 Operating & Financial Review
1. Overview of Operations
Brambles Limited is a supply-chain logistics company operating primarily
through the CHEP and IFCO brands. Brambles is listed on the Australian
Securities Exchange (ASX) and has its headquarters in Sydney, Australia,
but operates in more than 60 countries, with its largest operations in North
America and Western Europe.
Brambles provides supply-chain logistics services to its customers based
upon the Group’s longstanding expertise in the management of reusable
unit-load equipment1 such as pallets, crates and containers.
Brambles primarily serves customers in the fast-moving consumer goods
(e.g. dry food, grocery, and health and personal care), fresh produce,
beverage, retail and general manufacturing industries, counting many of
the world’s best known brands among its customers. The Group also
operates specialist container logistics businesses serving the automotive,
aerospace, and oil and gas sectors.
At 30 June 2016, the Group employed more than 14,500 people and
owned more than 550 million pallets, crates and containers (after
provisions) through a network of more than 850 service centres.
For financial reporting purposes, Brambles is grouped into three segments:
-
Pallets, primarily serving the fast-moving consumer goods, fresh
produce and beverage industries, and sub-divided into three regions:
-
-
-
Americas (comprising the CHEP pallet-pooling operations
throughout that region and the CHEP recycled pallet
management operations in North America);
Europe, Middle East & Africa (comprising the CHEP pallet-
pooling operations in those regions, as well as India); and
Asia-Pacific (comprising the CHEP pallet-pooling operations in
that region);
-
RPCs (an acronym for Reusable Plastic or Produce Crates), serving
the fresh produce and broader food industry and comprising the
IFCO RPC pooling business worldwide and the CHEP RPC pooling
businesses in Australia, New Zealand and South Africa; and
-
Containers, comprising four distinct business units:
-
-
-
-
Automotive, serving the automotive manufacturing industry;
IBCs, primarily serving customers transporting raw materials in
the food and general manufacturing industries using
intermediate bulk containers (IBCs);
Oil & Gas, comprising Ferguson Group, a provider of container
management solutions to the offshore oil and gas industry, and
CHEP Catalyst & Chemical Containers, which rents containers
and provides associated services in the refining sector; and
Aerospace, which rents containers and pallets for the
transportation of baggage and cargo to airlines, as well as
maintaining these and other airliner equipment.
In August 2016, Brambles entered into an agreement to merge its
Oil & Gas containers business unit with leading containers solutions
provider, Hoover Containers Logistics Solutions, to create an independent
joint venture company – Hoover Ferguson Group (HFG), to be 50% owned
by Brambles. The transaction is expected to complete in October 2016
(subject to regulatory clearance and customary conditions precedent).
2. Customer Value and Operating Model
Brambles enhances performance for customers by helping them transport
goods through their supply chains more efficiently, safely and sustainably.
The Group’s primary activity is the provision of reusable pallets, crates and
containers for shared use by multiple participants throughout the supply
chain, under a “sharing and reusing“ model also known as “pooling“.
Under various pooling models, Brambles provides standardised reusable
pallets, crates and containers to customers from its service centres, as and
when customers require. Customers then use that equipment to transport
goods through their supply chains, and – depending on the specific
pooling model in operation – either arrange for its return to Brambles or
transfer it to another participant in the network for that participant’s use
prior to its return to Brambles.
By participating in Brambles’ pooling system, customers eliminate the
need to purchase and manage their own unit-load equipment, thereby
reducing the capital requirements and complexity of their operations and
simultaneously reducing waste from their supply chains. Customers benefit
from the shared scale efficiencies generated by Brambles’ network and
systems, as well as the Group’s asset management knowledge and
development of additional value-adding services, products and solutions.
Brambles generates sales revenue predominantly from rental and other
service fees that customers pay based on their usage of the Group’s
equipment. Brambles retains ownership of its equipment at all times,
inspecting, cleaning and repairing them as required to maintain
appropriate quality levels.
3. Shared Values
Brambles’ shared values are articulated in its 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.
4. Business Strategies, Opportunities and Risks
Brambles’ aspires to be a world-leading provider of logistics solutions,
working together with its customers to make supply chains more efficient,
safe and sustainable. Brambles’ current areas of strategic focus are:
-
-
-
Investing in network advantage: The strength and scale of
Brambles’ network of customers, people, service locations and asset
management capability is inherent to the Group’s value proposition
to customers and shareholders alike. The Group is committed to
investing to maintain this network advantage and enhance it through
innovation and customer collaboration;
Driving operational and organisational efficiency: Brambles
supports its investment programs with internal efficiency initiatives
that enable financial resources to be redirected to activities that are
value-adding for customers. The Group targets continuous
efficiencies in direct costs while the five-year organisational efficiency
program, One Better, is focused on indirect cost reduction; and
Disciplined capital allocation for long-term growth: In addition to
funding its established businesses, Brambles seeks to allocate capital
to organic business opportunities or acquisitions where the Group
believes its specific supply-chain expertise can add value for
customers and create value for shareholders.
The dynamic nature of the supply chains Brambles serves, provides the
Group with a broad range of growth opportunities including: increasing
penetration of core equipment-pooling products and services in existing
markets; diversifying the range of products and services; entering new and
adjacent parts of existing supply chains; expanding into new supply chains
or geographies; and/or exploring the digitisation of supply chains.
The principal factors that define growth opportunities for Brambles in the
pooling of unit-load equipment 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 generally 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.
1 Equipment used for grouping multiple units of goods (e.g. boxes of grocery items) in standardised volumes and formats for ease of shipment and storage through
the supply chain.
4
Operating & Financial Review – continued
4.1 Strategic and Operating Risks
Brambles has identified a number of key factors that influence its strategic objectives and financial performance targets (refer to section 5) and which
create areas of opportunity. These factors also create risks to the execution of Brambles’ strategic objectives, which have been assessed in the context of
the Group’s risk management framework, as described under Principle 7 of the Corporate Governance Statement on Brambles’ website. The table below
outlines these key factors, the associated risks and mitigating actions Brambles implemented in FY16:
Key factors
Strategic and/or financial risk
Mitigating actions
Macro-economic environment
The challenging macro-economic
environment may affect demand for
Brambles’ services and/or the Group’s
profitability
Continued focus on driving growth through
investment in expanded customer value proposition,
and targeted diversification in opportunities with
attractive long-term characteristics
Industry trends, particularly in the context of
dynamic retail, grocery and consumer goods
supply chains
Internal execution capabilities, in particular
maintaining control and quality of pooled
equipment in line with customer needs
Industry trends (e.g. the fragmentation of
the retail supply chain into multiple
channels, demand for differing materials
or designs for pooled equipment; the use
of asset-tracking technology) could affect
demand for Brambles’ current service
offerings, the value of its existing assets,
and/or its profitability
Failure to maintain adequate quality
standards or control of Brambles’ pooled
equipment may result in reduced
customer satisfaction or additional costs
Meeting customer demand for sustainable
outsourced supply-chain solutions amid an
intensifying competitive environment
Competitor activity, particularly in
relation to changing customer demands
and/or market structures, could affect
Brambles’ market penetration, revenue
and profitability
Ongoing programs to drive customer intimacy
throughout the supply chain and uncover
opportunities to leverage the Group’s unique global
scale and value proposition
- Strict adherence to equipment quality standards,
including continuous monitoring of critical-to-
quality metrics to assess and ensure quality of
products issued to customers
- Appointment of dedicated asset control teams
across all business units and creation of a
comprehensive system of processes to increase the
timely collection of assets
- Regular schedule of customer equipment inventory
audits to assess key asset recovery metrics and
identify potential control issues
Rejuvenated sustainability strategy and key brand
programs focused on leveraging the inherent
sustainability of Brambles’ business models and
driving new levels of customer engagement
Brambles has identified the following additional risks to its financial performance and operations. These risks have also been assessed in the context of
Brambles’ risk management framework and were addressed by the following mitigating actions in FY16:
Operating risk
Implication
Mitigating actions
Execution and integration of acquisitions
Potential for interruption, compromise or
failure of the systems and technology upon
which Brambles relies to operate its business
Regulatory compliance, particularly as
Brambles operates in a large number of
countries with widely differing legal
regimes, legislative requirements and
compliance cultures
A failure to properly execute or integrate
an acquisition could result in Brambles
not realising its anticipated benefits and
synergies
A failure of this nature could adversely
affect Brambles’ ongoing profitability by
impairing its ability to service, attract and
retain customers
A failure to comply with regulatory
obligations and local laws could
adversely affect Brambles’ operational
and financial performance
Ability to attract, develop and retain high
performing individuals, as well as having
proper succession planning
A failure to attract, develop and retain
high performing individuals could
adversely impact Brambles’ ability to
implement and manage its strategic
objectives
- Implementation of standard acquisition integration
process for all acquisitions
- Dedicated integration leader appointed to lead the
integration process for each acquisition
- Adoption of business continuity plans for
interruptions to or failure of its information
technology system
- Implementation of processes for the detection and
management of cybersecurity and other IT risks
- Code of Conduct which provides a framework for
detailed policies addressing regulatory compliance,
among other things
- Adoption of Group-wide online compliance training
programs to supplement face-to-face training
- Appointment of a dedicated Compliance Manager
whose responsibilities include monitoring the
implementation and ongoing application of
compliance management systems
- Detailed talent management and succession
planning processes to identify high potential
employees and prepare “ready now“ successors for
senior executive positions throughout the Group
- Formal mentoring programs offered to all Brambles
employees
5
Operating & Financial Review
5. Investor Value Proposition
Brambles’ relative competitive position is defined by the scale and density
of its pooling networks, and the additional services and value these
networks enable the Group to provide to customers. This concept is also
referred to as Brambles’ “network advantage“.
Over time, Brambles’ network advantage is strengthened through the
disciplined expansion of its pooling networks and accompanying
investment in customer service, creating a sustainable competitive
advantage that enables the delivery of attractive returns to shareholders.
The scale of Brambles’ established operations and customer relationships
provides the Group with unique access to additional customer growth
opportunities.
In December 2013, Brambles communicated the following financial targets,
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 currency;2 and
Consistent incremental improvement in Return on Capital Invested to
at least 20% by the end of the 2019 financial year.
These targets were set exclusive of the impact of merger or acquisition
activity and in line with certain assumptions in relation to macro-economic
and operational risks (see Section 4.1).
5.1 Recent Financial Performance
Over the past five years, Brambles has consistently outperformed the
benchmark Australian share index, the S&P/ASX200 Index, by delivering
superior rates of profitable growth and shareholder returns.
Based on Bloomberg data for the five years ended 31 December 2015:
Brambles’ compound average growth rate in sales revenue was 5%,
compared with 2% for the S&P/ASX200 Index, and Brambles’ average
post-tax return on capital was 16%, compared with 4% for the Index.
In the 2016 financial year, Brambles’ delivered a total shareholder return3
of 20%, compared with 1% for the S&P/ASX200 Accumulation Index and
19% for the S&P/ASX200 Industrials Accumulation Index. On a five-year
basis, Brambles’ total shareholder return has been 115%, compared with
43% for the S&P/ASX200 Index and 78% for the S&P/ASX200 Industrials.
While there is no guarantee that these absolute or relative returns will
continue, Brambles believes that superior execution of its strategy will
enable continued strong performance.
5.2 Performance Drivers and 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 sales
revenue growth, 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 its operations (often described
as “net new business wins“4); and
Movements in pricing and changes in product/customer mix.
Brambles’ key profit metric is Underlying Profit,5 which is adjusted from
statutory operating profit by removing Significant Items.6 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 operating costs in relation to management of service centre
networks and the inspection, cleaning 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 lost or otherwise
irrecoverable pooling equipment.
Brambles defines Return on Capital Invested as Underlying Profit divided
by Average Capital Invested.7 The main driver of Average Capital Invested
is capital expenditure on pooling equipment, which is primarily influenced
by the rate of sales growth and by 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 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).
6. Sustainability
Brambles believes its operating model is inherently sustainable. By
promoting the reuse of assets among multiple parties in the supply chain,
Brambles’ sharing and reusing operating model creates more efficient
supply chains by reducing operating costs and demand on natural
resources.
Brambles’ sustainability framework organises the Group’s sustainability
activities in three areas: Better Business, Better Planet and Better
Communities. During FY16, this framework was enhanced through the
release of Brambles’ 2020 sustainability goals. These goals focus on the
strategic sustainability issues that preserve and create value, while
managing actions that reduce the impacts of the Group’s operations on
the environment and communities in which it operates. Brambles’ 2020
sustainability goals were mapped to the United Nations Sustainable
Development Goals (SDGs)8 released in 2015. The Group’s goals were
established through internal consultation with Brambles’ businesses and
input from customers, suppliers, peak industry bodies and sustainability
practitioners.
During FY16, Brambles’ management established a sustainability risk
committee whose primary function, is to identify, assess, monitor and
report on the Group’s exposure to sustainability risks and determine
whether the exposure to these risks is material.
In FY16, Brambles’ sustainability risk committee conducted a review of
material sustainability risks and issues, recognising: previously identified
material sustainability issues; the third edition of the ASX Corporate
Governance Principles & Recommendations, particularly Recommendation
7.4 concerning economic, environmental and social sustainability risks; and
the Global Reporting Initiative’s G4 reporting framework.
2 Calculated by translating reported period results into US dollars at the actual monthly exchange rates applicable in the prior corresponding period.
3 Data sourced from Orient Capital. Total shareholder return reflects share price movements, assuming the reinvestment of dividends on the payment date and is
adjusted for the demerger of Recall, the information management business, in December 2013.
4 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.
5 Profit from continuing operations before finance costs, tax and Significant Items.
6 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.
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.
8 Further information on Brambles’ 2020 sustainability goals and their alignment to SDGs is located on Brambles’ website http://www.brambles.com/sustainability.
6 7.3 Funding and Liquidity
Brambles funded its operations during the 2016 financial year primarily
through retained cash flow and borrowings. Brambles generally sources
borrowings from relationship banks and debt capital market investors on a
medium-to-long-term basis.
During the Year, Brambles issued US$500 million of guaranteed senior
notes due in 2025 at a coupon of 4.125% in the US 144A market. Proceeds
of the note issue were used to repay bank borrowings.
Bank borrowing facilities were either maintained or renewed throughout
the Year. These facilities are generally structured on a multi-currency,
revolving basis with maturities ranging to 2020. Borrowings under the
facilities are floating-rate, unsecured obligations with covenants and
undertakings typical for these types of arrangements.
7.3.1 Maturity Profile of Committed Borrowing
Facilities and Outstanding Bonds
(% of total committed credit facilities)
25%
25%
1.0
B
$
S
U
0.5
6%
-
18%
15%
11%
9%
< 1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
> 5 yrs
Bonds/notes
Bank borrowings
Undrawn bank facilities
The average term to maturity of Brambles’ committed credit facilities as at
30 June 2016 was 4.3 years (2015: 3.9 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.
Operating & Financial Review – continued
This review identified the following material sustainability risks:
- Materials sourcing: Ongoing secure supply of materials for the
production and repair of pooling equipment, in particular wood used
for pallets, is critical to Brambles. In FY16, Brambles set a goal to
achieve chain-of-custody certification for 100% of wood purchased9
for manufacture and repair of CHEP pallets by 2020. In FY16,
Brambles purchased 2.7 million cubic metres of wood for use in CHEP
pooled pallets, up 416,300 cubic metres since FY15. During the Year,
the volume of wood from certified sources remained in line with FY15
levels, at 97%, while the volume of wood carrying full chain-of-
custody certification increased to 49%, from 43% in FY15. Brambles’
sustainable sourcing objectives are directly linked to SDG 13 -
Climate Action and SDG 15 - Sustainable Forestry; and
Safety: Brambles’ Zero Harm Charter states that everyone has the
right to be safe at work and to return home as healthy as they started
the day. Brambles measures its safety performance through the
Brambles Injury Frequency Rate (BIFR), which measures work-related
injuries, fatalities, lost time, modified duties and incidents requiring
medical treatment per million hours worked. Brambles’ met its target
of year-on-year improvement in the BIFR rate in FY16, recording a
BIFR of 9.7, an improvement from 13.3 in FY15. This result reflects
continuous improvement in the safety culture of Brambles. Brambles’
Zero Harm Charter and safety targets align with SDG 3 Good Health
and Wellbeing.
-
Further details of Brambles’ sustainability framework and new sustainability
goals are located on Brambles’ website. A full review of Brambles’
sustainability risks and performance will be included in the Group’s
Sustainability Review, scheduled for publication in October 2016.
7. Financial Position and Financial Risk Management
7.1 Capital Structure
Brambles manages its capital structure to maintain a solid investment-
grade credit rating. During the financial year ended 30 June 2016,
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, the potential funding requirements of its existing
business, 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.
7.2 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.
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.
9 An explanation of chain-of-custody certification, certified sources and other terms is on Brambles’ website.
7
Operating & Financial Review – continued
7.4 Net Debt and Key Ratios
US$M
Current debt
June 2016
201.7
June 2015
127.5
Change
74.2
8. Financial Review
8.1 Group Overview
Non-current debt
Gross debt
Less cash
Net debt
Key ratios
Net debt to EBITDA
EBITDA interest cover
(151.4)
(77.2)
10.1
(67.1)
2,576.2
2,727.6
2,777.9
2,855.1
(156.1)
(166.2)
2,621.8
2,688.9
FY16
1.70x
13.5x
FY15
1.75x
13.7x
Brambles’ financial policy is to target a net debt to EBITDA ratio 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.
7.5 Dividend Policy and 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 2016 of 14.5 Australian cents per
share, in line with the previous interim dividend and up 0.5 Australian cents
per share on the previous final dividend. The 2016 final dividend is payable
on 13 October 2016 to shareholders on the Brambles register at 5.00pm
on 8 September 2016. The ex-dividend date is 7 September 2016.
Total dividends for the Year were 29.0 Australian cents per share, up
1 Australian cent per share. Brambles paid the 2016 interim dividend
of 14.5 Australian cents per share on 14 April 2016.
Brambles’ 2016 dividends are 25% franked. The unfranked component of
the final dividend is conduit foreign income: shareholders not resident in
Australia will not pay Australian dividend withholding tax on this dividend.
7.5.1 Dividend Reinvestment Plan
Brambles’ Board maintained the Dividend Reinvestment Plan (DRP) for the
2016 financial year, in support of the Group’s ongoing funding needs.
Commencing with the 2016 final dividend, shares issued under the DRP
will no longer attract a discount and any dilutive impact on earnings per
share of DRP-issued shares will be neutralised through the transfer of
existing shares to participating shareholders, via on-market purchases
rather than issuing new shares to them.
8.1.1 Summary: Key Metrics
US$M
(Continuing operations)
Sales revenue
FY16
FY15
5,535.4 5,440.5
Change
Actual
FX
2%
Constant
FX
8%
Operating profit
Significant Items
915.1
941.8
(3)%
5%
78.1
45.1
Underlying Profit
993.2
986.9
1%
9%
Underlying Profit margin
17.9%
18.1%
(0.2)pts
+0.1pts
Average Capital Invested
6,486.4
6,251.5
4%
10%
Return on Capital
Invested
15.3%
15.8%
(0.5)pts
(0.2)pts
Brambles Value Added10
248.3
233.5
14.8
Cash Flow from
Operations
513.8
729.5
(215.7)
(187.1)
Brambles’ financial results for the 12 months ended 30 June 2016 reflected
the continued execution of the Group’s growth strategy and commitment
to delivering direct and indirect cost efficiencies across its operations.
The variance between actual and constant-currency growth reflects the
strength of Brambles’ reporting currency, the US dollar, relative to the
Group’s other operating currencies, in particular the euro, British pound,
Australian dollar and Canadian dollar.
Sales revenue was US$5,535.4 million, up 2%. Constant-currency growth
of 8% was in line with management’s FY16 guidance for constant-currency
sales revenue growth between 8% and 10%, and consistent with the
Group’s medium-term objective for average annual constant-currency
sales revenue growth in the “high single digits“. Constant-currency growth
was primarily driven by: strong net new business wins, robust like-for-like
volume growth and modest pricing gains in the developed markets pooled
Pallets businesses; improved growth momentum in emerging markets
Pallets businesses; continued expansion with new and existing retailers in
European RPCs; and contributions from recent acquisitions.
Underlying Profit, which excludes Significant Items, was US$993.2 million,
up 1%. Constant-currency growth of 9% was in line with management’s
FY16 guidance for constant-currency Underlying Profit growth of between
8% and 10%. Constant-currency growth reflected strong sales revenue
growth, direct cost efficiencies in the Pallets and European RPCs segments,
and US$23 million of overhead cost efficiencies resulting from the One
Better program. These drivers more than offset the impact of increased
operating costs in the North American recycled pallets business, short-
term network inefficiencies in North American RPCs and ongoing industry
headwinds in Oil & Gas.
Average Capital Invested was US$6,486.4 million, up 4% (up 10% at
constant currency), reflecting the impact of acquisitions since 1 July 2014.
Excluding these acquisitions (Braecroft, Ferguson Group, Rentapack, IFCO
Japan and Empacotecnia), constant-currency Average Capital Invested
growth was up 7%, reflecting growth capital expenditure to support
expansion in the Pallets and RPCs businesses.
Return on Capital Invested was 15.3%, down 0.5 percentage points
(down 0.2 percentage points at constant currency), reflecting the increase
in Average Capital Invested. On a pro-forma FY19 target basis (excluding
acquisitions11 and foreign exchange impacts since December 2013 when
Brambles set a target for Return on Capital Invested of 20% by FY19),
Return on Capital Invested was 17.2%, up 0.1 percentage points (up
0.4 percentage points at constant currency) reflecting the improved
profitability in the Pallets segment.
10 Calculated at 30 June 2015 FX rates.
11 Brambles’ FY19 ROCI target of 20% excludes acquisitions made since December 2013 (the date the target was set). As such the Airworld, Braecroft, Ferguson
Group, IFCO Japan, Rentapack, Transpac and Empacotecnia acquisitions are excluded from ROCI.
8
8.1.3 Cash Flow Reconciliation
US$M
Underlying Profit
Depreciation and amortisation
FY16
993.2
545.8
FY15
986.9
546.1
EBITDA
1,539.0
1,533.0
Capital expenditure (cash basis)
(1,080.3)
(982.5)
Proceeds from sale of PP&E
Working capital movement
IPEP expense
Other
Cash Flow from Operations
Significant Items
Discontinued operations
103.6
(146.9)
74.8
23.6
513.8
(44.9)
(5.4)
Change
6.3
(0.3)
6.0
(97.8)
25.2
(151.1)
(4.9)
6.9
78.4
4.2
79.7
16.7
729.5
(215.7)
(48.7)
(4.3)
3.8
(1.1)
Financing costs and tax
(291.8)
(272.4)
(19.4)
171.7
404.1
(232.4)
(205.1)
(359.3)
154.2
(78.2)
Free Cash Flow after dividends12
(33.4)
44.8
Cash Flow from Operations was US$513.8 million, down US$215.7 million.
This reflected increased capital expenditure to fund growth in the Pallets
segment and increased working capital due to one-time change to
payment processes resulting in lower creditors.
Capital expenditure of US$1,080.3 million included: US$407 million to fund
growth programs mainly in Pallets Americas, Pallets EMEA and European
RPCs; and US$620 million to replace irrecoverable or scrapped pooling
equipment. The remaining capital expenditure relates to other plant
investments and the timing of payments.
Proceeds from the sale of PP&E increased by US$25.2 million, reflecting a
Group-wide alignment of reporting compensations for lost RPCs.
Previously, parts of the business recorded compensations for lost RPCs in
working capital.
Free Cash Flow after dividends12 was a negative US$33.4 million, down
US$78.2 million, reflecting the reduced Cash Flow from Operations. This
was partly offset by lower dividends paid due to the reactivation of the
Dividend Reinvestment Plan, which generated US$124.8 million of cash,
and the translation impact of the weaker Australian dollar in which
dividends are paid.
48.4
59.3
(18)%
(11)%
Free Cash Flow
Dividends paid
Operating & Financial Review – continued
Brambles Valued Added, a measure of economic profit calculated at
constant 30 June 2015 exchange rates, was US$248.3 million, up
US$14.8 million, reflecting similar trends as Return on Capital Invested.
Cash Flow from Operations was US$513.8 million, down
US$215.7 million, due to higher capex to support growth and one-time
change to payment processes that drove increased working capital.
8.1.2 Profit Reconciliation
US$M
Underlying Profit
Pallets Americas
Pallets EMEA
Pallets Asia Pacific
Total Pallets
RPCs
Containers
Corporate
FY16
FY15
428.1
354.5
65.1
417.6
343.9
71.6
847.7
833.1
131.4
131.5
(34.3)
(37.0)
Total Underlying Profit
993.2
986.9
Significant Items
Operating profit
Net finance costs
Tax expense
Profit after tax
Weighted average
number of shares (M)
Basic EPS (US cents)
Basic EPS from continuing
operations (US cents)
(78.1)
(45.1)
915.1
941.8
(114.0)
(111.9)
(243.7)
(242.3)
557.4
587.6
1,577.6
1,566.0
37.3
35.3
37.3
37.5
Change
Actual
FX
Constant
FX
3%
3%
(9)%
2%
0%
8%
14%
3%
10%
10%
7%
1%
(3)%
(2)%
(1)%
(5)%
1%
0%
(6)%
(5)%
9%
5%
(8)%
(10)%
2%
1%
7%
1%
Operating profit of US$915.1 million, was down 3%, and up 5% on a
constant-currency basis. This reflected the impact of US$78.1 million of
Significant Items, comprising:
-
-
-
-
Restructuring and integration costs of US$37.7 million ($30.4 million
of which related to the One Better program);
Goodwill impairment charge of US$38.0 million in the Oil & Gas
business reflecting current market conditions in that sector;
Acquisition-related costs of US$7.8 million; and
A US$5.4 million gain on acquisitions, predominantly related to the
IFCO Japan business.
Net finance costs were US$114.0 million, up 2%. Constant-currency
growth of 8% reflected an increased proportion of long-term, higher fixed-
rate debt.
Tax expense was US$243.7 million, up 1%. Constant-currency growth of
10%, reflected the lower tax deductibility of Significant Items in FY16. This
resulted in an effective tax rate on operating profit of 30% (FY15: 29%). The
effective tax rate on Underlying Profit was 29%, the same as FY15.
