FOCUS ON
CORE DRIVERS OF
VALUE
Annual Report 2017
www.brambles.com
Contents
Letter from the Chairman
Letter from the CEO
Operating & Financial Review
Board & Executive Leadership Team
Directors’ Report – Remuneration Report
Directors’ Report – Other Information
2
3
4
17
22
43
Shareholder Information
Consolidated Financial Report
Independent Auditor’s Report
Auditor’s Independence Declaration
Five-year Financial Performance Summary
Glossary
49
51
110
118
119
120
All acronyms and terminology referred to in this document are defined in the Glossary on page 120
Brambles Limited
ABN 89 118 896 021
Go to Brambles.com to
review the Group’s online
annual review for 2017
Forward-Looking Statements
Certain statements made in this report are “forward-looking statements” – that is, statements related to future, not past, events.
Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will”, “should”, and similar expressions
are intended to identify forward-looking statements. These forward-looking statements are not historical facts, but rather are
based on Brambles’ current beliefs, assumptions, expectations, estimates and projections. Forward-looking statements are
not guarantees of future performance, as they address matters that are uncertain and subject to known and unknown risks,
uncertainties and other factors that are beyond the control of Brambles, are difficult to predict and could cause actual results
to differ materially from those expressed or forecasted in the forward-looking statements. Brambles cautions shareholders and
prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the views of Brambles
only as of the date of this report. The forward-looking statements made in this report relate only to events as of the date on
which the statements are made – Brambles will not undertake any obligation to report publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances or events occurring after the date of this report, except as may be
required by law or by any appropriate regulatory authority.
Past performance cannot be relied on as a guide to future performance.
Making Supply Chains More Efficient, Safe and Sustainable
Who we are…
Brambles Limited is an ASX-listed supply
chain logistics company with operations
in over 60 countries.
What we do…
Brambles is the world-leading provider
of supply chain logistics solutions based
on the provision of reusable pallets,
crates and containers for shared use by
multiple participants throughout the
supply chain.
Brambles’ longstanding asset
management expertise and superior
network advantage are integral to
its customer solutions.
Our customers…
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.
At 30 June 2017, the Group...
Held leading positions in…
Employed...
Owned...
Operated a network of...
60+
countries
~14,000
people
~590 million
pallets, crates and containers
850+
service centres
Our Brands and Operations...
Brambles operates primarily through the CHEP and IFCO brands and manages its businesses within the following
operating segments:
IFCO
The RPC (Reusable Plastic
Crates) businesses in Europe,
North America, South America
and Asia operating under the
IFCO brand
CHEP Europe Middle East and Africa (EMEA)
The pallet and container pooling businesses in EMEA
and the CHEP-branded RPC business in South Africa
CHEP Americas
The pallet and container
pooling businesses in
the Americas
CHEP Asia-Pacific
The pallet and container pooling
businesses in Asia-Pacific and the
CHEP-branded RPC business in
Australia and New Zealand
1
Letter from the
Chairman
FY17 was a difficult year for Brambles and its shareholders.
Despite resilient performances in most of our businesses,
operating challenges in our US pallets business weighed on
our overall financial performance.
This year was also one of transition and renewal, during which
we welcomed our new CEO and CFO, took strategic actions
in relation to our Oil and Gas, Aerospace and CHEP Recycled
businesses and refocused our strategy on the core drivers
of value.
Operating Challenges and Withdrawal of the FY19 Targets
We entered FY17 with confidence following a successful
FY16 where we had achieved strong growth. Unfortunately,
the unexpected challenges in our largest business, US pallets,
which emerged in the final months of the 2016 calendar
year, led to the lowering of the Company’s FY17 guidance
in February 2017.
The impact of these challenges on the Group’s projections
for FY18 and FY19, coupled with the need for financial
flexibility to allow our businesses to meet the evolving needs
of customers and maintain our network advantage, were the
principal reasons for the Board’s decision to withdraw the
FY19 financial targets (originally announced to the market
in December 2013). This decision also recognised the reality
of the changing operating conditions and increasingly
competitive landscape in our major markets.
While our FY17 performance was disappointing,
the underlying strength of all of our businesses, including
US pallets, remains intact.
Strategy
Looking forward, Brambles is committed to leveraging its
global scale and industry-leading expertise as we collaborate
with customers to build the supply chains of the future.
We seek to deliver growth and operational excellence in our
core pallet, RPC and container pooling businesses through a
focus on the core drivers of value, which include: strengthening
our network advantage; delivering operational and
organisational efficiencies; driving disciplined capital allocation
and improved cash generation; and developing our people.
We are also committed to investing in innovation and
technology to explore the opportunities to support customers
more closely. These include developing innovative solutions
for omni-channel retail and e-commerce supply chains as well
as exploring the role of technology in delivering customer
insights and driving operational efficiencies.
Corporate Actions
We undertook a number of strategic actions during the year
with the formation of the Hoover Ferguson Group joint venture
in October 2016 and the divestment of our Aerospace business
in November 2016. Furthermore, in line with the Group’s
strategy of focusing on our core pallet, RPC and container
pooling businesses, we announced our intention to divest our
North America whitewood pallet business, CHEP Recycled in
August 2017.
Management
In keeping with the succession plan announced in August 2016,
Graham Chipchase joined Brambles on 1 January 2017 before
taking over as CEO from Tom Gorman on 20 February 2017.
Nessa O’Sullivan joined Brambles in October 2016 and
formally succeeded Zlatko Todorcevski as Brambles’ CFO
on 17 November 2016. Both Graham and Nessa bring with
them considerable leadership credentials and experience in
publicly-listed companies.
Although I have already previously acknowledged both Tom
and Zlatko’s contribution to the success of Brambles, I would
once again like to thank them for their many years of service
to the Group.
In February this year we announced an organisational
realignment and the opening of a new corporate office in
London in July 2017 to position the CEO, CFO and other senior
executives closer to the majority of Brambles’ operations
and customers. Importantly, Brambles remains an Australian
company listed on the ASX with the corporate Head Office
in Sydney.
With the Board’s support, our new management team
is committed to delivering long-term value for our
shareholders, customers and employees by addressing
our short-term challenges and building on Brambles’ strong
competitive position.
Board
Reflecting the CEO and CFO transitional arrangements,
Graham Chipchase and Nessa O’Sullivan were appointed
to the Board as Executive Directors on 20 February 2017 and
24 April 2017, respectively.
This year, we announced Christine Cross’ decision to retire
as a Non-Executive Director from Brambles’ Board effective
31 August 2017. Christine’s decision reflects her desire to
minimise her travel commitments and focus on her European
directorships and consultancy business. The Board thanks
Christine for her valuable contribution to Brambles over the
past three and a half years.
On behalf of all shareholders, I thank all of our employees
for their dedication and hard work and look forward to
their continuing contribution to the long-term success
of our company.
Stephen Johns
Chairman
Sales Revenue1
US$5,104.3m
Underlying Profit1
US$957.5m
Total Dividends
29.0 AU cents per share
Up 6% at constant currency
Down 1% at constant currency
Final dividend of 14.5 AU cents per share (30% franked)
2
1 Continuing operations
Letter from the
CEO
Our strategy to focus on the core drivers of value reflects
our priorities as we leverage Brambles’ strengths to
support our customers and deliver attractive returns for
our shareholders, over the long term.
Today, Brambles operates in an increasingly competitive
environment characterised by ongoing macroeconomic
uncertainty and a customer base navigating the challenges
of a rapidly evolving retail landscape and changing consumer
behaviour. In this context, our priority as a company is to build
upon the strength of our business model and competitive
advantage to position Brambles as a partner of choice for
our customers, as we help them build the supply chains of
the future.
2017 Performance
Brambles delivered constant-currency sales revenue growth
of 6% and Underlying Profit broadly in line with the prior year.
Return On Capital Invested (ROCI) decreased 2.3 percentage
points to 17.0% and Cash Flow from Operations increased
by US$72.7 million.
Our FY17 performance was driven by solid revenue growth
across most of our businesses, with notable contributions
from our global IFCO RPC businesses and pallets businesses in
Europe and Latin America. Our Underlying Profit performance
was impacted by challenges in our US pallets business, which
faced competitive and direct costs pressures. We are taking
steps to address these challenges and it was good to see new
business wins in the US pallets business during the second
half of the year. A full analysis of our financial results is on
pages 12 to 16 in the Operating & Financial Review.
Organisational Realignment
In February, I announced a realignment of Brambles’ global
organisational structure and a new executive leadership team.
This included a flattening of the structure to allow me to be
closer to the businesses and to achieve greater consistency
of approach across the Group. The executive team, outlined
on pages 20 to 21, also reflects a better balance between the
operating and functional leaders of our business. Following
the divestment of Aerospace and formation of the HFG joint
venture, Containers is no longer a separate operating segment
under the new structure.
People, Safety & Sustainability
Thanks to the professionalism of our people and deeply
embedded safety culture, the Brambles Injury Frequency
Rate has continued to improve and I am pleased to report
no fatalities occurred in our operations during the year.
During FY17, we made good progress towards our 2020
sustainability goals. The value of our inherently sustainable
business model continues to be recognised by our customers
and investors, who choose to partner with and invest in
Brambles to make a sustainable difference in their supply
chains and businesses. Details can be found on pages 4 and
5 in the Operating & Financial Review.
Strategy and Priorities
We will continue to build on Brambles’ supply chain solutions
strategy with a clear focus on the core drivers of value for
our customers, shareholders and employees. The five core
drivers are:
1. Growing and strengthening our network advantage that
we derive from the integral role we play in our customers’
supply chains. We are committed to strengthening our
industry-leading position and optimising our network
by investing in platform quality and differentiated,
value-enhancing customer solutions;
2. Delivering operational and organisational efficiencies
to reduce cost and improve productivity, by leveraging
our global scale and implementing global best practice
in areas such as procurement, plant automation and
transport optimisation;
3. Driving disciplined capital allocation and improved cash
flow generation by focusing our investment on core
businesses and innovation, and delivering asset efficiencies.
We will also seek to generate the cash needed to fully fund
both dividends and reinvestment in the business;
4. Innovating to create new value by investing in technology
that enhances our customer offering, product quality
and efficiency. This includes increasing our investment in
BXB Digital, a business established in 2016, to accelerate
digital innovation in the areas of smart assets and data
analytics; and
5. Developing world-class talent by empowering our
people with individual skills and capabilities, building
a leadership pipeline and fostering a safe, inclusive and
diverse organisation.
Outlook
By focusing on our strategic priorities, Brambles will continue
to deliver sustainable growth at returns well in excess of the
cost of capital. Through the cycle, we expect constant-currency
sales revenue growth in the mid-single digits and Underlying
Profit growth to exceed sales revenue growth. To ensure we
strike the right balance between growth and returns, ROCI
is expected to remain in the mid-teens. We will also focus
on generating sufficient cash to fully fund dividends and
reinvestment for growth, innovation, and the development
of our people.
Graham Chipchase
Chief Executive Officer
Cash Flow from Operations
US$591.5m
Up US$72.7m
Return on Capital Invested1
17.0%
Down 2.3 percentage points at
constant currency
Brambles Injury Frequency
Rate (BIFR)
6.6
Down from 9.7 in FY16
3
Operating Model
Brambles is the world-leading provider of supply chain logistics solutions
based on the provision of reusable pallets, crates and containers for shared
use by multiple participants throughout the supply chain, under a circular
‘share and reuse’ model known as pooling.
With in-depth knowledge of how supply chains work, Brambles has unique
expertise that leverages its network advantage to provide customers with
logistics solutions that improve the efficiency, safety and sustainability of
their supply chains.
Inherently Sustainable Operating Model
Brambles’ operating model follows the principles of the
circular and sharing economies, which create more efficient
supply chains by reducing operating costs and demand
on natural resources. By promoting the reuse of assets
among multiple parties in the supply chain, Brambles offers
customers a more efficient and sustainable alternative to
the use of disposable products or managing their own
proprietary platforms.
Network Advantage and Supply Chain
Expertise
Brambles’ operating model is underpinned by its superior
network advantage and industry-leading supply chain
expertise, which have been developed over 70 years of
managing customers’ supply chains.
With leading positions in over 60 countries, Brambles’ network
advantage comprises the superior scale and density of its
service centre network and the strength of its customer
relationships in every market in which it operates.
Sustainability Framework
Brambles’ sustainability framework organises the Group’s
sustainability activities and goals under three broad programs:
Better Business; Better Planet; and Better Communities.
The Group’s 2020 goals are incorporated into this framework
and address the material sustainability aspects of Brambles’
value chain. These goals are also aligned to the United
Nations Sustainable Development Goals (SDGs), in particular:
SDG 12 Responsible Consumption and Production, which
aligns with Brambles’ sustainable business model. Further
details of Brambles’ sustainability framework and 2020 goals
are located on Brambles’ website.
In FY17, Brambles’ Sustainability Risk Committee
conducted a review of the economic, environmental and
social sustainability risks to which the Group is subject.
This review identified material sourcing and safety as the
Group’s material sustainability risks. Details of the Group’s
FY17 safety performance and material sourcing are detailed
on pages 8 and 9 respectively. A full review of Brambles’
sustainability risks and performance will be included in the
2017 Sustainability Review scheduled for publication in
September 2017.
Share and reuse: How it works
1
1
PRODUCER
CONTAINERS
1
3
RPCs
2
3
3
GROWER
2
MANUFACTURER
PALLETS
RETAILER
2
1. Brambles provides standardised pallets, crates and
containers to customers from its service centres as
and when the customer requires.
2. Customers use this equipment and Brambles’ support
services to transport goods through the supply chain.
3. Customers either arrange for the equipment’s return to
Brambles or transfer it to another participant for reuse.
Using its network advantage and asset management
expertise, Brambles seamlessly connects supply chain
participants, ensuring the efficient flow of goods through
the supply chain. By reducing transport distances and the
number of platforms required to service the supply chain,
Brambles delivers savings in which all participants share.
Brambles retains ownership of its equipment at all times,
inspecting, cleaning and repairing it in order to maintain
appropriate quality levels. Under its share and reuse model,
Brambles generates sales revenue predominantly from
rental and other service fees that customers pay based
on their use of its platforms and services.
4
Operating & Financial Review Customer Value Proposition
Brambles is integral to its customers’ supply chains, optimising the flow of
goods across the fast-moving consumer goods, fresh produce, beverage,
retail and general manufacturing industries, globally.
With an inherently sustainable business model, superior network advantage
and unique expertise, Brambles helps customers achieve operating and
financial efficiencies otherwise not available through the use of disposable
alternatives or proprietary platforms.
End-to-End Supply Chain Solutions
Brambles plays an integral role in customers’ supply chains, working closely with all participants including manufacturers,
producers, growers and retailers. With end-to-end visibility, Brambles has unique insights into what impacts the safe, efficient
and sustainable operation of global supply chains.
By leveraging these insights and its unmatched expertise, Brambles offers customers comprehensive solutions that improve
the performance of the supply chain and help address the challenges associated with the increasing complexity and rapid
evolution of modern supply chains. Brambles’ suite of customer solutions comprises:
Platform Solutions
Brambles offers customers the widest range of supply chain
platforms including: pallets (timber, plastic and display), RPCs,
bins, specialised containers as well as unit-load containment
and safe handling equipment.
By eliminating the need for customers to purchase and
manage their own platforms, Brambles reduces the capital
requirements and complexity of customers’ operations while
simultaneously reducing waste from their supply chains.
System-Wide Solutions
Brambles conducts in-depth studies of customers’ supply
chains to map the flow of goods, information and platforms
in order to identify the causes of network inefficiencies and
product damage.
By determining the optimal mix of platforms and processes
for customers’ individual supply chains, Brambles can mitigate
network inefficiencies and ensure the safe and sustainable
transportation of goods through the supply chain.
Transportation Solutions
Brambles’ superior network scale provides a unique capability
to coordinate collaboration between multiple supply chain
participants to deliver transport efficiencies. This includes
matching and eliminating empty transport lanes, sharing
transport and contracting transport for and from customers.
Retail Store Solutions
Brambles works closely with customers to develop
store-solution strategies and consumer-facing platforms
that improve the efficiency of the shared supply chain
by increasing sales at lower costs to the supplier, retailer
and consumer.
These merchandising and fulfilment solutions, which include
full size and fractional display pallets, trays and RPCs,
effectively reduce the time, labour and activity required to
move goods from the point of production to the point of sale.
Manufacturing, Warehouse and Distribution
Centre Solutions
Using its experience in managing platforms, optimising
automated facilities and packaging performance testing,
Brambles has developed solutions that improve the overall
performance and efficiency of customers’ facilities.
These solutions include: customising customers’ platform
processes; optimising how customers configure, build and
protect product loads; and providing higher quality platforms
and engineering counsel to improve the performance of
automated facilities.
Environmental Benefits
Brambles’ supply chain solutions help customers address key sustainability issues by managing deforestation risks associated
with sourcing of wood for pallets and preventing the carbon emissions and solid waste associated with the production, use and
disposal of single-use platform solutions. In 2017, Brambles successfully helped customers:
Eliminate 2.5 million tonnes
of CO2 and 1.4 million tonnes
of waste by using pallets and
RPCs
Save 1.6 million cubic metres
of raw materials through the
repair and reuse of pallets
Save 1.6 million trees and
4,600 megalitres of water
through the share and reuse
of pallets and RPCs
Eliminate 4,329 tonnes of
food waste through the use
of RPCs
5
Operating & Financial Review Strategic Priorities
Brambles is committed to leveraging its global scale and industry-leading
expertise as it collaborates with its customers to build the supply chains
of the future.
Faced with a rapidly changing and increasingly competitive operating environment,
Brambles’ five strategic priorities are integral to the delivery of superior value for
customers, shareholders and employees.
Grow and
strengthen
its network
advantage
Deliver operational
and organisational
efficiencies
Drive disciplined
allocation of capital
and improved cash
flow generation
Innovate to
create new value
Develop
world-class
talent
Grow and Strengthen Our Network
Advantage
Brambles’ network advantage, comprising the scale and
density of its customer and service centre network and its
industry-leading asset management expertise, is critical to the
Group’s value proposition for both its customers and investors.
By investing in platform quality and a differentiated,
value-enhancing service offering, Brambles is committed
to optimising its network, growing its business and
strengthening its industry-leading position.
Deliver Operational and Organisational
Efficiencies
Through a focus on Group-wide operational and
organisational efficiencies, Brambles seeks to offset the
impact of cost inflation and competitive price pressures.
To achieve additional efficiencies, Brambles will seek to
leverage its global scale and implement global best practice
in areas such as procurement, plant automation and
transport optimisation.
Drive Disciplined Allocation of Capital and
Improved Cash Flow Generation
Brambles allocates capital to maintain and grow its existing
businesses, to drive innovation and to diversify its portfolio
of products and services.
Going forward, Brambles will adopt a more disciplined
approach to capital allocation focused on: growing businesses
with proven economic returns; a more measured expansion
of new businesses achieving the right balance between
near- and long-term returns; investing in innovation to
deliver differentiated customer solutions; and a more focused
strategy in relation to mergers and acquisitions.
A key strategic objective for the Group is improving the
cash generation of the business. Brambles aims to achieve
this through an increased focus on improving asset
utilisation, reducing equipment loss and lowering equipment
damage rates.
Innovate to Create New Value
Understanding customers’ evolving needs and
providing differentiated value-enhancing solutions is
core to the sustainability of Brambles’ business model
and competitive advantage.
Faced with a changing retail landscape, including the
expansion of e-commerce and omni-channel retail formats,
Brambles is investing in new platform solutions that enable its
customers to increase sales, gain greater market insights and
improve operational efficiencies.
Brambles is also increasing its investment in its BXB Digital
business, which is working to apply technology to collect
and transform data into services that track goods, optimise
operations and improve supply chain efficiency.
Develop World-Class Talent
Successfully attracting and retaining high calibre people is
integral to Brambles’ ongoing success.
Brambles’ key priorities for its employees are safety,
engagement and capability. The Group is committed to
fostering a culture of agility and innovation where employees
can grow their skills and capabilities through comprehensive,
world-class development programs.
6
Operating & Financial Review Investor Value Proposition
Brambles generates value through
a virtuous circle that leverages its
network advantage of scale, density
and expertise to achieve superior
operational efficiencies.