Profit after tax of US$557.4 million was down 5%. Constant-currency
growth of 2% reflected higher net finance costs and tax expense which
partly offset operating profit growth.
Basic earnings per share were 37.3 US cents, the same as FY15. Basic
earnings per share from continuing operations of 35.3 US cents were down
6% in actual-currency terms. Constant-currency growth of 1%, reflected
the increase in profit after tax partly offset by the higher weighted average
number of shares on issue.
12 Free Cash Flow after dividends excludes proceeds from the disposal of the LeanLogistics business, which was a net cash inflow of US$100.0 million.
9
Operating & Financial Review – continued
8.1.4 Five-Year Trends13
Group Sales Revenue (US$M)
Return on Capital Metrics
4,780
5,083
5,405
5,441
5,535
15.7
16.4
16.3
15.8
15.3
217
229
234
248
174
350
300
250
200
150
100
50
0
18
16
14
12
10
8
6
4
2
0
FY12
FY13
FY14
FY15
FY16
FY12
FY13
FY14
FY15
FY16
Pallets
RPCs
Containers
Brambles Value Added (US$M)
Return on Capital Invested (%)
Brambles’ sales revenue of US$5,535.4 million in FY16 reflected a five-year
compound annual growth rate of 8%.14 This was delivered despite
relatively weak underlying economic conditions in the period. The growth
reflected the execution of the Group’s strategy: to expand the Pallets
business through winning new customers, entering new markets and
expanding its product offerings; to expand the RPCs operations through
ongoing investment to support increased retailer conversions; to increase
its presence in the Intermediate Bulk Containers and Automotive space
through acquisitions and continued investment; and diversification
through acquisition into new supply chains in the Containers segment
such as Aerospace and Oil & Gas.
The trend in Brambles’ key return on capital metrics (Return on Capital
Invested and Brambles Value Added14) over the five-year period ended 30
June 2016 reflected the Group’s expansion through both organic growth
and acquisitions. Return on Capital Invested declined from 15.7% to 15.3%
reflecting the impact on capital invested of acquired intangibles. Excluding
the impact of acquisitions and foreign exchange movements since
December 2013, Return on Capital Invested has increased to 17.2%. The
trend in Brambles Value Added – a measure of economic profit over and
above the cost of capital invested to create that profit – demonstrates how
profit growth outstripped growth in the cost of capital, increasing to
US$248 million in FY16.
Underlying Profit (US$M)
Cash Flow from Operations (US$M)
913
836
960
987
993
828
730
697
460
514
FY12
FY13
FY14
Pallets
RPCs
Containers
FY15
Corporate
FY16
FY12
FY13
FY14
FY15
FY16
Brambles’ Underlying Profit of US$993.2 million in FY16 reflected a five-
year compound annual growth rate of 9%.1414 The profit growth primarily
reflected sales revenue growth as well as the delivery of efficiencies
primarily in the Pallets business. Key drivers of profit improvement in the
period included: the successful execution of the Better Everyday program
to increase pallet and service quality through FY10 to FY13 in the USA
pooled pallet operations; the Global Supply Chain program to reduce
operating costs by US$100 million from FY12 to FY15, primarily through
plant network optimisation; and reductions in indirect costs worldwide as
part of the One Better program.
By nature of Brambles’ business, Cash Flow from Operations in a given
period is largely driven by profitability, capital expenditure and movements
in working capital balances. The five years to FY16 was a period of strong
profit growth, facilitated largely by significant investments in capital
expenditure for growth. In addition, improved asset control practices
contributed to reduced replacement capital expenditure relative to sales
growth. In FY12, capital expenditure was especially high relative to the size
of the business, reflecting growth programs to support expansion in
emerging markets of the Pallets business, and in the RPCs segment
following the IFCO acquisition. In FY16, capital expenditure increased to
support growth in the Pallets operations and there was a one-time change
to payment processes that increased working capital.
13 Data shown excludes the contribution of the Recall business demerged in December 2013 and is shown at actual FX rates. LeanLogistics is excluded in FY15 and
FY16 but included in earlier years.
14 Compound annual growth rate and Brambles Value Added calculated at 30 June 2015 FX rates.
10
Americas pooled pallet businesses (excluding North American recycled
pallet business) delivered constant-currency Underlying Profit growth of
14%, reflecting strong volume, price and sales mix benefits and supply-
chain efficiencies. Collectively, these benefits were more than sufficient to
offset increases in direct costs in the period. On a constant-currency basis:
-
-
-
Net plant costs increased by US$19 million, reflecting cost inflation
pressures, particularly in Latin America in line with the broader
inflationary environment in that region. US pallet durability measures
had a net-neutral impact on plant costs in FY16 and are expected to
deliver damage rate and cost benefits from FY17 onwards;
Depreciation expense increased by US$15 million, in line with
investment in the pallet pool to support expansion with new and
existing customers; and
Net transport costs increased by US$12 million with US third-party
freight inflation moderating during FY16. Continued improvements in
asset management and a reduction in the fuel surcharge also
contributed to higher transportation costs.
Underlying Profit in the North American recycled pallet business declined
by US$25 million reflecting pallet core-price inflation, lower volumes,
increased indirect costs and other one-off adjustments.
Operating profit of US$415.5 million was up 3% (up 8% at constant
currency). Significant Items of US$12.6 million primarily related to the One
Better program and the first phase of the CHEP brand refresh project.
Return on Capital
Return on Capital Invested was 18.1%, down 0.3 percentage points
(down 0.1 percentage points at constant currency), reflecting increased
Average Capital Invested and the decline in Underlying Profit contribution
from the North American recycled pallet business.
Return on Capital Invested for the Americas pooled pallet businesses
(excluding the North American recycled pallet business) was 21.5%, up 1.1
percentage points at constant currency.
Capital expenditure16 was US$449.8 million, up US$71.4 million, driven by
investment to support strong sales volume growth in the pooled pallet
businesses, replenish US plant-stock levels and manage the impact of
increased cycle times associated with increased inventory levels in the US
retail supply chain.
Operating & Financial Review – continued
8.2 Segment Analysis
8.2.1 Pallets Americas
US$M
Sales revenue
Operating profit
Significant Items
Underlying Profit
Underlying Profit
(ex North American
recycled)
FY16
FY15
2,427.8 2,333.4
Change
Actual
FX
4%
Constant
FX
8%
415.5
403.1
3%
8%
12.6
14.5
428.1
417.6
432.3
397.1
3%
9%
8%
14%
Average Capital Invested
2,370.4
2,268.6
4%
8%
Return on Capital
Invested
Return on Capital Invested
(ex North American
recycled)
18.1%
18.4%
(0.3)pts
(0.1)pts
21.5%
20.7%
0.8pts
1.1pts
Brambles Value Added
166.7
157.2
9.5
Corporate actions
The LeanLogistics business, previously recognised in the Pallets Americas
segment, was sold on 31 May 2016. LeanLogistics’ FY16 results are
included in discontinued operations and prior year comparatives for Pallets
Americas have been restated.
Sales Revenue
Sales revenue in Pallets Americas was US$2,427.8 million, up 4% (up 8% at
constant currency), reflecting strong net new business wins15 and solid
pricing and like-for-like volume growth.
North America sales revenue was US$2,186.1 million, up 6% (up 7% in
constant currency). Net new business wins in the pooled pallet operations
contributed 3% constant-currency growth, reflecting strong progress with
the market segmentation strategy in the region. This strategy delivered a
number of key wins in the protein and pharmaceutical sectors and the
conversion of a large number of smaller customers in the US grocery
sector from disposable “white-wood“ alternatives. Like-for-like volume
growth contributed 1% of constant-currency growth, while price and sales
mix improved in all business units.
Within North America:
-
-
-
USA pooled pallet revenue was US$1,489.3 million, up 8%;
North American recycled pallet sales revenue was US$460.0 million,
up 3% (up 4% at constant currency); and
Canada sales revenue was US$236.8 million, down 5% (up 7% at
constant currency).
Latin America sales revenue was US$241.7 million, down 8%. Constant-
currency growth of 14%, was largely driven by strong like-for-like volume
growth in Mexico, in line with improved economic conditions, and solid
pricing growth, consistent with the inflationary environment in the region.
Profit
Underlying Profit was US$428.1 million, up 3% (up 8% in constant
currency), reflecting a very strong profit performance in pooled pallet
operations which more than offset operating challenges in the North
American recycled pallet business.
15 The change in sales revenue in the reporting period resulting from business won or lost in that period and the previous financial year. The revenue impact of net new
business wins is included across reporting periods for a total of 12 months from the date of the win or loss and calculated on a constant-currency basis.
16 Capital expenditure on property, plant and equipment on an accruals basis.
11
Operating & Financial Review – continued
8.2.2 Pallets EMEA
US$M
Sales revenue
Operating profit
Significant Items
FY16
FY15
1,343.1 1,380.5
Change
Actual
FX
(3)%
Constant
FX
6%
8.2.3 Pallets Asia-Pacific
US$M
Sales revenue
FY16
319.0
FY15
343.5
Change
Actual
FX
(7)%
Constant
FX
5%
351.8
341.8
3%
13%
Operating profit
65.0
70.6
(8)%
4%
2.7
2.1
Underlying Profit
354.5
343.9
Average Capital Invested
1,248.5
1,253.0
3%
0%
14%
9%
Significant Items
Underlying Profit
0.1
1.0
65.1
71.6
Average Capital Invested
323.6
357.1
(9)%
(9)%
3%
1%
Return on Capital Invested
28.4%
27.4%
1.0pts
1.2pts
Return on Capital Invested
20.1% 20.1%
0.0pts
0.8pts
Brambles Value Added
215.8
185.6
30.2
Brambles Value Added
27.5
25.9
1.6
Sales
Sales
Sales revenue in Pallets EMEA was US$1,343.1 million, down 3%.
Constant-currency growth of 6%, reflected broadly equal contributions
from like-for-like volume growth and net new business wins with minimal
price growth in a low inflationary environment in Europe.
Sales revenue in Pallets Asia-Pacific was US$319.0 million, down 7%.
Constant-currency growth of 5% largely reflected robust pricing gains and
like-for-like volume growth in Australia and continued expansion with new
and existing customers in Asia.
-
-
Australia & New Zealand sales revenue was US$274.2 million,
down 8% (up 5% at constant currency).
Asia sales revenue was US$44.8 million, down 2%. Constant-currency
growth of 6%, reflected continued growth in dynamic flow, wooden
pallet volumes in China as the business transitions away from the
legacy closed-loop, plastic pallet business.
Profit
Underlying Profit was US$65.1 million, down 9%. Constant-currency
growth of 3% was largely driven by the pricing component of sales
revenue in Australia, which was partially offset by reduced customer
compensations in line with lower pallet losses in the period.
Operating profit was US$65.0 million, down 8% (up 4% in constant
currency). Significant Items of US$0.1 million related to the One Better
program.
Return on Capital
Return on Capital Invested was 20.1%, in line with FY15. At constant
currency, Return on Capital Invested improved by 0.8 percentage points,
reflecting the Underlying Profit growth and minimal growth in Average
Capital Invested. Capital expenditure was US$51.2 million, down US$10.4
million, primarily reflecting lower investment in Asia.
Europe sales revenue was US$1,194.2 million, down 3% (up 5% at constant
currency). Like-for-like volume growth contributed 2% constant-currency
growth, reflecting solid consumer demand across the major European
economies particularly in the second half of the year. Net new business
wins contributed 3% constant-currency growth, driven by continued
market share expansion in continental Europe and minimal customer
losses.
Within Europe:
- Mid Europe (comprising Germany, Italy, Benelux, Scandinavia,
-
-
-
-
Switzerland and Austria) sales revenue was US$361.6 million, down
2%. Constant-currency growth of 6% was primarily driven by
continued expansion with new and existing customers;
UK & Ireland sales revenue was US$339.1 million, down 7%.
Constant-currency growth was flat year-on-year as the rollover
impact of prior-year contract losses in the first half of the year, and
indexation-related price reductions offset solid contributions from
new contract wins and like-for-like volume growth;
Iberia sales revenue was US$229.6 million, down 2%. Constant-
currency growth of 6% reflected net new business wins and improved
like-for-like volume growth, particularly in the beverage sector;
France sales revenue was US$153.6 million, down 3%. Constant-
currency growth of 4% was driven by solid new business growth and
a modest contribution from like-for-like volume growth; and
Central & Eastern Europe sales revenue was US$110.3 million, up 8%.
Constant-currency growth of 20% was driven by strong new business
growth particularly in the region’s largest markets, Poland and
Turkey.
Africa, India & Middle East sales revenue was US$148.9 million, down 2%
(up 16% at constant currency), primarily driven by like-for-like volume
growth and price increases.
Profit
Underlying Profit was US$354.5 million, up 3%. Constant-currency growth
of 14% reflected the delivery of plant and transport cost efficiencies in a
low-inflation environment and indirect cost benefits associated with the
One Better program.
Operating profit was US$351.8 million, up 3% (13% at constant currency).
Significant Items of US$2.7 million primarily reflected One Better-related
costs.
Return on Capital
Return on Capital Invested was 28.4%, up 1.0 percentage points (1.2
percentage points at constant currency), reflecting the continued strong
profitability across the region. Capital expenditure was US$280.9 million,
up US$24.9 million, reflecting investment to fund the growth with key
customers in the region.
12
Operating & Financial Review – continued
8.2.4 RPCs
US$M
Sales revenue
Operating profit
Significant Items
Underlying Profit
Change
Actual
FX
8%
Constant
FX
16%
FY16
991.8
FY15
917.6
8.2.5 Containers
US$M
Sales revenue
Change
Actual
FX
(3)%
Constant
FX
5%
FY16
453.7
FY15
465.5
134.4
130.8
3%
14%
Operating profit
7.7
58.1
(87)%
(91)%
(3.0)
0.7
131.4
131.5
0%
5%
10%
11%
Significant Items
Underlying Profit
40.7
48.4
1.2
59.3
(18)%
(11)%
Average Capital Invested
957.6
874.1
10%
18%
Average Capital Invested
1,623.7
1,541.2
Return on Capital Invested
8.1%
8.5%
(0.4)pts
0.0pts
Return on Capital Invested
5.1%
6.8%
(1.7)pts
(1.7)pts
Brambles Value Added
(60.1)
(53.4)
(6.7)
Brambles Value Added
(70.5)
(46.5)
(24.0)
Sales
Corporate actions
Sales revenue in RPCs was US$991.8 million, up 8%. Constant-currency
growth of 16% reflected the continued expansion of RPC programs with
existing and new retail partners in Europe and the contribution of
acquisitions.
On 5 August 2016, Brambles announced the combination of its Oil & Gas
business into an independent joint venture company, Hoover-Ferguson
Group (HFG). The Oil & Gas business’ results in FY16 are reported in
continuing operations.
All major markets delivered solid like-for-like volume growth and modest
pricing gains. Excluding the impact of the acquisitions of Rentapack (Chile),
IFCO Japan and Empacotecnia (Colombia), RPCs’ constant-currency sales
revenue growth was 12%.
-
-
-
Europe sales revenue was US$621.4 million, up 7%. Constant-
currency growth of 15% was primarily driven by very strong volume
growth with existing retail partners (including REWE in Germany, The
Co-operative Food Group in the UK and DIA in Spain) and with new
retail partners, most significantly Intermarché in France. Performance
in the second-half of the year was particularly strong with constant-
currency sales revenue growth of 17%.
North America sales revenue was US$199.2 million, up 4%, as growth
with key retail partners (including Walmart, Kroger, Loblaws and HEB)
more than offset the impact of significantly reduced volumes, with
Safeway following its decision to revert to the use of cardboard
boxes within its supply chain. Price increases implemented during
FY16 contributed modestly to the growth.
Sales revenue in the other regions was US$171.2 million, up 19%.
Constant-currency growth of 38% reflected the acquisitions of
Rentapack, IFCO Japan and Empacotecnia. Excluding these
acquisitions, constant-currency sales revenue growth of 11% was
driven by continued expansion in Australia, South Africa and Latin
America.
Profit
Underlying Profit of US$131.4 million was flat on the prior year. Constant-
currency growth of 10% primarily reflected the sales revenue growth and
scale-related network and transportation efficiencies in Europe. These
benefits were partly offset by higher depreciation costs in line with the
growth and diversification of the RPC pool. In North America, short-term
network inefficiencies created by the loss of volumes with Safeway in the
first half of the year have been addressed and profit margins improved in
the second half of the year.
Operating profit was US$134.4 million, up 3% (up 14% at constant
currency). Significant Items of US$3.0 million largely reflected a fair value
gain recognised on the acquisition of IFCO Japan, offset by costs
associated with the One Better program and IFCO branding.
Return on Capital
Return on Capital Invested was 8.1%, down 0.4 percentage points (flat at
constant currency). The Underlying Profit growth was offset by a strong
increase in Average Capital Invested due to continued relatively high levels
of capital expenditure in the segment to support growth and platform
diversity. Capital expenditure was US$231.0 million, down US$7.3 million.
Sales
Sales revenue in the Containers segment was US$453.7 million, down 3%.
At constant currency, sales revenue was up 5% as growth in the
Intermediate Bulk Containers, Automotive and Aerospace businesses more
than offset a decline in the Oil & Gas business. Excluding the Oil & Gas
business, constant-currency sales revenue growth was 8%.
Automotive sales revenue was US$145.9 million, down 1%. Constant-
currency sales revenue was up 7%, as strong like-for-like volume growth
and contract wins in North America and Europe more than offset the
ongoing decline of the Australian automotive industry.
Intermediate Bulk Containers sales revenue was US$131.8 million, up 2%.
Constant-currency growth of 10% was driven by strong market share gains
in Pallecon Europe and North America.
Aerospace sales revenue was US$78.3 million, up 1%. Constant-currency
growth of 5% reflected strong growth in the pooling business associated
with the rollout of the Cathay Pacific contract. This increase more than
offset volume declines in the repair business.
Oil & Gas sales revenue was US$97.7 million, down 12%. A constant-
currency decline of 5% reflected a 31% decline in Ferguson’s like-for-like
sales revenue, in line with the reduction in expenditures by customers in
the offshore oil and gas sector following heavy falls in the oil price. This
was partly offset by the additional two months’ Ferguson ownership and
increased customer maintenance activity at refineries in the Catalyst &
Chemical business.
Profit
Underlying Profit was US$48.4 million, down 18% (down 11% in constant
currency), as sales revenue growth was insufficient to offset margin
pressure associated with industry trends in Oil & Gas and short-term cost
pressures in Intermediate Bulk Containers. Excluding the Oil & Gas
business, constant-currency Underlying Profit growth was 27%, primarily
reflecting strong profit leverage in the Automotive business.
Operating profit was US$7.7 million, down 87% (down 91% in constant
currency). Significant Items of US$40.7 million included a US$38.0 million
goodwill impairment charge in the Oil & Gas business, reflecting current
market conditions in the sector. The balance of Significant Items related to
the One Better program.
Return on Capital
Return on Capital Invested was 5.1%, down 1.7 percentage points,
reflecting the increase in Average Capital Invested as a result of the
Ferguson acquisition and the decline in Underlying Profit. Capital
expenditure was US$82.1 million, down US$18.9 million, primarily due to
minimal requirements in Ferguson.
13
Board & Executive Leadership Team
Board of Directors
Stephen Johns Non-Executive Chairman (Independent)
Chairman of the Nominations Committee and member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in August 2004 and was appointed Chairman in September 2014. He is a
former Chairman and a Non-Executive Director of Leighton Holdings 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 is also a Director of the Garvan
Institute of Medical Research. He has a Bachelor of Economics degree from the University of Sydney and is a Fellow of the
Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of Company Directors. Age: 69.
Christine Cross Non-Executive Director (Independent)
Member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in January 2014. She is a Non-Executive Directorship of Sonae Group,
Kathmandu, Plantasjen, Hilton Food Group and Coca-Cola European Partners and previously served on the Boards of
Woolworths, Next, Empire Canada, Fairmont Hotel Group Canada and Taylor Wimpey and as Chief Retail Advisor for
PricewaterhouseCoopers. 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 currently retains the title of Visiting Professor at Belfast and Hull University Business Schools. Christine
has a Bachelor of Education degree, Master of Science in Food Science degree and a Diploma in Management. Age: 65.
George El Zoghbi Non-Executive Director (Independent)
Member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in January 2016. George has extensive international consumer packaged
goods and supply-chain experience. He is currently Chief Operating Officer of US commercial businesses for Kraft Heinz
Company, based in Chicago, USA, and prior to the merger of Kraft Foods Group and Heinz in July 2015, George was Chief
Operating Officer of Kraft. Prior to joining Kraft in 2007, he held a number of executive roles with Fonterra Cooperative
and various managerial and sales roles with Associated British Foods. He holds a Diploma of Business, Marketing, as well
as a Masters of Enterprise from the University of Melbourne and has also completed an Accelerated Development
Program at MC London Business School in the United Kingdom. Age: 49.
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 and
Chairman of Foodbank Australia. 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: 68.
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 in many executive roles including 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. Tom will retire as Chief
Executive Officer and Director on 28 February 2017. Age: 56.
14
Board & Executive Leadership Team - continued
David Gosnell Non-Executive Director (Independent)
Member of the Audit Committee and the Nominations Committee
Re-joined Brambles as a Non-Executive Director in December 2011. He is a Non-Executive Director of Coats and Coats
Group. David retired from his role as President of Global Supply & Procurement for Diageo in December 2014. In that role
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 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 in 1998, 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 and is a Fellow of the Institute of
Engineering and Technology, England. Age: 59.
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 Canada Pension
Plan Investment Board and was previously a Non-Executive Director of Recall Holdings. 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 & 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: 63.
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 Scentre Group, John Swire &
Sons Pty Ltd, Chief Executive Women and The General Sir John Monash Foundation, an External Board Member of Allens
Linklaters and a member of the Future Fund Board of Guardians. She was also formerly a Non-Executive Director of a
number of organisations including Commonwealth Bank of Australia and Infrastructure NSW. Carolyn has more than 30
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: 55.
Brian Long Non-Executive Director (Independent)
Chairman of the Audit Committee.
Joined Brambles as a Non-Executive Director in July 2014. He is a Non-Executive Director of Commonwealth Bank of
Australia, at which he is Chairman of its Audit Committee. Previously, Brian was a Non-Executive Director and Deputy
Chairman of Ten Network Holdings. He was a senior Australian audit partner at EY, 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. Age: 70.
Scott Perkins Non-Executive Director (Independent)
Member of the Audit Committee
Joined Brambles as a Non-Executive Director in June 2015. Scott is a Non-Executive Director of Woolworths and Origin
Energy and was a Director of Meridian Energy from 1999 to 2002. He is a Director of the Museum of Contemporary Art
and is active in the charity and public policy sector as the founder or director of a number of organisations. Scott has
extensive experience in corporate finance, capital markets and investment banking. He held senior executive leadership
positions at Deutsche Bank from 1999 to 2013, including as Managing Director and Head of Corporate Finance for
Australia & New Zealand and as a member of the Asia-Pacific management committee. Age: 51.
15
Board & Executive Leadership Team - continued
Executive Leadership Team
Tom Gorman Chief Executive Officer
Chairman of the Executive Leadership Team
(See biography on page 14.)
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: 57.
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: 50.
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: 59.
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: 47.
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: 55.
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. Zlatko will retire as Chief Financial Officer in February 2017. Age: 48.
16
Directors’ Report – 2016 Remuneration Report
Executive Summary
1. Background
Business Performance
Remuneration for senior executives in FY16 reflected another year of
strong Brambles results and continued execution of Brambles’ business
strategy, as detailed in the Operating & Financial Review pages 4 to 13.
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:
a) Non-Executive Directors;
b)
Executive Directors; and
c) Group executives who have authority and responsibility for
planning, directing and controlling the Group’s activities. This is
defined as those who, for some or all of the year ended 30 June
2016 (the Year), were members of the Executive Leadership Team
(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.
1.1 Basis of Valuation of Equity-Based Awards
Unless otherwise specified, the fair values of the STI and LTI share
awards (see Section 3) 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 23 on page 66 of the financial statements.
This fair value is not used to calculate the number of STI and LTI share
awards granted to executives. The number of share awards granted is
based on the market value of Brambles shares calculated using the
volume-weighted average share price for the five-day period to the
grant date. This is termed a "face value approach".
1.2 Claw Back of Awards
The rules of Brambles’ 2006 Performance Share Plan (2006 Share Plan)
include a clawback provision. Under this provision, the Board may
cancel any STI or LTI share 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 due to error or
omission, and negligence.
Annual Short-Term Incentive
Annual Short-Term Incentive (STI) cash awards for continuing senior
executives ranged from 55% to 78% of base salary. These STI outcomes
were driven by Brambles’ financial performance and executives’
achievement of specific personal objectives.
Long-Term Incentive
Brambles’ performance over the three years to FY16 triggered 75% of
Long-Term Incentive (LTI) awards granted in FY14 to vest. This reflects TSR
performance of 35.89% above the Median company in the ASX100,
together with sales CAGR of over 6.5% and Brambles Value Added (BVA)
above the $800 million threshold.
Executive salaries
In October 2015, salary reviews across the company were restricted to
reflect the economic circumstances at that time. As a consequence, some
members of the Executive Leadership Team (ELT) opted not to take an
increase for the year. Across the ELT, the average increase was below 1.0%,
ranging from 0% to 3.2%. Details of ELT salaries are shown in Section 6.3.1.
There were no changes to the members of ELT in FY16.
Non-Executive Directors fees
The annual review of Non-Executive Directors' fees was carried out during
the Year. In FY15, the Board decided to defer the effective date of their
2015 fee increase from 1 January 2015 to 1 July 2015. Base fees for the
Board Chairman and other Non-Executive Directors increased by 2% from 1
July 2015. Non-Executive Director fees are detailed in Section 7.1.
Remuneration strategy
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.
Contents
1. Background
2. Remuneration Policy and Framework
3. Remuneration Structure
4. Performance of Brambles and At Risk Remuneration
5. Employee Share Plan
6. Executive Directors and Disclosable Executives
7. Non-Executive Directors’ Disclosures
8. Remuneration Governance
17
Directors’ Report – 2016 Remuneration Report – continued
2. Remuneration Policy and framework
3. Remuneration 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.
Section 3.1 sets out how Brambles’ remuneration policy is directly
linked to the Company’s financial performance, the creation of
shareholder wealth and the delivery of strategy.
The Group’s remuneration policy is to set pay opportunity around the
median level of remuneration (the comparator group of companies is
set out in the next paragraph) but with upper-quartile total potential
rewards for outstanding performance and proven capability.
Brambles’ global remuneration framework, which applies to all salaried
employees, 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 2015. This approach provides a sound basis for delivering a
non-discriminatory pay structure for all Group employees.
Remuneration is divided into those components which are 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, benefits and
superannuation contributions.
A significant element of Disclosable Executives’ total reward is required
to be At Risk. An individual will achieve maximum 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’ total remuneration
comprising At Risk Remuneration is illustrated in Chart 3.2.1.
Brambles’ At Risk Remuneration is provided by way of three types of
annual incentive awards: an STI cash award, an STI share 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 respect to any financial year would
not normally exceed two and a half times their base salary.
STI share awards vest two years following the grant date subject to
continuing employment. The STI share award value is derived from the
executives’ STI cash award up to a maximum of 100% of the STI cash
award. They are exercisable for six years from the date of grant.
No Brambles shares were purchased on market during the Year to
satisfy the entitlements of holders of STI share awards or LTI share
awards.
Disclosable Executives have the opportunity to receive an annual
performance based equity grant in the form of LTI share awards.
Vesting occurs three years from the date the award is granted and is
subject to satisfaction of performance conditions 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 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 and all unvested LTI
share awards are forfeited in the case of resignations, or terminations
for cause.
The remuneration structure and the key features of Fixed and At Risk
Remuneration are summarised in Table 3.0 and diagrammatically
represented in the diagram that follows Table 3.0. The application of
the At Risk element of remuneration is further described in Section 4.
18
Directors’ Report – 2016 Remuneration Report – continued
Table 3.0 – Remuneration Structure - Fixed and Variable pay
Remuneration
Element
Performance
Measures
FIXED REMUNERATION
Base salary,
superannuation
and benefits
N/A
AT RISK REMUNERATION
STI Cash Award
financial measures
(comprising 70%
of the STI cash
award)
- BVA
- Cash Flow from
Operations
- Profit after tax (PAT)
(for CEO and CFO)
- Sales revenue growth
(for Group President,
Containers)
STI Cash Award
non-financial
measures
(comprising 30%
of the STI cash
award)
STI Share Award
(deferred equity)
- Safety
- Business strategy and
growth objectives
- Customer satisfaction
and retention
- People and talent
management
As per STI Cash Award
LTI Share Award
(3-year
performance
period)
Relative TSR
(comprising half of the
LTI Share Award)
LTI Share Award
(3-year
performance
period)
Sales Revenue and BVA
growth (comprising half
of the LTI Share Award)
Rationale
Performance level required for payment
Fixed remuneration reflects the executive’s role,
duties, responsibilities and level of performance,
taking into account the individual’s location and
Brambles’ size, geographic scale and
complexity. Base salaries are generally set at
median level.
N/A
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. Profit after tax (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.
Non-financials are set to link executives’
performance to Brambles’ overall strategic
objectives.
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).
Non-financial objectives and their associated
performance measures are set at the beginning
of the financial year and assessed in full detail
by the Remuneration Committee at year-end.
Provides continuing alignment of executives’
interests with shareholders’ for an additional
2 years beyond the financial year to which the
award relates.
Provides a major retention mechanism for
executives.
The size of the STI Share Award is derived from
the STI Cash Award. This results in half of the
total STI Award being deferred into Brambles
share rights which vest subject to continued
employment on the second anniversary of the
grant (i.e. 2-year deferral).
Creation of shareholder value
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 shares over the same period of time.
Profitable 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.
For LTI share awards granted from FY16, 50% of
LTI share awards will vest if the Company’s
relative TSR performance over the 3-year
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 3-year Performance Period.
If Brambles’ TSR performance is between these
two levels, vesting will be on a pro rata straight-
line basis.
Each year, a sales revenue CAGR/BVA matrix is
set by the Remuneration Committee for each LTI
share award based on budget targets approved
by the Board. The matrix is published in the
subsequent year’s Remuneration Report. This
allows the Board to set targets for each LTI share
award that reward strong performance over a
3-year period in light of the prevailing and
forecast economic and trading conditions.
19
Directors’ Report – 2016 Remuneration Report – continued
Diagrammatic representation of Brambles’ Remuneration Structure
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 hurdles.
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).
3.1 Remuneration and the Link to Business Strategy
Brambles’ business strategy is set out in the Operational & Financial Review on pages 4 to 13. 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 BVA as a key performance indicator (KPI) 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 BVA and 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 share
awards, which do not vest for two years from the date they are granted, helps retain key executives and aligns their interests with shareholders.
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 supports 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 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 on pages 85 and 86.
20
Directors’ Report – 2016 Remuneration Report – continued
3.2 Remuneration Mix for Disclosable Executives
Brambles’ executive remuneration mix is strongly linked to performance. At Risk Remuneration represents 70% to 76% of Disclosable Executives’
maximum remuneration package.
Chart 3.2.1 below illustrates the level of actual remuneration received by Disclosable Executives compared with their respective total remuneration
package mix. The remuneration mix (Rem Mix) 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 4.1.1) and full vesting of all LTI share awards.
The respective columns of Chart 3.2.1 labelled Actual comprise:
-
-
-
-
Base salary: base salary for FY16;
STI cash: the STI cash award received in respect to FY16 performance (see Section 4.1);
STI shares: the STI share award earned in respect to FY16 performance, the vesting of which is deferred until FY18 (see Section 4.1); and
LTI shares: the proportion of the FY14–FY16 LTI share awards that will vest at the end of the year (see Section 4.2.3).
The Rem Mix column represents the maximum value of each element of the respective executive’s remuneration package mix that could be
received in each case by the individual Disclosable Executive.
Chart 3.2.1- Remuneration Mix
21
Directors’ Report – 2016 Remuneration Report – continued
4. Performance of Brambles & At Risk Remuneration
4.1.1 Actual STI Cash Payable and Forfeited for FY16
As outlined in the Operating & Financial Report on pages 4 to 13, FY16
reflects another year of strong business results.
At Risk Remuneration for executives is entirely dependent upon
performance against KPIs set by the Remuneration Committee.
The following table summarises the components and weighting of KPIs
for STI cash awards for Disclosable Executives:
Non-
Financial
KPIs
Financial KPIs
Segment
BVA/
sales
Group
cash
flow
Segment
cash
flow
Group
PAT
-
20%
20%
-
25%
-
-
20%
Group
BVA
30%
25%
% of
Target
Financials
KPIs
achieved
% of non-
financial
KPIs
achieved
Maximum
STI Cash as
% of base
salary
% of
maximum
STI cash
payable
% of
maximum
STI cash
forfeited
Name
Disclosable Executives
Tom Gorman
122%
Zlatko
Todorcevski
122%
Jean Holley
122%
Peter Mackie
125%
Wolfgang
Orgeldinger
147%
93%
100%
97%
83%
92%
90%
90%
75%
90%
90%
76%
77%
76%
75%
87%
24%
23%
24%
25%
13%
30%
30%
Jason
Rabbino
90%
93%
90%
61%
39%
Nick Smith
122%
87%
75%
74%
26%
Disclosable
Executive
CEO, CFO
Group
Presidents:
Pallets,
RPCs,
Containers
Other
Disclosable
Executives
50%
-
-
20%
-
30%
4.1 STI Key Performance
Disclosable Executives have the opportunity to receive annual STI cash
and share awards based on performance against KPIs. The actual levels
of performance achieved for the Year against the financial KPIs are
summarised in the following table:
KPIs1
Brambles BVA
Brambles PAT
Brambles Cash Flow from
Operations3
Level of performance achieved
during the Year2
Between Target and Maximum
Between Target and Maximum
Achieved Target
Pallets BVA
Between Target and Maximum
Pallets Cash Flow from
Operations3
Achieved Target
Containers Sales
Between Threshold and Target
Containers Cash Flow from
Operations3
IFCO RPCs BVA
IFCO RPCs Cash Flow from
Operations3
Achieved Target
Achieved Maximum
Achieved Target
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. Half of the STI Award
is provided as cash, the other half is deferred into equity for two years
to provide a continuing link to Company performance. The market
value of Brambles shares is used to determine the number of STI
Awards granted.
4.2 LTI Share Awards
Disclosable Executives have the opportunity to receive an annual equity
grant in the form of LTI share awards. The maximum value of LTI awards
to the CEO, CFO and Group Presidents of Pallets and Containers may
not exceed 130% of those executives’ respective base salaries. The
maximum value of LTI awards for the Group President of RPC is 50% of
base salary due to prior contract arrangements. The maximum value of
LTI awards for the other Disclosable Executives is 100% of their
respective base salaries.
In all cases, the market value (face value) of Brambles shares is used to
determine the number of LTI Share Awards granted.
4.2.1 LTI Share Award Performance Conditions
LTI share awards have two sets of performance conditions (TSR and
sales revenue with a BVA hurdle), each with equal weighting. The tables
in 4.2.3 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.
4.2.2 Sales CAGR/BVA LTI Performance Matrix for FY16 to FY18
The table on the next page is the sales revenue CAGR/BVA matrix for
LTI share awards made during the Year. The LTI performance matrix
shown encompasses the entire Brambles Group. 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.
1 Definitions of BVA, PAT, Cash flow from Operations and EBITDA measurements and the methods by which they are calculated are included in the Glossary on pages 85
and 86.
2 Financial targets set for FY16 under Brambles’ incentive plans will not constitute profit forecasts and the Board is conscious that their publication may therefore be
misleading. Accordingly Brambles does not publish in advance the coming year’s financial targets for incentive purposes.
3 "Achieved Target" for BVA, PAT or Sales reflects performance within +/- 1% of Target. STI payments are calculated using the actual performance against Target.
22
Directors’ Report – 2016 Remuneration Report – continued
Vesting %
Sales revenue CAGR4
4%
5%
6%
7%
8%
9%
Cumulative three-year BVA at fixed
30 June 2015 FX rates (US$M)
700
-
20%
40%
60%
80%
100%
850
20%
40%
60%
80%
100%
100%
1,000
40%
60%
80%
100%
100%
100%
The sales revenue CAGR currently 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 5.7% and a BVA outcome of US$1,000 million would provide
vesting of 70%. For LTI share awards granted from FY16 there will also
be a half point vesting scale between the respective BVA hurdles. For
example, a sales revenue CAGR of 7% and a BVA outcome of US$950
million would provide vesting of 90%.
4.2.3 Performance of LTI Share Awards under the 2006 Share Plan
The tables below detail actual performance against the applicable
performance condition for LTI share awards made during the five
financial years indicated.
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 TSR5
Vesting triggered (% of original award):
period to 30 June 2016
FY12
FY13
FY14
Relative TSR
Relative TSR
Relative TSR
1 July 2011
18.0 percentage points
1 July 2012
29.8 percentage points
83.3% LTI TSR Award
84.2% LTI TSR Award
1 July 2013
35.9 percentage points
100.0% LTI TSR Award
The following table provides similar details for awards that have yet to be tested:
Awards made
during
Performance condition
Start of
performance period
Out-performance of
median company’s TSR
(%)
Period to 30 June 2016: vesting if current
performance is maintained until earliest
testing date (% of original award)
FY15
FY16
Relative TSR
Relative TSR
1 July 2014
20.0 percentage points
88.0% LTI TSR awards
1 July 2015
13.4 percentage points
76.7% LTI TSR awards
Level of Vesting of LTI Share Awards based on Sales Revenue CAGR and BVA performance
Awards made
during
FY12
FY13
FY14
Performance condition
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Start of
performance period
1 July 2011
1 July 2012
1 July 2013
Vesting triggered (% of original award):
prior period and period to 30 June 2016
20.0% of LTI sales revenue CAGR/BVA awards
30.0% of LTI sales revenue CAGR/BVA awards
50.0% 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:
Awards made
during
FY15
FY16
Performance condition
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Start of
performance period
1 July 2014
1 July 2015
Period to 30 June 2016 vesting if
current performance is maintained until
earliest testing date (% of original award)
50.0% LTI sales revenue CAGR/BVA awards
60.0% LTI sales revenue CAGR/BVA awards
Total level of Vesting of LTI Share Awards
The combined vesting of the two LTI components for 2014, 2015 and 2016 is shown below:
Awards made
during
FY12
FY13
FY14
Start of
performance period
End of
performance period
Total vesting (TSR and sales
revenue CAGR/BVA combined)
1 July 2011
1 July 2012
1 July 2013
30 June 2014
30 June 2015
30 June 2016
51.6%
57.1%
75.0%
4 Three-year CAGR over base year is used.
5 Percentage out-performance of the median company’s TSR against the S&P/ASX100 Index.
23
Directors’ Report – 2016 Remuneration Report – continued
4.3 Summary of STI and LTI Awards under the 2006 Share Plan
The table below contains details of the STI and LTI awards granted under the 2006 Share Plan in which former or current Disclosable Executives
have unvested and/or unexercised awards that could affect remuneration in this or future reporting periods. The awards in bold relate to targets
which were relevant to vesting during the Year. STI and LTI awards do not have an exercise price and carry no dividend or voting rights. In all cases
the awards are Share Rights, with the size of the award being determined by the percentage of salary and have a maximum life of six years from
grant date. For STI awards the vesting period is two years and in the case of LTI awards the performance/vesting period is three years.
Details pertaining to the MyShare Plan are detailed in section 5.
2006 Share
Plan Awards
STI Awards
TSR LTI Awards
(2015 and prior years)
TSR LTI Awards
(post-2016 grant)
Vesting condition
100% vesting based on continuous employment
40% vesting if TSR is equal to the median ranked company. 100% vesting if 25% above the median ranked
company.
Vesting between minimum and maximum on a straight line basis.
50% vesting if TSR is equal to the median ranked company. 100% vesting if 25% above the median ranked
company.
Vesting between minimum and maximum on a straight line basis.
FY13–FY15 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$848M over three-year period. 100% vesting occurs if
CAGR is 7% and BVA is US$1,248M over three-year period.
FY14–FY16 BVA LTI Award
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.
FY15–FY17 BVA LTI Award
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.
FY16–FY18 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$700M over three-year period. 100% vesting occurs if CAGR is 7%
and BVA is US$1,000M over three-year period.
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. The STI share awards vest on the second
anniversary of their grant date, subject to continued employment to that date. The LTI TSR awards vest on the third anniversary of their grant date,
subject to continued employment to that date and meeting a TSR performance condition. The LTI BVA vest on the third anniversary of their grant
date, subject to continued employment to that date and meeting a sales revenue CAGR and BVA performance condition.
2006 Share
Plan Awards
Grant date
Expiry date
Value at grant
Status/vesting date
LTI TSR/ LTI 13–15 BVA
25 September 2012
25 September 2018
A$6.07 (BVA)/ A$3.41 (TSR)
LTI TSR/ LTI 13–15 BVA
12 October 2012
12 October 2018
STI/ LTI TSR/ LTI 14–16 BVA
25 September 2013
25 September 2019
STI/ LTI TSR/ LTI 15–17 BVA
25 September 2014
25 September 2020
STI/ LTI TSR/ LTI 16–18 BVA
25 September 2015
25 September 2021
A$6.23 (BVA)/
A$3.50 (TSR)
A$8.45 (STI)/
A$8.16 (BVA)/
A$4.19 (TSR)
A$9.15 (STI)/
A$8.83 (BVA)/
A$5.00 (TSR)
A$9.17 (STI)/
A$8.91 (BVA)/
A$4.07 (TSR)
30% (BVA) 84.17% (TSR) vested at
25 September 2015
30% (BVA) 84.17% (TSR) vested at
25 September 2015
STI – 100% vested at
25 September 2015
LTI – 25 September 2016
STI – 25 September 2016
LTI – 25 September 2017
STI – 25 September 2017
LTI – 25 September 2018
24
Directors’ Report – 2016 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. There is
automatic vesting of the Matching Shares on the second anniversary of the first acquisition.
Under the MyShare Plan, Brambles has over 4,000 participants who held 3,153,338 Brambles shares in total at 30 June 2016.
Disclosable Executives are eligible to participate in MyShare. Acquired Shares, Dividend Shares and vested Matching Shares obtained by Disclosable
Executives through MyShare are included in Section 6.6. Matching Shares allocated but not yet vested are shown in Sections 6.5 and 6.7.
During the Year 798,896 Brambles shares were purchased on-market under the MyShare Plan, being the Acquired Shares purchased by participants
in that plan, at an average price of A$11.28 per share. The accounting share value at grant ranged from A$9.17 to A$12.72 based on the monthly
share price value. For further details of the share grant values please refer to the Financial Report.
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
Grant date
Expiry date
Value at grant
Status/vesting date
MyShare
20146
MyShare
20157
MyShare
20168
Each month from 31 March
2014 to 27 February 2015
Each month from 31 March
2015 to 29 February 2016
Each month from 31 March
2016 to 29 July 2016
1 April 2016
Values range per month from A$8.74 to
A$10.45
100% vested on 31 March 2016
1 April 2017
Values range per month from A$9.17 to
A$11.74
31 March 2017
1 April 2018
Values range per month from A$11.55 to
A$12.72
31 March 2018
6. Executive Directors and Disclosable Executives
6.3.1 Contract Terms for Disclosable Executives
6.1 Executive Director Changes
There were no changes to Brambles’ Executive Directors during the
Year.
6.2 Other Disclosable Executive Changes
Name and role(s)
Disclosable Executives
Base salary at
30 June 2015
Base salary at
30 June 2016
T Gorman, CEO
A$2,186,000
A$2,186,000
There were no changes to Other Disclosable Executives during the Year.
Z Todorcevski, CFO
A$1,140,000
A$1,140,000
6.3 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 Mackie, executives remunerated on a base salary
approach receive pension contributions not exceeding 15% of base
salary.
In October 2015, salary reviews across the company were restricted to
reflect the economic circumstances at that time. As a consequence,
some ELT members opted not to take a salary increase for the Year.
The Remuneration Committee has decided to take this into account
when conducting salary reviews for the FY17 year. Across ELT the
average increase was below 1.0%, ranging from 0% to 3.2%. Details of
ELT salaries are shown in table 6.3.1.
J Holley, Chief Information
Officer
P Mackie,9 Group President,
Pallets
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
US$465,000
US$480,000
£460,000
£460,000
€660,000
€660,000
US$695,000
US$710,000
A$675,000
A$675,000
6 The Matching Awards granted under MyShare vest on 31 March 2016, subject to continuing employment and the retention of the associated Acquired Shares. On
vesting they are automatically exercised.
7 The Matching Awards granted under MyShare vest on 31 March 2017, subject to continuing employment and the retention of the associated Acquired Shares. On
vesting they are automatically exercised.
8 The plan "MyShare 2016" ends on 28 February 2017. For FY16 reporting purposes, data is only available up to 29 July 2016. The remaining information will be reported
in next year’s Annual Report. The Matching Awards granted under MyShare vest on 31 March 2018, subject to continuing employment and the retention of the
associated Acquired Shares. On vesting they are automatically exercised.
9 Mr Mackie received employer superannuation (pension) contributions of 21% of base salary for income up to £153,700 and 15% of base salary for income above that
amount.
25
Directors’ Report – 2016 Remuneration Report – continued
6.4 Total Remuneration & Benefits for the Year
The purpose of the table below is to enable shareholders to understand the remuneration received by Disclosable Executives. The table provides a
summary of the actual remuneration, before equity, received or receivable by the Disclosable Executives for the Year, together with prior year
comparatives. The value of equity granted during the Year is based on theoretical accounting values including those relating to unvested share
awards. The values are a statutory disclosure requirement.
(US$’000)
Short-term employee benefits
Post-
employment
benefits
Other
Share-based payment
Cash/
salary/
fees
US$’000
Cash
bonus
US$’000
Non-
monetary
benefits10
US$’000
Super-
annuation
US$’000
Termination/
sign-on
payments/
retirement
benefits
Other11
US
$’000
Total
before
equity
US$’000
Options/
Awards
US$’000
As %
of total
Total
US$’000
Name
Year
EXECUTIVE DIRECTORS
3,359
2,522
43%
5,881
3,576
2,550
42%
6,126
1,567
1,281
45%
2,848
1,696
1,219
42%
2,915
T J Gorman12
FY16
2,031
1,085
FY15
2,174
1,058
CURRENT DISCLOSABLE EXECUTIVES
Z Todorcevski12
FY16
953
FY15
1,074
J K Holley
P S Mackie12
W Orgeldinger12
J D Rabbino
N P Smith12
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
498
483
791
829
730
788
736
720
561
635
576
562
275
232
457
390
571
419
390
367
273
269
Totals
FY16
6,300
3,627
FY15
6,703
3,297
182
289
13
16
-
-
1
1
37
32
-
-
2
2
235
340
-
-
22
25
71
62
44
27
8
8
106
89
25
29
276
240
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61
55
3
19
17
17
2
2
5
5
17
17
(10)
8
861
794
1,295
1,249
1,351
1,252
1,249
1,193
851
943
503
444
967
881
648
376
882
689
619
625
95
10,533
7,422
123
10,703
6,784
37%
1,364
36%
1,238
43%
2,262
41%
2,130
32%
1,999
23%
1,628
41%
2,131
37%
1,882
42%
1,470
40%
1,568
17,955
17,487
10 "Non-monetary benefits" include car parking, motor vehicles, personal/spouse travel, club membership and fringe benefit tax.
11 "Other" includes leave entitlement taken within FY16 and health/salary continuance insurances.
12 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.8301, €1=US1.1946 and £1=1.5734 for FY15 and
A$1=US$0.7270, €1=US1.1058 and £1=1.4719 for FY16.
26
Directors’ Report – 2016 Remuneration Report – continued
6.5 Equity-Based Awards
The following table shows details of equity-based awards made to Disclosable Executives during the Year. STI and LTI share awards were made
under the 2006 Share Plan, the terms and conditions of which are set out in Sections 4.3. Matching Awards were made under MyShare, the terms
and conditions of which are set out in Section 5.
Name
Type of award
Number
Value at grant (US$’000)13
Disclosable Executives
T Gorman
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino
N Smith
STI
LTI
MyShare Matching
Totals
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
STI
LTI
MyShare Matching
Total
130,913
291,816
444
423,173
69,535
152,182
444
222,161
33,987
68,096
500
102,583
55,274
133,290
474
189,038
57,428
53,994
456
111,878
53,729
132,312
419
186,460
33,242
69,312
443
102,997
894
1,993
4
2,891
475
1,039
4
1,518
232
465
4
701
377
910
4
1,291
392
369
4
765
367
903
3
1,273
227
473
4
704
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 4. 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.
27
Directors’ Report – 2016 Remuneration Report – continued
6.6 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
Disclosable Executives
T Gorman15
Z Todorcevski16
J Holley17
P Mackie17
W Orgeldinger17
J Rabbino17
N Smith1518
6.7 Interests in Share Rights19
Balance at the start of the Year
Net changes during the Year
Balance at the end of the Year14
268,260
116,143
87,692
95,724
2,709
715
74,393
388,339
178,808
45,036
68,620
830
67,555
95,009
656,599
294,951
132,728
164,344
3,539
68,270
169,402
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 25 September 2012, 12 October 2012, 25 September 2013, 25 September 2014 and 25 September 2015 under the
2006 Share Plan; and Matching Awards, being conditional rights awarded during the Year under MyShare.
Balance at
the start
of the Year
Granted
during
the Year
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
Number
Number22
Number
Number23
Number
Number
US$’000
Disclosable Executives
T Gorman
Z Todorcevski
J Holley
P Mackie
W Orgeldinger
J Rabbino
N Smith
1,311,214
645,920
227,389
451,059
190,004
381,036
315,915
423,173
222,161
102,583
189,038
111,878
186,460
102,997
(387,895)
(178,364)
(66,999)
(121,820)
(523)
(96,783)
(94,509)
(181,938)
(90,588)
(28,631)
(55,876)
-
(45,979)
(43,244)
1,164,554
599,129
234,342
462,401
301,359
424,734
281,159
-
-
-
-
37,450
-
-
2,660
1,219
459
833
5
662
647
14 On 29 July 2016, the following Disclosable Executives acquired ordinary shares under MyShare, which are held by AET Structured Finance Services Pty Limited: Tom
Gorman (31), Zlatko Todorcevski (31), Jean Holley (28), Peter Mackie (25), Wolfgang Orgeldinger (29), Jason Rabbino (24) and Nick Smith (31).
15 Of which AET Structured Finance Services Pty Limited holds 4,295 shares for Tom Gorman and 99,402 shares for Nick Smith.
16 Of which 500 shares were held by Zlatko Todorcevski and Robert Todorcevski, 291,697 shares were held by Tentwentyfive Pty Ltd and 2,754 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.
19 Of the awards detailed in Section 4.3, the following plans' items are relevant to Disclosable Executives: Tom Gorman, Zlatko Todorcevski, Jean Holley, Peter Mackie,
Jason Rabbino and Nick Smith (STI, LTI TSR, LTI 13–15 BVA, LTI BVA 14–16, LTI 15–17 BVA, LTI 16–18 BVA and MyShare 2014, 2015 and 2016); Wolfgang Orgeldinger
(STI, LTI TSR, LTI BVA 14–16, LTI 15–17 BVA, LTI 16–18 BVA and MyShare 2014, 2015 and 2016). Lapses occurred for Tom Gorman, Zlatko Todorcevski, Jean Holley,
Peter Mackie, Jason Rabbino and Nick Smith (LTI TSR and LTI 13–15 BVA). Exercises occurred for Tom Gorman, Zlatko Todorcevski, Jean Holley, Peter Mackie, Jason
Rabbino and Nick Smith (STI, LTI TSR, LTI 13–15 BVA and MyShare 2014); Wolfgang Orgeldinger (MyShare 2014)
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 29 July 2016, the following Disclosable Executives received Matching Awards under MyShare: Tom Gorman (31), Zlatko Todorcevski (31), Jean Holley (28), Peter
Mackie (25), Wolfgang Orgeldinger (29), Nick Smith (31) and Jason Rabbino (24).