These efficiencies in turn generate
cash flow that can either be returned
to shareholders or reinvested in the
business to fund growth, innovation
and development of its people.
Scale-related
operational
efficiencies
Shareholders
First mover
advantage
Network scale,
density and expertise
Cash flow
generation
Reinvest in growth,
innovation and people
Long-term Value Creation and Superior Shareholder Returns
Brambles shares the efficiencies generated by its scale, density and expertise with its customers, providing a compelling value
proposition compared to alternatives. By providing customers with supply chain solutions in over 60 countries, Brambles offers
shareholders exposure to geographically diversified earning streams primarily from the global consumer staples sectors.
The supply chains served by Brambles also provide 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; and exploring the digitisation of supply chains.
Within this context, Brambles is committed to striking the right balance between growing its business and delivering superior
shareholder returns over the long term. By focusing on its core drivers of value, Brambles expects to deliver through the cycle:
Cash generation to fund growth, innovation
and shareholder returns
• Free Cash Flow sufficient to fully fund capital expenditure
and dividends
Dividend Reinvestment Plan
Brambles’ Board maintained the Dividend Reinvestment Plan
(DRP) for the 2017 financial year. Shares issued under the DRP
do not attract a discount. 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.
Sustainable growth and returns well in excess of the
cost of capital
• Sales revenue growth2 in the mid-single digits;
• Underlying Profit growth2 in excess of sales revenue
growth; and
• Return on Capital Invested in the mid-teens.
Dividend Policy and Payment
Brambles has a progressive dividend policy. Under this
policy, the Group seeks to maintain or increase dividend per
share each year, in Australian cents, subject to its financial
performance and cash requirements.
The Board has declared a final dividend for 2017 of 14.5
Australian cents per share, in line with the previous interim
and final dividend. The 2017 final dividend will be 30%
franked and is payable on 12 October 2017 to shareholders
on the Brambles register at 5.00pm on 14 September 2017.
The ex-dividend date is 13 September 2017.
Total dividends for the Year were 29.0 Australian cents per
share, in line with the prior year. Brambles paid the 2017
interim dividend of 14.5 Australian cents per share on
13 April 2017.
ESG Recognition
Third-party Environmental, Social and Governance (ESG) investor research consistently recognises Brambles’ strong
governance processes and the long-term sustainability of its business model and strategies. In 2017, Brambles was
placed amongst the leading companies in the global industrial services sector by the following ESG research firms:
2 At constant currency
7
Operating & Financial Review Key Performance Drivers and Metrics
Brambles monitors its performance and value creation through a number of non-financial and financial metrics.
These include:
Sales Revenue Growth
Key Drivers
• General increases in sales volumes in line with economic/industry trends;
• The rate at which the Group expands its operations (often described as ‘net new
business wins’); and
• Movements in pricing and changes in product/customer mix.
5-Year Performance – Continuing Operations
Sales revenue of US$5,104.3 million in FY17, reflected a five-year compound
annual growth rate of 7%, at fixed 30 June 2016 FX rates. This growth reflects the
expansion of the global CHEP pallets and IFCO RPC businesses through the ongoing
conversion of new customers to pooled solutions, new market entry and expansion
of the core product offering.
4,539
4,831
4,806
4,900
5,104
FY13
FY14
FY15
FY16
FY17
(US$m)
Underlying Profit
Key Drivers
• 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);
892
• Other operational expenses (primarily overheads such as selling, general and
administrative expenses); and
• Depreciation, as well as provisioning for irrecoverable pooling equipment.
951
950
985
958
5-Year Performance – Continuing Operations
Underlying Profit of US$957.5 million in FY17, reflected a five-year compound
annual growth rate of 6%, at fixed 30 June 2016 FX rates. The profit performance
in the period reflected sales revenue growth, the delivery of efficiencies primarily
in the pallets businesses, and the impact on FY17 Underlying Profit of challenges in
the US pallets business, losses in the HFG joint venture and increased investment
in BXB Digital. Key drivers of profit improvement in the period included: the Global
Supply Chain program to reduce operating costs by US$100 million from FY12 to
FY15, primarily through plant network optimisation; and reductions in indirect costs
worldwide as part of the One Better program.
FY13
FY14
FY15
FY16
FY17
(US$m)
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
19.3
5-Year Performance
Brambles measures its safety performance through 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 FY17,
recording a BIFR of 6.6, an improvement from 9.7 in FY16. 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.
8
15.6
13.3
9.7
6.6
FY13
FY14
FY15
FY16
FY17
Operating & Financial Review Cash Flow from Operations
Key Drivers
• Profitability;
• Capital expenditure; and
• Movements in working capital.
5-Year Performance – Continuing Operations
The five years to FY17 was a period of solid profit growth, facilitated largely by
significant investments in capital expenditure to support growth. In addition,
improved asset control practices contributed to reduced replacement capital
expenditure relative to sales growth. 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. In FY17, Cash Flow from
Operations largerly reflected improved working capital movements which offset
increases in capital expenditure (cash basis).
800
677
702
592
519
FY13
FY14
FY15
FY16
FY17
(US$m)
Return on Capital Invested (ROCI) and Brambles Value Added (BVA)
Key Drivers
• Capital expenditure on pooling equipment, which is primarily dependent on
the rate of sales growth. Brambles’ main capital cost exposures are raw materials,
primarily wood and plastic resin;
• Asset control factors, i.e. the amount of pooling equipment not recoverable or
repairable each year (and therefore requiring replacement); and
• Frequency with which customers return or exchange pooling equipment.
5-Year Performance – Continuing Operations
The trend in Brambles’ key return on capital metrics ROCI and BVA over the five-year
period ended 30 June 2017 reflected the Group’s expansion through both organic
growth and acquisitions. Return on Capital Invested declined from 18.8% in FY13 to
17.0% in FY17. The decline in FY17 reflected lower Underlying Profit and a significant
increase in Average Capital Invested in line with higher equipment balances to
support growth and the recognition of the Group’s investment in the HFG oil and
gas containers joint venture following its formation in FY17. Prior year comparatives
recognise Brambles’ Oil and Gas containers businesses in discontinued operations
and are therefore not captured in this chart.
The trend in BVA – a measure of economic profit over and above the cost of capital
invested to create that profit – was driven by the same factors as ROCI.
18.8
18.9
19.0
265
277
239
19.3
333
17.0
235
FY13
FY14
FY15
FY16
FY17
Brambles Value Added (US$m)
Return on Capital Invested (%)
Material Sourcing
Ongoing secure supply of materials for the production and repair
of pooling equipment, in particular wood used for pallets, is critical
to Brambles.
5-Year Performance
Brambles aims to procure 100% of its wood supply from certified sources by 2020.
In FY17, 99.1% of Brambles’ wood supply was from certified sources, representing
a 2.1 percentage point improvement on FY16 levels.
Brambles also aspires to achieve 100% chain-of-custody certification for its global
wood supply. This objective seeks to preserve and enhance the Group’s key resource
dependency and is directly linked to SDG 15 Sustainable Use of the World’s Forests
and SDG 13 Climate Action. In line with this goal, the percentage of wood with
chain-of-custody certification increased to 57% in FY17 from 48% in FY16.
94%
88%
97%
97%
99%
43%
43%
33%
57%
48%
FY13
FY14
FY15
FY16
FY17
% of certified sources
% of chain of custody
9
Operating & Financial Review Strategic and Operating Risks
Brambles’ risk management framework, as described in the Corporate Governance Statement on Brambles’ website, incorporates
effective risk management into its strategic planning processes and requires business operating plans to effectively manage key
risks. The key risks to Brambles’ ability to achieve its financial and strategic objectives and respective mitigating actions are:
Risk
Implication
Mitigating actions
Macro-economic conditions, or economic
conditions affecting the supply chain or
industries in which Brambles’ customers
operate, may affect demand for Brambles’
services and/or its financial performance
Industry trends (e.g. fragmentation of the
retail supply chain, growth of e-commerce,
demand for different pooling equipment
materials or designs) could affect demand
for Brambles’ current service offerings,
the value of its existing assets, and/or its
financial performance
• Continued focus on driving growth through investment
in expanded customer value proposition, and targeted
diversification in opportunities with attractive long-term
characteristics
Ongoing programs to:
• Drive customer intimacy throughout the supply chain
and uncover opportunities to leverage the Group’s
unique global scale and value proposition; and
• Create new products and service lines to meet
customers’ requirements
A failure to maintain adequate quality
standards may result in reduced customer
satisfaction, additional costs and affect the
Group’s financial performance
• Strict adherence to equipment quality standards,
including continuous monitoring of critical-to-quality
metrics to assess and ensure quality of products issued
to customers
Macro-economic
conditions
Industry trends in
the retail, grocery
and consumer
goods supply
chains
Maintaining the
quality of pooled
equipment in line
with customer
needs
Maintaining
control of pooling
equipment
The loss of pooled equipment is inherent in
Brambles’ business model. Failure to maintain
appropriate asset control and recovery
processes may result in additional costs and
affect the Group’s financial performance
Competitors
Brambles operates in competitive markets.
Increasing intensity of competitor activity
could affect Brambles’ market penetration
and financial performance
• 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
• Leverage Brambles’ unique global scale, network
advantage and sustainable business model to deliver
customer value and strengthen relationships
• Rejuvenated innovation program and establishment
of BXB Digital to explore the role of technology in
Brambles’ business and customer offering
Retailer acceptance
of pooled solutions
Innovation
Failure of
information
systems and
technology (IT)
and cyber security
Regulatory
compliance
Retailers are integral to Brambles’ operating
model. A reduction or loss of retailer support
for pooled solutions in their supply chains
could result in a loss of customers and/or
market penetration and adversely impact
Brambles’ financial performance
• Dedicated teams with executive-level responsibility for
strengthening retailer relationships, identifying retailer-
specific product requirements and ensuring retailers
understand Brambles’ value proposition
• Improving the value proposition for retailers through
the implementation of joint business plans
The successful innovation of products and
services is an important component of
Brambles’ ability to meet its financial and
strategic objectives
Brambles relies on its IT systems to operate
its business. A disruption to those systems
due to their failure, or the unauthorised
access to or use of them, could adversely
impact Brambles’ ability to serve its
customers or compromise customer or
employee data, resulting in reputational
damage and/or financial loss
• Formation of BXB Digital to engage in innovation of
products and services in the digital space
• Rejuvenated innovation program focused on existing
products and services
• Adoption and testing of: disaster recovery plans to
ensure IT systems can be recovered; and business
continuity plans to ensure the business can operate
in the event of interruptions or failure of its IT systems
• Implementing technologies and processes to ensure
systems are protected, unauthorised or inappropriate
activities are detected and responded to promptly
Brambles operates in a large number of
countries with widely differing legal regimes,
legislative requirements and compliance
cultures. A failure to comply with regulatory
obligations and local laws could adversely
affect Brambles’ operational and financial
performance and its reputation
• Code of Conduct which provides a framework for
detailed policies addressing regulatory compliance
• Adoption of Group-wide online compliance training
programs to supplement face-to-face training
• Dedicated Compliance Manager responsible for
monitoring the implementation and ongoing application
of compliance management systems
Attraction and
retention of talent
A failure to attract, develop and retain high
performing individuals could adversely
impact Brambles’ ability to implement and
manage its strategic objectives
• Detailed talent management and succession planning
processes to identify high potential employees and
prepare successors for senior executive positions
• Formal mentoring programs offered to all employees
10
Operating & Financial Review Financial Position and Financial Risk Management
Capital Structure
Brambles manages its capital structure to maintain a solid investment-grade credit rating. During FY17, 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.
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.
Funding and Liquidity
Brambles funded its operations during FY17 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.
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 2021. Borrowings under the 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 paid either annually
or semi-annually. At balance date, loan notes had maturities out to October 2025.
A €500 million Euro Medium Term Note matures in April 2018. Brambles expects to refinance this note prior to its maturity in
the debt capital markets. Consistent with its Liquidity and Funding Risk Policy, Brambles has sufficient undrawn committed bank
facilities to repay this obligation.
Net Debt and Key Ratios
Current debt
Non-current debt
Gross debt
Less cash
Net debt
Key ratios
Net debt to EBITDA
EBITDA interest cover
June 2017 June 2016
Change
471.7
(517.2)
(45.5)
(3.6)
(49.1)
673.4
2,059.0
2,732.4
(159.7)
2,572.7
FY17
1.73x
15.0x
201.7
2,576.2
2,777.9
(156.1)
2,621.8
FY16
1.70x
13.5x
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.
1.0
0.5
0.5
Maturity Profile of Committed Borrowing Facilities
and Outstanding Bonds
(% of total committed credit facilities)
US$b
25%
26%
16%
15%
9%
9%
< 1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
> 5 yrs
Bonds/notes
Bank borrowings
Undrawn bank facilities
As at 30 June 2017, Brambles’ total committed credit facilities
were US$4.1 billion. The average term to maturity of Brambles’
committed credit facilities as at 30 June 2017 was 3.7 years
(2016: 4.3 years). In addition to these facilities, Brambles enters
into operating leases for office and operational locations
and certain plant and equipment to achieve flexibility in the
use of certain assets. The rental periods vary according to
business requirements.
11
Operating & Financial Review Operating & Financial Review – continued
1. Financial Review
1.1 Group Overview
1.1.1 Summary of 2017 Financial Result
US$m
(Continuing operations)
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Sales revenue
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate
Underlying Profit
Significant Items
Operating profit
Net finance costs
Tax expense
Profit after tax from continuing operations
Loss from discontinued operations
Profit after tax
Average Capital Invested
Return on Capital Invested
Weighted average number of shares (m)
Basic EPS (US cents)
Basic EPS from continuing operations (US cents)
FY17
2,073.5
1,575.2
484.8
970.8
5,104.3
395.1
387.1
112.1
117.6
(54.4)
957.5
(186.1)
771.4
(98.7)
(227.8)
444.9
(262.0)
182.9
5,646.4
17.0%
1,588.3
11.5
28.0
FY16
2,010.5
1,550.1
457.8
881.7
4,900.1
439.4
386.0
100.9
97.3
(39.1)
984.5
(39.2)
945.3
(112.9)
(240.1)
592.3
(4.6)
587.7
5,096.4
19.3%
1,577.6
37.3
37.5
Change
Actual FX
3%
Constant FX
4%
2%
6%
10%
4%
(10)%
0%
11%
21%
5%
3%
12%
6%
(9)%
4%
6%
22%
(3)%
(1)%
(18)%
13%
5%
(25)%
(69)%
11%
(2.3)pp
1%
(69)%
(25)%
(17)%
13%
4%
(23)%
(69)%
12%
(2.3)pp
1%
(69)%
(23)%
Sales revenue from continuing operations was
US$5,104.3 million, an increase of 4% at actual FX rates over
the prior year. On a constant-currency basis, sales revenue
growth of 6% was primarily driven by: new business in Europe
pallets; expansion with new and existing RPC customers in
IFCO; and continued momentum in the Latin America pallets
businesses. Growth in the US pallets business was modest, as
increased competition put pressure on volume and pricing
growth in the period.
Underlying Profit of US$957.5 million from continuing
operations, which excludes Significant Items, declined 3% over
prior year at actual FX rates. Underlying Profit at constant
currency declined 1%, to be broadly in line with the prior year.
The Underlying Profit result reflects:
-
The contribution from sales growth across all the
operating segments with lower price realisation in the
major US and European pallets markets;
- Direct cost increases in the US pallets business due to:
increased costs associated with accelerated sales growth
in the prior year; structural changes to the network cost
structure; and other one-off costs relating to excess pallet
inventories during the year.
Increased depreciation charges across the Group; and
-
- Higher Corporate segment costs due to the inclusion of
the HFG joint venture losses of US$12.5 million and
BXB Digital investment costs of US$10.3 million. These
costs were partly offset by other cost reductions.
Operating profit from continuing operations (which
includes Significant Items) of US$771.4 million declined 18%
at actual FX rates and 17% at constant currency. Significant
Items of US$186.1 million included a US$120 million non-cash
impairment of the Group's investment in the HFG joint
venture and costs associated with the One Better program,
the CHEP and IFCO brand refresh and other organisational
restructuring initiatives announced in FY16 and FY17.
Profit after tax from continuing operations of
US$444.9 million declined 25% at actual FX rates. The
constant-currency decline of 23% reflected lower operating
profit and a higher effective tax rate on statutory profit before
tax of 33.9% (FY16: 28.8%), partly offset by a reduction in net
finance costs.
12
Operating & Financial Review
Operating & Financial Review – continued
Net finance costs of US$98.7 million decreased 13%, primarily
due to interest income on the HFG joint venture shareholder
loan and deferred consideration.
Tax expense of US$227.8 million decreased 5% largely
reflecting the geographic mix of profits. The effective tax rate
on Underlying Profit from continuing operations was 28.8%,
marginally below the prior year.
Profit after tax of US$182.9 million declined 69% at actual FX
and constant-currency rates and included a US$243.8 million
non-cash impairment of Brambles' North America recycled
pallets business, CHEP Recycled, which was classified as held
for sale and recognised in discontinued operations in FY17.
Average Capital Invested of US$5,646.4 million increased
11% at actual FX rates and 12% at constant currency due to:
- Higher pooling equipment balances to support volume
-
growth in the current year and the full-year impact of the
significant growth in the US pallet pool during FY16;
The impact of the Group's investment in the HFG joint
venture, which included the equity investment, deferred
consideration and a shareholder loan. The prior year
comparative has been restated to reflect the recognition
of Aerospace, Oil and Gas, and North America recycled
pallets businesses as discontinued operations.
Return on Capital Invested of 17.0% declined by
2.3 percentage points at actual FX and constant-currency
rates, due to lower Underlying Profit, largely in the US pallets
business and the increase in Average Capital Invested.
Basic EPS of US11.5 cents per share declined 69% in actual FX
and constant-currency terms, largely due to the impairments
of CHEP Recycled and the HFG joint venture investment.
Cash Flow from Operations of US$591.5 million increased by
US$72.7 million over the prior year as movements in working
capital offset increases in capital expenditure (cash basis) and
unfavourable movements in other cash flow.
- Movements in working capital resulted in a
-
US$104.3 million increase in cash flow due to the cycling
of one-off increases in prior year outflows associated with
standardisation of payments practices.
Capital expenditure (cash basis) increased
US$24.7 million, primarily due to the timing of payments
relating to higher capital commitments in FY16. This
increase is despite a reduction in capital spend across the
group in FY17 on an accruals basis.
IPEP expense increased US$14.5 million, primarily due to
a combination of volume growth across the Group and
higher unit pallet values used in the IPEP calculation for
both the Europe and Latin America pallets businesses.
- Other cash flow movements resulted in a decrease of
-
US$28.9 million, primarily reflecting reduced provisions
for employee-related payments in the current year, as
well as the payment of an earn-out relating to a prior year
acquisition.
Free Cash Flow after dividends was a deficit of
US$123.8 million, reflecting increased cash dividend payments
over the prior year. This is largely due to the neutralisation of
the Dividend Reinvestment Plan (DRP) in the current year.
Dividend payments were lower in the prior year as the impact
of the DRP was not neutralised.
1.2 Segment Analysis
1.2.1 CHEP Americas
US$m
Change
Actual
FX
3%
Constant
FX
4%
16%
3%
16%
4%
(9)%
13%
1.1.2 Cash Flow Reconciliation
US$m
Underlying Profit
Depreciation and
amortisation
EBITDA
Capital expenditure (cash
basis)
FY17
957.5
526.7
FY16
Change
984.5
502.1
(27.0)
24.6
Pallets
FY17
FY16
2,025.4 1,969.2
Containers
48.1
41.3
Sales revenue
2,073.5 2,010.5
1,484.2 1,486.6
(2.4)
(1,060.1)
(1,035.4)
(24.7)
Operating profit
377.3
426.3
(11)%
(10)%
Significant Items
(17.8)
(13.1)
Underlying Profit
395.1
439.4
(10)%
Proceeds from sale of PP&E
108.9
99.0
9.9
Working capital movement
(25.0)
(129.3)
104.3
Average Capital
Invested
1,958.7 1,750.4
12%
IPEP expense
Other
Cash Flow from
Operations
Significant Items
Discontinued operations
89.2
(5.7)
74.7
23.2
591.5
518.8
(50.0)
2.0
(41.9)
(13.4)
14.5
(28.9)
72.7
(8.1)
15.4
Financing costs and tax
(319.3)
(291.8)
(27.5)
Free Cash Flow
Dividends paid
Free Cash Flow after
dividends
224.2
171.7
52.5
(348.0)
(205.1)
(142.9)
(123.8)
(33.4)
(90.4)
ROCI
20.2% 25.1%
(4.9)pp
(4.8)pp
Corporate actions: CHEP Recycled, Brambles' North America
recycled pallets business, which was formerly part of
CHEP Americas, has been classified as held for sale and
recognised in discontinued operations in FY17, pending its
divestment. Prior year comparatives for CHEP Americas have
been restated.
Sales revenue
Pallets' sales revenue was US$2,025.4 million, an increase of
3% at actual FX rates. Constant-currency growth of 4% was
primarily driven by strong expansion in Latin America pallets
and modest volume growth in the US and Canada pallets
business.
13
Operating & Financial Review
Operating & Financial Review – continued
US pallets' revenue was US$1,513.7 million, up 2% comprising:
-
-
-
like-for-like volume growth of 1%, including improved
volumes in the second half of year following particularly
challenging trading conditions in the second quarter;
net new business growth of 1%, reflecting the rollover
impact of prior year contract wins and new business wins
during the year. The rate of net new business growth was
lower than prior years due to increased competitive
pressures and lower whitewood pallet prices, which
slowed the rate of new customer conversions to pooled
pallet solutions. The rate of net new business growth
increased in the final quarter of the fiscal year following
several contract wins; and
Reduced price realisation due to competitive pressures
and unfavourable customer mix. During the second half
of the year the business was also cycling strong price and
sales mix performances in the prior corresponding period,
primarily due to an increased proportion of sales from
higher cost-to-serve channels.
Canada pallets' sales revenue was US$241.2 million, an
increase of 2% on both an actual FX and constant-currency
basis, reflecting solid like-for-like volume growth and sales
mix benefits in the current fiscal year, which more than offset
the impact of prior year contract losses.
Latin America pallets' sales revenue of US$270.5 million
increased 12% at actual FX rates. Constant-currency growth of
18% largely reflected: strong like-for-like volume growth; net
new business growth particularly in Mexico, Brazil and Central
America; and solid pricing growth consistent with the
inflationary environment in the region.
Containers' sales revenue (comprising the IBCs and
Automotive businesses in the region) was US$48.1 million, an
increase of 16% on both an actual FX and constant-currency
basis, reflecting strong volume growth with new and existing
customers in both Automotive and IBCs.
Profit
Underlying Profit for the region of US$395.1 million declined
10% at actual FX rates over the prior year. The primary driver
of this decline was lower Underlying Profit in the US pallets
business reflecting: lower margins in line with increased
competition; higher cost-to-serve and increased depreciation
expenses relating to the accelerated sales growth in the
second half of the prior year; and structural changes to the
network cost structure. One-off costs relating to excess pallet
holdings and lower demand in the second and third quarter of
the fiscal year also impacted the performance of the business
in FY17.
The constant-currency decline of 9% reflected:
-
Volume, price and mix contributions of US$40 million,
reflecting strong growth in Latin America pallets, and
modest contributions from volume growth in the US and
Canada pallets businesses;
- Net plant cost increases of US$27 million, primarily in the
US pallets business, as higher pallet repair volumes
following strong growth in the second half of the prior
year, other structural cost increases and one-off costs
14
associated with excess pallet holdings were unable to be
fully offset by supply chain efficiencies. Higher operating
costs in the Canada pallets business associated with the
transition to the "block" type pallet and inflationary
impacts in the Latin America pallets business also
contributed to plant cost increases in the period;
- Net transport costs increases of US$19 million as supply
chain efficiencies did not fully offset additional costs
associated with higher pallet inventory balances and
structural cost pressures in the US pallets business;
- Depreciation expense increases of US$25 million due
-
to the significant capital investment in the US pallet pool
in the prior year in anticipation of higher growth,
as well as investments in pallets to support growth in
Latin America; and
Indirect cost increases of US$8 million, largely reflecting
higher IPEP expenses due to customer mix changes in the
US pallets business and a combination of volume growth
and higher unit pallet values in the Latin America pallets
business.
Operating profit of US$377.3 million declined 11% at actual FX
rates and 10% at constant currency. Significant Items of
US$17.8 million primarily related to the One Better program,
the roll out of the CHEP brand refresh in the US pallets
business and other restructuring initiatives.
Return on Capital
Return on Capital Invested was 20.2%, down 4.9 percentage
points, reflecting the decline in Underlying Profit and growth
in Average Capital Invested. The growth in Average Capital
Invested was primarily due to: capital expenditure to support
volume growth, particularly in Latin America; and the
significant growth in the size of the US pallet pool, particularly
in the prior fiscal year.
1.2.2 CHEP EMEA
US$m
Pallets
RPCs
FY17
1,358.3
FY16
1,343.1
Change
Actual
FX
1%
Constant
FX
5%
25.8
20.6
25%
16%
Containers
191.1
186.4
Sales revenue
1,575.2 1,550.1
Operating profit
Significant Items
375.1
(12.0)
382.2
(3.8)
Underlying Profit
387.1
386.0
Average Capital
Invested
1,568.4
1,464.5
3%
2%
(2)%
0%
7%
6%
5%
2%
4%
9%
ROCI
24.7%
26.4%
(1.7)pp
(1.2)pp
Sales revenue
Pallets' sales revenue was US$1,358.3 million, an increase of
1% at actual FX rates on the prior year. Constant-currency
growth of 5%, reflected strong volume growth in all regions
and price increases in Africa, India & Middle East.
Operating & Financial Review
Operating & Financial Review – continued
Europe pallets' sales revenue was US$1,194.6 million, in line
with prior year at actual FX rates. At constant currency, sales
revenue growth was 5%, comprising:
-
-
like-for-like volume growth of 1%, largely reflecting solid
demand in the fast-moving consumer goods and produce
sectors;
net new business growth of 4% driven by broadly equal
contributions from new contract wins across the region
and the rollover impact of contracts won during the prior
year; and
- modest price declines, in line with lower inflation-related
price indexation and specific pricing actions in the region.
Within Europe pallets:
- Northern Europe pallets' (comprising UK and Ireland)
-
sales revenue was US$304.0 million, a decline of 10% at
actual FX rates, reflecting the weaker British pound. At
constant currency revenue increased 3%;
Southern Europe pallets' (comprising Iberia, Italy, Turkey
and Greece) sales revenue was US$353.8 million, an
increase of 3% at actual FX rates and 4% at constant
currency;
- Western Europe pallets' (comprising France and Benelux)
sales revenue was US$257.8 million, an increase of 4% at
actual FX rates and 5% at constant currency; and
Central & Eastern Europe pallets' (including Germany,
Poland and the Nordics) sales revenue was US$279.0
million, an increase of 6% at actual FX rates and 7% at
constant currency.
-
Africa, India & Middle East pallets' sales revenue of US$163.7
million increased 10% at actual FX rates and 5% at constant
currency on the prior year. The increase was primarily driven
by price increases and net new business wins. Like-for-like
volumes were broadly flat during the period.
RPC sales revenue was US$25.8 million, an increase of 25% at
actual FX rates and 16% at constant currency, reflecting price
increases and strong like-for-like volume growth.
Containers' sales revenue (comprising the IBCs and
Automotive businesses in the region) was US$191.1 million, an
increase of 3% on the prior year at actual FX rates. Constant-
currency growth of 6% primarily reflected: customer and
product mix benefits and strong like-for-like volume growth
with Original Equipment Manufacturers (OEMs) in Automotive
Europe; like-for-like volume declines and lower new
equipment sales in IBCs; and the full year contribution of the
Kegstar keg pooling business.
Profit
Underlying Profit of US$387.1 million was broadly flat to prior
year at actual FX rates. Underlying Profit increased 4% at
constant currency, reflecting:
-
Volume, price and mix contributions of US$30 million due
to strong volume growth in the Europe pallets and
Automotive businesses as well as price and mix benefits
in both Africa, India & Middle East pallets and
Automotive businesses;
- Net plant costs decreases of US$3 million, primarily due
to supply chain efficiencies in Europe pallets;
- Net transport costs increases of US$3 million, as supply
chain efficiencies partially offset higher costs relating to
asset recovery activities in the Europe pallets businesses
and cost inflation in the Africa, India & Middle East pallets
businesses;
- Depreciation expense increases of US$8 million due to
investments in the pool to support volume growth; and
Indirect cost increases of US$8 million primarily related to
higher IPEP expense in European pallets largely due to
volume growth and higher unit pallet values.
-
Operating profit of US$375.1 million decreased 2% at actual
FX rates but increased 2% on a constant-currency basis.
Significant Items of US$12.0 million primarily related to the
One Better program and other restructuring initiatives
undertaken during the year.
Return on Capital
Return on Capital Invested was 24.7%, down 1.7 percentage
points, reflecting flat Underlying Profit and growth in Average
Capital Invested. The growth in Average Capital Invested was
primarily due to capital expenditure to support volume
growth.
1.2.3 CHEP Asia-Pacific
US$m
Pallets
RPCs
Containers
FY17
331.9
98.1
54.8
FY16
317.6
89.5
50.7
Sales revenue
484.8
457.8
Operating profit
110.9
100.6
Significant Items
(1.2)
(0.3)
Underlying Profit
112.1
100.9
Average Capital
Invested
427.8
413.0
Change
Actual
FX
5%
Constant
FX
1%
10%
8%
6%
10%
11%
4%
5%
6%
3%
6%
6%
2%
ROCI
26.2% 24.4%
1.8pp
1.1pp
Sales revenue
Pallets' sales revenue was US$331.9 million, an increase of 5%
at actual FX rates. Constant-currency growth of 1% reflected
modest pricing gains and like-for-like volume growth in
Australia & New Zealand. This was partially offset by lower
revenues in the Asia pallets businesses, primarily relating to
the ongoing reduction in plastic-pallet revenues in China.
Within Pallets:
-
-
Australia and New Zealand sales revenue was
US$290.0 million, an increase of 6% at actual FX rates and
2% at constant currency; and
Asia sales revenue was US$41.9 million, a decline of 6% at
actual FX rates and 3% at constant currency.
RPC sales revenue was US$98.1 million, an increase of 10% at
actual FX rates and 5% at constant currency, driven by solid
volume growth with new and existing customers.
15
Operating & Financial Review
- North America sales revenue was US$223.4 million, an
increase of 12% on both an actual FX and constant-
currency basis, reflecting improved pricing and strong
like-for-like volume growth with key retailers; and
- Other regions' (comprising South America and Asia) sales
revenue was US$74.7 million, an increase of 22% at actual
FX rates and 20% at constant currency, largely reflecting
the contribution from the IFCO Japan and Empacotecnia
(Colombia) acquisitions.
Profit
Underlying Profit was US$117.6 million, up 21% at actual FX
rates and up 22% at constant currency, primarily reflecting an
improved profit performance in the North America business
following revenue and cost challenges in the prior fiscal year.
At constant currency:
-
Volume, price and mix contribution of US$31 million,
largely driven by strong volume growth and pricing
impacts in North America and South America;
- Net plant costs decreases of US$1 million, largely due to
plant cost efficiencies in Europe;
- Net transport costs decreases of US$5 million driven by
strong performance in North America following
headwinds in the prior corresponding period relating to
the loss of advocacy of a major retailer;
- Depreciation expense increases of US$6 million due to
investments in the pool to support volume growth; and
- Other indirect costs increases of US$9 million, reflecting
increased costs in line with the growth.
Operating profit was US$116.7 million, an increase of 16% at
actual FX rates and 17% at constant currency, and included
Significant Items of US$0.9 million in the current period
relating to the IFCO brand refresh. Significant Items in the
prior corresponding period largely reflected the fair value gain
on the acquisition of IFCO Japan.
Return on Capital
Return on Capital Invested was 7.4%, up 1.0 percentage point,
reflecting strong Underlying Profit growth and modest
increases in Average Capital Invested.
Operating & Financial Review – continued
Containers' sales revenue (comprising the IBCs and
Automotive businesses in the region) was US$54.8 million, an
increase of 8% at actual FX rates. Constant-currency growth of
6% reflected strong volume growth in IBCs and the
Automotive business in Asia.
Profit
Underlying Profit was US$112.1 million, an increase of 11% at
actual FX rates and 6% at constant currency. Current year
performance includes a contribution to Underlying Profit of
US$23 million, which will not recur in FY18 due to the roll off
of a large Australian RPC contract and the impact of
automotive plant closures on a number of Australian
automotive contracts. This contribution also included the
earnings benefits associated with fully written-down assets
relating to these income streams.
At constant currency:
Volume, price and mix contribution was US$12 million;
-
- Net plant and net transport costs increased US$2 million
as supply chain efficiencies largely offset cost inflation;
- Depreciation expense decreased US$1 million; and
- Other indirect costs increased US$5 million, primarily in
China, relating to the impairment of automotive assets,
lower government subsidies and higher insurance costs.
Operating profit was US$110.9 million, an increase of 10% at
actual FX rates and 6% at constant currency, and included
Significant Items of US$1.2 million primarily relating to the
One Better program.
Return on Capital
Return on Capital Invested was 26.2%, up 1.8 percentage
points, reflecting the Underlying Profit growth and minimal
growth in Average Capital Invested.
1.2.4 IFCO
US$m
Sales revenue
FY17
970.8
FY16
881.7
Change
Actual
FX
10%
Constant
FX
12%
Operating profit
116.7
100.2
16%
17%
Significant Items
(0.9)
2.9
Underlying Profit
117.6
97.3
Average Capital
Invested
1,582.3 1,530.1
21%
3%
22%
4%
ROCI
7.4%
6.4%
1.0pp
1.1pp
Sales revenue
Sales revenue in IFCO RPCs was US$970.8 million, up 10% at
actual FX rates and 12% at constant currency, reflecting strong
growth with new and existing retailers in all regions. Regional
contributions were as follows:
Europe sales revenue was US$672.7 million, an increase of
8% at actual FX rates and 11% at constant currency,
reflecting strong volume growth with most retail partners
during the year. Net new business wins contributed 3%
growth with broadly equal contributions from contract
wins in the period and the rollover impact of contract
wins in the prior year;
-
16
Operating & Financial Review
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 Non-Executive Director of Goodman Group and 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: 70.
Graham Chipchase Chief Executive Officer
Chairman of the Executive Leadership Team
Joined Brambles at the beginning of January 2017 as Chief Executive Officer Designate and became
Chief Executive Officer on 20 February 2017. Prior to Brambles, Graham was Chief Executive Officer of
Rexam plc, one of the world’s largest consumer packaging companies, from 2010 to June 2016.
Graham had first joined Rexam in 2003 as Group Finance Director before moving to Group Director of
Plastic Packaging. Graham left Rexam in June 2016, after Rexam was successfully acquired by Ball
Corporation. He is also a Non-Executive Director of AstraZeneca plc and chair of its Remuneration
Committee. He holds a MA (Hons) Chemistry from Oriel College, Oxford and is a fellow of the Institute
of Chartered Accountants in England and Wales. Age: 54.
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 Director of
Sonae Group, Kathmandu, Hilton Food Group and Coca-Cola European Partners and previously
served on the Boards of Plantasjen, 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. Christine
will retire as a Director on 31 August 2017. Age: 66.
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: 50.
17
Board & Executive Leadership Team
Board & Executive Leadership Team - continued
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 Chairman of Foodbank Australia.
Previously, Tony was a Non-Executive Director of Coca-Cola Amatil, 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: 69.
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. 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. He is a Non-Executive Director of Coats Group and Chairman of The Old Bushmills
Distillery. David retired from his role as President of Global Supply & Procurement for Diageo plc on
31 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 pound procurement budget. 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: 60.
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: 64.
Carolyn Kay Non-Executive Director (Independent)
Member of the Audit Committee
Joined Brambles as a Non-Executive Director in June 2006. She is 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, a member of the Future Fund Board of
Guardians and a Board Member of the Australia-China Council. 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: 56.
18
Board & Executive Leadership Team
Board & Executive Leadership Team - continued
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. 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: 71.
Nessa O'Sullivan Chief Financial Officer
Joined Brambles in October 2016 and was appointed to the role of Chief Financial Officer on 17
November 2016. She became an Executive Director of Brambles in April 2017. Prior to joining
Brambles, Nessa worked for ten years at Coca-Cola Amatil in a number of senior financial and
operating roles, including Group Chief Financial Officer from 2010 to May 2015. She was also Group
Chief Financial Officer for Operations and Chief Financial Officer for Australia and New Zealand. Nessa
began her career working as an Auditor at Price Waterhouse in Dublin, New York and Sydney. She
spent two years at Tyco Grinnell Asia Pacific before joining PepsiCo/Yum! Restaurants in 1995. Over a
10-year period at Yum! Restaurants International, she held a number of senior finance, IT and strategy
roles, including five years as Chief Financial Officer for the South Pacific Region. Nessa is a Fellow of
the Institute of Chartered Accountants in Ireland. She holds a Bachelor of Commerce degree from
University College Dublin and is a graduate of the Australian Institute of Company Directors. Age 52.
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 Limited 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
strategy, 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: 52.
19
Board & Executive Leadership Team
Board & Executive Leadership Team - continued
Executive Leadership Team
Graham Chipchase Chief Executive Officer
Chairman of the Executive Leadership Team
(See biography on page 17.)
Carmelo Alonso-Bernaola Senior Vice President, Global Supply Chain
Joined Brambles in 1992 and was appointed Senior Vice President Supply Chain for CHEP’s global
operations in February 2011. At Brambles, Carmelo has served in a range of supply chain roles,
ranging from Quality Manager in Iberia, Logistics Director for South Europe, Vice President Logistics
Europe, Senior Vice President Supply Chain Europe to his current global role in Supply Chain. Carmelo
is a Spanish citizen, and holds an Agro-industrial Engineering degree from the Universidad Politécnica
of Madrid. He also holds a Master of Business Administration degree from IE Business School, Madrid,
and a Diploma of Manufacturing and Production Management. Age 51.
Phillip Austin President, CHEP Pallets Asia-Pacific
Joined Brambles in 1989 and became President CHEP Asia Pacific in October 2014, having previously
held the positions of President CHEP Australia and New Zealand and President CHEP Australia. Phillip
has held a variety of senior roles across Brambles, including Chief Financial Officer of the Brambles
Transport Group, Chief Financial Officer of CHEP Australia, Operations Manager for Wreckair Hire, and
executive roles in the CHEP Australia business responsible for Sales, Asset Management and Business
Development. Phillip is a board member of Enactus Australia and an Ambassador for the National
Association for Women in Operations (NAWO). He holds a Bachelor of Economics and a Masters of
Logistics Management, both from the University of Sydney. Age 51.
Robert Gerrard Group Vice President, Legal and Secretariat
Joined Brambles in 2003 as Senior Counsel, Brambles Group and was appointed Group Company
Secretary in February 2008. Prior to joining Brambles, he was General Counsel and Company
Secretary of Roc Oil Company Limited; Group Legal Manager, Cairn Energy plc; General Counsel and
Company Secretary of Command Petroleum Limited; and a solicitor and senior associate with Allen
Allen & Hemsley. He holds a Master of Law from the University of Sydney and Bachelor of Science
and Bachelor of Law degrees from the University of New South Wales. He is a Solicitor of the
Supreme Court of New South Wales. Age 55.
Rodney Hefford Chief Information Officer
Joined Brambles in June 2017 as Chief Information Officer. Before joining Brambles, Rod was Vice
President, Information Technologies and Services at Ball Corporation, where he integrated the IT
elements of Ball’s acquisition of Rexam and led the development of an IT strategy for the combined
entity. Prior to that, he was Group CIO for Rexam and held several CIO roles at Unilever. He holds a
Bachelors’ degree in Materials Engineering from Monash University, Australia, and a Master of
Business Administration from Warwick Business School in the UK. Age 53.
20
Board & Executive Leadership Team
Board & Executive Leadership Team - continued
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 a Master of Business
Administration degree from the University of Bayreuth, Germany. Age: 60.