22 During the Year, 3,142,754 equity-settled performance share rights were granted under the 2006 Share Plan, of which 422,729 were granted to Tom Gorman and
221,717 were granted to Zlatko Todorcevski. 798,896 Matching Awards were granted under MyShare during the Year, of which 444 were granted to Tom Gorman and
444 were granted to Zlatko Todorcevski. Approval for these issues of securities to Tom Gorman was obtained under ASX Listing Rule 10.14 at the AGM held on 6
November 2014.”
23 "Lapse" in this context means that the Awards were forfeited due to either the applicable service or performance conditions not being met.
28
Directors’ Report – 2016 Remuneration Report – continued
7.3 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:
Ordinary
shares
Balance at
start of Year
Changes
during Year
Balance at
end of Year
Current Non-Executive Directors
-
C Cross
G El Zoghbi
A G Froggatt24
D P Gosnell25
T Hassan26
S P Johns27
S C H Kay28
B Long29
S Perkins
-
14,890
22,910
15,000
47,500
14,877
8,000
-
-
-
-
-
-
1,278
-
-
-
-
-
14,890
22,910
15,000
48,778
14,877
8,000
-
Pursuant to Brambles’ Securities Trading Policy, Directors (amongst
others) were prevented from being able to acquire shares for most of
FY16 due both to scheduled close periods under that policy and to the
conduct of the project which ultimately resulted in the creation of the
Oil & Gas containers joint venture announced to the market on
5 August 2016. The Non-Executive Directors who do not currently hold
Brambles Shares intend to acquire such shares during the course of
FY17, subject to being able to do so under the Securities Trading Policy.
7. Non-Executive Directors’ Disclosures
7.1 Non-Executive Directors’ Remuneration Policy
The Chairman’s fees are determined by the Remuneration Committee
and the other Non-Executive Directors’ fees are determined by the
Chairman and Executive 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.
All Non-Executive Directors’ fees are set in Australian dollars and paid
in local currencies.
Brambles’ base fees for Non-Executive Directors are set with reference
to the comparator group of companies referred to in Section 2, which is
consistent with Brambles’ policy on executive pay.
In FY15 the Board decided to defer the effective date of their 2015 fee
increase from 1 January 2015 to 1 July 2015. Base fees for the Board
Chairman and other Non-Executive Directors increased by 2% from 1
July 2015. Non-Executive Director fees are detailed below.
The annual review of Non-Executive Directors' fees for 2016 was carried
out during the Year. As a result of the review, revised fees have been
determined for Non-Executive Director and Board Chairman fees.
The revised fees for the Chairman and Non-Executive Directors that
apply from 1 July 2016 are:
-
-
Chairman: A$627,000; and
Non-Executive Directors: A$209,000.
The following travel allowances and Committee membership fees were
not increased during the 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;
Travel allowance per long-haul flight: A$5,000.
The above supplemental Committee fees do not apply to the Board
Chairman.
The next fee review will take effect from 1 July 2017.
7.2 Non-Executive Directors’ Appointment Letters
Non-Executive 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,
available on Brambles’ website, 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.
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 plans.
24 Of which 7,000 shares were held by Christine Joanne Froggatt and 7,890 shares were held by Anthony Grant Froggatt.
25 Held by Charles Stanley & Co Australia in the name of Susan Gosnell.
26 Held by RBC Dexia Custodian on behalf of Tahira Hassan.
27 Of which 28,240 shares were held by Canzak Pty Ltd, and 20,538 shares were held by Caran Pty Limited. Additional shares acquired through participation in DRP.
28 Of which 4,900 were held by Sarah Carolyn Hailes Kay, 5,500 were held by Carolyn Kay ATF Superannuation Fund A/C, and 4,477 were held by Sarah Carolyn Kay and
Simon Swaney ATF Carolyn Kay Superannuation Fund A/C.
29 Of which 4,000 were held by BJ & VG Long Investments Pty Limited ATF BJ Long Super Fund A/C and 4,000 were held by BJ and VG Long Investment Pty Limited.
29
Directors’ Report – 2016 Remuneration Report – continued
7.4 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 the table below 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.
Table 7.4.1: Non-Executive Directors’ 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.
(US$’000)
Name
Short-term employee benefits
Post-employment benefits
Year
Directors’ fees
Superannuation
Other30
Total31
CURRENT NON-EXECUTIVE DIRECTORS
C Cross32
G El Zoghbi32
A G Froggatt32
D Gosnell32
T Hassan32
S P Johns32
S C H Kay32
B J Long32
S Perkins32
Totals
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
158
185
73
-
168
197
158
181
158
185
425
407
148
166
175
193
148
16
1,611
1,530
8
9
3
-
16
19
8
9
8
9
25
29
14
16
16
18
14
2
112
111
-
-
10
-
13
3
3
25
6
33
11
3
0
3
11
-
-
-
54
67
166
194
86
-
197
219
169
215
172
227
461
439
162
185
202
211
162
18
1,777
1,708
30 “Other” includes personal/spouse travel, meals and fringe benefits tax.
31 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.
32 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.8301, €1=US1.1946 and £1=1.5734 for FY15 and
A$1=US$0.7270, €1=US1.1058 and £1=1.4719 for FY16.
30
Directors’ Report – 2016 Remuneration Report – continued
8. Remuneration Governance
8.1 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 Tony Froggatt
(Committee chairman), Stephen Johns, Tahira Hassan and Christine
Cross. 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 and Related
Documents in the Corporate Governance section of Brambles’ website.
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.
8.2 Securities Trading Policy and Incentive Awards
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 4.3 summarise all the incentive plans under which awards to
Disclosable Executives are still to vest or be exercised.
8.3 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.
31
Directors’ Report – Other Information
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 2016 (the Year).
Principal Activities
The principal activities of the Group during the Year were the provision
of supply-chain logistics services, focusing on the provision of
reusable pallets, crates and containers, of which Brambles is a leading
global provider.
Further details of the Group’s activities are set out in Section 1 of the
Operating & Financial Review on page 4.
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 of the results of those operations
are given in the Letter from the Chairman on page 1, the Letter from the
CEO on page 2, the Strategy Scorecard on page 3 and the Operating &
Financial Review from pages 4 to 13.
Information about the financial position of the Group is included in the
Operating & Financial Review and in the Five-Year Financial Performance
Summary on page 84.
Significant Changes in State of Affairs
There were no significant changes to the state of affairs of the Group for
the Year.
Matters since the End of the Financial Year
The Directors are not aware of any matter or circumstance that has arisen
since 30 June 2016 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 except as may be stated in the Letter from the Chairman on
page 1, the Letter from the CEO on page 2 and the Operating & Financial
Review on pages 4 to 13.
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 on page 1, the
Letter from the CEO on page 2, the Strategy Scorecard on page 3 and the
Operating & Financial Review on pages 4 to 13.
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 14.5 Australian
cents per share, which will be 25% franked. The dividend will be paid on
13 October 2016 to shareholders on the register on 8 September 2016.
On 14 April 2016, an interim dividend for the Year was paid, which
was 14.5 Australian cents per share and 25% franked. On 8 October 2015,
a final dividend for the year ended 30 June 2015 was paid, which
was 14 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 14 and 15.
Christine Cross
George El Zoghbi
1 July 2015 to date
1 January 2016 to date
Anthony Grant Froggatt
1 July 2015 to date
Thomas Joseph Gorman
1 July 2015 to date
David Peter Gosnell
Tahira Hassan
Stephen Paul Johns
1 July 2015 to date
1 July 2015 to date
1 July 2015 to date
Sarah Carolyn Hailes Kay
1 July 2015 to date
Brian James Long
Scott Redvers Perkins
1 July 2015 to date
1 July 2015 to date
Secretary
Details of the qualifications and the experience of the Company Secretary
of Brambles Limited are as follows: Robert Nies Gerrard joined Brambles in
2003 as Senior Counsel and was appointed Group Company Secretary in
February 2008. Prior to joining Brambles, he was General Counsel to, and
Company Secretary of, Roc Oil Company Limited; Group Legal Manager,
Cairn Energy plc; General Counsel to, and Company Secretary of,
Command Petroleum Limited; and a solicitor with Allen Allen & Hemsley.
He holds a Masters of Law (LLM) from the University of Sydney and
Bachelor of Science (BSc) and Bachelor of Law (LLB) degrees from the
University of New South Wales. He is a Solicitor of the Supreme Court of
New South Wales.
32
Directors’ Report – Other Information – continued
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’
2016 Sustainability Review which will be available on Brambles’ website in
October 2016. 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
Brambles’ website at www.brambles.com.
The Chief Executive Officer and the Group Presidents of the Pallets, RPCs
and Containers business segments, are responsible for policy
implementation and safety performance.
Health and safety performance indicators measure compliance with
corporate objectives and milestones, allow assessment of progress and
comparison with industry benchmarks and provide incentives for
improvement. Reporting on health and safety performance will be shown
in the 2016 Sustainability Review, which will be available on Brambles’
website in October 2016.
Employees
The 2016 Sustainability Review, available on Brambles’ website in October
2016, will contain details of Brambles’ performance as an employer.
Indemnities
Under its constitution, to the extent permitted by law, Brambles Limited
indemnifies each person who is, or has been, a Director or Secretary of
Brambles Limited against any liability which results from facts or
circumstances relating to the person serving or having served in the
capacity of Director, Secretary, other officer or employee of Brambles
Limited or any of its subsidiaries, other than:
-
in respect of a liability other than for legal costs:
-
-
-
a liability owed to Brambles Limited or a related body
corporate;
a liability for a pecuniary penalty order under section 1317G of
the Act or a compensation order under section 1317H of the
Act; or
a liability that is owed to someone (other than Brambles Limited
or a related body corporate) and did not arise out of conduct in
good faith; and
-
in respect of a liability for legal costs:
-
-
-
-
in defending or resisting criminal proceedings in which the
person is found to have a liability for which they could not have
been indemnified in respect of a liability owed to Brambles
Limited or a related body corporate;
in defending or resisting criminal proceedings in which the
person is found guilty. This does not apply to costs incurred in
responding to actions brought by ASIC or a liquidator as part of
an investigation before commencing proceedings for a Court
order;
in defending or resisting proceedings brought by ASIC or a
liquidator for a Court order if the grounds for making the order
are found by the Court to be established; or
in connection with proceedings for relief to any persons under
the Act in which the Court denies the relief.
As allowed by its constitution, Brambles Limited has provided indemnities
to its Directors and to Directors, Secretaries or other Statutory Officers of
its subsidiaries (Beneficiaries) against all loss, cost and expenses
(collectively Loss) caused by or arising from any act or omission by the
relevant person in performance of that person’s role as a Director,
Secretary or Statutory Officer.
The indemnity given by Brambles Limited excludes the following matters:
-
-
-
-
-
-
-
any Loss to the extent caused by or arising from an act or omission of
the Beneficiary prior to the effective date of the indemnity;
any Loss to the extent indemnity in respect of that Loss is prohibited
under the Act (or any other law);
any Loss to the extent it arises from private or personal acts or
omissions of the Beneficiary;
any Loss comprising the reimbursement of normal day-to-day
expenses such as travelling expenses;
any Loss to the extent the Beneficiary failed to act reasonably to
mitigate the Loss;
any Loss to the extent it is caused by or arises from acts or omissions
of the Beneficiary after the date the indemnity is revoked by
Brambles Limited in accordance with the terms of the indemnity; and
any Loss to the extent it is caused by or arises from any breach by the
Beneficiary of the terms of the indemnity.
Insurance policies are in place to cover Directors and executive officers,
however, the terms of the policies prohibit disclosure of the details of the
insurance cover and the premiums paid.
33
Directors’ Report – Other Information – continued
Directors’ Meetings
Details of the Board committee memberships are given in the Directors’ biographies on pages 14 and 15. The following table shows the actual Board and
committee meetings held during the Year and the number attended by each Director or committee member.
Regular
Special Committees
Audit Committee
meetings
Remuneration
Committee meetings
Nominations
Committee meetings
Board meetings
Directors
C Cross
G El Zoghbi
A G Froggatt
T J Gorman
D P Gosnell
T Hassan
S P Johns
S C H Kay
B J Long
S R Perkins
(a)
12
6
12
12
12
10
12
12
12
12
(b)
12
6
12
12
12
12
12
12
12
12
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
-
-
2
4
-
-
5
4
4
3
-
-
2
4
-
-
5
4
4
3
-
-
-
-
6
-
-
6
6
6
-
-
-
-
6
-
-
6
6
6
5
2
5
-
-
4
5
-
-
-
5
2
5
-
-
5
5
-
-
-
-
-
7
-
7
-
7
-
-
-
-
-
7
-
7
-
7
-
-
-
a)
b)
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.
The number of meetings held while the Director was a member of the Board or relevant committee which the Director was eligible to attend.
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 2013.
Director
C Cross
Listed company
Next plc
Sonae Group plc
Kathmandu Holdings Limited
Woolworths Limited
Coca-Cola European Partners plc
Hilton Food Group plc
G El Zoghbi
None
A G Froggatt
Billabong International Limited
Coca-Cola Amatil Limited
T J Gorman
None
D P Gosnell
Coats plc
T Hassan
S P Johns
S C H Kay
Coats Group plc
Recall Holdings Limited
None
Commonwealth Bank of Australia
Scentre Group Limited
B J Long
Commonwealth Bank of Australia
Ten Network Holdings Limited
S R Perkins
Woolworths Limited
Origin Energy Limited
Period directorship held
2005 to May 2014
2009 to current
2012 to current
2012 to November 2015
May 2016 to current
March 2016 to current
-
2008 to 2013
2010 to current
-
2015 to current
2015 to current
2013 to May 2016
-
2003 to March 2015
February 2016 to current
2010 to current
2010 to July 2016
2014 to current
2015 to current
34
Directors’ Report – Other Information – continued
Interests in Securities
Pages 28 and 29 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 22
and 23 of the Financial Report on pages 65 and 66.
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:
-
-
-
53,069 grants under the 2016 MyShare offer;
34,409 exercises resulting in the issue of fully paid ordinary shares:
6,515 under the 2015 MyShare offer; 2,687 under the 2016 MyShare
offer; 25,207 under the 2006 PSP STI Awards; and
356,655 lapses: 8,554 under the 2015 MyShare offer; 5,064 under the
2016 MyShare offer; 15,524 under the 2006 PSP STI Awards; 8,572
under the 2006 PSP TSR LTI Awards; 310,590 under the 2006 PSP
FY14-FY16 BVI LTI Award; 2,418 under the 2006 PSP FY15-FY17 BVA
LTI Award; 5,933 under the 2006 PSP FY16-FY18 BVA LTI Award.
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 on page 5 in the Operating & Financial Review and in
Principle 7 of Brambles 2016 Corporate Governance Statement.
Treasury Policies
A discussion of the implementation of treasury policies and mitigation of
treasury risks can be found on pages 7 and 8 in the Operating & Financial
Review.
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, which
activities comprise:
-
-
-
-
-
Continuously testing its pallets, crates and containers 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
Reviewing market segments and geographies where pooling
solutions could deliver both shareholder and customer value.
During the Year, Brambles launched BXB Digital, which is based in Silicon
Valley, Northern California and will advance its asset tracking capabilities
and the development of data-driven digital solutions.
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.
Corporate Governance Statement
Brambles is committed to observing the corporate governance
requirements applicable to publicly listed companies in Australia. The
Board has adopted a corporate governance framework designed to enable
Brambles to meet is legal, regulatory and governance requirements.
During the Year, the Board believes Brambles met or exceeded all the
requirements of the Australian Securities Exchange Corporate Governance
Council Corporate Governance Principles and Recommendations, Third
Edition. Brambles' 2016 Corporate Governance Statement is on Brambles
website at www.brambles.com/corporate-governance-overview.
35 Directors’ Report – Other Information – continued
Non-Audit Services and Auditor Independence
The amount of US$0.23 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 compliance projects 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 5 August 2016 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.
Auditor's Independence Declaration
A copy of the auditor’s independence declaration as required under
section 307C of the Act is set out on page 83.
Annual General Meeting
The AGM will be held at 2.00pm (AEDT) on 16 November 2016 at
The Wesley Theatre, Wesley Conference Centre, 220 Pitt Street, Sydney,
NSW 2000.
This Directors’ Report is made in accordance with a resolution of
the Board.
Stephen Johns
Tom Gorman
Chairman
18 August 2016
Chief Executive Officer
36
Shareholder Information
Directors
S P Johns
(Non-Executive Chairman)
C Cross
(Non-Executive Director)
G El Zoghbi
(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 C H Kay
(Non-Executive Director)
B J Long
(Non-Executive Director)
S R Perkins
(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
is 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 not participating in the Dividend Reinvestment Plan 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 2016 AGM will be held at 2.00pm (AEDT)
on 16 November 2016 at The Wesley Theatre, Wesley Conference Centre,
220 Pitt Street, Sydney, New South Wales 2000.
Financial Calendar
Final Dividend 2016
Ex-dividend date – Wednesday, 7 September 2016
Record date – Thursday, 8 September 2016
Payment date – Thursday, 13 October 2016
2017 (Provisional)
Announcement of interim results – mid February 2017
Interim dividend – mid April 2017
Announcement of final results – mid August 2017
Final dividend – mid October 2017
AGM – November 2017
Analysis of Holders of Equity Securities as at 29 July 2016
Substantial Shareholders
Brambles has been notified of the following substantial shareholdings:
Holder
Commonwealth Bank of Australia
MFS Investment Management on behalf of Sun Life Financial Inc.
Number of ordinary
shares
152,968,834
125,699,812
% of issued ordinary
share capital1
9.64%
8.02%
1 Percentages are as disclosed in substantial holding notices given to Brambles Limited.
37
Shareholder Information - continued
Number of Ordinary Shares on Issue and Distribution of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holders
31,057
29,971
5,181
3,027
126
69,362
Shares
14,864,168
69,166,119
36,302,172
62,174,697
1,403,517,427
1,586,024,583
The number of members holding less than a marketable parcel of 38 ordinary shares (based on a market price of A$13.45 on 29 July 2016) is 1,017 and
they hold a total of 9,608 ordinary shares. The voting rights of ordinary shares are described below.
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 below.
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
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
AMP LIFE LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
AET SFS PTY LTD
AUSTRALIAN UNITED INVESTMENT COMPANY LIMITED
SHARE DIRECT NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
AET SFS PTY LTD
IOOF INVESTMENT MANAGEMENT LIMITED
FORSYTH BARR CUSTODIANS LTD
Holders
3,072
33
25
90
14
3,234
Share rights
931,275
112,698
179,407
2,689,354
4,066,047
7,978,781
Number of ordinary
shares
626,976,684
% of issued ordinary
share capital
39.53%
298,617,156
194,942,205
101,646,843
41,312,619
17,545,223
17,010,100
13,323,996
11,702,170
7,939,372
6,448,223
5,501,609
3,098,972
2,100,000
2,042,392
2,032,381
1,877,512
1,835,403
1,778,749
1,748,819
18.83%
12.29%
6.41%
2.60%
1.11%
1.07%
0.84%
0.74%
0.50%
0.41%
0.35%
0.20%
0.13%
0.13%
0.13%
0.12%
0.12%
0.11%
0.11%
Percentage of total holdings of 20 largest holders
1,359,480,428
85.72%
Voting Rights: Ordinary Shares
Brambles Limited’s constitution provides that each member entitled to attend and vote may do so in person or by proxy, by attorney or, where the
member is a body corporate, by representative. The Directors may also determine that at any general meeting, a member who is entitled to attend and
vote on a resolution at that meeting is entitled to a direct vote in relation to that resolution. The Directors have prescribed rules to govern direct voting
which are available at www.brambles.com.
On a show of hands, every member present in person, by proxy, by attorney or, where the member is a body corporate, by representative and having the
right to vote on a resolution has one vote. The Directors have determined that members who submit a direct vote will be excluded on a vote by a show of
hands. On a poll, every member present in person, by proxy, by attorney or, where the member is a body corporate, by representative and having the right
to vote on the resolution has one vote for each ordinary share held. The Directors have determined that votes cast by members who submit a direct vote
will be included on a vote by a poll, being one vote for each ordinary share held.
Voting Rights: Share Rights
Performance share rights over ordinary shares and MyShare Matching Awards do not carry any voting rights.
38
Financial Report
for the year ended 30 June 2016
INDEX
PAGE
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in equity
Notes to the financial statements
1 Basis of preparation
2 Significant accounting policies
3 Critical accounting estimates and judgements
4 Segment information
5 Operating expenses – continuing operations
6 Significant Items – continuing operations
7 Net finance costs – continuing operations
8 Income tax
9 Earnings per share
10 Dividends
11 Discontinued operations
12 Business combinations
13 Trade and other receivables
14 Inventories
15 Other assets
16 Property, plant and equipment
17 Goodwill and intangible assets
18 Trade and other payables
19 Provisions
20 Borrowings
21 Retirement benefit obligations
22 Contributed equity
23 Share-based payments
24 Reserves and retained earnings
25 Financial risk management
26 Cash flow statement – additional information
27 Commitments
28 Contingencies
29 Auditor’s remuneration
30 Key Management Personnel
31 Related party information
32 Events after balance sheet date
33 Net assets per share
34 Parent entity financial information
Directors’ declaration
Independent auditor’s report
Auditor’s independence declaration
40
41
42
43
44
45
45
50
51
53
53
54
54
57
58
59
59
59
60
60
61
62
64
64
64
65
65
66
67
68
73
74
75
76
76
77
77
78
78
80
81
83
39 Consolidated Income Statement
for the year ended 30 June 2016
Continuing operations
Sales revenue
Other income
Operating expenses
Share of results of joint ventures and associates
Operating profit
Finance revenue
Finance costs
Net finance costs
Profit before tax
Tax expense
Profit from continuing operations
Profit/(loss) from discontinued operations
Profit for the year attributable to members of the parent entity
Earnings per share (US cents)
Total
- basic
- diluted
Continuing operations
- basic
- diluted
Note
2016
US$M
2015
US$M
4
5
7
8
11
9
5,535.4
90.4
5,440.5
114.7
(4,710.7)
(4,614.2)
-
915.1
17.9
(131.9)
(114.0)
801.1
(243.7)
557.4
30.3
587.7
37.3
37.1
35.3
35.2
0.8
941.8
13.8
(125.7)
(111.9)
829.9
(242.3)
587.6
(3.2)
584.4
37.3
37.2
37.5
37.4
The consolidated income statement should be read in conjunction with the accompanying notes.
40 Consolidated Statement of Comprehensive Income
for the year ended 30 June 2016
Profit for the year
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial losses on defined benefit pension plans
Income tax on items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign subsidiaries
Other comprehensive loss for the year
Total comprehensive income for the year attributable to members of the parent entity
Note
8A
24
2016
US$M
587.7
(3.6)
0.8
(2.8)
(90.2)
(90.2)
(93.0)
494.7
2015
US$M
584.4
(1.0)
0.3
(0.7)
(350.0)
(350.0)
(350.7)
233.7
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
41 Consolidated Balance Sheet
as at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Investments
Property, plant and equipment
Goodwill and intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Retirement benefit obligations
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Note
2016
US$M
2015
US$M
26
13
14
15
16
17
8C
15
18
20
19
20
19
21
8C
18
22
24
24
156.1
1,150.0
86.2
77.6
166.2
1,044.6
81.3
59.0
1,469.9
1,351.1
-
4,732.3
1,635.2
36.0
22.9
6,426.4
7,896.3
5.9
4,424.7
1,751.0
41.9
20.0
6,243.5
7,594.6
1,268.4
1,285.8
201.7
74.4
114.3
127.5
63.2
103.0
1,658.8
1,579.5
2,576.2
2,727.6
27.7
47.5
627.0
4.0
3,282.4
4,941.2
2,955.1
6,173.3
(7,191.5)
3,973.3
2,955.1
19.2
55.0
564.3
7.9
3,374.0
4,953.5
2,641.1
6,027.4
(7,101.8)
3,715.5
2,641.1
42 Consolidated Cash Flow Statement
for the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Interest received
Interest paid
Income taxes paid on operating activities
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Proceeds from disposal of businesses
Acquisition of subsidiaries, net of cash acquired
Loan outflows with associates
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Net outflow from hedge instruments
Proceeds from issues of ordinary shares
Dividends paid, net of Dividend Reinvestment Plan1
Net cash (outflow)/inflow from financing activities
Net decrease in cash and cash equivalents
Cash and deposits, net of overdrafts, at beginning of the year
Effect of exchange rate changes
Cash and deposits, net of overdrafts, at end of the year
26A
The consolidated cash flow statement should be read in conjunction with the accompanying notes.
1 The Dividend Reinvestment Plan was reactivated in FY16 (refer to Note 10).
Note
2016
US$M
2015
US$M
6,118.3
(4,659.6)
1,458.7
1.6
(113.0)
(180.4)
6,128.3
(4,532.7)
1,595.6
1.7
(107.5)
(166.6)
26B
1,166.9
1,323.2
(1,080.7)
(983.6)
103.6
(14.6)
100.0
(27.5)
(3.4)
78.4
(13.8)
-
(497.8)
-
(922.6)
(1,416.8)
1,617.2
(1,674.7)
1,578.3
(1,120.5)
(8.2)
1.0
(205.1)
(269.8)
(25.5)
156.7
(16.0)
115.2
(38.5)
-
(359.3)
60.0
(33.6)
221.8
(31.5)
156.7
43 Consolidated Statement of Changes in Equity
for the year ended 30 June 2016
Year ended 30 June 2015
Opening balance
Profit for the year
Other comprehensive income
Total comprehensive income
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
Transactions with owners in their capacity as owners:
- dividends declared
- issues of ordinary shares, net of transaction costs
Closing balance
Year ended 30 June 2016
Opening balance
Profit for the year
Other comprehensive loss
Total comprehensive income
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
Transactions with owners in their capacity as owners:
- dividends declared
- issues of ordinary shares, net of transaction costs
- transfers between reserves
Closing balance
Contributed
Note
equity
US$M
Reserves1
US$M
Retained
earnings
US$M
Total
US$M
5,993.4
(6,742.5)
3,500.1
2,751.0
(368.3)
(368.3)
-
34.0
6,027.4
(7,101.8)
3,715.5
2,641.1
6,027.4
(7,101.8)
3,715.5
2,641.1
-
587.7
-
-
-
-
-
-
-
34.0
-
-
-
-
-
-
-
145.9
-
584.4
(350.0)
(0.7)
(350.0)
583.7
-
-
-
(2.8)
584.9
-
-
-
21.8
(34.0)
2.9
-
-
(90.2)
(90.2)
23.6
(20.1)
2.2
-
-
584.4
(350.7)
233.7
21.8
(34.0)
2.9
587.7
(93.0)
494.7
23.6
(20.1)
2.2
(332.3)
(332.3)
-
5.2
145.9
-
-
(5.2)
6,173.3
(7,191.5)
3,973.3
2,955.1
24
24
22
24
24
22
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1 Refer Note 24 for further information on reserves.