Nessa O'Sullivan Chief Financial Officer
(See biography on page 19.)
Michael Pooley President, CHEP Pallets Europe, Middle East & Africa
Joined Brambles in 2002. Michael became President CHEP EMEA in February 2017, having previously
held the following positions within Brambles: President CHEP Europe; Senior Vice President Sales and
Customer Operations, CHEP USA; Managing Director, CHEP UK & Ireland; and Vice President
European Key Accounts. Before joining CHEP in 2002, Michael held management roles within the BOC
Group and, between 2013 and 2015, he worked for Exova Group Plc as Managing Director Europe
and was a member of its executive leadership team that took the company through an IPO to float on
the London Stock Exchange in 2014. Michael is a Chartered Mechanical Engineer and has a Master of
Business Administration degree from Henley Management College. Age 49.
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: 56.
Prasad Srinivasamurthy President, BXB Digital
Joined Brambles in March 2016 as the President of Brambles’ new Silicon Valley-based business, BXB
Digital. Before joining Brambles, Prasad was Senior Vice President of Internet of Things and Customer
Innovation at SAP, where he led a global organisation in building and commercialising new digital
innovations. Prior to that, Prasad held a variety of executive roles through which he created and
scaled new revenue streams for innovative software products in Customer Relationship Management
and Supply Chain Management. He holds a Masters degree in Computer Science from University of
Southern California and a Master of Business Administration degree from the University of California,
Berkeley. Age 46.
21
Board & Executive Leadership Team
Directors’ Report 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report
Executive Summary
Executive Summary
Business Performance
Business Performance
Remuneration for key management personnel in FY17 reflected Brambles' results and continued execution of Brambles' business
Remuneration for key management personnel in FY17 reflected Brambles' results and continued execution of Brambles' business
strategy, as detailed in the Operating & Financial Review on pages 4 to 16.
strategy, as detailed in the Operating & Financial Review on pages 4 to 16.
Annual Short-Term Incentive
Annual Short-Term Incentive
Annual Short-Term Incentive (STI) cash awards for continuing key management personnel ranged from 21% to 58% of base salary.
Annual Short-Term Incentive (STI) cash awards for continuing key management personnel ranged from 21% to 58% of base salary.
These STI outcomes were driven by Brambles’ financial performance and by executives’ achievement of specific personal strategic
These STI outcomes were driven by Brambles’ financial performance and by executives’ achievement of specific personal strategic
objectives. For the vast majority of executives, this was a substantial drop from their respective FY16 STI cash awards, reflecting the
objectives. For the vast majority of executives, this was a substantial drop from their respective FY16 STI cash awards, reflecting the
FY17 financial performance of the Company. Having regard to the Company’s performance and its remuneration policy, the Board
FY17 financial performance of the Company. Having regard to the Company’s performance and its remuneration policy, the Board
exercised its discretion and determined not to pay any FY17 STI cash award to the former Chief Executive Officer and the former
exercised its discretion and determined not to pay any FY17 STI cash award to the former Chief Executive Officer and the former
Group President, CHEP Pallets and to reduce the FY17 cash award for the former Chief Financial Officer.
Group President, CHEP Pallets and to reduce the FY17 cash award for the former Chief Financial Officer.
Long-Term Incentive
Long-Term Incentive
Brambles’ TSR performance over the three years to FY17 was below the median company in the ASX100, which resulted in 0% vesting
Brambles’ TSR performance over the three years to FY17 was below the median company in the ASX100, which resulted in 0% vesting
for that component of the Long-Term Incentive (LTI) awards granted in FY15. Over the same period, Brambles' sales revenue CAGR
for that component of the Long-Term Incentive (LTI) awards granted in FY15. Over the same period, Brambles' sales revenue CAGR
was over 6.0% and Brambles Value Added (BVA) was just below the $1,000.0 million midpoint, resulting in 40% of this component of
was over 6.0% and Brambles Value Added (BVA) was just below the $1,000.0 million midpoint, resulting in 40% of this component of
that LTI award to vest. This resulted in 20% of the total LTI awards granted in FY15 to vest.
that LTI award to vest. This resulted in 20% of the total LTI awards granted in FY15 to vest.
Disclosable Executive Salaries
Disclosable Executive Salaries
As a result of an organisational restructure announced during February 2017, there were changes to key management personnel
As a result of an organisational restructure announced during February 2017, there were changes to key management personnel
during FY17. The base salaries of the new key management personnel were determined in accordance with the Company's
during FY17. The base salaries of the new key management personnel were determined in accordance with the Company's
Remuneration Policy described in Section 2. Details of key management personnel remuneration, including those who departed
Remuneration Policy described in Section 2. Details of key management personnel remuneration, including those who departed
Brambles during the Year, are set out in Section 6.
Brambles during the Year, are set out in Section 6.
Non-Executive Directors' fees
Non-Executive Directors' fees
The 2016 annual review of fees resulted in a 3% increase for Non-Executive Directors' and the Chairman's base fees, which took effect
The 2016 annual review of fees resulted in a 3% increase for Non-Executive Directors' and the Chairman's base fees, which took effect
on 1 July 2016. The 2017 annual review of Non-Executive Directors fees was carried out in June 2017. Taking into account all relevant
on 1 July 2016. The 2017 annual review of Non-Executive Directors fees was carried out in June 2017. Taking into account all relevant
circumstances relating to the Company's performance, the Board decided that there would be no increase to fees for the Chairman
circumstances relating to the Company's performance, the Board decided that there would be no increase to fees for the Chairman
and other Non-Executive Directors for FY18. Non-Executive Director fees are detailed in Section 7.1. The next fee review will take
and other Non-Executive Directors for FY18. Non-Executive Director fees are detailed in Section 7.1. The next fee review will take
place during June 2018 and take effect from 1 July 2018.
place during June 2018 and take effect from 1 July 2018.
Remuneration Strategy
Remuneration Strategy
During the Year, the Remuneration Committee carried out its annual review the Brambles’ remuneration strategy, structure and policy,
During the Year, the Remuneration Committee carried out its annual review the Brambles’ remuneration strategy, structure and policy,
including share-based incentive plans. This review is undertaken to enable the Committee to be satisfied that the current strategy
including share-based incentive plans. This review is undertaken to enable the Committee to be satisfied that the current strategy
continues strongly to align executives' interests with those of the Company and its shareholders. As a result of this review, the Board
continues strongly to align executives' interests with those of the Company and its shareholders. As a result of this review, the Board
approved a number of key changes to the Company's remuneration strategy. The changes are detailed in Section 3.1 of this report.
approved a number of key changes to the Company's remuneration strategy. The changes are detailed in Section 3.1 of this report.
The key changes include:
The key changes include:
For STI awards:
-
For STI awards:
-
-
-
-
-
These changes will be implemented with effect from FY18.
These changes will be implemented with effect from FY18.
For LTI awards:
For LTI awards:
- Dividing the TSR component into two equal tranches: one tranche continuing with an ASX 100 TSR comparator and, for the
- Dividing the TSR component into two equal tranches: one tranche continuing with an ASX 100 TSR comparator and, for the
other tranche an international comparator TSR metric (MSCI World Industrials) to reflect the global nature of the Company’s
other tranche an international comparator TSR metric (MSCI World Industrials) to reflect the global nature of the Company’s
businesses; and
businesses; and
For the Sales CAGR matrix, replacing the BVA gateway with a ROCI gateway.
For the Sales CAGR matrix, replacing the BVA gateway with a ROCI gateway.
Replacing BVA with Underlying Profit as the key STI financial metric; and
Replacing BVA with Underlying Profit as the key STI financial metric; and
Increasing the amount of annual STI cash awards based on financial results from 70% to 80%.
Increasing the amount of annual STI cash awards based on financial results from 70% to 80%.
-
-
These changes require amendments to the 2006 Performance Share Plan for which shareholder approval will be sought at the
These changes require amendments to the 2006 Performance Share Plan for which shareholder approval will be sought at the
2017 Annual General Meeting. Subject to that approval being obtained, these changes will be implemented with effect from
2017 Annual General Meeting. Subject to that approval being obtained, these changes will be implemented with effect from
FY18.
FY18.
Changes to the Company’s minimum shareholding requirements including an increase in the CEO’s shareholding requirement
Changes to the Company’s minimum shareholding requirements including an increase in the CEO’s shareholding requirement
from 100% to 150% of base salary, as well as a requirement for Executive Directors to maintain at least 50% of the minimum
from 100% to 150% of base salary, as well as a requirement for Executive Directors to maintain at least 50% of the minimum
shareholding for 12 months after ceasing employment with the Company.
shareholding for 12 months after ceasing employment with the Company.
-
-
-
-
Contents
Contents
1. Background
1. Background
2. Remuneration Policy and Framework
2. Remuneration Policy and Framework
3. Remuneration Structure
3. Remuneration Structure
4. Performance of Brambles and At Risk Remuneration
4. Performance of Brambles and At Risk Remuneration
5. Employee Share Plan
5. Employee Share Plan
6. Executive Directors and Disclosable Executives
6. Executive Directors and Disclosable Executives
7. Non-Executive Directors’ Disclosures
7. Non-Executive Directors’ Disclosures
8. Remuneration Governance
8. Remuneration Governance
22
Directors’ Report – 2017 Remuneration Report Directors’ Report 2017 Remuneration Report continued
1. Background
The Remuneration Report provides information on Brambles’
remuneration policy, the link between that policy and the
performance of Brambles and remuneration information about
Brambles’ Key Management Personnel. Brambles’ Key
Management Personnel are its:
1. Non-Executive Directors;
2. Executive Directors; and
3. Group executives who have authority and responsibility for
planning, directing and controlling the Group’s activities.
Due to the organisational restructure carried out during
the Year, and the consequent changes to the roles and
responsibilities of the executives comprising the
Executive Leadership Team (ELT), the Board has determined
that the executives who come within this definition are
those set out in Section 6.2.
In this report, executives coming within paragraphs 2 and 3
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.
1.2 Basis of Valuation of Equity-Based Awards
Unless otherwise specified, the fair values of the STI and
LTI share awards included in the tables in this report have been
estimated by EY 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 21 on pages 88 and 89 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, which is not less than the 5-day volume-weighted
average share price prior to the grant date. This is termed a
"face value approach".
1.3 Clawback 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 awards that have
been granted but which have 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.
Subject to obtaining shareholder approval at the 2017 Annual
General Meeting, the Board proposes to broaden its discretion
to cancel STI and LTI share awards which have been granted
but which have not vested in the following circumstances:
-
-
to protect the financial soundness of the Company or a
related body corporate;
to respond to an exceptional event which has a material
impact on the value of the Company or a related body
corporate;
-
-
-
-
to respond to any material inaccuracy in the assessment of
the performance of a participant where the inaccurate
assessment contributed to the grant of the award;
to respond to any misrepresentation, material
misstatement, or material inaccuracy in the measurement
of the financial position or performance of the Company
(or any related body corporate), where the
misrepresentation, misstatement or inaccuracy contributed
to the grant of the award;
in light of any subsequent or adverse development
regarding the personal performance of a participant, the
performance of his or her business unit or the performance
of the Company;
if a participant in the 2006 Share Plan:
-
-
-
has engaged or participated in conduct which
adversely affects, or is likely to adversely affect, the
financial position or reputation of the Group or a
Group Company;
is under investigation for misconduct, where such
misconduct may result in financial and/or reputational
impact to the Company or a related body corporate;
or
has hedged the value, or entered into a derivative
arrangement in respect of any unvested award or has
granted a security interest over an award or the share
to which it relates.
23
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
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.
All 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 resignations or terminations
for cause, all unvested STI and LTI share awards are forfeited.
The remuneration structure and the key features of Fixed and
At Risk Remuneration are summarised in Table 3.1.1 and
diagrammatically represented in the diagram that follows
Table 3.1.1. The application of the At Risk element of
remuneration is further described in Section 4.
3.1 Changes to Brambles' Remuneration Structure and Policy
Each year, the Remuneration Committee reviews the executive
remuneration strategy, including all elements of the
remuneration structure and policy, to satisfy itself that it
continues to align with the Company's business strategy,
supports the delivery of the Company’s financial performance
and the creation of shareholder value.
As a result of this review, the Board has approved a number of
proposed changes to the Company's remuneration strategy.
The changes to the STI awards will be implemented with effect
from FY18. The changes to the LTI awards will also be
implemented with effect from FY18, subject to obtaining
shareholder approval to the necessary amendments to the
2006 Share Plan at the Company's 2017 Annual General
Meeting.
The principal change is to replace BVA – an economic value
added measure that has been in place since 2002 as a
performance condition in the STI and LTI awards with an
Underlying Profit condition and a Return on Capital Invested
(ROCI) condition respectively.
BVA has been beneficial in the past as it focused executives on
the economic value that is added through the Company’s
investment and performance by measuring the relationship
between profit and the cost of capital (see Section 3.2).
However, BVA is a complex measure and has limited relevance
to executives at lower levels of the Brambles organisation. The
Committee endorsed a proposal to use measures that have a
clearer “line of sight” for all executives, namely the use of
Underlying Profit for STI awards, and ROCI for LTI awards. In
addition, the use of these two metrics will more closely align
executives with the financial goals of the Company.
2. Remuneration Policy and Framework
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 3.2 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 year-end. This approach provides a sound basis for
delivering a non-discriminatory pay structure for all Group
employees.
3. Remuneration Structure
Remuneration is divided into those components not directly
linked to performance (Fixed Remuneration) and those
components which are variable and directly linked to Brambles’
financial performance and the delivery of personal strategic
objectives (At Risk Remuneration).
Fixed Remuneration generally consists of base salary, 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 on Chart 3.3.1.
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. If awards vest, 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.
24
Directors’ Report – 2017 Remuneration Report Directors’ Report 2017 Remuneration Report continued
STI Awards
In addition to the replacement of the BVA performance
condition with the Underlying Profit measure, the amount of
annual STI awards that is determined by the achievement of
financial objectives will be increased from 70% to 80%, thus
placing a greater emphasis on the achievement of financial
results. The balance of STI cash awards will be based on the
achievement of personal strategic objectives.
All executives will also have a measure based on the Brambles
Group Free Cash Flow to emphasise the importance of cash
generation to the Company.
LTI Awards
Annual LTI awards consist of two components: half based on a
relative TSR measure and half on a sales revenue CAGR with a
BVA hurdle (see Section 4.2 for further details).
The proposed changes to the LTI awards are as follows.
From FY18, the relative TSR component will comprise half of the
LTI award but will be split across two tranches:
-
-
half will continue to be on TSR against the ASX100; and
the other half will be TSR against the MSCI World
Industrials, using 50 companies either side of Brambles’
(rolling 12-month average) market capitalisation.
The introduction of an international comparator index, the
MSCI World Industrials, reflects the global nature of Brambles'
business. The Company operates in over 60 countries and more
than 90% of its revenue is from locations outside of Australia.
Performance against both the ASX100 and the MSCI World
Industrials will be based on the standard ranking approach, with
vesting commencing at the 50th percentile progressively
vesting to full vesting at the 75th percentile as per the table
below.
TSR Percentile
% Vesting of Shares
Below Threshold
Below 50th
No vesting
Threshold
50th
50%
Between
Threshold and
Maximum
Between 50th and
75th
Pro rata straight-
line vesting
Maximum
75th and above
100%
From FY18 onwards, it is proposed that the Sales CAGR/BVA
matrix component of LTI awards be replaced with a Sales
CAGR/ROCI matrix of similar design to the existing matrix.
LTI targets for LTI awards granted for the FY16-18 and
FY17-19 Performance Periods will not be changed and will
continue to reflect the original targets as disclosed in the
2016 Annual Report and this Annual Report respectively.
The LTI changes are summarised in the table below.
LTI Plan
External metric
LTI plans to FY17
50% based on
relative TSR against
ASX100
LTI plans from
FY18 onwards
25% based on
relative TSR against
ASX100
25% based on
relative TSR against
MSCI World
Industrials Index
Internal metric
50% based on Sales
CAGR/BVA matrix
50% based on Sales
CAGR/ROCI matrix
Minimum Shareholding Requirements
The Board has also approved changes to Brambles' minimum
shareholding requirements for Disclosable Executives (and all
other ELT members) to require Disclosable Executives to hold a
meaningful stake in the Company and to assist in aligning their
interests with those of its shareholders. The requirements are:
-
The CEO’s minimum shareholding has been increased to
150% of base salary, with other ELT members' minimum
shareholding required to be 100% of their respective base
salaries, to be built up over 5 years;
- Whilst building their minimum shareholding requirement,
ELT members will not be permitted to sell Brambles shares
other than to pay tax obligations they incur by reason of
STI or LTI awards vesting, until they have achieved 100% of
their shareholding requirements;
- Where an Executive Director steps down from their
Executive Director position but continues to be employed
by the Company, they will, under the Company's Securities
Trading Policy, need the Chairman’s approval to deal in
Brambles shares; and
Executive Directors who cease to be employees of the
Company shall be required to retain at least 50% of their
minimum shareholding for the 12 months following their
cessation of employment.
-
25
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
Table 3.1.1 – Remuneration Structure 2017 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)
STI cash award
Personal
Strategic
Measures
(comprising
30% of the STI
cash award)
-
-
-
-
-
-
-
BVA
Cash Flow
from
Operations
Profit After
Tax (PAT)
Safety
Business
strategy and
growth
objectives
Customer
satisfaction
and retention
Employee
engagement
STI share award
(deferred
equity)
As per STI cash
award
LTI share award
(Three-year
Performance
Period)
Relative TSR
(comprising half of
the LTI share award)
26
Rationale
Performance level required
for payment
N/A
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.
Financial measures 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.
Personal strategic objectives are set to
link executives’ performance to Brambles’
overall strategic objectives.
The key levels of performance possible
against each of the financial measures
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).
Personal strategic objectives and their
associated performance measures are set
at the beginning of the financial year and
assessed by the Remuneration
Committee at year-end.
Provides continuing alignment of
executives' interests with shareholders’
for an additional two 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. two-
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
stocks over the same period of time.
-
-
-
50% of LTI share awards will vest if
the Company's relative TSR
performance over the three-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
three-year Performance Period; and
If Brambles’ TSR performance is
between these two levels, vesting
will be on a pro rata straight line
basis.
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
Remuneration
Element
Performance
Measures
Rationale
Performance level required
for payment
LTI share award
(Three-year
Performance
Period)
Long-Term sales
revenue and BVA
growth (comprising
half of the LTI share
award)
Profitable growth
Half of the LTI share award incentivises
both long-term sales revenue and BVA
growth. Vesting is based on achievement
of sales revenue targets with three-year
performance targets set on a CAGR basis.
The sales revenue growth targets are
underpinned by BVA hurdles. This is
designed to drive profitable business
growth, to ensure quality of earnings is
maintained at a strong level and to
deliver increased shareholder value. Both
sales revenue CAGR and BVA are
measured in constant currency.
Each year, a sales revenue CAGR/BVA
matrix is set by the Remuneration
Committee for each LTI share award
based on budget targets approved by the
Board. The matrix is published in the
subsequent Remuneration Report. This
allows the Board to set targets for each
LTI share award to reward strong
performance in the light of the prevailing
and forecast economic and trading
conditions.
The sales revenue CAGR/BVA matrix
provides performance focus over a 3-year
period.
27
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
Diagrammatic representation of Brambles' Remuneration Structure 2017
LTI SHARE AWARD
Size of grant calculated as percentage of salary and based on:
-
TSR performance against the ASX100 median-ranked company. (Vesting starts
at median with full vesting for outperformance of median by 25%); and
Sales revenue compound annual growth rate with BVA hurdle.
-
Awards subject to performance testing at end of three years (see Section 4.2 for
details).
AT RISK REMUNERATION
STI SHARE AWARD
Size derived from size of STI cash award.
Awards vest subject to continued employment at second anniversary of grant (see
Section 4.1 for details).
STI CASH AWARD
Size determined by performance against financial objectives (including BVA, PAT
and cash flow) and personal strategic objectives (see Section 4.1 for details).
FIXED REMUNERATION
Fixed remuneration consists of base salary, superannuation and benefits.
3.2 Remuneration and the Link to Business Strategy
Brambles’ business strategy is set out in the Operational & Financial Review on pages 4 to 7. 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 financial objective (called Financial KPIs in this report) 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. Going forward, the replacement of BVA with
ROCI in the sales CAGR component of the LTI awards will maintain executive alignment with the sustainable growth strategy
and enable them to focus on delivering growth in excess of the cost of capital. In addition, replacing BVA with Underlying
Profit in the STI plan will align executives with strategy of delivering underlying profit growth in excess of sales revenue growth;
Recruiting and retaining high-calibre executives: Remuneration packages for executives are designed to be competitive to
assist Brambles in attracting talented managers and to reward strong performance. The award of a significant proportion of
executives’ STI awards as shares, which do not vest for two years 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 strategic objectives (called Personal KPIs in this report). These include objectives
focused 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; and
- 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, CAGR and ROCI measurements and the methods by which they are calculated are included in the Glossary
on pages 120 and 122.
28
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
3.3 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 3.3.1 below illustrates the level of actual remuneration received by Disclosable Executives compared with their respective total
remuneration package mix. The remuneration mix ("Rem Mix" in Chart 3.3.1) is the Disclosable Executive’s base salary plus his or
her STI cash and STI share awards, assuming the maximum level of performance (see Section 4.1) and full vesting of all LTI share
awards.
The respective columns of Chart 3.3.1 labelled Actual comprise:
-
-
-
-
Base salary: contains base salary for FY17;
STI cash: the STI cash award received in respect to FY17 performance (see Section 4.1);
STI shares: the STI share award earned in respect to FY17 performance, the vesting of which is deferred until FY19 (see Section
4.1); and
LTI shares: the proportion of the FY15-FY17 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 3.3.1- Remuneration Mix
N
O
I
T
A
R
E
N
U
M
E
R
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
32%
22%
22%
7%
7%
7%
7%
16%
27%
27%
3%
17%
17%
29%
21%
21%
6%
6%
24%
24%
24%
30%
30%
29%
29%
Rem Mix:
CEO, CFO
Actual:
CEO
Actual:
CFO
Rem Mix:
Group
President
IFCO
Actual:
Group
President
IFCO
EXECUTIVES
Rem Mix:
President
EMEA
Actual:
President
EMEA
Base Salary
STI Cash
STI Shares
LTI
29
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
4. Performance of Brambles & At Risk
Remuneration
As outlined in the Operating & Financial Report on pages 4 to
16, FY17 business results were as shown below.
Financial measure
Sales revenue
Operating profit
Profit after tax
Brambles Value Added
FY17 result
(US$m)
5,104.3
Change from FY16
(constant currency)
6%
771.4
444.9
235.1
(17%)
(23%)
Brambles' TSR for the three-years to 30 June 2017 was
16.814%.
At Risk Remuneration for Disclosable Executives is entirely
dependent upon performance against Financial and Personal
KPIs set by the Remuneration Committee.
4.1 STI Key Performance
Disclosable Executives have the opportunity to receive annual
STI cash and share awards based on performance against
Financial 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
Operations
Pallets BVA
Pallets Cash Flow from
Operations
Level of performance achieved
during the Year2
Below Threshold
Below Threshold
Achieved Target
Below Threshold
Below Target
Pallets Europe BVA
Between Threshold and Target
The following table summarises the components and weighting
of Financial KPIs for STI cash awards for Disclosable Executives:
Pallets Europe Cash Flow
from Operations
Below Target
Disclosable
Executive
Financial KPIs
Personal
strategic
objectives
KPIs
IFCO BVA
IFCO Cash Flow from
Operations
Achieved Maximum
Achieved Target
Segment
BVA /
Sales
-
Group
BVA
30%
Group
PAT
20%
Group
cash
flow
20%
Segment
cash
flow
-
25%
25%
-
-
20%
30%
30%
CEO, CFO
Group
Presidents:
Pallets,
IFCO;
President
Pallets
EMEA
Details of the STI cash awards payable to Disclosable Executives
and the STI cash awards 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 Table 4.1.1. 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 used to determine the number of STI awards
granted is the five-day volume weighted average share price
prior to the grant date.
Based on the assessment in Table 4.1.1, the former CEO
(T Gorman) would have been eligible for an STI cash award of
US$475,930, the former CFO (Z Todorcevski) would have been
eligible for an STI cash award of US$169,444 and the former
Group President, Pallets (P Mackie) would have been eligible
for an STI cash award of US$38,104. The Board has discretion
to determine whether STI cash awards should be made in any
given year. In the exercise of this discretion, having regard to
the Company’s overall FY17 financial and share price
performance, and the Company’s remuneration policy, the
Board has determined that no STI cash awards should be made
to the former CEO and Group President, Pallets and that the
former CFO’s STI cash award should be reduced to US$108,156
to reflect his performance outcomes against his personal
strategic objectives only (this amount also reflects a pro-rating
for his period of service in FY17).
1 Definitions of BVA, PAT and Cash Flow from Operations measurements and the methods by which they are calculated are included in the Glossary on pages 120
and 122.
2 Financial targets set for FY17 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.
30
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
4.1.1 Actual STI Cash Payable and Forfeited for FY17
Name
Disclosable Executives
G Chipchase
N O’Sullivan
W Orgeldinger
M Pooley
Former Disclosable Executives
T Gorman
Z Todorcevski
P Mackie
% of Target
Financial KPIs
achieved
% of Personal
KPIs achieved
Maximum
STI cash as %
of base salary
% of maximum
STI cash payable
% of maximum
STI cash forfeited
29%
29%
100%
21%
29%
29%
0%
90%
90%
90%
88%
86%
100%
45%
90%
90%
90%
75%
90%
90%
90%
31%
31%
65%
28%
0%
20%
0%
69%
69%
35%
72%
100%
80%
100%
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 President of Pallets may not exceed 130% of those executives' respective base salaries.
The maximum value of LTI awards for the Group President of IFCO 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 Revenue CAGR/BVA LTI Performance Matrix for FY16 to FY18
The table below 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 Remuneration 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.
Vesting %
Sales revenue CAGR3
4%
5%
6%
7%
8%
9%
Cumulative three-year BVA at fixed
30 June 2016 FX rates (US$m)
950
-
20%
40%
60%
80%
100%
1,150
20%
40%
60%
80%
100%
100%
1,350
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$1,000.0
million would provide vesting of 30%. 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$1,100.0 million would provide
vesting of 70%.
3 Three-year CAGR over base year is used.
31
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Directors’ Report 2017 Remuneration Report continued
4.2.3 Performance of LTI Share Awards Under the 2006 Share Plan
The following tables 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
FY13
FY14
FY15
Performance condition
Period
company’s TSR4
award): period to 30 June 2017
Start of Performance
Out-performance of median
Vesting triggered (% of original
Relative TSR
Relative TSR
Relative TSR
1 July 2012
29.75 percentage points
84.17% LTI TSR award
1 July 2013
35.89 percentage points
100% LTI TSR award
1 July 2014
16.81 percentage points
0.0% LTI TSR award
The following table provides similar details for Awards that have yet to be tested:
Awards
made
during
FY16
FY17
Performance condition
Period
median company’s TSR (%)
date (% of original award)
Start of Performance
Out-performance of
maintained until earliest testing
Relative TSR
Relative TSR
1 July 2015
(3.56) percentage points
0.0% LTI TSR awards
1 July 2016
(16.72) percentage points
0.0% LTI TSR awards
Period to 30 June 2017:
vesting if current performance is
Level of Vesting of LTI Share Awards based on Sales Revenue CAGR and BVA Performance:
Awards
made
during
FY13
FY14
FY15
Performance condition
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Start of Performance
Period
1 July 2012
1 July 2013
1 July 2014
Vesting triggered (% of original award):
prior period and period to 30 June 2017
30.0% of LTI sales revenue CAGR/BVA awards
50.0% of LTI sales revenue CAGR/BVA awards
40.0% of LTI sales revenue CAGR/BVA awards
The following table provides similar details for awards that have yet to be tested:
Awards
made
during
FY16
FY17
Performance condition
Sales revenue CAGR/BVA
Sales revenue CAGR/BVA
Start of Performance
Period to 30 June 2017 vesting if current performance
Period
is maintained until earliest testing date (% of original award)
1 July 2015
1 July 2016
40.0% LTI sales revenue CAGR/BVA awards
0.0% LTI sales revenue CAGR/BVA awards
Total Level of Vesting of LTI Share Awards:
The combined vesting of the two LTI components is shown below.
Awards
made
Start of
End of Performance
during
performance period
Period
Total vesting (TSR and sales revenue CAGR/BVA combined)
FY13
FY14
FY15
1 July 2012
1 July 2013
1 July 2014
30 June 2015
30 June 2016
30 June 2017
57.1%
75.0%
20.0%
4 Percentage out-performance of the median company’s TSR against the S&P/ASX100 Index.
32
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Directors’ Report 2017 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. 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
Vesting condition
STI Awards
TSR LTI Awards
100% vesting based on continuous employment
50% vesting if TSR is equal to the median-ranked company. 100% vesting if 25% above the
median-ranked company.
FY14-FY16 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$800m over the three-year period. 100%
vesting occurs if CAGR is 7% and BVA is US$1,200m over the three-year period.
FY15-FY17 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$800m over the three-year period. 100% vesting
occurs if CAGR is 7% and BVA is US$1,200m over the three-year period.
FY16-FY18 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$700m over the three-year period. 100% vesting
occurs if CAGR is 7% and BVA is US$1,000m over the three-year period.
FY17-FY19 BVA LTI Award
20% vesting occurs if CAGR is 5% and BVA is US$950m over the three-year period. 100% vesting
occurs if CAGR is 7% and BVA is US$1,350m over the 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
awards vest on the second anniversary of their grant date, subject to continued employment. The LTI TSR awards vest on the third
anniversary of their grant date, subject to continued employment and meeting a TSR performance condition. The LTI BVA vest on
the third anniversary of their grant date, subject to continued employment 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 14-16 BVA
25 September 2013 25 September 2019 A$8.45 (STI)/
A$8.16 (BVA)/
A$4.19 (TSR)
STI/ LTI TSR/ LTI 15-17 BVA
25 September 2014 25 September 2020 A$9.15 (STI)/
A$8.83 (BVA)/
A$5.00 (TSR)
STI/ LTI TSR/ LTI 16-18 BVA
25 September 2015 25 September 2021 A$9.17 (STI)/
A$8.91 (BVA)/
A$4.07 (TSR)
50% (BVA) 100% (TSR) vested on
25 September 2016
STI 100% vested on
25 September 2016
LTI 25 September 2017
STI 25 September 2017
LTI 25 September 2018
STI/ LTI TSR/ LTI 17-19 BVA
LTI TSR/ LTI 17-19 BVA
(Sign-on awards)
LTI TSR/ LTI 17-19 BVA
(Sign-on awards)
2 September 2016 2 September 2022 A$11.50 (STI)/
A$11.20 (BVA)/
A$4.91 (TSR)
STI 2 September 2018
LTI 2 September 2019
10 October 2016
2 September 2022 A$11.20 (BVA)/
LTI 2 September 2019
A$4.91 (TSR)
6 March 2017
2 September 2022 A$11.20 (BVA)/
LTI 2 September 2019
A$4.91 (TSR)
33
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 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
provided the relevant employee remains employed by the Group at the end of that period.
Under the MyShare program, Brambles has over 4,265 participants who held 3,386,755 Brambles shares in total at 30 June 2017.
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, 814,568 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$10.94 per share. The accounting share value at grant ranged from
A$8.79 to A$12.72 based on the monthly share price value. For further details of the share grant values, 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
20155
MyShare
20166
MyShare
20177
Each month from 31 March 2015
to 29 February 2016
Each month from 31 March 2016
to 31 March 2017
Each month from 31 March 2017
to 31 July 2017
1 April 2017
1 April 2018
1 April 2019
Values range per month from
A$9.17 to A$11.74
100% vested on
31 March 2017
Values range per month from
A$8.79 to A$12.72
Values range per month from
A$8.93 to A$9.97
31 March 2018
31 March 2019
5 The Matching Awards granted under MyShare vested on 31 March 2017, subject to continuing employment and the retention of the associated Acquired Shares. On
vesting they were automatically exercised.
6 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.
7 The plan "MyShare 2017" ends on 28 February 2018. For FY17 reporting purposes, data is only available up to 31 July 2017. The remaining information will be reported
in next year's Annual Report. The Matching Awards granted under MyShare vest on 31 March 2019, subject to continuing employment and the retention of the
associated Acquired Shares. On vesting they are automatically exercised.
34
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Directors’ Report 2017 Remuneration Report continued
6. Executive Directors and Disclosable Executives
6.1 Executive Director Changes
Graham Chipchase joined Brambles at the beginning of
January 2017 as Chief Executive Officer Designate and became
Chief Executive Officer on 20 February 2017.
Tom Gorman stepped down as CEO and retired from the Board
on 20 February 2017. He remained an employee with Brambles
until 30 June 2017.
Nessa O’Sullivan, joined Brambles on 10 October 2016 as Chief
Financial Officer Designate, and became Chief Financial Officer
on 17 November 2016 and was appointed as an Executive
Director of Brambles on 24 April 2017.
6.2 Other Disclosable Executive Changes
In addition to Brambles’ Executive Directors, the following
executives comprise current Key Management Personnel:
- Mike Pooley, President, CHEP Pallets Europe, Middle East
& Africa; and
- Wolfgang Orgeldinger, Group President, IFCO.
As a result of the organisational changes, Zlatko Todorcevski
left the business on 28 February 2016 and Peter Mackie, Group
President, CHEP Pallets, left Brambles on 31 March 2017. They
were Disclosable Executives up to their respective date of
departure from the Group.
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.
Details of Disclosable Executive’s salaries are shown in
Table 6.3.1.
6.3.1 Contract Terms for Disclosable Executives
Base salary at
30 June 2016
Name and role(s)
Disclosable Executives
G Chipchase
Chief Executive Officer
(from 20 Feb 2017)
N O'Sullivan
Chief Financial Officer
(from 17 Nov 2016)
W Orgeldinger
Group President, IFCO
M Pooley
President, CHEP Pallets Europe,
Middle East & Africa
(from 1 Mar 2017)
Former Disclosable Executives
T Gorman
Former CEO
Z Todorcevski
Former CFO
P Mackie
Group President, Pallets
Base salary at
30 June 2017
£1,100,000
A$1,061,000
-
-
€660,000
€670,000
-
£306,000
A$2,186,000
A$2,295,300
A$1,140,000
A$1,197,000
£460,000
£492,200
35
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Directors’ Report 2017 Remuneration Report continued
6.4 Total Remuneration & Benefits for the Year
The purpose of the table below is to enable shareholders to understand the actual remuneration received by Disclosable
Executives. The table provides a summary of the actual remuneration, before equity, received or receivable by the Disclosable
Executives for the Year, together with prior year comparatives.
Income derived from the vesting of shares during the Year has been included below as “Actual share income”. The value shown is
the market value at the time the income became available to the executive. These awards were granted in prior financial years and
vested in September 2016. Theoretical accounting values for unvested share awards are shown in Section 8.4; those values are a
statutory disclosure requirement. Unvested share awards may result in “Actual share income” in future years and, if so, the income
will be reported in the table below in the Remuneration Report for the relevant year.
US$'000
Short-term employee benefits
Post-
employment
benefits
Other
Share-based payment
Cash /
salary /
fees
Non-
monetary
benefits8
Cash
bonus
Super-
annuation
Termination
/ sign-on
payments
/ retirement
benefits
Total
before
equity
Options
/ Awards
As %
of total
Other9
Name
Year
Executive Directors
G Chipchase
FY17
817
196
115
N O'Sullivan
FY16
FY17
FY16
-
-
644
163
-
-
Current Disclosable Executives
731
W Orgeldinger10 FY17
M Pooley11
FY16
FY17
FY16
730
154
-
Former Disclosable Executives
T Gorman10
FY17
2,148
427
571
27
-
-
FY16
2,031
1,085
Z Todorcevski10 FY17
P Mackie10
FY16
FY17
FY16
672
953
657
791
Totals
FY17
5,823
108
576
-
457
921
FY16
4,505
2,689
-
9
-
32
37
3
-
186
182
16
13
1
1
362
233
-
-
26
-
8
8
19
-
-
-
23
22
-
44
76
74
-
-
-
-
-
-
-
-
11
-
14
-
632
-
657
-
-
5
5
1
-
9
1,137
-
-
38
880
-
-
-
-
-
0%
0%
0%
0%
Total
1,137
-
880
-
1,203
835
41%
2,038
1,351
5
0%
1,356
204
125
38%
329
-
-
0%
-
36
2,381
3,445
59%
5,826
61
3,359
2,650
44%
6,009
5
3
2
2
838
1,750
68%
2,588
1,567
1,219
44%
2,786
1,292
1,248
49%
2,540
1,295
833
39%
2,128
96
7,935
7,403
71
7,572
4,707
15,338
12,279
There were a number of changes to Disclosable Executives in FY17 including the appointment of Graham Chipchase as CEO and the
departures of the former CEO, the former CFO, and the former Group President of Pallets. The Group President of Pallets received a
separation payment as his role was made redundant.
As illustrated in the table above, cash bonus payments for 2017 were well below cash bonuses for 2016.
The share-based payment shown relates to STI and LTI share awards that vested in September 2016. The LTI vesting was based on
the three-year performance to 30 June 2016, which included TSR performance at maximum vesting level.
8 This includes car parking, personal/spouse travel, club membership and fringe benefit tax and for Mr Chipchase, also includes accommodation costs whilst he was
based in Sydney from January to May 2017.
9 This includes leave entitlement taken within FY17 and health/salary continuance insurance.
10 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.7270, €1=US$1.1058 and £1=US$1.4719 for FY16 and
A$1=US$0.7540, €1=US$1.0950 and £1=US$1.2732 for FY17.
11 Mr Pooley's based salary related to the period during the Year in which he was a Disclosable Executive, being from 1 March to 30 June 2017.
36
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Directors’ Report 2017 Remuneration Report continued
6.5 Equity-Based Awards
The following table12 shows details of equity-based awards made to Disclosable Executives during the Year. STI and LTI share
awards were made under the 2006 Share Plan, the terms and conditions of which are set out in Section 4.3. Matching Awards were
made under MyShare, the terms and conditions of which are set out in Section 5.
Former CEO and former Group President, Pallets, were "good leavers" under the 2006 Share Plan rule. Their 2017 LTI award will be
pro-rated for the portion of the Performance Period for which they were employees.
Name
Type of award
Number
Value at grant US$'000
Executive Directors
G Chipchase
N O'Sullivan
Current Disclosable Executives
W Orgeldinger
M Pooley
Former Disclosable Executives
T Gorman
Z Todorcevski
P Mackie
STI
LTI
MyShare Matching
Totals
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
-
168,432
175
168,607
-
102,852
162
103,014
62,210
39,742
423
102,375
14,927
18,914
362
34,203
121,189
230,746
289
352,224
-
-
289
289
44,327
85,366
296
129,989
-
1,190
1
1,191
-
952
1
953
579
370
3
952
139
176
3
318
1,127
2,146
3
3,276
-
-
3
3
412
794
2
1,208
12 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.
37
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Directors’ Report 2017 Remuneration Report continued
6.6 Shareholdings
The following table shows details of Brambles Limited ordinary shares in which the Disclosable Executives held relevant interests
during the Year, being issued shares held by them and their related parties.13,14
The Company’s revised minimum shareholding policy is described in Section 3.1.