44 Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2016
Note 1. Basis of Preparation
These financial statements present the consolidated results of Brambles
Limited (ACN 118 896 021) (Company) and its subsidiaries (Brambles or
the Group) for the year ended 30 June 2016. These financial statements
have been authorised for issue in accordance with a resolution of the
Directors on 18 August 2016.
The financial statements comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). This general purpose financial report has been prepared in
accordance with Australian Accounting Standards (AAS), other
authoritative pronouncements of the Australian Accounting Standards
Board (AASB) and the requirements of the Corporations Act 2001 (Act).
The financial statements are drawn up in accordance with the conventions
of historical cost accounting, except for derivative financial instruments
and financial assets at fair value through profit or loss.
References to 2016 and 2015 are to the financial years ended 30 June 2016
and 30 June 2015 respectively.
LeanLogistics was divested effective 31 May 2016. LeanLogistics’
comprehensive income and cash flows for the period up to the date of
divestment has been presented within discontinued operations. Prior year
comparatives for the income statement have been restated. LeanLogistics’
assets and liabilities are excluded from the consolidated balance sheet at
30 June 2016.
Note 2. Significant Accounting Policies
The consolidated financial statements and all comparatives have been
prepared using the accounting policies set out below which are consistent
with the prior year.
Changes in Accounting Policies
There have not been any significant changes to Brambles’ accounting
policies during the current period.
Basis of Consolidation
The consolidated financial statements of Brambles include the assets,
liabilities and results of Brambles Limited and all its legal subsidiaries. The
consolidation process eliminates all inter-entity accounts and transactions.
Any financial statements of overseas subsidiaries that have been prepared
in accordance with overseas accounting practices have been adjusted to
comply with AAS before inclusion in the consolidation process. The
financial statements of all material subsidiaries are prepared for the same
reporting period.
Business Combinations
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to the income statement in the period
of acquisition. The interest of non-controlling shareholders is stated at the
non-controlling proportion of the fair values of the assets and liabilities
recognised. Any acquisition-related transaction costs are expensed in the
period of acquisition.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Investment in Controlled Entities
Shares in controlled entities, as recorded in the parent entity, are recorded
at cost, less provision for impairment.
Investment in Joint Ventures and Associates
Associates are those entities in which Brambles has significant influence,
but not control or joint control, over the financial and operating policies. A
joint venture is an arrangement in which Brambles has joint control,
whereby Brambles has rights to the net assets of the arrangement rather
than rights to its assets and obligations for its liabilities.
Investments in joint venture and associate entities are accounted for using
the equity method in the consolidated financial statements, and include
any goodwill arising on acquisition. Under this method, Brambles’ share of
the post-acquisition profits or losses of the joint venture and associate is
recognised in the income statement and its share of post-acquisition
movements in reserves is recognised in consolidated reserves. The
cumulative post-acquisition movements are adjusted against the carrying
amount of the investment.
If Brambles’ share of losses in a joint venture or associate equals or
exceeds its interest in the joint venture or associate, Brambles does not
recognise further losses unless it has incurred obligations or made
payments on behalf of the joint venture or associate.
Loans to equity accounted joint ventures or associates under formal loan
agreements that are long term in nature are included as investments.
Where there has been a change recognised directly in the joint venture’s
equity, Brambles recognises its share of any changes as a change in equity.
Discontinued Operations
The trading results for business operations disposed during the year or
classified as held for sale are disclosed separately as discontinued
operations in the income statement. The amount disclosed includes any
related impairment losses recognised and any gains or losses arising on
disposal.
Presentation Currency
The consolidated and summarised parent entity financial statements are
presented in US dollars.
Brambles uses the US dollar as its presentation currency because:
-
-
a significant portion of Brambles’ activity is denominated in US
dollars; and
the US dollar is widely understood by Australian, UK and international
investors and analysts.
Foreign Currency
Items included in the financial statements of each of Brambles’ entities are
measured using the functional currency of each entity.
Foreign currency transactions are translated into the functional currency of
each entity using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation at year-end rates
of monetary assets and liabilities denominated in foreign currencies, are
recognised in the income statement, except where deferred in equity as
qualifying cash flow hedges, qualifying net investment hedges or are
attributable to part of the net investment in foreign subsidiaries and joint
ventures.
Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at
the date when the fair value was determined. Gains and losses arising on
retranslation are recognised directly in equity.
The results and cash flows of Brambles Limited, subsidiaries and joint
ventures are translated into US dollars using the average exchange rates
for the period. Where this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, the
exchange rate on the transaction date is used. Assets and liabilities of
Brambles Limited, subsidiaries and joint ventures are translated into US
dollars at the exchange rate ruling at the balance sheet date. The share
capital of Brambles Limited is translated into US dollars at historical rates.
All resulting exchange differences arising on the translation of Brambles’
overseas and Australian entities are recognised as a separate component
of equity.
The financial statements of foreign subsidiaries and joint ventures that
report in the currency of a hyperinflationary economy are restated in terms
of the measuring unit current at the balance sheet date before they are
translated into US dollars.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
45
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
The principal exchange rates affecting Brambles were:
Average
2016
A$:US$
0.7270
€:US$
1.1058
£:US$
1.4719
2015
0.8301
1.1946
1.5734
Year end 30 June 2016
0.7467
1.1123
1.3453
30 June 2015
0.7673
1.1220
1.5729
Actuarial gains and losses arising from differences between expected and
actual returns, and the effect of changes in actuarial assumptions are
recognised in full through the statement of comprehensive income in the
period in which they arise.
The costs of other post-employment liabilities are calculated in a similar
way to defined benefit pension schemes and spread over the period
during which benefit is expected to be derived from the employees’
services, in accordance with the advice of qualified actuaries.
Executive and Employee Share-Based Compensation Plans
Incentives in the form of share-based compensation benefits are provided
to executives and employees under performance share and MyShare
employee share plans approved by shareholders.
Performance share awards are fair valued by qualified actuaries at their
grant dates in accordance with the requirements of AASB 2: Share-based
Payments, using a binomial model. The cost of equity-settled transactions
is recognised, together with a corresponding increase in equity, on a
straight-line basis over the period in which the performance conditions are
fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (vesting date).
Executives and employees in certain jurisdictions are provided cash
incentives calculated by reference to the awards under the share-based
compensation schemes (phantom shares). These phantom shares are fair
valued on initial grant and at each subsequent reporting date.
The cost of such phantom shares is charged to the income statement over
the relevant vesting periods, with a corresponding increase in provisions.
The fair value calculation of performance shares granted excludes the
impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that
are expected to become exercisable. At each balance sheet date, Brambles
reviews its estimate of the number of performance shares that are
expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate.
Revenue
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to Brambles and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or
receivable. Amounts disclosed as revenue are net of duties and taxes paid
(Goods and Services Tax and local equivalents).
Revenue for services is recognised when invoicing the customer following
the provision of the service and/or under the terms of agreed contracts in
accordance with agreed contractual terms in the period in which the
service is provided.
Other Income
Other income includes net gains on disposal of property, plant and
equipment in the ordinary course of business, which are recognised when
control of the property has passed to the buyer. Amounts arising from
compensation for irrecoverable pooling equipment are recognised only
when it is probable that they will be received.
Dividend Revenue
Dividend revenue is recognised when Brambles’ right to receive the
payment is established. Dividends received from investments in
subsidiaries and joint ventures are recognised as revenue, even if they are
paid out of pre-acquisition profits.
Finance Revenue
Finance revenue is recognised as the interest accrues (using the effective
interest method, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial instrument) to the
net carrying amount of the financial asset.
Borrowing Costs
Borrowing costs are recognised as expenses in the year in which they are
incurred, except where they are included in the cost of qualifying assets.
The capitalisation rate used to determine the amount of borrowing costs
to be capitalised is the weighted average interest rate applicable to the
entity’s outstanding borrowings during the year. No borrowing costs were
capitalised in 2016 or 2015.
Pensions and Other Post-Employment Benefits
Payments to defined contribution pension schemes are charged as an
expense as they fall due. Payments made to state-managed retirement
benefit schemes are dealt with as payments to defined contribution
schemes where Brambles’ obligations under the schemes are equivalent to
those arising in a defined contribution pension scheme.
A liability in respect of defined benefit pension schemes is recognised
in the balance sheet, measured as the present value of the defined benefit
obligation at the reporting date less the fair value of the pension scheme’s
assets at that date. Pension obligations are measured as the present value
of estimated future cash flows discounted at rates reflecting the yields of
high quality corporate bonds. The costs of providing pensions under
defined benefit schemes are calculated using the projected unit credit
method, with actuarial valuations being carried out at each balance sheet
date. Past service cost is recognised immediately to the extent that the
benefits are already vested.
46
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Assets
Cash and Cash Equivalents
For purposes of the cash flow statement, cash and cash equivalents include
deposits at call with financial institutions and other highly liquid
investments which are readily convertible to cash on hand and are subject
to an insignificant risk of changes in value, net of outstanding bank
overdrafts. Bank overdrafts are presented within borrowings in the balance
sheet.
Receivables
Receivables due within one year do not carry any interest and
are recognised at amounts receivable less an allowance for any
uncollectible amounts. Trade receivables are recognised when services are
provided and settlement is expected within normal credit terms.
Bad debts are written-off when identified. A provision for doubtful
receivables is established when there is a level of uncertainty as to the
full recoverability of the receivable, based on objective evidence.
Significant financial difficulties of the debtor, probability that the debtor
will enter liquidation, receivership or bankruptcy, and default or significant
delay in payment are considered indicators that the trade receivable is
doubtful.
The amount of the provision is measured as the difference between the
carrying amount of the trade receivables and the estimated future cash
flows expected to be received from the relevant debtors. When a trade
receivable for which a provision had been recognised becomes
uncollectible in a subsequent period, it is written off against the provision
account. Subsequent recoveries of amounts previously written off are
credited against other expenses in the income statement.
Inventories
Inventories on hand are valued at the lower of cost and net realisable value
and, where appropriate, provision is made for possible obsolescence. Work
in progress, which represents partly-completed work undertaken at pre-
arranged rates but not invoiced at the balance sheet date, is recorded at
the lower of cost or net realisable value.
Cost is determined on a first-in, first-out basis and, where relevant,
includes an appropriate portion of overhead expenditure. Net realisable
value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and costs to make the sale.
Recoverable Amount of Non-Current Assets
At each reporting date, Brambles assesses whether there is any indication
that an asset, or cash generating unit to which the asset belongs, may be
impaired. Where an indicator of impairment exists, Brambles makes a
formal estimate of the recoverable amount. The recoverable amount of an
asset is the greater of its fair value less costs to sell and its value in use.
Where the carrying value of an asset exceeds its recoverable amount, the
asset is considered to be impaired and is written down to its recoverable
amount. The impairment loss is recognised in the income statement in the
reporting period in which the write-down occurs.
The expected net cash flows included in determining recoverable amounts
of non-current assets are discounted to their present values using a
market-related risk adjusted discount rate.
Property, Plant and Equipment
Property, plant and equipment (PPE) is stated at cost, net of depreciation
and any impairment, except land which is shown at cost less impairment.
Cost includes expenditure that is directly attributable to the acquisition of
assets, and, where applicable, an initial estimate of the cost of dismantling
and removing the item and restoring the site on which it is located.
Subsequent expenditure is capitalised only when it is probable that future
economic benefits associated with the expenditure will flow to Brambles.
Repairs and maintenance are expensed in the income statement in the
period they are incurred.
Depreciation is charged in the financial statements so as to write-off the
cost of all PPE, other than freehold land, to their residual value on a
straight-line or reducing balance basis over their expected useful lives to
Brambles. Residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. The expected useful lives of PPE
are generally:
-
-
-
buildings: 50 years
pooling equipment: 5–10 years
other plant and equipment (owned and leased): 3–20 years
The cost of improvements to leasehold properties is amortised over
the unexpired portion of the lease, or the estimated useful life of the
improvement to Brambles, whichever is the shorter.
Provision is made for irrecoverable pooling equipment based on
experience in each market. The provision is presented within accumulated
depreciation.
The carrying values of PPE are reviewed for impairment when
circumstances indicate their carrying values may not be recoverable. Assets
are assessed within the cash generating unit to which they belong. Any
impairment losses are recognised in the income statement.
The recoverable amount of PPE is the greater of its fair value less costs to
sell and its value in use. Value in use is determined as estimated future
cash flows discounted to their present value using a pre-tax discount rate
reflecting current market assessments of the time value of money and the
risk specific to the asset.
PPE is derecognised upon disposal or when no future economic benefits
are expected to arise from continued use of the asset. Any net gain or loss
arising on derecognition of the asset is included in the income statement
and presented within other income in the period in which the asset is
derecognised.
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is
not amortised.
Goodwill represents the excess of the cost of an acquisition over the fair
value of Brambles’ share of the net identifiable assets of the acquired
subsidiary or joint venture at the date of acquisition. Goodwill on
acquisitions of subsidiaries is included in intangible assets. Goodwill on
acquisitions of joint ventures is included in investments in joint ventures.
Upon acquisition, any goodwill arising is allocated to each cash generating
unit expected to benefit from the acquisition. Goodwill is tested annually
for impairment, or more frequently if events or changes in circumstances
indicate that it might be impaired. An impairment loss is recognised when
the recoverable amount of the cash generating unit is less than its carrying
amount.
On disposal of an operation, goodwill associated with the disposed
operation is included in the carrying amount of the operation when
determining the gain or loss on disposal.
Intangible Assets
Intangible assets acquired are capitalised at cost, unless acquired as part of
a business combination in which case they are capitalised at fair value as at
the date of acquisition. Following initial recognition, intangible assets are
carried at cost less provisions for amortisation and impairment.
47
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
The costs of acquiring computer software for internal use are capitalised as
intangible non-current assets where it is used to support a significant
business system and the expenditure leads to the creation of an asset.
Dividends
A provision for dividends is only recognised where the dividends have
been declared prior to the reporting date.
Useful lives have been established for all non-goodwill intangible assets.
Amortisation charges are expensed in the income statement on a straight-
line basis over those useful lives. Estimated useful lives are reviewed
annually.
The expected useful lives of intangible assets are generally:
-
-
customer lists and relationships: 3–20 years
computer software: 3–10 years
There are no non-goodwill intangible assets with indefinite lives.
Intangible assets are tested for impairment where an indicator of
impairment exists, either individually or at the cash generating unit level.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the income statement
when the asset is derecognised.
Liabilities
Payables
Trade and other creditors represent liabilities for goods and services
provided to Brambles prior to the end of the financial year which remain
unpaid at the reporting date. The amounts are unsecured and are paid
within normal credit terms.
Non-current payables are discounted to present value using the effective
interest method.
Provisions
Provisions for liabilities are made on the basis that, due to a past event, the
business has a constructive or legal obligation to transfer economic
benefits that are of uncertain timing or amount. Provisions are measured
at the present value of management’s best estimate at the balance sheet
date of the expenditure required to settle the obligation. The discount rate
used is a pre-tax rate that reflects current market assessments of the time
value of money and the risks appropriate to the liability.
Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost in the income statement.
Interest-Bearing Liabilities
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the borrowing proceeds (net of transaction costs) and
the redemption amount is recognised in the income statement over the
period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless Brambles has an
unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
Employee Entitlements
Employee entitlements are provided by Brambles in accordance with the
legal and social requirements of the country of employment. Principal
entitlements are for annual leave, sick leave, long service leave and
contract entitlements. Annual leave and sick leave entitlements are
presented within trade and other payables.
Liabilities for annual leave, as well as those employee entitlements which
are expected to be settled within one year, are measured at the amounts
expected to be paid when they are settled. All other employee entitlement
liabilities are measured at the estimated present value of the future cash
outflows to be made in respect of services provided by employees up to
the reporting date.
Employee entitlements are classified as current liabilities unless Brambles
has an unconditional right to defer settlement of the liability for at least 12
months after the balance sheet date.
Leases
Leases are classified at their inception as either operating or finance leases
based on the economic substance of the agreement so as to reflect the
risks and benefits incidental to ownership.
Operating leases
The minimum lease payments under operating leases, where the lessor
effectively retains substantially all of the risks and benefits of ownership of
the leased item, are recognised as an expense on a straight-line basis over
the term of the lease.
Finance leases
Finance leases, which effectively transfer substantially all of the risks and
benefits incidental to ownership of the leased item to Brambles, are
capitalised at the inception of the lease at the fair value of the leased asset
or, if lower, present value of the minimum lease payments, and disclosed
as property, plant and equipment held under lease. A lease liability of
equal value is also recognised.
Lease payments are allocated between finance charges and a reduction of
the lease liability so as to achieve a constant period rate of interest on the
lease liability outstanding each period. The finance charge is recognised as
a finance cost in the income statement.
Capitalised lease assets are depreciated over the shorter of the estimated
useful life of the assets and the lease term.
Income Tax
The income tax expense or benefit for the year is the tax payable or
receivable on the current year’s taxable income based on the national
income tax rate for each jurisdiction, adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences between the tax
bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax basis
used in the computation of taxable profit, calculated using tax rates which
are enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognised for deductible temporary differences
and unused tax losses only if it is probable that future taxable amounts will
be available to utilise those temporary differences and losses. The carrying
amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be
utilised.
Deferred tax assets and liabilities are not recognised:
-
-
where the deferred tax arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
in respect of temporary differences associated with investments in
subsidiaries and joint ventures where the timing of the reversal of the
temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Current and deferred tax attributable to amounts recognised directly
in equity are also recognised directly in equity.
48
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Financial Assets
Brambles classifies its financial assets in the following two categories:
financial assets at fair value through profit or loss; and loans and
receivables. The classification depends on the purpose for which the
financial assets were acquired.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held
for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Financial assets are recognised on Brambles’ balance sheet when Brambles
becomes a party to the contractual provisions of the instrument.
Derecognition takes place when Brambles no longer controls the
contractual rights that comprise the financial instrument, which is normally
the case when the instrument is sold, or all the cash flows attributable to
the instrument are passed through to an independent third party.
Derivatives and Hedging Activities
Derivative instruments used by Brambles, which are used solely for
hedging purposes (i.e. to offset foreign exchange and interest rate risks),
comprise interest rate swaps and forward foreign exchange contracts. Such
derivative instruments are used to alter the risk profile of Brambles’
existing underlying exposure in line with Brambles’ risk management
policies.
Derivative financial instruments are stated at fair value. The fair value of
forward exchange contracts is calculated by reference to current forward
exchange rates for contracts with similar maturities at the balance sheet
date. The fair value of interest rate swap contracts is calculated as the
present value of the forward cash flows of the instrument after applying
market rates and standard valuation techniques.
For the purposes of hedge accounting, hedges are classified as either fair
value hedges, cash flow hedges or net investment hedges.
Fair value hedges
Fair value hedges are derivatives that hedge exposure to changes in the
fair value of a recognised asset or liability, or an unrecognised firm
commitment. In relation to fair value hedges which meet the conditions for
hedge accounting, any gain or loss from remeasuring the hedging
instrument at fair value is recognised immediately in the income
statement.
Any gain or loss attributable to the hedged risk on remeasurement of the
hedged item is adjusted against the carrying amount of the hedged item
and recognised in the income statement. Where the adjustment is to the
carrying amount of a hedged interest-bearing financial instrument, the
adjustment is amortised to the income statement such that it is fully
amortised by maturity.
Hedge accounting is discontinued prospectively if the hedge is terminated
or no longer meets the hedge accounting criteria. In this case, any
adjustment to the carrying amounts of the hedged item for the designated
risk for interest-bearing financial instruments is amortised to the income
statement following termination of the hedge relationship.
Cash flow hedges
Cash flow hedges are derivatives that hedge exposure to variability in cash
flows that is either attributable to a particular risk associated with a
recognised asset or liability, or a highly probable forecast transaction.
In relation to cash flow hedges to hedge forecast transactions which meet
the conditions for hedge accounting, the portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is
recognised in other comprehensive income within equity and the
ineffective portion is recognised in the income statement.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated or exercised, or no longer qualifies for hedge
accounting.
At that point in time, any cumulative gain or loss on the hedging
instrument recognised in equity is kept in equity until the forecast
transaction occurs.
If a hedged transaction is no longer expected to occur, the net cumulative
gain or loss recognised in equity is transferred to net profit or loss for the
year.
For all other cash flow hedges, the gains or losses that are recognised in
equity are transferred to the income statement in the same year in which
the hedged firm commitment affects the net profit and loss, for example
when the future sale actually occurs.
When the hedged firm commitment results in the recognition of an asset
or a liability, then, at the time the asset or liability is recognised, the
associated gains or losses that had previously been recognised in equity
are included in the initial measurement of the acquisition cost or other
carrying amount of the asset or liability.
Net investment hedges
Hedges for net investments in foreign operations are accounted for
similarly to cash flow hedges.
Any gain or loss on the hedging instrument that is determined to be an
effective hedge is recognised in other comprehensive income within equity
and the ineffective portion is recognised in the income statement.
Gains and losses accumulated in equity are included in the income
statement when the foreign operation is disposed or sold.
Derivatives that do not qualify for hedge accounting
Where derivatives do not qualify for hedge accounting, gains or losses
arising from changes in their fair value are taken directly to net profit or
loss for the year.
Contributed Equity
Ordinary shares including share premium are classified as contributed
equity. No gain or loss is recognised in the income statement on the
purchase, sale, issue or cancellation of Brambles’ own equity instruments.
Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction from the proceeds of issue.
49
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 3. Critical Accounting Estimates and
Judgements
In applying its accounting policies, Brambles has made estimates and
assumptions concerning the future, which may differ from the related
actual outcomes. Those estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
Irrecoverable Pooling Equipment Provisioning
Loss is an inherent risk of pooling equipment operations. Brambles’
pooling equipment operations around the world differ in terms of business
model, market dynamics, customer and distribution channel profiles,
contractual arrangements and operational details. Brambles monitors its
pooling equipment operations using detailed key performance indicators
(KPIs) and conducts audits continuously to confirm the existence and the
condition of its pooling equipment assets and to validate its customer hire
records. During these audits, which take place at Brambles' plants,
customer sites and other locations, pooling equipment is counted on a
sample basis and reconciled to the balances shown in Brambles’ customer
hire records.
The irrecoverable pooling equipment provision (IPEP) is determined by
reference to historical statistical data in each market, including the
outcome of audits and relevant KPIs.
Impairment of Goodwill
Brambles’ business units undertake an impairment review process annually
to ensure that goodwill balances are not carried at amounts that are in
excess of their recoverable amounts. The recoverable amount of the
goodwill in continuing operations is determined based on the higher of
the fair value less costs to sell and the value in use calculations undertaken
at the cash generating unit level. These calculations require the use of key
assumptions which are set out in Note 17.
Income Taxes
Brambles is a global company and is subject to income taxes in many
jurisdictions around the world. Significant judgement is required in
determining the provision for income taxes on a worldwide basis. There
are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain.
Brambles recognises liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from amounts provided, such
differences will impact the current and deferred tax provisions in the
period in which such outcome is obtained. Refer to Note 8 for further
details.
Earnings Per Share (EPS)
Basic EPS is calculated as net profit attributable to members of the parent
entity, adjusted to exclude costs of servicing equity (other than dividends),
divided by the weighted average number of ordinary shares, adjusted for
any bonus element.
Diluted EPS is calculated as net profit attributable to members of the
parent entity, adjusted for:
-
-
-
costs of servicing equity (other than dividends) and preference share
dividends;
the after-tax effect of dividends and finance costs associated with
dilutive potential ordinary shares that have been recognised as
expenses;
other non-discretionary changes in revenues or expenses during the
year that would result from the dilution of potential ordinary shares;
and divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
EPS on Underlying Profit after finance costs and tax is calculated as
Underlying Profit after finance costs and tax attributable to members of
the parent entity, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
New Accounting Standards and Interpretations Issued But
Not Yet Applied
At 30 June 2016, certain new accounting standards and interpretations
have been published that will become mandatory in future reporting
periods. Brambles has not early-adopted these new or amended
accounting standards and interpretations in 2016.
AASB 9: Financial Instruments is applicable to annual reporting periods
beginning on or after 1 January 2018. AASB 9 addresses the classification,
measurement and derecognition of financial assets and liabilities,
introduces a new impairment model and introduces new rules for hedge
accounting. AASB 9 may affect Brambles’ accounting for financial assets
and liabilities, however it is not expected to have a significant impact on
Brambles’ financial statements.
AASB 15: Revenue from Contracts with Customers is applicable to annual
reporting periods beginning on or after 1 January 2018 and is based on
the principle that revenue is recognised when control of a good or service
transfers to a customer. The new standard replaces the principle under the
current standard of recognising revenue when risks and rewards transfer to
the customer. Brambles is yet to assess the impact of the new rules on its
revenue recognition policy.
AASB 16: Leases requires lessees to recognise most leases on the balance
sheet. AASB 16 is effective for reporting periods beginning or after 1
January 2019. Brambles is yet to assess the impact of the new standard on
its financial statements.
Rounding of Amounts
As Brambles is a company of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191, relevant
amounts in the financial statements and Directors’ Report have been
rounded to the nearest hundred thousand US dollars or, in certain cases,
to the nearest thousand US dollars. Amounts in cents have been rounded
to the nearest tenth of a cent.
50
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 4. Segment Information
Brambles’ segment information is provided on the same basis as internal management reporting to the CEO and reflects how Brambles is
organised and managed.
Brambles has six reportable segments, being Pallets - Americas, Pallets - EMEA, Pallets - Asia-Pacific (each pallet-pooling businesses), Reusable
Plastic Crates (RPCs) (crate-pooling businesses), Containers (container-pooling businesses) and Corporate (corporate centre).
Segment performance is measured on sales revenue, Underlying Profit, Cash Flow from Operations and Brambles Value Added (BVA).
Underlying Profit is the main measure of segment profit. A reconciliation between Underlying Profit and operating profit is set out below.
Segment sales revenue is measured on the same basis as in the income statement. Segment sales revenue is allocated to segments based on
product categories and physical location of the business unit that invoices the customer. Intersegment revenue during the period was
immaterial. There is no single external customer who contributed more than 10% of Group sales revenue.
Assets and liabilities are measured consistently in segment reporting and in the balance sheet. Assets and liabilities are allocated to segments
based on segment use and physical location. Cash, borrowings and tax balances are managed centrally and are not allocated to segments.
Sales
revenue
Cash Flow from
Operations1
Brambles
Value Added2
By operating segment
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
Pallets
RPCs
Containers
Corporate
Continuing operations
By geographic origin
Americas
Europe
Australia
Other
Total
By operating segment
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
Pallets
RPCs
Containers
Corporate
Continuing operations
2016
US$M
179.7
222.4
56.3
458.4
54.0
29.7
(28.3)
513.8
2015
US$M
338.8
260.0
71.2
670.0
63.5
30.7
(34.7)
729.5
2016
US$M
166.7
215.8
27.5
410.0
(60.1)
(70.5)
(31.1)
248.3
2015
US$M
157.2
185.6
25.9
368.7
(53.4)
(46.5)
(35.3)
233.5
2016
US$M
2015
US$M
2,427.8
1,343.1
319.0
4,089.9
991.8
453.7
-
2,333.4
1,380.5
343.5
4,057.4
917.6
465.5
-
5,535.4
5,440.5
2,755.2
2,074.4
373.7
332.1
2,635.8
2,076.4
409.7
318.6
5,535.4
5,440.5
Operating
profit3
Significant Items
before tax4
Underlying
Profit4
2016
US$M
415.5
351.8
65.0
832.3
134.4
7.7
(59.3)
915.1
2015
US$M
403.1
341.8
70.6
815.5
130.8
58.1
(62.6)
941.8
2016
US$M
(12.6)
(2.7)
(0.1)
(15.4)
3.0
(40.7)
(25.0)
(78.1)
2015
US$M
(14.5)
(2.1)
(1.0)
(17.6)
(0.7)
(1.2)
(25.6)
(45.1)
2016
US$M
428.1
354.5
65.1
847.7
131.4
48.4
(34.3)
993.2
2015
US$M
417.6
343.9
71.6
833.1
131.5
59.3
(37.0)
986.9
51 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 4. Segment Information – continued
Capital
expenditure5
Depreciation
and amortisation
By operating segment
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
Pallets
RPCs
Containers
Corporate
2016
US$M
449.8
280.9
51.2
781.9
231.0
82.1
0.2
2015
US$M
378.4
256.0
61.6
696.0
238.3
101.0
0.1
Continuing operations
1,095.2
1,035.4
2016
US$M
219.1
117.5
36.5
373.1
104.9
66.6
1.2
545.8
2015
US$M
211.9
124.0
40.1
376.0
102.0
66.4
1.7
546.1
By operating segment
Pallets – Americas
Pallets – EMEA
Pallets – Asia-Pacific
Pallets
RPCs
Containers
Corporate
Continuing operations
Discontinued operations
Total segment assets and liabilities
Cash and borrowings
Current tax balances
Deferred tax balances
Equity-accounted investments
Total assets and liabilities
Non-current assets by geographic origin6
Americas
Europe
Australia
Other
Total
Segment assets
Segment liabilities
2016
US$M
2015
US$M
2016
US$M
2015
US$M
2,559.9
1,463.3
415.1
4,438.3
2,240.4
968.2
51.3
2,354.6
1,419.7
397.6
4,171.9
2,025.1
1,100.4
31.8
382.1
257.0
65.6
704.7
617.7
77.2
62.3
382.2
310.6
75.5
768.3
521.5
112.6
51.4
7,698.2
7,329.2
1,461.9
1,453.8
-
7,698.2
156.1
6.0
36.0
-
44.3
7,373.5
166.2
7.1
41.9
5.9
-
1,461.9
2,777.9
74.4
627.0
-
17.1
1,470.9
2,855.1
63.2
564.3
-
7,896.3
7,594.6
4,941.2
4,953.5
2,954.8
2,618.7
334.4
465.8
2,833.4
2,615.6
319.6
424.7
6,373.7
6,193.3
1
2
3
4
5
6
Cash Flow from Operations is cash flow generated after net capital expenditure but excluding Significant Items that are outside the ordinary
course of business.
Brambles Value Added (BVA) is a non-statutory profit measure and represents the value generated over and above the cost of the capital
used to generate that value. It is calculated using fixed 30 June 2015 exchange rates as:
• Underlying Profit; plus
• Significant Items that are part of the ordinary activities of the business; less
• Average Capital Invested, adjusted for accumulated pre-tax Significant Items that are part of the ordinary activities of the business,
multiplied by 12%.
Operating profit is segment revenue less segment expense and excludes net finance costs.
Underlying Profit is a non-statutory profit measure and represents profit from continuing operations before finance costs, tax and Significant
Items (refer Note 6). It is presented to assist users of the financial statements to better understand Brambles’ business results.
Capital expenditure on property, plant and equipment on an accruals basis.
Non-current assets exclude derivative financial instruments and deferred tax assets.
52 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 5. Operating Expenses – Continuing Operations
Employment costs
Service suppliers:
- transport
- repairs and maintenance
- subcontractors and other service suppliers
Raw materials and consumables
Occupancy
Depreciation of property, plant and equipment
Impairment of goodwill and property, plant and equipment (Refer to Note 6 and Note 16)
Irrecoverable pooling equipment provision (IPEP) expense
Amortisation of intangible assets
Net foreign exchange gains
Other
2016
US$M
878.9
2015
US$M
877.1
1,089.8
1,080.5
785.4
521.3
462.0
199.8
504.2
39.7
74.8
41.6
(1.1)
741.6
492.0
447.7
208.2
500.9
5.0
79.7
45.2
(1.6)
114.3
137.9
4,710.7
4,614.2
Note 6. Significant Items – Continuing Operations
Significant Items are items of income or expense which are, either individually or in aggregate, material to Brambles or to the relevant business
segment and are:
• outside the ordinary course of business (e.g. gains or losses on the sale or termination of operations, the cost of significant
reorganisations or restructuring); or
• part of the ordinary activities of the business but unusual due to their size and nature.
Significant Items are disclosed to assist users of the financial statements to better understand Brambles’ business results.
2016
US$M
2015
US$M
Before tax
Tax
After tax
Before tax
Tax
After tax
Items outside the ordinary course of business:
- acquisition-related costs1
- restructuring and integration costs2
- impairment of goodwill3
- acquisition gains4
(7.8)
(37.7)
(38.0)
5.4
Significant Items from continuing operations
(78.1)
0.2
12.3
-
(0.1)
12.4
(7.6)
(25.4)
(38.0)
5.3
(65.7)
(10.3)
(34.8)
-
-
0.1
10.8
-
-
(10.2)
(24.0)
-
-
(45.1)
10.9
(34.2)
1
2
3
Professional fees and other transaction costs were incurred in relation to IFCO Japan and other acquisition activities in 2016. In 2015
acquisition-related costs were incurred for the Ferguson, Rentapack and other acquisition activities.
Redundancy, integration and other restructuring costs include US$30.4 million relating to the One Better program (2015: US$28.0 million).
Comprises goodwill impairment of the Oil & Gas cash generating unit (CGU) (Refer to Note 17).
4 The remaining two-thirds of IFCO Japan was acquired on 18 August 2015. On acquisition, the existing interest was remeasured at fair value
resulting in a gain of US$5.0 million. In addition, there was another minor acquisition during the year which resulted in an acquisition gain of
US$0.4m.
53 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 7. Net Finance Costs – Continuing Operations
Finance revenue
Bank accounts and short-term deposits
Derivative financial instruments
Other
Finance costs
Interest expense on bank loans and borrowings
Derivative financial instruments
Other
Net finance costs
Note 8. Income Tax
A) Components of Tax Expense
Amounts recognised in the income statement
Current income tax – continuing operations:
- income tax charge
- prior year adjustments
Deferred tax – continuing operations:
- origination and reversal of temporary differences
- previously unrecognised tax losses
- prior year adjustments
Tax expense – continuing operations
Tax expense/(benefit) – discontinued operations (Note 11)
Tax expense recognised in the income statement
Amounts recognised in the statement of comprehensive income
- on actuarial losses on defined benefit pension plans
Tax benefit recognised directly in the statement of comprehensive income
2016
US$M
1.0
16.3
0.6
17.9
(120.7)
(6.7)
(4.5)
(131.9)
(114.0)
2016
US$M
192.9
(9.6)
183.3
57.7
(5.0)
7.7
60.4
243.7
17.3
261.0
(0.8)
(0.8)
2015
US$M
0.9
12.2
0.7
13.8
(121.5)
(0.6)
(3.6)
(125.7)
(111.9)
2015
US$M
201.8
3.0
204.8
54.8
(10.3)
(7.0)
37.5
242.3
(0.1)
242.2
(0.3)
(0.3)
54 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 8. Income Tax – continued
B) Reconciliation Between Tax Expense and Accounting Profit Before Tax
Profit before tax – continuing operations
Tax at standard Australian rate of 30% (2015: 30%)
Effect of tax rates in other jurisdictions
Prior year adjustments
Prior year tax losses written-off
Current year tax losses not recognised
Foreign withholding tax unrecoverable
Change in tax rates
Non-deductible expenses
Other taxable items
Prior year tax losses recouped/recognised
Other
Tax expense – continuing operations
Tax expense/(benefit) – discontinued operations (Note 11)
Total income tax expense
2016
US$M
801.1
240.3
(19.4)
(5.1)
3.2
4.9
6.3
(0.5)
18.4
0.8
(5.0)
(0.2)
243.7
17.3
261.0
2015
US$M
829.9
249.0
(23.9)
(4.0)
-
8.0
6.4
1.1
11.3
4.9
(10.3)
(0.2)
242.3
(0.1)
242.2
C) Components of Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities shown in the balance sheet are represented by cumulative temporary differences attributable to:
2016
US$M
2015
US$M
Assets
Liabilities
Assets
Liabilities
Items recognised through the income statement
Employee benefits
Provisions
Losses available against future taxable income
Accelerated depreciation for tax purposes
Other
28.0
39.4
231.8
-
86.2
385.4
Items recognised in the statement of comprehensive income
Actuarial losses/(gains) on defined benefit pension
plans
Share-based payments
Set-off against deferred tax (liabilities)/assets
Net deferred tax assets/(liabilities)
9.1
12.8
21.9
(371.3)
36.0
-
-
-
(891.4)
(106.1)
(997.5)
(0.8)
-
(0.8)
371.3
(627.0)
21.9
36.9
241.0
-
46.1
345.9
11.6
11.6
23.2
(327.2)
41.9
-
-
-
(805.0)
(85.3)
(890.3)
(1.2)
-
(1.2)
327.2
(564.3)
55 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 8. Income Tax – continued
D) Movements in Deferred Tax Assets and Liabilities
At 1 July
(Charged)/credited to the income statement
Credited directly to equity
Acquisition of subsidiary
Divestment of subsidiaries
Offset against deferred tax (liabilities)/assets
Foreign exchange differences
At 30 June
2016
US$M
2015
US$M
Assets
Liabilities
Assets
Liabilities
41.9
(2.4)
0.8
0.3
(0.1)
(3.0)
(1.5)
36.0
(564.3)
(58.0)
-
(3.7)
7.6
3.0
(11.6)
(627.0)
44.3
24.7
0.3
5.3
-
(25.1)
(7.6)
41.9
(541.0)
(62.2)
-
(32.7)
-
25.1
46.5
(564.3)
Deferred tax assets are recognised for carried forward tax losses to the extent that the realisation of the related tax benefit through future
taxable profits is probable. At reporting date, Brambles has unused tax losses of US$1,015.7 million (2015: US$1,062.3 million) available for
offset against future profits. A deferred tax asset has been recognised in respect of US$681.4 million (2015: US$730.3 million) of such losses.
The benefit for tax losses will only be obtained if:
-
-
-
Brambles derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the
losses to be realised;
Brambles continues to comply with the conditions for deductibility imposed by tax legislation; and
no changes in tax legislation adversely affect Brambles in realising the benefit from the deductions for the losses.
No deferred tax asset has been recognised in respect of the remaining unused tax losses of US$334.3 million (2015: US$332.0 million) due to
the unpredictability of future profit streams in the relevant jurisdictions. Tax losses of US$530.9 million (2015: US$558.0 million), which have
been recognised in the balance sheet, have an expiry date between 2017 and 2035 (2015: between 2016 and 2035), however it is expected
that these losses will be recouped prior to expiry. The remaining tax losses of US$150.5 million (US$172.3 million), which have been
recognised in the balance sheet, can be carried forward indefinitely.
At reporting date, undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised in the consolidated
financial statements are US$1,762.9 million (2015: US$1,045.5 million). No deferred tax liability has been recognised for these amounts
because Brambles controls the distributions from its subsidiaries and is satisfied that there is no liability in the foreseeable future.
The majority of the deferred tax assets and liabilities are expected to be recovered/realised after 12 months of the balance date.
E) Tax Consolidation
Brambles Limited and its Australian subsidiaries formed a tax consolidated group in 2006. Brambles Limited, as the head entity of the tax
consolidated group, and its Australian subsidiaries have entered into a tax sharing agreement in order to allocate income tax expense. The
tax sharing agreement uses a stand-alone basis of allocation. Consequently, Brambles Limited and its Australian subsidiaries account for their
own current and deferred tax amounts as if they each continue to be taxable entities in their own right. In addition, the agreement provides
funding rules setting out the basis upon which subsidiaries are to indemnify Brambles Limited in respect of tax liabilities and the
methodology by which subsidiaries in tax loss are to be compensated.
F) Tax Policy
Brambles Limited has a Tax Policy approved by the Board of Directors, which sets out the Company’s approach to tax risk management and
governance, attitude towards tax planning, and its approach in dealing with tax authorities. The Tax Policy is included in Brambles Limited’s
Code of Conduct. In addition, commencing this year Brambles Limited’s Sustainability Review will include a Tax Report which will include,
amongst other things, details such as the corporate income tax paid by, and effective tax rates of, Brambles. The Sustainability Review is
scheduled for publication in October 2016 and will be posted on Brambles’ website.
56 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 9. Earnings Per Share
Earnings per share
- basic
- diluted
From continuing operations
- basic
- diluted
- basic, on Underlying Profit after finance costs and tax
From discontinued operations
- basic
- diluted
2016
US cents
2015
US cents
37.3
37.1
35.3
35.2
39.5
2.0
1.9
37.3
37.2
37.5
37.4
39.7
(0.2)
(0.2)
Performance share rights and MyShare matching conditional rights granted under Brambles’ share plans are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. Details
are set out in Note 23.
A) Weighted Average Number of Shares During the Year
Used in the calculation of basic earnings per share
Adjustment for share rights
Used in the calculation of diluted earnings per share
B) Reconciliations of Profits used in Earnings Per Share Calculations
Statutory profit
Profit from continuing operations
Profit/(loss) from discontinued operations
Profit used in calculating basic and diluted EPS
Underlying Profit after finance costs and tax
Underlying Profit (Note 4)
Net finance costs (Note 7)
Tax expense on Underlying Profit
Underlying Profit after finance costs and tax
which reconciles to statutory profit:
Underlying Profit after finance costs and tax
Significant Items after tax (Note 6)
Profit from continuing operations
2016
Million
1,577.6
6.1
1,583.7
2016
US$M
557.4
30.3
587.7
993.2
(114.0)
(256.1)
623.1
623.1
(65.7)
557.4
2015
Million
1,566.0
4.8
1,570.8
2015
US$M
587.6
(3.2)
584.4
986.9
(111.9)
(253.2)
621.8
621.8
(34.2)
587.6
57 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 10. Dividends
A) Dividends During the Year
Dividend per share (in Australian cents)
Cost (in US$ million)1
Payment date
Interim
2016
14.5
174.6
Final
2015
14.0
155.3
14 April 2016
8 October 2015
1
The interim dividend and final dividend amounts include US$56.5 million and US$68.3 million respectively, relating to the non-cash
Dividend Reinvestment Plan participation.
Dividends during the year total US$329.9 million (2015: US$359.3 million), which differs to the amount recognised in equity
(US$332.3 million) due to the impact of foreign exchange movements on the Australian dividend payments between the dividend record and
payment dates.
B) Dividend Declared after 30 June 2016
Dividend per share (in Australian cents)
Cost (in US$ million)
Payment date
Dividend record date
As this dividend had not been declared at 30 June 2016, it is not reflected in these financial statements.
C) Franking Credits
2016
US$M
Franking credits available for subsequent financial years based on an Australian tax rate of 30%
38.7
The amounts above represent the balance of the franking account as at the end of the year, adjusted for:
- franking credits that will arise from the payment of the current tax liability;
- franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
- franking credits that will arise from dividends recognised as receivables at the reporting date; and
- franking credits that may be prevented from being distributed in subsequent financial years.
The final 2016 dividend will be franked at 25%.
Final
2016
14.5
176.1
13 October 2016
8 September 2016
2015
US$M
32.4
58 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 11. Discontinued Operations
Discontinued operations primarily comprise the LeanLogistics business which was divested effective 31 May 2016. As a consequence of the
divestment, LeanLogistics is presented in discontinued operations in the current and comparative reporting periods. In addition to
LeanLogistics, discontinued operations comprise net adjustments relating to divestments completed in prior years.
Financial information for discontinued operations is summarised below:
Operating loss
Relating to:
- LeanLogistics1
- other discontinued operations
Profit on divestment of LeanLogistics
Profit/(loss) before tax
Tax (expense)/benefit2
Profit/(loss) for the year from discontinued operations
1
2
Operating loss includes US$2.4 million of depreciation and amortisation expense (2015: US$2.9 million).
Tax expense recognised in 2016 relates to the divestment of LeanLogistics.
2016
US$M
(5.1)
(3.5)
(1.6)
52.7
47.6
(17.3)
30.3
2015
US$M
(3.3)
(3.3)
-
-
(3.3)
0.1
(3.2)
Significant Items outside the ordinary course of business relating to discontinued operations recognised during 2016 were US$53.0 million,
which included the profit on divestment of LeanLogistics (2015: US$(1.5) million).
Note 12. Business Combinations
On 18 August 2015, Brambles acquired the remaining two-thirds of IFCO Japan in a transaction valuing IFCO Japan at ¥4.84 billion
(US$38.9 million) and paying cash consideration of US$17.4 million. Goodwill of US$17.9 million has been recognised for this acquisition. A
gain of US$5.0 million has been recognised in the income statement in relation to the remeasurement of the existing interest in IFCO Japan to
fair value (refer Note 6).
In addition to the above acquisition, there were other minor acquisitions during the period with immaterial impact.
Note 13. Trade and Other Receivables
Current
Trade receivables
Provision for doubtful receivables
Net trade receivables
Other debtors
Accrued and unbilled revenue
2016
US$M
904.1
(14.4)
889.7
149.1
111.2
2015
US$M
817.0
(14.6)
802.4
141.6
100.6
1,150.0
1,044.6
Trade receivables are non-interest bearing and are generally on 30–90 day terms. A provision for doubtful receivables is established when
there is a level of uncertainty as to the full recoverability of the receivable, based on objective evidence. A provision of US$7.6 million
(2015: US$5.6 million) has been recognised as an expense in the current year for specific trade and other receivables for which such evidence
exists.
Other debtors primarily comprise GST/VAT recoverable and loss compensation receivables.
59 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 13. Trade and Other Receivables – continued
Trade receivables
Other debtors
2016
US$M
2015
US$M
2016
US$M
2015
US$M
At 30 June, the ageing analysis of trade receivables and other debtors by reference to due dates was as follows:
Not past due
Past due 0–30 days but not impaired
Past due 31–60 days but not impaired
Past due 61–90 days but not impaired
`
Past 90 days but not impaired
Impaired
Refer to Note 25 for other financial instruments' disclosures.
730.9
118.5
19.8
5.7
14.8
14.4
618.9
134.3
26.4
9.5
13.3
14.6
74.6
6.8
8.5
4.5
54.7
-
65.3
5.2
3.8
2.4
64.9
-
904.1
817.0
149.1
141.6
Note 14. Inventories
Raw materials and consumables
Work in progress
Finished goods
Note 15. Other Assets
Current
Prepayments
Current tax receivable
Derivative financial instruments (Note 25)
Non-current
Prepayments
Derivative financial instruments (Note 25)
Other receivables
51.3
0.6
34.3
86.2
49.6
6.0
22.0
77.6
4.4
16.7
1.8
22.9
53.1
2.4
25.8
81.3
46.8
7.1
5.1
59.0
6.2
8.3
5.5
20.0
60 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 16. Property, Plant and Equipment
Opening net carrying amount
Additions
Acquisition of subsidiaries
Divestment of subsidiaries
Disposals
Depreciation charge
Impairment of plant and equipment
IPEP expense
Foreign exchange differences
Closing net carrying amount
At 30 June
Cost
Accumulated depreciation
Net carrying amount
2016
US$M
2015
US$M
Land and
buildings
Plant and
equipment
Total
Land and
buildings
Plant and
equipment
Total
40.8
6.8
-
-
(1.6)
(2.8)
-
-
(3.1)
40.1
4,383.9
4,424.7
1,088.4
1,095.2
24.9
(1.2)
(109.9)
(501.4)
(1.7)
(74.8)
24.9
(1.2)
(111.5)
(504.2)
(1.7)
(74.8)
(116.0)
(119.1)
4,692.2
4,732.3
68.4
(28.3)
40.1
7,508.5
7,576.9
(2,816.3)
(2,844.6)
4,692.2
4,732.3
27.4
5.1
15.3
-
(0.7)
(2.9)
-
-
(3.4)
40.8
68.4
(27.6)
40.8
4,340.1
4,367.5
1,031.5
1,036.6
186.1
201.4
-
(79.7)
(498.4)
(5.0)
(79.7)
-
(80.4)
(501.3)
(5.0)
(79.7)
(511.0)
(514.4)
4,383.9
4,424.7
7,111.7
7,180.1
(2,727.8)
(2,755.4)
4,383.9
4,424.7
The net carrying amounts above include plant and equipment held under finance lease US$38.3 million (2015: US$34.2 million); leasehold
improvements US$19.0 million (2015: US$20.4 million); and capital work in progress US$22.9 million (2015: US$26.6 million).
61 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 17. Goodwill and Intangible Assets
A) Net Carrying Amounts and Movements During the Year
2016
US$M
2015
US$M
Goodwill
Software
Other1
Total
Goodwill
Software
Other1
Total
Opening carrying amount
1,530.5
Additions
Disposals
Acquisition of subsidiaries
Divestment of subsidiaries
-
-
49.2
(33.3)
42.7
10.8
(0.2)
0.2
(5.4)
Impairment loss2
(38.0)
Foreign exchange differences
(54.8)
Closing carrying amount
1,453.6
-
(0.6)
36.4
At 30 June
Amortisation charge
-
(11.1)
(30.5)
177.8
1,751.0
1,322.4
1.7
-
4.5
(0.2)
-
(8.1)
12.5
(0.2)
53.9
(38.9)
(41.6)
(38.0)
(63.5)
-
-
351.4
-
-
-
(143.3)
145.2
1,635.2
1,530.5
47.2
11.7
(0.1)
0.1
-
173.9
1,543.5
2.1
(0.1)
53.8
-
13.8
(0.2)
405.3
-
(15.2)
(32.5)
(47.7)
-
(1.0)
42.7
-
-
(19.4)
(163.7)
177.8
1,751.0
Gross carrying amount
1,491.6
309.3
296.4
2,097.3
1,530.5
328.4
309.9
2,168.8
Accumulated impairment
(38.0)
-
-
(38.0)
Accumulated amortisation
-
(272.9)
(151.2)
(424.1)
-
-
-
-
-
(285.7)
(132.1)
(417.8)
Net carrying amount
1,453.6
36.4
145.2
1,635.2
1,530.5
42.7
177.8
1,751.0
1 Other intangible assets primarily comprise acquired customer relationships, customer lists and agreements.
2
Based on the fair value less costs to sell model used during impairment testing, a goodwill impairment loss of US$38.0 million has been
recognised in relation to the Oil & Gas CGU, reflecting the current market conditions in the oil and gas sector.
B) Summary of Net Carrying Amount
Goodwill acquired through business combinations is allocated to cash generating units (CGU), which are the smallest identifiable groupings of
Brambles’ cash generating assets. A summary of the goodwill allocation is presented as follows:
2016
US$M
2015
US$M
Pallets - Americas
Pallets - EMEA
Pallets - Asia-Pacific
Pallets
RPCs
Oil & Gas
IBCs
Aerospace
Containers
Total goodwill
281.6
315.2
34.5
48.6
38.3
24.9
364.7
378.4
671.1
648.0
240.0
136.3
41.5
417.8
320.5
139.5
44.1
504.1
1,453.6
1,530.5
62 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 17. Goodwill and Intangible Assets – continued
C) Goodwill Recoverable Amount Testing – Continuing Operations
The recoverable amount of goodwill is determined based on the higher of the value in use and the fair value less costs to sell calculations
undertaken at the CGU level. The value in use is calculated using a discounted cash flow methodology covering a five-year period with an
appropriate terminal value at the end of that period. Management has determined the recoverable amount of the Oil & Gas CGU by assessing
its fair value less costs to sell. This valuation is considered to be Level 3 in the fair value hierarchy due to unobservable inputs used in the
valuation. Based on the impairment testing, the carrying amounts of goodwill in the CGUs related to continuing operations at reporting date
were fully supported. The key assumptions on which management has based its cash flow projections were:
Cash flow forecasts
Cash flow forecasts are post tax and based on the most recent financial projections covering a maximum period of five years. Financial
projections are based on assumptions that represent management’s best estimates.
Revenue growth rates
Revenue growth rates used are based on management’s latest five-year plan. Five-year growth rates ranged between 5.3% and 10.0% (average
rates: Pallets 6.6%; RPCs 10.0%; Oil & Gas 5.3%; IBCs 9.1% and Aerospace 8.0%). Growth rates for 2015 ranged between 6.4% and 15.6%.