Ordinary shares
Balance at the start of the Year
Changes during the Year
Balance at the end of the Year
Executive Directors
G Chipchase
N O'Sullivan
Current Disclosable Executives
W Orgeldinger
M Pooley
Former Disclosable Executives
T Gorman
Z Todorcevski
P Mackie
0
0
3,539
121
656,599
294,951
164,344
7,375
163
(2,222)
369
(654,769)
(276,883)
(162,832)
7,375
163
1,317
490
1,830
18,068
1,512
6.7 Interests in Share Rights15
The following table shows details of rights over Brambles Limited ordinary shares in which the Disclosable Executives held relevant
interests during the Year, being share awards made on 25 September 2013, 25 September 2014, 2 November 2015,
2 September 2016, 10 October 2016 and 6 March 2017 under the 2006 Share Plan; and Matching Awards, being conditional rights
awarded during the Year under MyShare.16,17,18
Balance at
the start of
the Year
Granted
during
the Year
Exercised
during
the Year
Lapsed
during
the Year
Balance at
the end of
the Year
Vested and
exercisable at the
end of the Year
Value at
exercise
Name
Number
Number
Number
Number
Number
Number
US$'000
Executive Directors
G Chipchase
N O'Sullivan
-
-
168,607
103,014
-
-
-
-
168,607
103,014
-
-
Current Disclosable Executives
W Orgeldinger
301,359
102,375
(37,923)
(13,956)
351,855
91,225
M Pooley
21,048
34,203
(14,021)
-
41,230
Former Disclosable Executives
T Gorman
1,164,554
352,224
(377,899)
(333,405)
805,474
Z Todorcevski
P Mackie
599,129
289
(192,072)
(125,575)
281,771
462,401
129,989
(137,058)
(157,645)
297,687
-
-
-
-
-
-
375
110
3,461
1,758
1,263
13 On 31 July 2017, the following Disclosable Executives acquired ordinary shares under MyShare, which are held by AET Structured Finance Services Pty Limited: Graham
Chipchase (46), Wolfgang Orgeldinger (42) and Mike Pooley (35). On 31 July 2017, the following Disclosable Executives received Matching Awards under MyShare:
Graham Chipchase (46), Wolfgang Orgeldinger (42), and Mike Pooley (35).
14 N O'Sullivan, W Orgeldinger, M Pooley, T Gorman and P Mackie: all of their shares are held by AET Structured Finance Services Pty Limited.
G Chipchase: of which 7,200 shares were held by Rathbones Nominees Ltd and 175 shares were held by AET Structured Finance Services Pty Limited.
Z Todorcevski: of which 500 shares were held by Zlatko Todorcevski and Robert Todorcevski, 17,568 shares were held by Tentwentyfive Pty Ltd.
15 Of the awards detailed in Section 4.3, the following plans' items are relevant to Disclosable Executives: Wolfgang Orgeldinger, Tom Gorman, Zlatko Todorcevski,
Peter Mackie (STI, LTI TSR, LTI BVA 14-16, LTI BVA 15-17, LTI BVA 16-18, MyShare 2015); Mike Pooley, Wolfgang Orgeldinger, Tom Gorman, Peter Mackie (STI, LTI TSR,
LTI BVA 17-19); Graham Chipchase, Nessa O'Sullivan (LTI TSR, LTI BVA 17-19) sign-on awards; Nessa O'Sullivan, Wolfgang Orgeldinger, Tom Gorman, Zlatko
Todorcevski, Peter Mackie (MyShare 2016); and Graham Chipchase, Nessa O'Sullivan, Wolfgang Orgeldinger, Peter Mackie (MyShare 2017).
Lapses occurred for: Wolfgang Orgeldinger, Tom Gorman, Zlatko Todorcevski, Peter Mackie (LTI BVA 14-16); Zlatko Todorcevski, Peter Mackie (LTI TSR / LTI BVA 15-
17); Tom Gorman, Zlatko Todorcevski, Peter Mackie (LTI TSR / LTI BVA 16-18); and Tom Gorman, Peter Mackie (LTI TSR / LTI BVA 17-19).
Exercises occurred for: Tom Gorman, Zlatko Todorcevski and Peter Mackie (STI, LTI TSR / BVA 14-16); Wolfgang Orgeldinger, Tom Gorman, Zlatko Todorcevski and
Peter Mackie (MyShare 2015); Tom Gorman, Zlatko Todorcevski, Peter Mackie (MyShare 2016); and Peter Mackie (MyShare 2017).
16 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.
17 During the Year, 2,953,372 equity-settled performance share rights were granted under the 2006 Share Plan, of which 351,935 were granted to Tom Gorman.
814,568 Matching Awards were granted under MyShare during the Year, of which 289 were granted to Tom Gorman and 289 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. 168,432 performance share
rights and 175 Matching Awards were granted to Graham Chipchase. Approval for these issues of securities was obtained under ASX Listing Rule 10.14 at the AGM
held on 16 November 2016. 102,852 performance share rights and 162 Matching Awards were granted to Nessa O’Sullivan. These were granted before Nessa became
an Executive Director.
18 "Lapse" in this context means that the Awards were forfeited due to either the applicable service or performance conditions not being met.
38
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Directors’ Report 2017 Remuneration Report continued
7. Non-Executive Directors’ Disclosures
7.1 Non-Executive Directors’ Remuneration Policy
The Chairman’s fees are determined by the Remuneration
Committee and the other Non-Executive Directors’ fees are
determined by the Chairman and Executive Directors. In setting
the fees, advice is sought from external remuneration advisors
on the appropriate level of fees, taking into account the
responsibilities of Directors in dealing with the complexity and
global nature of Brambles’ affairs and the level of fees paid to
Non-Executive Directors in comparable companies.
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.
The 2016 annual fee review resulted in a 3% increase of Non-
Executive Directors' and the Chairman's base fees. This increase
took effect on 1 July 2016. The 2017 annual fee review was
carried out during June 2017. Taking into account all relevant
circumstances relating to the Company's performance, it was
determined that there would be no increase to fees for the
Board Chairman and other Non-Executive Directors for FY18.
The fees for the Chairman and Non-Executive Directors remain
as follows:
Chairman: A$627,000; and
-
- Non-Executive Directors: A$209,000.
The following travel allowances and Committee membership
fees were also 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; and
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 place in June 2018 and take effect
from 1 July 2018.
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.
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
parties19:
Ordinary shares
Balance at
the start of the
Year
Changes
during the
Year
Balance at
the end of
the Year
Current Non-Executive Directors
C Cross
-
G El Zoghbi
A G Froggatt
D P Gosnell
T Hassan
S P Johns
S C H Kay
B Long
S Perkins
-
14,890
22,910
15,000
48,778
14,877
8,000
-
15,000
35,000
-
-
-
9,378
4,000
16,000
20,000
15,000
35,000
14,890
22,910
15,000
58,156
18,877
24,000
20,000
19 C Cross: held by Christine Cross.
G El Zoghbi: held by The George El Zoghbi Trust Agreement on behalf of George El Zoghbi.
A G Froggatt: of which 7,000 shares were held by Christine Joanne Froggatt and 7,890 shares were held by Anthony Grant Froggatt.
D P Gosnell: held by Charles Stanley & Co Australia in the name of Susan Gosnell.
T Hassan: held by RBC Dexia Custodian on behalf of Tahira Hassan.
S P Johns: 37,038 ordinary shares held by Canzak Pty Ltd; 21,118 ordinary shares held by Caran Pty Limited.
S C H Kay: 8477 ordinary shares held by Sarah Carolyn Kay & Simon Swaney ; 4,900 ordinary shares held by
Sarah Carolyn Hailes Kay; 5,500 ordinary shares held by Carolyn Kay .
B Long: 20,000 ordinary shares held by BJ Long Investments Pty Limited ATF BJ Long Super Fund A/C and 4,000 ordinary shares held by BJ Long Investments Pty Ltd.
S Perkins: 20,000 ordinary shares held by Perkins Family Super Pty Ltd ATF Perkins Family S/F A/C.
39
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 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 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 on page 43. 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. Any contributions to personal
superannuation or pension funds on behalf of the Non-Executive Directors are deducted from their overall fee entitlements.
Table 7.4.1: Non-Executive Directors’ Remuneration for the Year 20,21
US$'000
Name
Short-term employee benefits
Post-employment benefits
Year
Directors' fees
Superannuation
Other21
Total
CURRENT NON-EXECUTIVE DIRECTORS
C Cross
G El Zoghbi
A G Froggatt
D Gosnell
T Hassan
S P Johns
S C H Kay
B J Long
S Perkins
Totals
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
168
158
176
73
186
168
168
158
176
158
446
425
165
148
192
175
165
148
1,842
1,611
8
8
8
3
17
16
8
8
8
8
42
25
15
14
18
16
15
14
139
112
-
-
38
10
29
13
8
3
8
6
47
11
13
-
29
11
-
-
172
54
176
166
222
86
232
197
184
169
192
172
535
461
193
162
239
202
180
162
2,153
1,777
20 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.7270, €1=US$1.1058 and £1=US$1.4719 for FY16 and
A$1=US$0.7540, €1=US$1.0950 and £1=US$1.2732 for FY17.
21 “Other” includes personal/spouse travel, meals and fringe benefits tax.
40
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 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, Christine Cross and George El Zoghbi. 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 Vice President, Legal & Secretariat and
Group Vice President of Remuneration & Benefits, as well as
Brambles’ external remuneration advisor, EY.
During the Year, the Committee held seven 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.
Section 4.2.3 summarises 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 EY 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 EY.
During the Year, no remuneration recommendations, as
defined by the Act (Recommendations), were provided by EY.
EY 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. Brambles has made arrangements
to ensure that the making of any Recommendations, should
they be made, would be free from undue influence by the
Disclosable Executives to whom a Recommendation may relate.
The engagement letter entered into by Brambles and EY
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 EY may provide
Brambles’ management, which excludes
Recommendations;
Any requests to EY from Brambles' management that
might constitute a Recommendation are to be referred by
EY to the Committee for its consideration and direction;
EY is not permitted to provide Recommendations to
Brambles’ management;
If EY 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 EY attend all Committee meetings;
Except for the CEO, 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 EY 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.
41
Directors’ Report – 2017 Remuneration Report
Directors’ Report 2017 Remuneration Report continued
8.4 Share Based Payments – Future Potential
The table below provides annual accounting values for shares granted during years 2015-2017, are been amortised over three
years. These share awards are subject to conditions set out in Section 4.3. Remuneration will not be received as a result of the
underlying share awards vesting until the conditions have been met.
US$'000
Name
Executive Directors
G Chipchase
N O'Sullivan
Current Disclosable Executives
W Orgeldinger
M Pooley
Former Disclosable Executives
T Gorman
Z Todorcevski
P Mackie
Totals
Year
Total before equity
Awards
Share of FY17
total remuneration
Share-based payments
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
1,137
-
880
-
1,203
1,351
204
-
2,381
3,359
838
1,567
1,292
1,295
7,935
7,572
55
-
90
-
788
648
176
-
3,845
2,522
806
1,281
1,510
967
7,270
5,418
5%
-
9%
-
40%
32%
46%
-
62%
43%
49%
45%
54%
43%
Total
1192
-
970
-
1,991
1,999
380
-
6,226
5,881
1,644
2,848
2,802
2,262
15,205
12,990
42
Directors’ Report – 2017 Remuneration Report
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 2017 (the Year).
Principal Activities
The principal activities of the Group during the Year were the
provision of supply chain logistics solutions, 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 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 Letters from the Chairman and the
CEO and the Operating & Financial Review from pages 2 to
16.
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 119.
Significant Changes in State of Affairs
On 5 August 2016, Brambles announced the formation of an
oil and gas container joint venture in which Brambles would
combine its Ferguson Group and CHEP Catalyst & Chemical
Containers businesses with Hoover Container Solutions to
create Hoover Ferguson Group. Hoover Ferguson Group is
50% owned by Brambles and 50% owned by Hoover
shareholders. The formation of Hoover Ferguson Group was
completed on 21 October 2016.
Other than the above, there were no significant changes to
the state of affairs of the Group for the Year.
Matters since the End of the Financial Year
On 11 August 2017, Brambles announced its intention to
divest its North American recycled whitewood business, CHEP
Recycled.
Other than the above, the Directors are not aware of any
matter or circumstance that has arisen since 30 June 2017 up
to the date of this report that has significantly affected or may
significantly affect the operations of the Group, the results of
those operations or the state of affairs of the Group in future
financial years.
Business Strategies and Prospects for Future
Financial Years
The business strategies and prospects for future financial
years, together with likely developments in the operations of
the Group in future financial years and the expected results of
those operations known at the date of this report, are set out
in in the Letters from the Chairman and the CEO, and
Operating & Financial Review on pages 2 to 16.
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 30% franked. The
dividend will be paid on 12 October 2017 to shareholders on
the register on 14 September 2017.
On 13 April 2017, an interim dividend for the Year was paid,
which was 14.5 Australian cents per share and 25% franked.
On 13 October 2016, a final dividend for the year ended
30 June 2016 was paid, which was 14.5 Australian cents per
share and 25% 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 17 to 19.1
Graham Andrew Chipchase 20 February 2017 to date
Christine Cross
1 July 2016 to date2
George El Zoghbi
1 July 2016 to date
Anthony Grant Froggatt
1 July 2016 to date
Thomas Joseph Gorman
1 July 2016 to 20 February 2017
David Peter Gosnell
1 July 2016 to date
Tahira Hassan
1 July 2016 to date
Stephen Paul Johns
1 July 2016 to date
Sarah Carolyn Hailes Kay
1 July 2016 to date
Brian James Long
1 July 2016 to date
Nessa O'Sullivan
24 April 2017 to date
Scott Redvers Perkins
1 July 2016 to date
Secretary
Details of the qualifications and the experience of Robert Nies
Gerrard, the Company Secretary of Brambles Limited, are set
out on page 20.
1 Tom Gorman was Brambles' Chief Executive Officer from November 2009 to February 2017. Previously, he was Group President of CHEP EMEA and, prior to that,
served in many executive roles with the Ford Motor Company. He holds a Bachelor of Arts from Tufts University and a Master of Business Administration from
Harvard Business School.
2 Christine Cross will retire as a Director on 31 August 2017.
43
Directors’ Report – Other Information
Directors’ Report – Other Information – continued
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, 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;
-
-
-
-
44
-
-
-
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.
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.
Brambles has set environmental performance targets as part
of its sustainability strategy. Reporting of performance against
those targets will be contained in Brambles’ 2017
Sustainability Review which will be available on the Brambles
website in September 2017. A copy of the complete
Environmental Policy is set out in Brambles’ Code of Conduct,
which is available at www.brambles.com.
Occupational Health and Safety
The Board is responsible for setting Brambles’ Health and
Safety Policy, which states that Brambles is to provide and
maintain a healthy and safe working environment and to
prevent injury, illness or impairment to the health of
employees, contractors, customers or the public.
Brambles has adopted a Zero Harm Charter, which sets out
the vision, values and behaviours and commitment required
to work safely and ensure human rights and environmental
compliance is provided to all employees and, together with
the complete Health and Safety Policy, is on the Brambles
website at www.brambles.com.
The Chief Executive Officer, together with the Group's
business unit presidents, 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 provide incentives for improvement. The
Operating & Financial Review on page 8 sets out the
performance of the Group against its principal performance
indicator, Brambles Injury Frequency Rate. More detailed
reporting on health and safety performance will be shown in
the 2017 Sustainability Review, which will be available on
Brambles’ website in September 2017.
Directors’ Report – Other Information Directors’ Report – Other Information – continued
Employees
The 2017 Sustainability Review, available on Brambles’ website in September 2017, will contain details of Brambles’ performance
as an employer.
Directors’ Meetings
Details of the Board committee memberships are given in the Directors' biographies on pages 17 to 19. The following table
shows the actual Board and committee meetings held during the Year and the number attended by each Director or committee
member.
Regular3
Special Committees
Audit Committee
meetings
Remuneration
Committee meetings
Nominations
Committee meetings
Board meetings
Directors
(a)
G A Chipchase
5
C Cross
G El Zoghbi
A G Froggatt
D P Gosnell
T Hassan
S P Johns
S C H Kay
B J Long
N O'Sullivan
S R Perkins
Former Director
14
13
14
13
14
14
14
13
3
13
T J Gorman
7
(b)
5
14
14
14
14
14
14
14
14
3
14
7
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
-
-
-
1
-
-
2
1
3
-
-
3
-
-
-
1
-
-
2
1
3
-
-
3
-
-
-
-
6
-
-
7
7
-
7
-
-
-
-
-
7
-
-
7
7
-
7
-
-
7
6
7
-
7
7
-
-
-
-
-
-
7
7
7
-
7
7
-
-
-
-
-
-
-
-
3
3
-
3
-
-
-
-
-
-
-
-
3
3
-
3
-
-
-
-
-
a) The number of meetings attended during the period the Director was a member of the Board or relevant committee
which the Director was eligible to attend.
b) The number of meetings held while the Director was a member of the Board or relevant committee which the Director
was eligible to attend.
3 The Board meetings that Messrs El Zoghbi, Gosnell and Long did not attend were one-hour telephone conference meetings.
45
Directors’ Report – Other Information
Directors’ Report – Other Information – continued
Directors’ Directorships of Other Listed Companies
The following lists the directorships held by the Directors in listed companies (other than Brambles Limited) since 30 June 2014.
Director
G A Chipchase
C Cross
G El Zoghbi
A G Froggatt
D P Gosnell
T Hassan
S P Johns
S C H Kay
B J Long
N O'Sullivan
S R Perkins
Former Director
T J Gorman
Listed company
AstraZeneca plc
Period directorship held
2012 to current
Coca-Cola European Partners plc
2016 to current
Hilton Food Group plc
Kathmandu Holdings Limited
Sonae Group plc
Woolworths Limited
None
Coca-Cola Amatil Limited
Coats plc
Coats Group plc
Recall Holdings Limited
Goodman Group:
Goodman Limited
2016 to current
2012 to current4
2009 to current
2012 to November 2015
-
2010 to May 2017
2015 to July 2015
2015 to current
2013 to May 2016
January 2017 to current
Goodman Funds Management Limited
January 2017 to current
Commonwealth Bank of Australia
2003 to March 2015
Scentre Group
2016 to current
Commonwealth Bank of Australia
2010 to current
Ten Network Holdings Limited
2010 to July 2016
None
Woolworths Limited
Origin Energy Limited
-
2014 to current
2015 to current
None
-
4 Christine will retire as a director of Kathmandu Holdings Limited on 2 October 2017.
46
Directors’ Report – Other Information
Directors’ Report – Other Information – continued
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 breaches 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
its 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'
2017 Corporate Governance Statement is on Brambles'
website at www.brambles.com/corporate-governance-
overview.
Interests in Securities
Pages 38 and 39 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 20 and 21 of the Financial Report
on pages 87 to 89.
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:
-
86,677 grants under the 2017 MyShare offer;
-
-
49,742 exercises resulting in the issue of fully paid
ordinary shares: 7,756 under the 2016 MyShare
offer; 3,864 under the 2017 MyShare offer; 38,122 under
the 2006 PSP STI award; and
491,594 lapses: 8,516 under the 2016 MyShare
offer; 6,533 under the 2017 MyShare offer; 21,865 under
the 2006 PSP STI award; 227,340 under the 2006 PSP TSR
LTI award; 6,509 under the 2006 PSP FY15-FY17 BVA LTI
award; 88,427 under the 2006 PSP FY16-FY18 BVA LTI
award; 132,404 under the 2006 PSP FY17-FY19 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 10 in the Operating
& Financial Review and in Principle 7 of Brambles' 2017
Corporate Governance Statement which is available on the
Brambles website.
Treasury Policies
A discussion of the implementation of treasury policies and
mitigation of treasury risks can be found on page 11 in the
Operating & Financial Review.
Non-Audit Services and Auditor Independence
The amount of US$0.073 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 agreed upon procedures in relation
to financial metrics and disclosures.
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 4
August 2017 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.
47
Directors’ Report – Other Information Directors’ Report – Other Information – continued
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 118.
Annual General Meeting
The AGM will be held at 2.00pm (AEDT) on 18 October 2017 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
Graham Chipchase
Chairman
Chief Executive Officer
21 August 2017
48
Directors’ Report – Other Information
Shareholder Information
Stock Exchange Listing
Brambles’ ordinary shares are listed on the Australian
Securities Exchange and are traded under the stock code
“BXB”.
Uncertificated Forms of Shareholding
Brambles’ ordinary shares are held in uncertificated form.
There are two types of uncertificated holdings:
Issuer Sponsored Holdings: This type of holding is recorded
on a subregister of the Brambles share register, maintained by
Brambles. If your holding is recorded on the issuer sponsored
subregister, you will be allocated a Securityholder Reference
Number or SRN, which is a unique number used to identify
your holding of ordinary shares in Brambles.
Broker Sponsored Holdings: This type of holding is recorded
on the main Brambles share register. Shareholders who are
sponsored by an ASX market participant broker will be
allocated a Holder Identification Number or HIN. One HIN can
relate to an investor’s shareholdings in multiple companies.