Terminal value
The terminal value calculated after year five is determined using the stable growth model, having regard to the weighted average cost of
capital (WACC) and terminal growth factor appropriate to each CGU. Average terminal growth rates used in the financial projections were:
Pallets 2.5%; RPCs 2.0%; Oil & Gas 1.9%; IBCs 2.2% and Aerospace 2.0%. Average terminal growth rates for 2015 ranged between 2.1% and
2.9%.
Discount rates
Discount rates used are the pre-tax WACC and include a premium for market risks appropriate to each country in which the CGU operates.
WACCs ranged between 7.3% and 11.4% (average rates: Pallets 10.4%; RPCs 8.2%; Oil & Gas 9.6%; IBCs 8.9% and Aerospace 10.6%). Average
WACC rates for 2015 ranged between 7.9% and 9.2%.
Sensitivity
With the exception of the Oil & Gas and Aerospace CGUs, any reasonable change to the above key assumptions would not cause the carrying
value of any of the remaining CGUs to materially exceed its recoverable amount.
During impairment testing it was noted that Aerospace has a reduced headroom in the value in use calculation. All other things being equal, a
reasonably possible change in any of the key assumptions may cause the carrying amount of the Aerospace CGU to be impaired.
In relation to the Oil & Gas CGU, all other things being equal, a reasonably possible change in any of the key assumptions may cause an
increase in the goodwill impairment being recognised.
63 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 18. Trade and Other Payables
Current
Trade payables
GST/VAT, refundable deposits and other payables
Accruals and deferred income
Derivative financial instruments (Note 25)
Non-current
Derivative financial instruments (Note 25)
Other liabilities
2016
US$M
396.5
533.9
335.9
2.1
2015
US$M
496.9
471.1
313.8
4.0
1,268.4
1,285.8
-
4.0
4.0
1.8
6.1
7.9
Trade payables and other current payables are non-interest bearing and are generally settled on 30–90 day terms.
Refer to Note 25 for other financial instruments' disclosures.
Note 19. Provisions
Employee entitlements
Other
Note 20. Borrowings
Unsecured
Bank overdrafts
Bank loans
Loan notes1
Finance lease liabilities
2016
US$M
2015
US$M
Current
Non-current
Current
Non-current
83.1
31.2
114.3
4.6
23.1
27.7
71.6
31.4
103.0
3.9
15.3
19.2
2016
US$M
2015
US$M
Current
Non-current
Current
Non-current
40.9
38.2
112.9
9.7
201.7
-
405.6
2,142.0
28.6
2,576.2
9.5
39.9
68.7
9.4
127.5
-
964.0
1,738.8
24.8
2,727.6
1
In October 2015, US$500 million of guaranteed senior notes were issued to qualified institutional buyers in the United States 144A bond
market with a term of 10 years and a coupon rate of 4.125%.
64
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 21. Retirement Benefit Obligations
A) Defined Contribution Plans
Brambles operates a number of defined contribution retirement benefit plans for qualifying employees. The assets of these plans are held in
separately administered trusts or insurance policies. In some countries, Brambles’ employees are members of state-managed retirement
benefit plans. Brambles is required to contribute a specified percentage of payroll costs to the retirement benefit plan to fund benefits. The
only obligation of Brambles with respect to defined contribution retirement benefit plans is to make the specified contributions.
US$17.0 million (2015: US$21.9 million) has been recognised as an expense in the income statement representing contributions paid and
payable to these plans by Brambles at rates specified in the rules of the plans, of which US$16.6 million relates to continuing operations (2015:
US$21.3 million).
B) Defined Benefit Plans
Brambles operates a small number of defined benefit pension plans, which are closed to new entrants. The majority of the plans are self-
administered and the plans’ assets are held independently of Brambles’ finances. Under the plans, members are entitled to retirement benefits
based upon a percentage of final salary. No other post-retirement benefits are provided. The plans are funded plans.
The plan assets and the present value of the defined benefit obligation recognised in Brambles’ balance sheet are based upon the most recent
formal actuarial valuations which have been updated to 30 June 2016 by independent professionally qualified actuaries and take account of
the requirements of AASB 119. For all plans, the valuation updates have used assumptions, assets and cash flows as at 31 May 2016. The
present value of the defined benefit obligation and the past service cost were measured using the projected unit credit method.
A net expense of US$3.1 million has been recognised in the income statement in respect of defined benefit plans (2015: US$0.2 million), of
which US$2.4 million net expense relates to continuing operations (2015: US$0.2 million). Included within the total expense recognised during
the year is a net interest cost of US$1.4 million (2015: US$1.5 million).
The amounts recognised in the balance sheet are as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net liability recognised in the balance sheet
2016
US$M
281.4
(233.9)
47.5
2015
US$M
299.4
(244.4)
55.0
Currency variations and deficit reduction contributions from sponsoring employers were the key drivers for the changes in the present value of
defined benefit obligations and the fair value of plan assets. Benefits paid during the period were US$7.7 million (2015: US$6.1 million). The
principal assumption used in the actuarial valuations of the defined benefit obligation was the discount rate of 2.8% (2015: 3.5%) for the plans
operating in the United Kingdom and 7.9% (2015: 7.4%) for the South African plans. A reasonably possible change in discount rate or other key
assumptions would not have a material impact on the defined benefit obligation.
Brambles has no legal obligation to settle this liability with an immediate contribution or additional one-off contributions. Brambles intends to
continue to make contributions to the plans at the rates recommended by the funds’ actuaries when actuarial valuations are obtained.
Additional annual contributions of US$6.7 million (2015: US$7.9 million) are being paid to remove the identified deficits over a period of 6
years (2015: 7 years).
Note 22. Contributed Equity
Total ordinary shares, of no par value, issued and fully paid:
At 1 July 2014
Issued during the year
At 30 June 2015
At 1 July 2015
Issued during the year
At 30 June 2016
Shares
US$M
1,562,945,947
5,993.4
4,019,587
34.0
1,566,965,534
6,027.4
1,566,965,534
6,027.4
19,026,169
145.9
1,585,991,703
6,173.3
Ordinary shares of Brambles Limited entitle the holder to participate in dividends and the proceeds on any winding up of the Company in
proportion to the number of shares held.
65
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 23. Share-Based Payments
The Remuneration Report sets out details relating to the Brambles share plans (pages 24 to 25), together with details of performance share
rights and MyShare matching conditional rights issued to the Executive Director and other Key Management Personnel (pages 27 to 28).
Rights granted by Brambles do not result in an entitlement to participate in share issues of any other corporation.
Set out below are summaries of rights granted under the plans.
A) Grants over Brambles Limited Shares
Grant date
Expiry date
2016
Performance share rights
Balance
at 1 July
Granted
during
the year
Exercised
during
the year
Forfeited/
lapsed during
the year
Balance
at 30 June
Awards granted in prior periods
7,107,281
-
(2,049,028)
(785,889)
4,272,364
14,410
(14,410)
-
-
1 July 2015
25 Sep 2015
2 Nov 2015
1 July 2021
25 Sep 2021
2 Nov 2021
16 March 2016
16 March 2022
21 June 2016
21 June 2022
MyShare matching conditional rights
-
-
-
-
-
3,042,495
20,927
70,372
500
-
-
-
-
31 Mar 2016
31 Mar 2017
31 Mar 2018
640,318
262,563
-
-
(607,766)
551,152
247,744
(23,659)
(3,648)
2014 Plan Year
2015 Plan Year
2016 Plan Year
Total rights
(39,862)
3,002,633
-
-
-
(32,552)
(65,202)
(4,396)
20,927
70,372
500
-
724,854
239,700
8,010,162
3,947,600
(2,698,511)
(927,901)
8,331,350
2015 (summarised comparative)
Total rights
9,730,424
3,501,805
(3,953,046)
(1,269,021)
8,010,162
Of the above grants, 379,044 rights were exercisable at 30 June 2016.
Weighted average data:
- fair value at grant date of grants made during the year
- share price at exercise date of grants exercised during the year
- remaining contractual life at 30 June
2016
2015
A$
A$
years
8.56
10.57
4.0
9.20
10.19
4.0
B) Fair Value Calculations
The fair values of performance share rights and MyShare matching conditional rights were determined as at grant date, using a binomial
valuation methodology. The values calculated do not take into account the probability of rights being forfeited prior to vesting, as a
probability adjustment is made when computing the share-based payment expense.
The significant inputs into the valuation models for the grants made during the year were:
Weighted average share price
Expected volatility
Expected life
Annual risk-free interest rate
Expected dividend yield
2016
Grants
A$10.10
17%
2015
Grants
A$9.92
20%
2-3 years
2-3 years
1.86-1.91%
2.66-2.80%
2.90%
3.50%
The expected volatility was determined based on a four-year historic volatility of Brambles’ share prices.
C) Share-Based Payments Expense
Brambles recognised a total expense of US$23.6 million (2015: US$21.8 million) relating to equity-settled share-based payments and
US$1.9 million relating to cash-settled share-based payments (2015: US$1.0 million). Of these amounts, US$0.7 million (2015: nil) related to
discontinued operations.
66 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 24. Reserves and Retained Earnings
A) Movements in Reserves and Retained Earnings
Reserves
Share-
based
payments
US$M
Foreign
currency
translation
US$M
Unification
Other
US$M US$M
Total
US$M
Retained
earnings
US$M
82.9
170.0
(7,162.4)
167.0
(6,742.5)
3,500.1
-
-
21.8
(34.0)
2.9
-
-
-
(350.0)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(350.0)
21.8
(34.0)
2.9
-
-
(0.7)
-
-
-
-
(368.3)
584.4
73.6
(180.0)
(7,162.4)
167.0
(7,101.8)
3,715.5
73.6
(180.0)
(7,162.4)
167.0
(7,101.8)
3,715.5
-
-
-
(90.2)
23.6
(20.1)
2.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5.2)
-
-
-
(90.2)
23.6
(20.1)
2.2
(5.2)
-
-
(2.8)
-
-
-
-
5.2
(332.3)
587.7
79.3
(270.2)
(7,162.4)
161.8
(7,191.5)
3,973.3
Year ended 30 June 2015
Opening balance
Actuarial loss on defined benefit plans
Foreign exchange differences
Share-based payments:
- expense recognised during the year
- shares issued
- equity component of related tax
Dividends declared
Net profit for the year
Closing balance
Year ended 30 June 2016
Opening balance
Actuarial loss on defined benefit plans
Foreign exchange differences
Share-based payments:
- expense recognised during the year
- shares issued
- equity component of related tax
Transfers between reserves
Dividends declared
Net profit for the year
Closing balance
B) Nature and Purpose of Reserves
Share-based payments reserve
This comprises the cumulative share-based payment expense recognised in the income statement in relation to equity-settled options and share
rights issued but not yet exercised. Refer to Note 23 for further details.
Foreign currency translation reserve
This comprises cumulative exchange differences arising from the translation of the financial statements of foreign subsidiaries, net of qualifying net
investment hedges. The relevant accumulated balance is recognised in the income statement on disposal of a foreign subsidiary.
Unification reserve
On Unification, Brambles Limited issued shares on a one-for-one basis to those Brambles Industries Limited (BIL) and Brambles Industries plc (BIP)
shareholders who did not elect to participate in the Cash Alternative. The Unification reserve of US$15,385.8 million was established on 4
December 2006, representing the difference between the Brambles Limited share capital measured at fair value and the carrying value of the share
capital of BIL and BIP at that date. In the consolidated financial statements, the reduction in share capital of US$8,223.4 million on 9 September
2011 by the parent entity in accordance with section 258F of the Corporations Act 2001 was applied against the Unification reserve.
Other
This comprises a merger reserve created in 2001, a capital redemption reserve created in 2006 and the hedging reserve. The hedging reserve
represents the cumulative portion of the gain or loss of cash flow hedges that are determined to be effective hedges. Amounts are recognised in
the income statement when the associated hedged transaction is recognised or the hedge or the forecast hedged transaction is no longer highly
probable. During 2016, the capital redemption reserve was transferred to retained earnings.
67 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 25. Financial Risk Management
Brambles is exposed to a variety of financial risks: market risk (including the effect of fluctuations in interest rates and exchange rates), liquidity
risk and credit risk.
Brambles’ overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of Brambles.
Brambles uses standard derivative financial instruments to manage its risk exposure in the normal course of business. Brambles does not trade
in financial instruments for speculative purposes. Hedging activities are conducted through Brambles’ Treasury department on a centralised
basis in accordance with Board policies and guidelines through standard operating procedures and delegated authorities.
A) Financial Assets and Liabilities
The fair values of all financial assets and liabilities held on the balance sheet as at 30 June 2016 equal the carrying amount, with the exception
of loan notes, which have an estimated fair value of US$2,300.0 million (2015: US$1,945.9 million). Financial assets and liabilities held at fair
value are estimated using Level 2 estimation techniques which uses inputs that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices). The fair value of loan notes has been calculated by discounting future cash flows at prevailing interest rates
for the relevant yield curves. The methodology for calculating fair values of derivative instruments is set out in Note 2.
B) Market Risk
Brambles has the following risk policies in place with respect to market risk.
Interest rate risk
Brambles’ exposure to potential volatility in finance costs, predominantly in US dollars and euros, is managed by maintaining a mix of fixed and
floating-rate instruments within select target bands over defined periods. In most cases, interest rate derivatives are used to achieve these
targets synthetically.
The following table sets out the financial instruments exposed to interest rate risk at reporting date:
Financial assets (floating rate)
Cash at bank
Short-term deposits
Weighted average effective interest rate
Financial liabilities (floating rate)
Bank overdrafts
Bank loans
Interest rate swaps (notional value) – fair value hedges
Net exposure to cash flow interest rate risk
Weighted average effective interest rate
Financial liabilities (fixed rate)
Loan notes
Bank loans
Finance lease liabilities
Interest rate swaps (notional value) – fair value hedges
Net exposure to fair value interest rate risk
Weighted average effective interest rate
2016
US$M
150.7
5.4
156.1
0.1%
40.9
415.3
556.2
1,012.4
1.6%
2015
US$M
158.3
7.9
166.2
1.0%
9.5
965.3
561.0
1,535.8
1.8%
2,254.9
1,807.5
28.5
38.3
(556.2)
1,765.5
4.9%
38.6
34.2
(561.0)
1,319.3
5.4%
68 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 25. Financial Risk Management – continued
B) Market Risk – continued
Interest rate swaps – fair value hedges
Brambles entered into interest rate swap transactions with various banks, swapping the €500 million 2024 Euro medium-term fixed-rate notes
to variable rates for all or part of the term. In accordance with AASB 139, the carrying value of the loan notes have been adjusted to increase
debt by US$22.6 million (2015: US$11.1 million) in relation to changes in fair value attributable to the hedged risk. The fair value of interest
rate swaps at reporting date was US$22.6 million (2015: US$11.0 million).
The terms of the swaps match the terms of the fixed-rate bond issue for the amounts and durations being hedged.
The gain or loss from re-measuring the interest rate swaps at fair value is recorded in the income statement together with any changes in the
fair value of the hedged asset or liability that is attributed to the hedged risk. For 2016, all interest rate swaps were effective hedging
instruments.
Sensitivity analysis
Given current economic conditions and Brambles’ approach to risk management, the Group’s sensitivity to changes in interest rates is not
material.
Foreign exchange risk
Exposure to foreign exchange risk generally arises in either the value of transactions translated back to the functional currency of a subsidiary
or the value of assets and liabilities of overseas subsidiaries when translated back to the Group’s reporting currency.
Foreign exchange hedging is used when a transaction exposure exceeds certain thresholds and as soon as a defined exposure arises. Within
Brambles, exposures may arise with external parties or, alternatively, by way of cross-border intercompany transactions. Forward foreign
exchange contracts are primarily used to manage these exposures. Given that Brambles both generates income and incurs expenses in its local
currencies of operation, these exposures are not significant.
Brambles generally mitigates translation exposures by raising debt in currencies where there are matching assets.
Currency profile
The following table sets out the currency mix profile of Brambles’ financial instruments at reporting date. Financial assets include cash, trade
receivables and derivative assets. Financial liabilities includes trade payables, debt and derivative liabilities:
2016
Financial assets
Financial liabilities
2015
Financial assets
Financial liabilities
US
dollar
US$M
Aust.
dollar
US$M
259.7
1,400.4
241.2
1,353.3
62.8
17.0
62.8
28.3
Sterling
US$M
Euro
US$M
Other
US$M
Total
US$M
68.2
447.0
246.8
1,084.5
136.4
1,398.8
223.9
3,176.5
62.0
349.3
266.7
982.0
309.9
1,351.6
314.7
3,357.8
Forward foreign exchange contracts – cash flow hedges
Brambles enters into forward foreign exchange contracts to hedge currency exposures arising from normal commercial transactions such as
the purchase and sale of equipment and services, intercompany interest and royalties.
During 2016, Brambles entered into forward foreign exchange transactions with various banks in a variety of cross-currencies for terms
ranging up to 6 months. Most contracts create an obligation on Brambles to take receipt of or deliver a foreign currency which is used to fulfil
the foreign currency sale or purchase order.
For 2016 and 2015, all foreign exchange contracts were effective hedging instruments. The fair value of these contracts at reporting date was
nil (2015: nil).
Other forward foreign exchange contracts
Brambles enters into other forward foreign exchange contracts for the purpose of hedging various cross-border intercompany loans to
overseas subsidiaries. In this case, the forward foreign exchange contract provides an economic hedge against exchange fluctuations in the
foreign currency loan balance. The face value and terms of the foreign exchange contracts match the intercompany loan balances. Gains and
losses on realignment of the intercompany loan and foreign exchange contracts to spot rates are offset in the income statement.
Consequently, these foreign exchange contracts are not designated for hedge accounting purposes and are classified as held for trading. The
fair value of these contracts at reporting date was US$14.6 million (2015: US$(2.9) million).
69
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 25. Financial Risk Management – continued
B) Market Risk – continued
Hedge of net investment in foreign entity
At 30 June 2016, €350.5 million (US$389.9 million) of the 2024 Euro medium-term note has been designated as a hedge of the net investment
in Brambles’ European subsidiaries and is being used to partially hedge Brambles’ exposure to foreign exchange risks on these investments. For
2016 and 2015, there was no ineffectiveness to be recorded from such partial hedges of net investments in foreign entities.
Sensitivity analysis
Based on the financial instruments held at 30 June 2016, if exchange rates were to weaken/strengthen by 10% with all other variables held
constant, the transaction exposure within profit after tax for the year would not have been material. However, the impact on equity would have
been US$27.7 million lower/higher (2015: US$28.0 million lower/higher) as a result of the incremental movement through the foreign currency
translation reserve relating to the effective portion of a net investment hedge.
C) Liquidity Risk
Brambles’ objective is to maintain adequate liquidity to meet its financial obligations as and when they fall due. Brambles funds its operations
through existing equity, retained cash flow and borrowings. Funding is generally sourced from relationship banks and debt capital market
investors on a medium to long term basis.
Bank credit facilities are generally structured on a committed multi-currency revolving basis and at balance date had maturities ranging out to
December 2020. Borrowings under the bank credit facilities are floating-rate, unsecured obligations with covenants and undertakings typical
for these types of arrangements.
Borrowings are raised from debt capital markets by the issue of unsecured fixed interest notes, with interest payable semi-annually or annually.
At balance date, loan notes had maturities out to October 2025.
The average term to maturity of the committed borrowing facilities and the loan notes is equivalent to 4.3 years (2015: 3.9 years). These
facilities are unsecured and are guaranteed as described in Note 34B.
Brambles also has access to further funding through overdrafts, uncommitted and standby lines of credit, principally to manage day-to-day
liquidity.
Borrowing facilities maturity profile
2016
Total facilities
Facilities used1
Facilities available
2015
Total facilities
Facilities used1
Facilities available
Year 1
US$M
Year 2
US$M
590.6
1,056.7
(184.8)
405.8
(644.9)
411.8
331.0
(109.5)
221.5
814.1
(409.5)
404.6
Year 3
US$M
660.2
(38.7)
621.5
1,051.2
(853.6)
197.6
Year 4
US$M
>4 years
US$M
Total
US$M
756.9
(609.0)
147.9
347.7
(114.3)
233.4
1,529.1
4,593.5
(1,274.8)
(2,752.2)
254.3
1,841.3
1,438.9
(1,351.2)
87.7
3,982.9
(2,838.1)
1,144.8
1
Facilities used represents the principal value of loan notes and borrowings drawn against the relevant facilities to reflect the correct amount
of funding headroom. This amount differs by US$25.7 million (2015: US$17.0 million) from loan notes and borrowings as shown in the
balance sheet which are measured on the basis of amortised cost as determined under the effective interest method and include accrued
interest, transaction costs and fair value adjustments on certain hedging instruments.
70 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 25. Financial Risk Management – continued
C) Liquidity Risk – continued
Maturities of financial liabilities
The maturities of Brambles’ contractual cash flows on non-derivative financial liabilities (for principal and interest) and contractual cash flows
on net and gross settled derivative financial instruments, based on the remaining period to contractual maturity date, are presented below.
Cash flows on interest rate swaps and forward foreign exchange contracts are valued based on forward interest and exchange rates applicable
at reporting date.
Year 1
US$M
Year 2
US$M
Year 3
US$M
Year 4
US$M
>4 years
US$M
Total
contractual
cash flows
US$M
Carrying
amount
(assets)/
liabilities
US$M
2016
Non-derivative financial liabilities
Trade payables
Bank overdrafts
Bank loans
Loan notes
Finance lease liabilities
Financial guarantees1
396.5
40.9
47.6
201.2
10.9
697.1
54.9
752.0
-
-
87.3
636.8
9.1
733.2
-
-
-
17.9
79.7
7.1
-
-
108.2
554.4
5.9
-
-
211.7
1,235.0
9.3
396.5
40.9
472.7
396.5
40.9
443.8
2,707.1
2,254.9
42.3
38.3
104.7
668.5
1,456.0
3,659.5
3,174.4
-
-
-
54.9
-
733.2
104.7
668.5
1,456.0
3,714.4
3,174.4
Derivative financial (assets)/liabilities
Net settled interest rate swaps
Interest rate swaps
- fair value hedges
(5.7)
(6.6)
(2.8)
(2.7)
(7.8)
(25.6)
(22.0)
Gross settled forward foreign exchange contracts
- (inflow)
- outflow
2015
(932.5)
917.9
(20.3)
-
-
-
-
-
-
-
-
(6.6)
(2.8)
(2.7)
(7.8)
Non-derivative financial liabilities
Trade payables
Bank overdrafts
Bank loans
Loan notes
Finance lease liabilities
Financial guarantees1
496.9
9.5
60.4
146.1
11.2
724.1
52.6
776.7
-
-
320.4
163.0
7.3
490.7
-
490.7
-
-
295.1
622.3
5.5
922.9
-
922.9
Derivative financial (assets)/liabilities
Net settled interest rate swaps
(932.5)
917.9
(40.2)
496.9
9.5
1,051.3
2,147.2
40.8
(14.6)
-
(36.6)
496.9
9.5
1,003.9
1,807.5
34.2
-
-
94.2
60.2
4.8
-
-
281.2
1,155.6
12.0
159.2
1,448.8
3,745.7
3,352.0
-
-
52.6
-
159.2
1,448.8
3,798.3
3,352.0
- fair value hedges
(4.0)
(4.3)
(2.5)
(1.3)
Gross settled forward foreign exchange contracts
- (inflow)
- outflow
(624.4)
627.3
(1.1)
-
-
(4.3)
-
-
(2.5)
-
-
(1.3)
1.1
-
-
1.1
(11.0)
(10.3)
(624.4)
627.3
(8.1)
-
2.9
(7.4)
1
Refer to Note 28A for details on financial guarantees. The amounts disclosed above are the maximum amounts allocated to the earliest
period in which the guarantee could be called. Brambles does not expect these payments to eventuate.
71 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 25. Financial Risk Management – continued
D) Credit Risk Exposure
Brambles is exposed to credit risk on its financial assets, which comprise cash and cash equivalents, trade and other receivables and derivative
financial instruments. The exposure to credit risks arises from the potential failure of counterparties to meet their obligations. The maximum
exposure to credit risk at the reporting date is the carrying amount of the financial instruments. There is no significant concentration of credit
risk.
Brambles trades only with recognised, creditworthy third parties. Collateral is generally not obtained from customers.
Customers are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past
experience and industry reputation. Credit limits are set for individual customers and approved by credit managers in accordance with an
approved authority matrix. These credit limits are regularly monitored and revised based on historic turnover activity and credit performance. In
addition, overdue receivable balances are monitored and actioned on a regular basis.
Exposure to credit risk also arises from amounts receivable from unrealised gains on derivative financial instruments. At the reporting date, this
amount was US$38.7 million (2015: US$12.1 million). Brambles transacts derivatives with prominent financial institutions and has credit limits in
place to limit exposure to any potential non-performance by its counterparties.
E) Capital Risk Management
Brambles’ objective when managing capital is to ensure Brambles continues as a going concern as well as to provide a balance between
financial flexibility and balance sheet efficiency. In determining its capital structure, Brambles considers the robustness of future cash flows,
potential funding requirements for growth opportunities and acquisitions, the cost of capital and ease of access to funding sources.
Brambles manages its capital structure to be consistent with a solid investment grade credit. At 30 June 2016, Brambles held investment grade
credit ratings of BBB+ from Standard and Poor’s and Baa1 from Moody’s Investor Services.
Initiatives available to Brambles to achieve its desired capital structure include adjusting the amount of dividends paid to shareholders,
returning capital to shareholders, buying-back share capital, issuing new shares, selling assets to reduce debt, varying the maturity profile of its
borrowings and managing discretionary expenses.
Brambles considers its capital to comprise:
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Total capital
2016
US$M
2015
US$M
2,777.9
2,855.1
(156.1)
2,621.8
2,955.1
5,576.9
(166.2)
2,688.9
2,641.1
5,330.0
Under the terms of its major borrowing facilities, Brambles is required to comply with the following financial covenants:
-
-
the ratio of net debt to EBITDA is to be no more than 3.5 to 1; and
the ratio of EBITDA to net finance costs is to be no less than 3.5 to 1.
Brambles has complied with these financial covenants for 2016 and prior years.
72 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 26. Cash Flow Statement – Additional Information
A) Reconciliation of Cash
For the purpose of the cash flow statement, cash comprises:
Cash at bank and in hand
Short-term deposits
Bank overdraft (Note 20)
2016
US$M
150.7
5.4
156.1
(40.9)
115.2
2015
US$M
158.3
7.9
166.2
(9.5)
156.7
Cash and cash equivalents include balances of US$1.5 million (2015: US$1.5 million) used as security for various contingent liabilities and is not
readily accessible. Short-term deposits have initial maturities varying between 7 days and 3 months.
Brambles has various master netting and set-off arrangements covering cash pooling. An amount of US$26.9 million has been reduced from
cash at bank and overdraft at 30 June 2016 (2015: US$55.3 million).
B) Reconciliation of Profit After Tax to Net Cash Flows from Operating Activities
Profit after tax
Adjustments for:
- depreciation and amortisation
- irrecoverable pooling equipment provision expense
- profit on divestment of LeanLogistics
- net losses on disposals of property, plant and equipment
- impairment of goodwill and plant and equipment
- other valuation adjustments
- joint ventures and associates
- equity-settled share-based payments
- finance revenues and costs
Movements in operating assets and liabilities, net of acquisitions and disposals:
- increase in trade and other receivables
- increase in prepayments
- increase in inventories
- increase in deferred taxes
- increase in trade and other payables
- increase in tax payables
- increase/(decrease) in provisions
- other
587.7
584.4
548.2
74.8
(52.7)
0.3
39.7
(6.2)
-
23.6
(2.6)
(139.5)
(5.8)
(7.1)
62.7
6.2
15.1
12.4
10.1
549.0
79.7
-
6.0
5.0
(7.2)
(0.8)
21.8
6.1
(57.7)
(9.4)
(14.5)
38.9
96.7
35.9
(5.2)
(5.5)
Net cash inflow from operating activities
1,166.9
1,323.2
73
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 26. Cash Flow Statement – Additional Information – continued
C) Reconciliation of Movement in Net Debt
Net debt at beginning of the year
Net cash inflow from operating activities
Net cash outflow from investing activities
Net inflow from hedge instruments
Proceeds from issue of ordinary shares
Dividends paid
Increase on business acquisitions
Interest accruals, finance leases and other
Foreign exchange differences
Net debt at end of the year
Being:
Current borrowings
Non-current borrowings
Cash and cash equivalents
Net debt at end of the year
2016
US$M
2,688.9
(1,166.9)
922.6
8.2
(1.0)
205.1
15.3
(10.4)
(40.0)
2,621.8
201.7
2,576.2
(156.1)
2,621.8
2015
US$M
2,361.7
(1,323.2)
1,416.8
38.5
-
359.3
116.6
(22.4)
(258.4)
2,688.9
127.5
2,727.6
(166.2)
2,688.9
D) Non-Cash Financing or Investing Activities
Apart from the Dividend Reinvestment Plan, there were no financing or investing transactions during the year which had a material effect on
the assets and liabilities of Brambles that did not involve cash flows.
Note 27. Commitments
A) Capital Expenditure Commitments
Capital expenditure, principally relating to property, plant and equipment, contracted for but not recognised as liabilities at reporting date was
as follows:
Within one year
Between one and five years
After five years
2016
US$M
113.6
151.5
38.1
303.2
2015
US$M
157.7
100.7
43.7
302.1
B) Operating Lease Commitments
Brambles has taken out operating leases for offices, operational locations and plant and equipment. The leases have varying terms, escalation
clauses and renewal rights. Escalation clauses are rare and any impact is considered immaterial.
The future minimum lease payments under such non-cancellable operating leases are as follows:
Within one year
Between one and five years
After five years
Minimum lease payments
Plant
Occupancy
2016
US$M
23.4
56.4
10.2
90.0
2015
US$M
22.5
48.7
7.6
78.8
2016
US$M
107.9
260.8
100.1
468.8
2015
US$M
107.4
303.5
112.7
523.6
During the year, operating lease expense of US$157.6 million (2015: US$143.6 million) was recognised in the income statement.
74 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 28. Contingencies
a)
Subsidiaries have contingent unsecured liabilities in respect of guarantees given relating to performance under contracts entered into
totalling US$54.9 million (2015: US$52.6 million), of which US$37.9 million (2015: US$35.7 million) is also guaranteed by Brambles Limited.
US$16.9 million (2015: US$16.9 million) is also guaranteed by Brambles Limited and certain of its subsidiaries under a deed of cross-
guarantee and are included in Note 34B.
b)
Brambles holds and guarantees certain Recall lease obligations. To the extent any claims or liabilities are caused by a Recall Group
company, Recall has indemnified Brambles under the Demerger Deed relating to the demerger of Recall.
c)
Environmental contingent liabilities
Brambles’ activities have previously included the treatment and disposal of hazardous and non-hazardous waste through subsidiaries and
corporate joint ventures. In addition, other activities of Brambles entail using, handling and storing materials which are capable of causing
environmental impairment.
As a consequence of the nature of these activities, Brambles has incurred and may continue to incur environmental costs and liabilities
associated with site and facility operation, closure, remediation, aftercare, monitoring and licensing. Provisions have been made in respect
of estimated environmental liabilities at all sites and facilities where obligations are known to exist and can be reliably measured.
However, additional liabilities may emerge due to a number of factors including changes in the numerous laws and regulations which
govern environmental protection, liability, land use, planning and other matters in each jurisdiction in which Brambles operates or has
operated. These extensive laws and regulations are continually evolving in response to technological advances, scientific developments and
other factors. Brambles cannot predict the extent to which it may be affected in the future by any such changes in legislation or regulation.
d)
In the ordinary course of business, Brambles becomes involved in litigation. Provision has been made for known obligations where the
existence of the liability is probable and can be reasonably quantified. Receivables have been recognised where recoveries, for example
from insurance arrangements, are virtually certain. As the outcomes of these matters remain uncertain, contingent liabilities exist for
possible amounts eventually payable that are in excess of the amounts provided.
75 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 29. Auditor’s Remuneration
Amounts received or due and receivable by PwC (Australia) for:
Audit services in Australia:
- audit and review of Brambles’ financial reports
- other assurance services
Other services:
- finance due diligence
- tax advisory services
- other
Total remuneration of PwC (Australia)
Amounts received or due and receivable by related practices of PwC (Australia) for:
Audit services outside Australia:
- audit and review of Brambles’ financial reports
- other assurance services
Other services:
- finance due diligence
- tax advisory services
- other
Total remuneration of related practices of PwC (Australia)
Total auditor’s remuneration
2016
US$’000
2015
US$’000
1,694
300
1,994
-
27
79
106
2,100
3,682
4
3,686
-
53
68
121
3,807
5,907
1,864
-
1,864
291
311
4
606
2,470
3,459
16
3,475
279
4
63
346
3,821
6,291
From time to time, Brambles employs PwC on assignments additional to their statutory audit duties where PwC, through their detailed
knowledge of the Group, are best placed to perform the services from an efficiency, effectiveness and cost perspective. The performance of
such non-audit related services is always balanced with the fundamental objective of ensuring PwC’s objectivity and independence as auditors.
To ensure this balance, Brambles’ Charter of Audit Independence requires that the Audit Committee approve any management
recommendation that PwC undertake non-audit work (with approval being delegated to the Chief Financial Officer within specified monetary
limits).
Non-audit assignments during the year primarily related to compliance projects and tax consulting advice.
Note 30. Key Management Personnel
A) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payment expense
10,162
10,340
276
95
7,422
17,955
240
123
6,784
17,487
B) Other Transactions with Key Management Personnel
Other transactions with Key Management Personnel are set out in Note 31A.
Further remuneration disclosures are set out in the Directors’ Report on pages 17 to 31 of the Annual Report.
76
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 31. Related Party Information
A) Other Transactions
Other transactions entered into during the year with Directors of Brambles Limited; with Director-related entities; with Key Management
Personnel (KMP, as set out in the Directors’ Report); or with KMP-related entities were on terms and conditions no more favourable than those
available to other employees, customers or suppliers and include transactions in respect of the employee option plans, contracts of
employment and reimbursement of expenses. Any other transactions were trivial or domestic in nature.
B) Other Related Parties
A subsidiary has a non-interest bearing advance outstanding as at 30 June 2016 of US$1,054,000 (2015: US$1,095,000) to Brambles Custodians
Pty Limited, the trustee under Brambles' employee loan scheme. This scheme enabled employees to acquire shares in BIL and has been closed
to new entrants since August 2002.
C) Material Subsidiaries
The principal subsidiaries of Brambles during the year were:
Name
CHEP USA
CHEP Canada, Inc.
CHEP UK Limited
CHEP Equipment Pooling NV
CHEP South Africa (Proprietary) Limited
CHEP Australia Limited
Pallet Companies LLC
IFCO Systems USA LLC
IFCO Systems GmbH
Brambles USA Inc.
Brambles Finance plc
Brambles Finance Limited
Place of incorporation
% interest held at
reporting date
2016
2015
USA
Canada
UK
Belgium
South Africa
Australia
USA
USA
Germany
USA
UK
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
In addition to the list above, there are a number of other non-material subsidiaries within Brambles.
Investments in subsidiaries are primarily by means of ordinary or common shares. All material subsidiaries prepare accounts with a 30 June
balance date.
Note 32. Events After Balance Sheet Date
On 4 August 2016, Brambles entered into an agreement to combine its Oil & Gas container solutions businesses, comprising Ferguson Group
(Ferguson) and CHEP Catalyst & Chemical Containers (CCC), with Hoover Container Solutions (Hoover) to create an independent joint venture
company, Hoover-Ferguson Group (HFG). Hoover’s major shareholder is First Reserve, a leading global private equity and infrastructure
investment firm exclusively focused on energy. HFG will be 50% owned by Brambles and 50% owned by Hoover shareholders and Brambles will
account for its interest as a joint venture. Brambles anticipates that the transaction will complete during October 2016, subject to regulatory
clearance and customary conditions precedent.
Brambles will receive consideration of approximately US$75 million from First Reserve to equalise ownership of HFG, with US$40 million
receivable in cash upon transaction close with the balance deferred. Brambles will contribute Ferguson and CCC to HFG with debt, including a
US$150 million subordinated shareholder loan with a cash interest rate of 10% per annum, payable monthly.
The Oil & Gas business has been classified as a continuing operation in the Containers segment at 30 June 2016.
Other than those outlined in the Directors’ Report or elsewhere in these financial statements, no other events have occurred subsequent to
30 June 2016 and up to the date of this report that have had a material impact on Brambles’ financial performance or position.
77 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 33. Net Assets Per Share
Based on 1,586.0 million shares (2015: 1,567.0 million shares):
- Net tangible assets per share
- Net assets per share
2016
US cents
2015
US cents
83.2
186.3
56.8
168.5
Net tangible assets per share is calculated by dividing total equity attributable to the members of the parent entity, less goodwill and
intangible assets, by the number of shares on issue at year end.
Net assets per share is calculated by dividing total equity attributable to the members of the parent entity by the number of shares on issue at
year end.
Note 34. Parent Entity Financial Information
A) Summarised Financial Data of Brambles Limited
Profit for the year
Other comprehensive loss for the year
Total comprehensive income/(loss)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Share-based payment reserve
Foreign currency translation reserve
Retained earnings
Total equity
Parent entity
2016
US$M
368.7
(142.3)
226.4
4.6
7,118.8
7,123.4
26.5
1,135.8
1,162.3
5,961.1
2015
US$M
296.1
(1,363.4)
(1,067.3)
8.2
6,854.1
6,862.3
15.0
932.0
947.0
5,915.3
6,173.3
6,027.4
47.6
(398.1)
138.3
41.8
(255.8)
101.9
5,961.1
5,915.3
78 Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2016
Note 34. Parent Entity Financial Information – continued
B) Guarantees and Contingent Liabilities
Brambles Limited and certain of its subsidiaries are parties to a deed of cross-guarantee which supports global financing credit facilities
available to certain subsidiaries. Total facilities available amount to US$1,875.5 million (2015: US$1,791.8 million) of which US$346.9 million
(2015: US$878.6 million) has been drawn.
Brambles Limited and certain of its subsidiaries are parties to guarantees which support US Private Placement borrowings of US$116.5 million
(2015: US$171.5 million) by a subsidiary.
Brambles Limited and certain of its subsidiaries are parties to a guarantee which support notes of US$1,000.0 million (2015: US$500.0 million)
issued by a subsidiary to qualified institutional buyers in accordance with Rule 144A and Regulation S of the United States Securities Act.
Brambles Limited and certain of its subsidiaries are parties to a guarantee which support notes of €1,000.0 million (2015: €1,000.0 million)
issued by two subsidiaries in the European bond market.
Brambles Limited has guaranteed repayment of certain facilities and financial accommodations made available to certain subsidiaries. Total
facilities and financial accommodations available amount to US$539.4 million (2015: US$553.2 million), of which US$147.6 million (2015:
US$139.7 million) has been drawn.
Other than these guarantees, the parent entity did not have any contingent liabilities at 30 June 2016 or 30 June 2015.
C) Contractual Commitments
Brambles Limited did not have any contractual commitments for the acquisition of property, plant and equipment at 30 June 2016 or 30 June
2015.
79 Directors’ Declaration
In the opinion of the Directors of Brambles Limited:
(a)
the financial statements and notes set out on pages 39 to 79 are in accordance with the Corporations Act 2001 , including:
(i)
complying with Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional
reporting
requirements; and
(ii)
giving a true and fair view of the financial position of Brambles as at 30 June 2016 and of its performance for the year ended on that
date;
(b)
there are reasonable grounds to believe that Brambles Limited will be able to pay its debts as and when they become due and
payable.
A statement of compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board is
included within Note 1 to the financial statements.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001 .
This declaration is made in accordance with a resolution of the Directors.
S P Johns
Chairman
T J Gorman
Chief Executive Officer
18 August 2016
80 Independent Auditor’s Report
to the Members of Brambles Limited
Report on the financial report
We have audited the accompanying financial report of Brambles Limited (the Company), which comprises the
consolidated balance sheet as at 30 June 2016, the consolidated income statement and consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the
year ended on that date, a summary of significant accounting policies, other explanatory notes and the Directors’
declaration for Brambles (the consolidated entity). The consolidated entity comprises the Company and the entities
it controlled at year’s end or from time to time during the financial year.
Directors' responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that is free from
material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks
of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the consolidated entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the Directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
81
Independent Auditor’s Report – continued
to the Members of Brambles Limited
Auditor’s opinion
In our opinion:
(a)
the financial report of Brambles Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 17 to 31 of the Directors’ report for the year ended 30
June 2016. The Directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion
on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Brambles Limited for the year ended 30 June 2016 complies with
section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Paul Bendall
Partner
Sue Horlin
Partner
Sydney
18 August 2016
Sydney
18 August 2016
82
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2016, I declare that to the best of my
knowledge and belief, there have been:
1.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
2.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Brambles Limited and the entities it controlled during the period.
Paul Bendall
Partner
PricewaterhouseCoopers
Sydney
18 August 2016
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
83
Five-Year Financial Performance Summary
Continuing operations1,2
Sales revenue1,2
EBITDA1,2
Depreciation and amortisation1,2
Operating profit1,2
Net finance costs1,2
Profit before tax1,2
Tax expense1,2
Profit from continuing operations1,2
Profit from discontinued operations1,2
Profit for the year1,2
Underlying Profit1,2
Significant Items1,2
Operating profit1,2
2016
US$M
5,535.4
1,460.9
(545.8)
915.1
(114.0)
801.1
(243.7)
557.4
30.3
587.7
993.2
(78.1)
915.1
2015
US$M
2014
US$M
2013
US$M
2012
US$M
5,440.5
1,487.9
(546.1)
941.8
(111.9)
829.9
(242.3)
587.6
(3.2)
584.4
986.9
(45.1)
941.8
5,404.5
5,082.9
1,457.8
(528.3)
929.5
(113.0)
816.5
(232.0)
584.5
683.2
1,267.7
960.1
(30.6)
929.5
1,382.8
(495.7)
887.1
(110.8)
776.3
(220.0)
556.3
84.3
640.6
913.0
(25.9)
887.1
5,625.0
1,491.4
(552.2)
939.2
(152.0)
787.2
(212.3)
574.9
1.4
576.3
1,009.7
(70.5)
939.2
Weighted average number of shares (Millions)
1,577.6
1,566.0
1,560.7
1,555.7
1,482.3
Earnings per share (US cents)
Basic
From continuing operations1,2
On Underlying Profit after finance costs and tax1,2
ROCI1,2
BVA1,2
Capex on property, plant and equipment1,2
Balance sheet
Capital employed
Net debt
Equity
Average Capital Invested1,2
Cash Flow
Cash Flow from Operations1,2
Free Cash Flow
Dividends paid, net of Dividend Reinvestment Plan
Free Cash Flow after dividends
Net debt ratios
Net debt to EBITDA (times)
EBITDA interest cover (times)
Average employees1,2
37.3
35.3
39.5
15%
37.3
37.5
39.7
16%
248.3
233.5
1,095.2
1,035.4
5,576.9
2,621.8
2,955.1
6,486.4
513.8
171.7
205.1
(33.4)
1.7
13.5
5,330.0
2,688.9
2,641.1
6,251.5
729.5
404.1
359.3
44.8
1.7
13.7
81.2
37.5
38.7
16%
266.5
908.0
5,112.7
2,361.7
2,751.0
5,889.6
828.2
430.9
394.2
36.7
1.6
13.2
41.2
35.8
36.9
16%
246.8
865.7
5,739.8
2,714.4
3,025.4
5,576.9
697.3
508.6
425.5
83.1
1.7
14.6
38.9
38.8
42.1
16%
248.6
921.1
5,430.3
2,689.9
2,740.4
6,413.7
591.2
179.5
397.7
(218.2)
1.7
10.3
14,570
13,854
14,086
13,166
17,021
Dividend declared per share (Australian cents)
29.0
28.0
27.0
27.0
26.0
1 LeanLogistics is presented within discontinued operations in 2016 and 2015. Periods prior to 2015 include LeanLogistics within continuing operations and are
consistent with previously published data.
2 Recall is presented within discontinued operations in 2014 and 2013. Periods prior to 2013 include Recall within continuing operations and are consistent with
previously published data.
84
Glossary
2006 Share Plan or PSP
The Brambles Limited 2006 Performance Share Plan (as amended)
Acquired Shares
Brambles Limited shares purchased by Brambles employees under MyShare
actual currency/FX
Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period
AGM
Annual General Meeting
ACI (Average Capital Invested)
A 12-month average of capital invested; capital invested is calculated as net assets before tax balances, cash
and borrowings, but after adjustment for accumulated pre-tax Significant Items, actuarial gains or losses and
net equity adjustments for equity-settled share-based payments
BIFR (Brambles Injuries Frequency Rate)
Safety performance indicator that measures the combined number of fatalities, lost-time injuries, modified
duties and medical treatments per million hours worked
BIL
BIP
Board
BVA (Brambles Value Added)
Brambles Industries Limited, which was one of the two listed entities in the previous dual-listed companies
structure
Brambles Industries plc, which was one of the two listed entities in the previous dual-listed companies
structure
The Board of Directors of Brambles Limited
The value generated over and above the cost of the capital used to generate that value. It is calculated using
fixed June 2015 exchange rates as: Underlying Profit; plus Significant Items that are part of the ordinary
activities of the business; less Average Capital Invested, adjusted for accumulated pre-tax Significant Items
that are part of the ordinary activities of the business, multiplied by 12%
CAGR (compound annual growth rate)
The annualised percentage at which a measure (e.g. sales revenue) would have grown over a period if it grew
at a steady rate
Cash Flow from Operations
Cash flow generated after net capital expenditure but excluding Significant Items that are outside the
ordinary course of business
CGPR
Company
The Australian Securities Exchange Corporate Governance Council Corporate Governance Principles &
Recommendations, Second Edition
Brambles Limited (ACN 118 896 021)
Constant currency/constant FX
Current period results translated into US dollars at the actual monthly exchange rates applicable in the
comparable period, so as to show relative performance between the two periods
Continuing operations
Continuing operations refers to Pallets, RPCs, Containers and the Corporate office
Disclosable Executives
Brambles Limited’s Executive Directors, Non-Executive Directors and other Group executives whose
remuneration details are required to be disclosed in the Remuneration Report
discontinued operations
Operations which have been divested/demerged or which are held for sale
Dividend Share Program
A program, under MyShare, which enables employees to reinvest dividends from their Acquired Shares; the
share purchase price is calculated using a volume-weighted average of the Brambles share price over the five
trading days up to and including the record date for the applicable dividend
DRP (Dividend Reinvestment Plan)
The Brambles Dividend Reinvestment Plan, under which Australian and New Zealand shareholders can elect
to apply some or all of their dividends to the purchase of shares in Brambles instead of receiving cash
DLC
Dual-listed companies structure: the contractual arrangement between Brambles Industries Limited and
Brambles Industries plc from August 2001 to December 2006 under which they operated as if a single
economic enterprise, while retaining separate legal identities, tax residences and stock exchange listings
EPS (earnings per share)
Profit after finance costs, tax, minority interests and Significant Items, divided by the weighted average
number of shares on issue during the period
EBITA (earnings before interest, tax and
amortisation)
EBITDA (earnings before interest,
taxation, depreciation and amortisation)
ELT
Free Cash Flow
Operating profit from continuing operations after adding back depreciation
Operating profit from continuing operations after adding back depreciation and amortisation
Brambles’ Executive Leadership Team, details of which are on page 16
Cash flow generated after net capital expenditure, finance costs and tax, but excluding the net cost of
acquisitions and proceeds from business disposals
FY (financial year)
Brambles’ financial year is 1 July to 30 June; FY16 indicates the financial year ended 30 June 2016
Group or Brambles
Brambles Limited and all of its related bodies corporate
IBCs (intermediate bulk containers)
Palletised containers used for the transport and storage of bulk products in a variety of industries including
the food, chemical, pharmaceuticals and transportation industries
IPEP (Irrecoverable Pooling Equipment
Provision)
Provision held by Brambles to account for pooling equipment that cannot be economically recovered and for
which there is no reasonable expectation of receiving compensation
Key Management Personnel
Members of the Board of Brambles Limited and Brambles’ Executive Leadership Team
KPI(s)
LTI
Key Performance Indicator(s)
Long Term Incentive
85 Glossary - continued
Matching Awards
Matching Shares
MyShare
Operating profit
Performance Period
Matching share rights over Brambles Limited shares allocated to employees when they purchase Acquired
Shares under MyShare; when an employee’s Matching Awards vest, Matching Shares are allocated
Shares allocated to employees who have held Acquired Shares under MyShare for two years, and who remain
employed at the end of that two-year period; one Matching Share is allocated for every Acquired Share held
The Brambles Limited MyShare Plan, an all-employee share plan, under which employees acquire ordinary
shares by means of deductions from their after-tax pay and must hold those shares for a two-year period. If
an employee holds those shares and remains employed at the end of the two-year period, Brambles will
match the number of shares that employee holds by issuing or transferring to them the same number of
shares they held for the qualifying period, at no additional cost to the employee
Statutory definition of profit before finance costs and tax; sometimes called EBIT (earnings before interest and
tax)
A two-to-three year period over which the achievement of performance conditions is assessed to determine
whether STI and LTI share awards will vest
PAT (profit after tax)
Profit after finance costs, tax, minority interests and Significant Items
RPCs
Reusable/returnable plastic/produce container/crate, generally used for shipment and display of fresh
produce items; also the name of one of Brambles’ operating segments
ROCI (Return On Capital Invested)
Underlying Profit divided by Average Capital Invested
Significant Items
Items of income or expense which are, either individually or in aggregate, material to Brambles or to the
relevant business segment and: outside the ordinary course of business (e.g. gains or losses on the sale or
termination of operations, the cost of significant re-organisations or restructuring); or part of the ordinary
activities of the business but unusual because of their size and nature
STI
Short Term Incentive
TSR (total shareholder return)
Measures the returns that a company has provided for its shareholders, reflecting share price movements and
reinvestment of dividends over a specified performance period
Underlying EPS
Underlying Profit
Unification
Unit-load equipment
Profit finance costs, tax and minority interests but before Significant Items, divided by the weighted average
number of shares on issue during the period
Profit from continuing operations before finance costs, tax and Significant Items
The unification of the dual-listed companies structure (between Brambles Industries Limited and Brambles
Industries plc) under a new single Australian holding company, Brambles Limited, which took place in
December 2006
A term for any tools or platforms (such as pallets, crates and containers) used for the shipment or storage of
multiple units of goods (for example, boxes of grocery items) in standardised volumes and formats for ease of
shipment and storage through the supply chain.
The Year
Brambles’ 2016 financial year
86
Notes
87
Notes
88
Contact Information
Registered Office
Brambles’ global headquarters is at its registered office in Sydney, Australia:
Level 40, Gateway Building
1 Macquarie Place
Sydney NSW 2000
Australia
ACN 118 896 021
Telephone: +61 (0) 2 9256 5222
Facsimile: +61 (0) 2 9256 5299
info@brambles.com
Email:
www.brambles.com
Website:
Investor & Analyst Queries
Telephone: +61 (0) 2 9256 5238
Email:
investorrelations@brambles.com
Share Registry
Access to shareholding information is available to investors through Link Market Services.
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000, Australia
Locked Bag A14, Sydney South NSW 1235, Australia
Telephone: 1300 883 073
Facsimile: +61 (0) 2 9287 0303
Email:
registrars@linkmarketservices.com.au
Website:
www.linkmarketservices.com.au
Share Rights Registry
Employees or former employees of Brambles who have queries about the following interests:
- Performance share rights under the 2004 or 2006 share plans;
- Matching share rights under MyShare; or
- Shares acquired under MyShare or other share interests held through AET Structured Finance Services Pty Ltd,
may contact:
Boardroom Pty Limited
Attention: Brambles Employee Share Plans, GPO Box 3993, Sydney NSW 2001, Australia
Telephone: 1800 180 833 (within Australia)
+61 (0) 2 9290 9684 (from outside Australia)
Facsimile:
1300 653 459 (within Australia)
+61 (0) 2 9279 0664 (from outside Australia)
Email:
bramblesesp@boardroomlimited.com.au
Website:
www.boardroomlimited.com.au