For example, a shareholder with a portfolio of holdings which
are managed by a broker would have the same HIN for each
shareholding.
American Depository Receipts
Brambles Limited shares may be traded in sponsored
American Depository Receipts form in the United States.
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 inside back cover of this Annual Report. Please note
that, under anti-money laundering regulations, Link Market
Services may require shareholders to complete an
identification information form.
If you are a Broker Sponsored shareholder, please contact
your broker if you wish to sell your Brambles shares.
Dividend
Shareholders may elect to receive dividend payments in
Australian dollars or pounds sterling by contacting Link
Market Services at the address set out in Contact Information
on the inside back cover of this Annual Report.
Annual General Meeting
The Brambles Limited 2017 AGM will be held at
2.00pm (AEDT) on 18 October 2017 at The Wesley Theatre,
Wesley Conference Centre, 220 Pitt Street, Sydney, New South
Wales 2000.
Financial Calendar
Final Dividend 2017
Ex-dividend date – Wednesday, 13 September 2017
Record date – Thursday, 14 September 2017
Payment date – Thursday, 12 October 2017
2018 (Provisional)
Announcement of interim results – mid-February 2018
Interim dividend – mid-April 2018
Announcement of final results – mid-August 2018
Final dividend – mid-October 2018
AGM – October 2018
Company Secretary
R N Gerrard
Analysis of Holders of Equity Securities as at 31 July 2017
Substantial Shareholders
Brambles has been notified of the following substantial shareholdings:
Holder
Baillie Gifford & Co
Blackrock Group
Commonwealth Bank of Australia
MFS Investment Management on behalf of Sun Life Financial Inc.
Schroder Investment Management Australia Limited
Number of Ordinary Shares on Issue and Distribution of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
1 Percentages are as disclosed in substantial holding notices given to Brambles Limited.
Number of ordinary
shares
79,937,676
79,901,641
118,493,531
125,699,812
82,724,920
% of issued ordinary
share capital1
5.04
5.02
7.46
8.02
5.21
Holders
33,720
32,980
5,587
3,101
131
75,519
Shares
16,353,093
76,538,873
39,473,831
63,973,521
1,393,104,135
1,589,443,453
49
Shareholder Information
Shareholder Information - continued
The number of members holding less than a marketable parcel of 54 ordinary shares (based on a market price of A$9.24 on
31 July 2017) is 1,687 and they hold a total of 32,053 ordinary shares. The voting rights of ordinary shares are described below.
Number of Share Rights on Issue and Distribution of Holdings
Holders
Share rights
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.
3,126
17
24
94
15
3,276
945,685
56,482
187,416
2,907,557
3,385,561
7,482,701
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 NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
AMP LIFE LIMITED
BNP PARIBAS NOMS (NZ) LTD
AET SFS PTY LTD
SBN NOMINEES PTY LIMITED <10004 ACCOUNT>
IOOF INVESTMENT MANAGEMENT LIMITED
CUSTODIAL SERVICES LIMITED
AUSTRALIAN UNITED INVESTMENT COMPANY LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
DJERRIWARRH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
Number of ordinary
shares
% of issued ordinary
share capital
767,039,047
259,158,422
104,066,984
81,206,730
41,371,714
26,090,979
12,138,658
10,451,972
10,025,553
5,501,609
5,248,432
3,539,765
3,326,618
2,869,500
2,678,706
2,623,957
2,100,000
2,052,198
1,998,365
1,719,255
48.26
16.30
6.55
5.11
2.60
1.64
0.76
0.66
0.63
0.35
0.33
0.22
0.21
0.18
0.17
0.17
0.13
0.13
0.13
0.11
Percentage of total holdings of 20 largest holders
1,345,208,464
84.63
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. 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.
50
Shareholder Information
Consolidated Financial Report
for the year ended 30 June 2017
INDEX
PAGE
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to and Forming Part of the Financial Statements
1 About this Report
2 Segment Information
3 Operating Expenses – Continuing Operations
4 Significant Items – Continuing Operations
5 Net Finance Costs – Continuing Operations
6 Income Tax
7 Earnings Per Share
8 Dividends
9 Investments
10 Discontinued Operations
11 Trade and Other Receivables
12 Inventories
13 Other Assets
14 Property, Plant and Equipment
15 Goodwill and Intangible Assets
16 Trade and Other Payables
17 Provisions
18 Borrowings
19 Retirement Benefit Obligations
20 Contributed Equity
21 Share-Based Payments
22 Reserves and Retained Earnings
23 Financial Risk Management
24 Cash Flow Statement – Additional Information
25 Commitments
26 Contingencies
27 Auditor’s Remuneration
28 Key Management Personnel
29 Related Party Information
30 Events After Balance Sheet Date
31 Net Assets Per Share
32 Parent Entity Financial Information
33 New Accounting Standards and Interpretations Not Yet Adopted
Directors' Declaration
Independent Auditor's Report
Auditor's Independence Declaration
52
53
54
55
56
58
63
64
65
66
70
72
73
74
77
78
78
79
81
84
84
85
85
87
88
90
92
100
102
103
104
105
105
106
106
107
108
109
110
118
51
Consolidated Financial Report
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2017
Continuing operations
Sales revenue
Other income
Operating expenses
Share of results of joint venture
Operating profit
Finance revenue
Finance costs
Net finance costs
Profit before tax
Tax expense
Profit from continuing operations
Loss from discontinued operations
Profit for the year attributable to members of the parent entity
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial loss on defined benefit pension plans
Income tax benefit 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 profit/(loss) for the year
Total comprehensive income for the year attributable to members of the
parent entity
Earnings per share (US cents)
Total
- basic
- diluted
Continuing operations
- basic
- diluted
Note
2
3
9
5
6A
10B
6A
22
7
2017
US$m
5,104.3
95.7
2016
US$m
4,900.1
90.0
(4,416.1)
(4,044.8)
(12.5)
771.4
30.1
(128.8)
(98.7)
672.7
(227.8)
444.9
(262.0)
182.9
(11.6)
1.9
(9.7)
35.3
25.6
-
945.3
17.9
(130.8)
(112.9)
832.4
(240.1)
592.3
(4.6)
587.7
(3.6)
0.8
(2.8)
(90.2)
(93.0)
208.5
494.7
11.5
11.5
28.0
27.9
37.3
37.1
37.5
37.4
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Results for divested entities up to the dates of divestment and held for sale businesses have been presented within discontinued
operations. Prior year comparatives have been restated (refer Note 10).
52
Consolidated Financial Report Consolidated Balance Sheet
as at 30 June 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Assets classified as held for sale
Total current assets
Non-current assets
Other receivables
Investments
Property, plant and equipment
Goodwill and intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Tax payable
Provisions
Liabilities classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Retirement benefit obligations
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Note
2017
US$m
2016
US$m
24
11
12
13
10
13
9
14
15
6C
13
16
18
17
10
18
17
19
6C
16
20
22
22
159.7
1,169.0
56.8
70.6
136.0
1,592.1
189.5
20.8
4,861.1
1,028.1
42.6
13.5
6,155.6
7,747.7
1,243.5
673.4
72.5
79.0
56.0
156.1
1,150.0
86.2
77.6
-
1,469.9
1.8
-
4,732.3
1,635.2
36.0
21.1
6,426.4
7,896.3
1,268.4
201.7
74.4
114.3
-
2,124.4
1,658.8
2,059.0
2,576.2
25.1
51.6
639.7
1.2
2,776.6
4,901.0
2,846.7
6,201.1
(7,152.8)
3,798.4
2,846.7
27.7
47.5
627.0
4.0
3,282.4
4,941.2
2,955.1
6,173.3
(7,191.5)
3,973.3
2,955.1
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Assets and liabilities relating to entities divested in 2017 are excluded from the consolidated balance sheet at 30 June 2017.
The comparative balance sheet remains unchanged.
53
Consolidated Financial Report
Consolidated Cash Flow Statement
for the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Interest received
Interest paid
Income taxes paid on operating activities
Note
2017
US$m
6,224.5
(4,694.0)
1,530.5
12.5
(111.4)
(220.4)
2016
US$m
6,118.3
(4,659.6)
1,458.7
1.6
(113.0)
(180.4)
Net cash inflow from operating activities
24B
1,211.2
1,166.9
Cash flows from investing activities
Payments for property, plant and equipment
(1,077.7)
(1,080.7)
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Proceeds from disposal of businesses, net of cash disposed
10
Acquisition of subsidiaries, net of cash acquired
Loan outflows with associates
111.2
(20.5)
160.1
-
-
103.6
(14.6)
100.0
(27.5)
(3.4)
Net cash outflow from investing activities
(826.9)
(922.6)
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Net inflow/(outflow) from hedge instruments
Proceeds from issues of ordinary shares
Dividends paid, net of Dividend Reinvestment Plan
8
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and deposits, net of overdrafts, at beginning of the year
Effect of exchange rate changes
Cash and deposits, net of overdrafts, at end of the year
24A
2,312.5
(2,365.4)
1,617.2
(1,674.7)
23.7
1.6
(348.0)
(375.6)
8.7
115.2
(11.2)
112.7
(8.2)
1.0
(205.1)
(269.8)
(25.5)
156.7
(16.0)
115.2
The consolidated cash flow statement should be read in conjunction with the accompanying notes.
Cash flows for divested entities up to the dates of divestment and held for sale businesses have been included in 2017. The
comparative cash flows remain unchanged.
54
Consolidated Financial Report
Consolidated Statement of Changes in Equity
for the year ended 30 June 2017
Year ended 30 June 2016
Opening balance as at 1 July 2015
Profit for the year
Other comprehensive loss
Total comprehensive income
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
Transactions with owners in their capacity as owners:
- dividends declared
- issues of ordinary shares, net of transaction costs
- transfers between reserves
Contributed
Note
equity
US$m
Reserves
US$m
Retained
earnings
US$m
Total
US$m
6,027.4
(7,101.8)
3,715.5
2,641.1
-
-
-
-
-
-
-
145.9
-
-
(90.2)
(90.2)
23.6
(20.1)
2.2
-
-
(5.2)
587.7
(2.8)
584.9
-
-
-
587.7
(93.0)
494.7
23.6
(20.1)
2.2
(332.3)
(332.3)
-
5.2
145.9
-
21
22
20
Closing balance as at 30 June 2016
6,173.3
(7,191.5)
3,973.3
2,955.1
Year ended 30 June 2017
Opening balance as at 1 July 2016
Profit for the year
Other comprehensive gain/(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
6,173.3
(7,191.5)
3,973.3
2,955.1
-
-
-
-
-
-
-
27.8
-
35.3
35.3
29.7
(26.2)
(0.1)
-
-
182.9
(9.7)
173.2
-
-
-
182.9
25.6
208.5
29.7
(26.2)
(0.1)
(348.1)
(348.1)
-
27.8
21
22
20
Closing balance as at 30 June 2017
6,201.1
(7,152.8)
3,798.4
2,846.7
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
55
Consolidated Financial Report Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2017
Note 1. About this Report
A) 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 2017. These financial statements have been
authorised for issue in accordance with a resolution of the
Directors on 21 August 2017.
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. It presents information on a historical
cost basis, except for derivative financial instruments and
financial assets at fair value through profit or loss.
The financial statements and all comparatives have been
prepared using the accounting policies disclosed throughout
the financial statements, which are consistent with the prior
year.
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.
References to 2017 and 2016 are to the financial years ended
30 June 2017 and 30 June 2016 respectively.
B) Principles of Consolidation
The consolidated financial statements of Brambles include the
assets, liabilities and results of Brambles Limited and all its
subsidiaries. The consolidation process eliminates all
intercompany accounts and transactions. The financial
statements of subsidiaries are prepared using consistent
accounting policies and for the same reporting period.
The results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the effective date of
acquisition or up to the effective date of disposal, as
appropriate.
The trading results for business operations disposed of during
the year or classified as held for sale are disclosed separately
as discontinued operations in the statement of comprehensive
income. The amount disclosed includes any related
impairment losses recognised and any gains or losses arising
on disposal.
C) Presentation Currency
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 and
international investors and analysts.
D) 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 profit or loss, 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.
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. Exchange
differences arising on the translation of Brambles’ overseas
and Australian entities are recognised as a separate
component of equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
The principal exchange rates affecting Brambles were:
A$:US$
€:US$
£:US$
Average
2017
0.7540
1.0950
1.2732
2016
0.7270
1.1058
1.4719
Year end
30 June 2017
0.7686
1.1439
1.3008
30 June 2016
0.7467
1.1123
1.3453
56
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Investment in Joint Ventures
E)
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 entities are equity accounted.
Under this method, Brambles’ share of the post-acquisition
profits or losses of the joint venture is recognised in profit or
loss 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.
Loans to equity accounted joint ventures under formal loan
agreements that are long term in nature are included as
investments.
F) 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.
G) 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.
Material estimates and judgements are found in the following
notes:
-
-
-
-
Income taxes (Note 6F)
Impairment of investments (Note 9)
Irrecoverable Pooling Equipment Provisioning (Note 14D)
Impairment of goodwill (Note 15D)
57
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 2. Segment Information
Brambles' segment information is provided on the same basis as internal management reporting to the CEO and reflects the
structure that has been in place since 1 March 2017. The revised structure was implemented to streamline reporting lines and
achieve greater consistency across the Group. Comparative balances have been restated to reflect the revised reporting
structure.
Brambles has five reportable segments, being CHEP Americas, CHEP EMEA, CHEP Asia-Pacific (each primarily comprising pallet
and container pooling businesses in that region operating under the CHEP brand), IFCO (RPCs pooling businesses operating
under the IFCO brand) and Corporate (corporate centre including HFG joint venture and BXB Digital).
Segment performance is measured on sales revenue, Underlying Profit, Cash Flow from Operations, Brambles Value Added
(BVA) and Return on Capital Invested (ROCI). Underlying Profit is the main measure of segment profit. A reconciliation between
Underlying Profit and operating profit is set out on page 60.
Segment sales revenue is measured on the same basis as in the statement of comprehensive income. 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 the period in which the service is provided.
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.
58
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 2. Segment Information – continued
Sales
revenue
2017
US$m
2016
US$m
2,073.5
1,575.2
484.8
970.8
-
2,010.5
1,550.1
457.8
881.7
-
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate
Continuing operations
5,104.3
4,900.1
By geographic origin
Americas
Europe
Australia
Other
Total
2,343.7
2,030.6
383.0
347.0
2,249.2
1,981.3
356.8
312.8
5,104.3
4,900.1
Cash Flow from
Operations1
Brambles
Value Added2
2017
US$m
218.9
262.3
111.6
55.0
(56.3)
591.5
2016
US$m
199.7
236.0
90.0
26.7
(33.6)
518.8
2017
US$m
142.7
189.5
58.3
(73.5)
(81.9)
235.1
2016
US$m
210.1
196.4
52.1
(88.0)
(37.7)
332.9
1
2
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 2016 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 outside the ordinary course of
business, multiplied by 12%.
59
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 2. Segment Information – continued
Operating
Profit3
Significant Items
before tax4
Underlying
Profit4
2017
US$m
377.3
375.1
110.9
116.7
(208.6)
771.4
2016
US$m
426.3
382.2
100.6
100.2
(64.0)
945.3
2017
US$m
(17.8)
(12.0)
(1.2)
(0.9)
(154.2)
(186.1)
2016
US$m
(13.1)
(3.8)
(0.3)
2.9
(24.9)
(39.2)
2017
US$m
395.1
387.1
112.1
117.6
(54.4)
957.5
2016
US$m
439.4
386.0
100.9
97.3
(39.1)
984.5
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate5
Continuing operations
3
4
5
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 4). It is presented to assist users of the financial statements to better understand
Brambles' business results.
Significant Items for the Corporate segment includes the impairment of the Hoover Ferguson Group (HFG) investment (refer
Note 9).
Underlying Profit for the Corporate segment includes the following:
2017
US$m
(31.6)
(10.3)
(12.5)
(54.4)
2016
US$m
(38.3)
(0.8)
-
(39.1)
Corporate costs
BXB Digital
HFG joint venture results
60
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 2. Segment Information – continued
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate8
2017
US$m
20.2%
24.7%
26.2%
7.4%
Return on
Capital Invested6
Average Capital
Invested7
2017
US$m
2016
US$m
1,958.7
1,568.4
427.8
1,750.4
1,464.5
413.0
2016
US$m
25.1%
26.4%
24.4%
6.4%
1,582.3
1,530.1
109.2
(61.6)
Continuing operations
17.0%
19.3%
5,646.4
5,096.4
6
7
8
Return on Capital Invested (ROCI) is Underlying Profit divided by Average Capital Invested. ROCI is not disclosed for the
Corporate segment as this is not deemed a relevant measure for this segment. ROCI for continuing operations includes the
Corporate segment.
Average Capital Invested (ACI) is a 12-month average of capital invested. Capital invested is calculated as net assets before
tax balances, cash and borrowings but after adjustment for actuarial gains and losses and net equity-settled shared-based
payments.
ACI for the Corporate segment at 30 June 2017 includes the US$150.0 million loan to HFG, US$39.2 million deferred
consideration receivable from First Reserve and US$20.8 million in relation to the investment in HFG (refer Note 9).
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate
Capital
expenditure9
Depreciation
and amortisation
2017
US$m
434.6
321.6
64.7
200.5
2.1
2016
US$m
457.6
320.0
70.8
212.2
0.2
2017
US$m
233.1
145.1
52.3
95.6
0.6
2016
US$m
214.6
139.7
52.7
93.9
1.2
Continuing operations
1,023.5
1,060.8
526.7
502.1
9 Capital expenditure on property, plant and equipment is on an accruals basis.
61
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 2. Segment Information – continued
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
IFCO
Corporate10
Continuing operations
Discontinued operations11
Segment assets
Segment liabilities
2017
US$m
2016
US$m
2,389.1
1,915.6
525.9
2,209.2
1,776.6
524.8
2,316.7
2,158.1
245.5
51.0
2017
US$m
330.1
254.0
85.5
677.3
49.6
2016
US$m
347.2
283.6
93.4
601.0
63.4
7,392.8
6,719.7
1,396.5
1,388.6
140.8
978.5
51.5
73.3
1,461.9
2,777.9
74.4
627.0
Total segment assets and liabilities
7,533.6
7,698.2
1,448.0
Cash and borrowings
Current tax balances
Deferred tax balances
160.1
156.1
2,740.8
11.4
42.6
6.0
36.0
72.5
639.7
Total assets and liabilities
7,747.7
7,896.3
4,901.0
4,941.2
Non-current assets by geographic origin12
Americas
Europe
Australia
Other
Total
2,778.8
2,557.8
308.9
459.3
2,954.8
2,618.7
334.4
465.8
6,104.8
6,373.7
10
11
Segment assets for Corporate as at 30 June 2017 includes the US$150.0 million loan to HFG, US$39.2 million deferred
consideration receivable from First Reserve and US$20.8 million in relation to the investment in HFG (refer Note 9).
Includes both the held for sale business and divested entities.
12 Non-current assets exclude financial instruments of US$8.2 million (June 2016: US$16.7 million) and deferred tax assets of
US$42.6 million (June 2016: US$36.0 million).
62
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 3. Operating Expenses – Continuing Operations
Employment costs
Service suppliers:
- transport
- repairs and maintenance
- subcontractors and other service suppliers
Raw materials and consumables
Occupancy
Depreciation of property, plant and equipment
Impairment of investment and property, plant and equipment (refer Note 9)
Irrecoverable pooling equipment provision expense
Amortisation of intangible asset
Net foreign exchange losses/(gains)
Other
2017
US$m
722.7
2016
US$m
700.5
1,113.0
1,055.8
816.9
545.1
227.2
162.1
500.0
120.0
89.2
26.7
3.6
89.6
782.0
483.9
224.9
164.0
469.3
1.7
74.7
32.8
(1.0)
56.2
4,416.1
4,044.8
63
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 4. Significant Items – Continuing Operations
Significant Items are items of income or expense which are, either individually or in aggregate, material to Brambles or to the
relevant business segment and:
- outside the ordinary course of business (e.g. gains or losses on the sale or termination of operations, the cost of significant
reorganisations or restructuring); or
- part of the ordinary activities of the business but unusual due to their size and nature.
Significant Items are disclosed to assist users of the financial statements to better understand Brambles’ business results.
2017
US$m
2016
US$m
Before tax
Tax
After tax
Before tax
Tax
After tax
Items outside the ordinary course of business:
- acquisition-related costs1
- restructuring & integration costs2
(0.8)
(65.3)
- impairment of investment (Note 9)
(120.0)
- acquisition gains3
-
0.1
19.5
-
-
(0.7)
(45.8)
(120.0)
-
(7.8)
(36.8)
-
5.4
0.2
12.3
-
(0.1)
(7.6)
(24.5)
-
5.3
Significant Items from continuing
operations
(186.1)
19.6
(166.5)
(39.2)
12.4
(26.8)
Professional fees of US$0.8 million were incurred relating to acquisition activities (2016: US$7.8 million).
Restructuring and integration costs include US$38.6 million relating to the One Better program (2016: US$30.4 million),
US$18.6 million for organisation restructure and leadership changes announced in 2017 and 2016 (2016: nil) and
US$7.3 million relating to the global CHEP brand refresh project which was completed during the year
(2016: US$7.4 million). The One Better program is in the final stages of completion. Restructuring and integration costs for
2016 includes a reversal of prior year provisions not incurred.
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 2016. In addition, there was another minor acquisition
during 2016 which resulted in an acquisition gain of $0.4 million.
1
2
3
64
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 5. Net Finance Costs – Continuing Operations
Finance revenue
Bank accounts and short-term deposits
Derivative financial instruments
Other
Finance costs
Interest expense on bank loans and borrowings
Derivative financial instruments
Other
Net finance costs
2017
US$m
1.2
15.6
13.3
30.1
2016
US$m
1.0
16.3
0.6
17.9
(116.6)
(119.7)
(9.9)
(2.3)
(128.8)
(98.7)
(6.6)
(4.5)
(130.8)
(112.9)
Finance revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the
financial asset.
Finance costs are recognised as expenses in the year in which they are incurred.
65
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 6. Income Tax
A) Components of Tax Expense
Amounts recognised in the statement of comprehensive income
Current income tax – continuing operations:
- income tax charge
- prior year adjustments
Deferred tax – continuing operations:
- origination and reversal of temporary differences
- previously unrecognised tax losses
- prior year adjustments
Tax expense – continuing operations
Tax expense – discontinued operations (Note 10)
Tax expense recognised in profit or loss
Amounts recognised in other comprehensive income
- on actuarial losses on defined benefit pension plans
Tax benefit recognised directly in other comprehensive income
2017
US$m
2016
US$m
209.7
1.6
211.3
35.5
(10.1)
(8.9)
16.5
227.8
1.5
229.3
(1.9)
(1.9)
183.5
(10.2)
173.3
63.7
(4.5)
7.6
66.8
240.1
20.9
261.0
(0.8)
(0.8)
The income tax expense or benefit for the year is the tax payable or receivable on the current year’s taxable income based on
the national income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Current and deferred tax, attributable to amounts recognised directly in equity, are recognised in equity.
66
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 6. Income Tax – continued
B) Reconciliation Between Tax Expense and Accounting Profit Before Tax
Profit before tax – continuing operations
Tax at standard Australian rate of 30% (2016: 30%)
Effect of tax rates in other jurisdictions
Equity accounted results of joint ventures
Prior year adjustments
Prior year tax losses written-off
Current year tax losses not recognised
Foreign withholding tax unrecoverable
Change in tax rates
Non-deductible expenses
Non-deductible impairment charge
Other taxable items
Prior year tax losses recouped/recognised
Other
Tax expense – continuing operations
Tax expense – discontinued operations (Note 10)
Total income tax expense
2017
US$m
672.7
201.8
(16.7)
3.7
(7.3)
0.2
5.7
5.4
0.6
7.9
36.0
1.6
(10.1)
(1.0)
227.8
1.5
229.3
2016
US$m
832.4
249.7
(23.3)
-
(5.7)
3.1
2.4
6.1
1.0
10.8
-
0.8
(4.5)
(0.3)
240.1
20.9
261.0
2017
US$m
2016
US$m
Assets
Liabilities
Assets
Liabilities
C) Components of Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities shown in the balance sheet are represented by cumulative temporary differences
attributable to:
Items recognised through the statement of comprehensive income
Employee benefits
Provisions and accruals
Losses available against future taxable income
Accelerated depreciation for tax purposes
Other
36.8
71.1
212.8
-
48.8
-
-
-
(892.4)
(91.9)
28.0
39.4
231.8
-
86.2
369.5
(984.3)
385.4
Items recognised in other comprehensive income
Actuarial losses/(gains) on defined benefit pension plans
Share-based payments
7.7
10.9
18.6
(0.9)
-
(0.9)
Set-off against deferred tax (liabilities)/assets
(345.5)
345.5
Net deferred tax assets/(liabilities)
42.6
(639.7)
9.1
12.8
21.9
(371.3)
36.0
-
-
-
(891.4)
(106.1)
(997.5)
(0.8)
-
(0.8)
371.3
(627.0)
67
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 6. Income Tax – continued
D) Movements in Deferred Tax Assets and Liabilities
At 1 July
Charged to profit or loss
Credited/(charged) directly to equity
Acquisition of subsidiary
Divestment of subsidiaries
Offset against deferred tax (liabilities)/assets
Foreign exchange differences
At 30 June
2017
US$m
2016
US$m
Assets
Liabilities
Assets
Liabilities
36.0
(627.0)
8.3
0.2
-
(0.5)
(1.9)
0.5
42.6
(24.8)
(0.1)
-
16.5
1.9
(6.2)
(639.7)
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)
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 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.
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. 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 assets to be utilised.
At reporting date, Brambles has unused tax losses of US$889.2 million (2016: US$1,015.7 million) available for offset against
future profits. A deferred tax asset has been recognised in respect of US$628.3 million (2016: US$681.4 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$260.9 million
(2016: US$334.3 million) due to the unpredictability of future profit streams in the relevant jurisdictions. Tax losses of
US$489.2 million (2016: US$530.9 million), which have been recognised in the balance sheet, have an expiry date between
2018 and 2037 (2016: between 2017 and 2035), however it is expected that these losses will be recouped prior to expiry. The
remaining tax losses of US$139.1 million (2016: US$150.5 million), which have been recognised in the balance sheet, can be
carried forward indefinitely.
68
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 6. Income Tax – continued
D) Movements in Deferred Tax Assets and Liabilities – continued
At reporting date, undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised in the
consolidated financial statements are US$1,837.7 million (2016: US$1,762.9 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 Estimates and Judgements
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.
In addition, Brambles regularly assesses the recognition and recoverability of deferred tax assets. This requires judgements
about the application of income tax legislation in jurisdictions in which Brambles operates. Changes in circumstances may
alter expectations and affect the carrying amount of deferred tax assets. 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.
G) 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, tax planning, and dealing with tax authorities. The Tax Policy is included in Brambles Limited’s
Code of Conduct. In addition, Brambles Limited’s Sustainability Review includes a Tax Report which comprises, amongst other
things, details such as the corporate income tax paid by, and effective tax rates of, Brambles. The 2017 Tax Report is
scheduled for publication in October 2017 and will be posted on Brambles’ website.
69
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 7. 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
2017
US cents
2016
US cents
11.5
11.5
28.0
27.9
38.5
(16.5)
(16.4)
37.3
37.1
37.5
37.4
39.2
(0.2)
(0.3)
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.
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.
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 EPS to the extent to which they are dilutive.
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.
70
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 7. Earnings Per Share – continued
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
Loss from discontinued operations
Profit used in calculating basic and diluted EPS
Underlying Profit after finance costs and tax
Underlying Profit (Note 2)
Net finance costs (Note 5)
Underlying Profit before tax
Tax expense on Underlying Profit
Underlying Profit after finance costs and tax
Which reconciles to statutory profit:
Underlying Profit after finance costs and tax
Significant Items after tax (Note 4)
Profit from continuing operations
2017
Million
1,588.3
7.0
1,595.3
2017
US$m
444.9
(262.0)
182.9
957.5
(98.7)
858.8
(247.4)
611.4
611.4
(166.5)
444.9
2016
Million
1,577.6
6.1
1,583.7
2016
US$m
592.3
(4.6)
587.7
984.5
(112.9)
871.6
(252.5)
619.1
619.1
(26.8)
592.3
71
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 8. Dividends
A) Dividends Paid During the Period
Dividend per share (in Australian cents)
Cost (in US$ million)
Payment date
Interim
2017
14.5
171.4
Final
2016
14.5
176.6
13 April 2017
13 October 2016
Dividends paid during the year of US$348.0 million (2016: US$329.9 million) differs from the amount recognised in equity of
US$348.1 million (2016: US$332.3 million) due to the impact of foreign exchange movements between the dividend record
and payment dates.
The Dividend Reinvestment Plan (DRP) was reactivated in 2016. The impact of the DRP for the dividend payments made in
2017, relating to the 2017 interim and 2016 final dividends, were neutralised by an on-market share buy-back. In 2016, the
DRP impact was US$124.8 million and was not neutralised.
B) Dividend Declared after 30 June 2017
Dividend per share (in Australian cents)
Cost (in US$ million)
Payment date
Dividend record date
Final
2017
14.5
180.7
12 October 2017
14 September 2017
As this dividend had not been declared at 30 June 2017, it is not reflected in these financial statements. A provision for
dividends is only recognised where the dividends have been declared prior to the reporting date.
C) Franking Credits
Franking credits available for subsequent financial years based on an Australian tax
rate of 30%
2017
US$m
56.9
2016
US$m
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 receivable at the reporting date; and
- franking credits that may be prevented from being distributed in subsequent financial years.
The final 2017 dividend will be franked at 30%.
72
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 9. Investments
On 21 October 2016, Brambles completed the transaction to combine its Oil and Gas 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). HFG is 50% owned by Brambles and 50% owned by First Reserve, with
both parties accounting for their interest as a joint venture on the basis the shareholders cannot control HFG and key decisions
require mutual agreement from both parties. Brambles' interest in the joint venture is equity accounted and is included within
the Corporate segment.
Brambles received consideration of US$76.8 million from First Reserve to equalise ownership of HFG, with US$40.0 million
received in cash and US$36.8 million as deferred consideration on acquisition. Brambles contributed Ferguson and CCC to HFG
with a US$150.0 million shareholder loan, with a cash interest rate of 10.0% per annum, payable quarterly.
The total loan (US$150.0 million) and deferred consideration including accrued interest (US$39.2 million) is disclosed within
other non-current receivables on the balance sheet at 30 June 2017. Interest revenue earned on the shareholder loan and
deferred consideration during the year was US$12.3 million.
The investment was fair valued on acquisition, which equalled the book value of the Ferguson and CCC net assets.
Investment recoverable amount testing
Based on the performance of HFG and the market conditions in the oil and gas sector, Brambles tested the recoverable amount
of the investment in HFG as at 31 December 2016.
The recoverable amount of the investment in HFG is determined based on the fair value less costs to sell calculation, using a
discounted cash flow methodology covering a ten-year period with an appropriate terminal value at the end of that period. Key
assumptions included in the fair value less costs to sell model relating to the investment include average revenue growth rate of
4.1%, terminal growth rate of 2.0% and pre-tax weighted average cost of capital (WACC) of 13.3%.
Based on the impairment testing at 31 December 2016, an impairment loss of US$120.0 million was recognised in relation to
the HFG investment.
At 30 June 2017, there were no indicators of impairment. The carrying value of the investment of US$20.8 million at
30 June 2017 includes the equity accounted loss for 2017 of US$12.5 million. All other things being equal, a reasonably possible
change in any of the key assumptions may cause an increase or decrease in the impairment of the investment being recognised.
73
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 10. Discontinued Operations
Discontinued operations comprise the held for sale business and divested entities.
A) Held for Sale Business and Divested Entities
Held for sale business
At 30 June 2017, Brambles decided to divest parts of its North American recycled whitewood pallets business. Brambles will
maintain ownership of those facilities which assist with the repair and recovery of pooled pallets.
Following this decision, the business to be divested (CHEP Recycled) has been classified as held for sale at 30 June 2017 in
accordance with the accounting standards. The results of CHEP Recycled for the current and comparative periods, have been
classified as discontinued operations in the statement of comprehensive income and all related note disclosures. The assets and
liabilities of CHEP Recycled have been classified as held for sale within the balance sheet and are excluded from all related note
disclosures in 2017. The comparative balance sheet and relevant notes remain unchanged.
Impairment testing of the CHEP Recycled business was undertaken at 30 June 2017 based on a stand-alone basis, which
resulted in the recognition of a non-cash impairment loss of US$243.8 million. The revised carrying value of the net assets is
US$80.0 million, reflecting its fair value less costs to sell as shown below.
Assets
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Goodwill and intangibles assets
Other assets
Total assets
Liabilities
Trade and other payables
Other liabilities
Total liabilities
Net assets
June
2017
US$m
0.4
45.3
23.1
45.1
22.1
136.0
42.0
14.0
56.0
80.0
Segment assets and liabilities of discontinued operations, as disclosed in Note 2, includes the held for sale business in 2017 and
2016.
The recoverable amount of the assets held for sale are determined based on the fair value less costs to sell calculation, using a
discounted cash flow methodology covering a ten-year period with an appropriate terminal value at the end of that period. Key
assumptions included in the fair value less costs to sell model relating to the assets include average revenue growth rate of
2.0%, terminal growth rate of 2.0% and pre-tax discount rate of 15.0%. All other things being equal, a reasonably possible
change in any of the key assumptions may cause an increase or decrease in the asset impairment being recognised.
74
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 10. Discontinued Operations – continued
A) Held for Sale Business and Divested Entities – continued
Divested entities
On 21 October 2016, Brambles combined its Oil and Gas container solutions businesses with Hoover to create a joint venture
company, HFG. As a result of this transaction, the Oil and Gas business is accounted for as a divestment as it is no longer 100%
owned by Brambles.
On 2 November 2016, Brambles entered into an agreement to sell the Aerospace business, with the completion of the sale
taking place on 30 November 2016.
As a consequence of these divestments, the Oil and Gas and Aerospace businesses are presented in discontinued operations in
the current and comparative reporting periods within the statement of comprehensive income. In addition to these divestments,
discontinued operations comprise net adjustments relating to divestments in prior years.
On 31 May 2016, Brambles divested the LeanLogistics business.
The carrying amount of assets and liabilities for the Aerospace and Oil and Gas businesses at their respective divestment dates
were:
Assets
Trade and other receivables
Property, plant and equipment
Goodwill and intangible assets
Other assets
Total assets
Liabilities
Trade and other payables
Deferred tax liabilities
Intercompany with Brambles
Borrowings
Other liabilities
Total liabilities
Net assets
Divestment
Dates
US$m
35.2
197.6
300.1
23.7
556.6
18.4
16.5
52.9
11.5
7.7
107.0
449.6
June
2016
US$m
39.5
202.4
322.6
19.8
584.3
22.2
34.2
6.5
14.8
14.6
92.3
492.0
Segment assets and liabilities of discontinued operations as at 30 June 2017, as disclosed in Note 2, exclude divested entities.
Segment assets and liabilities of discontinued operations as at 30 June 2016 include divested entities and differ to the balances
above as they do not include intercompany, cash and tax balances.
75
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 10. Discontinued Operations – continued
B) Results of Discontinued Operations
Financial information for discontinued operations is summarised below:
Operating results (excluding profit or loss on divestments) relate to:
- CHEP Recycled1
- Aerospace2
- Oil and Gas3
- LeanLogistics4
- other discontinued operations
Impairment of CHEP Recycled
Profit on divestment of Aerospace5
Loss on divestment of Oil and Gas6
Profit on divestment of LeanLogistics
Total operating (loss)/profit for the year
Finance costs
(Loss)/profit before tax
Tax expense7
Loss for the year from discontinued operations
2017
US$m
(8.9)
(1.1)
0.1
-
(1.0)
(10.9)
(243.8)
19.5
(24.9)
-
(260.1)
(0.4)
(260.5)
(1.5)
(262.0)
2016
US$m
(7.8)
(4.4)
(21.5)
(3.5)
1.9
(35.3)
-
-
-
52.7
17.4
(1.1)
16.3
(20.9)
(4.6)
1
2
3
4
5
6
Operating result includes US$9.6 million of depreciation and amortisation expense (2016: US$9.1 million).
Operating result includes US$4.9 million of depreciation and amortisation expense (2016: US$10.6 million).
Operating result includes US$7.0 million of depreciation and amortisation expense (2016: US$24.0 million).
Operating result for 2016 includes US$2.4 million of depreciation and amortisation expense.
US$12.5 million gain relating to the cumulative foreign currency translation of the investment previously recognised within
other comprehensive income, has been included in the profit on divestment of Aerospace.
US$14.7 million loss relating to the cumulative foreign currency translation of the investment previously recognised within
other comprehensive income, has been included in the loss on divestment of Oil and Gas.
7 Tax expense recognised in 2017 primarily relates to the divestment of the Aerospace and Oil and Gas businesses.
Significant Items outside the ordinary course of business relating to discontinued operations in 2017 were US$(250.0) million,
which includes the impairment of CHEP Recycled US$(243.8) million, the profit on divestment of Aerospace US$19.5 million, the
loss on divestment of Oil and Gas US$(24.9) million, US$(0.5) million related to CHEP Recycled and US$(0.3) million of other
costs.
Significant Items relating to discontinued operations of US$14.1 million recognised during 2016 comprised the gain on sale of
LeanLogistics of US$52.7 million, the impairment of goodwill in the Oil and Gas cash generating unit of US$(38.0) million and
integration costs of US$(0.6) million. Cash Generating Units (CGU), are the smallest identifiable groupings of Brambles’ cash
generating assets.
Proceeds from the disposal of businesses of US$160.1 million include net proceeds relating to the sale of Aerospace of
US$128.6 million and US$31.5 million received relating to the creation of the HFG joint venture. In 2016, proceeds of
US$100.0 million was received in relation to the sale of the LeanLogistics business.
76
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 11. Trade and Other Receivables
Current
Trade receivables
Provision for doubtful receivables
Net trade receivables
Other debtors
Accrued and unbilled revenue
2017
US$m
982.3
(13.0)
969.3
109.5
90.2
2016
US$m
904.1
(14.4)
889.7
149.1
111.2
1,169.0
1,150.0
Trade receivables are recognised when services are provided and settlement is expected within normal credit terms. 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. 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. A
provision of US$5.2 million (2016: US$7.6 million) has been recognised as an expense in the current year for specific trade and
other receivables for which such evidence exists. The amount of the provision is measured as the difference between the
carrying amount of the trade receivables and the estimated future cash flows expected to be received from the relevant
debtors. When a trade receivable for which a provision had been recognised becomes uncollectible in a subsequent period, it is
written off against the provision account.
Bad debts are written-off when identified. Subsequent recoveries of amounts previously written off are credited against other
expenses in profit or loss.
Other debtors primarily comprise GST/VAT recoverable and loss compensation receivables.
77
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 11. Trade and Other Receivables – continued
At 30 June, the ageing analysis of trade receivables and other debtors by reference to due dates was as follows:
Trade receivables
Other debtors
2017
US$m
2016
US$m
2017
US$m
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
802.8
127.6
22.9
7.4
8.6
13.0
982.3
730.9
118.5
19.8
5.7
14.8
14.4
904.1
Refer to Note 23 for other financial instruments' disclosures.
Note 12. Inventories
Raw materials and consumables
Work in progress
Finished goods
81.6
2.2
0.8
1.4
23.5
-
109.5
46.4
-
10.4
56.8
2016
US$m
74.6
6.8
8.5
4.5
54.7
-
149.1
51.3
0.6
34.3
86.2
Inventories on hand are valued at the lower of cost and net realisable value and, where appropriate, a provision is made for
possible obsolescence. Work in progress, which represents partly-completed work undertaken at pre-arranged rates but not
invoiced at the balance sheet date, is recorded at the lower of cost or net realisable value.
Cost is determined on a first-in, first-out basis and, where relevant, includes an appropriate portion of overhead expenditure.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
costs to make the sale.
Note 13. Other Assets
Current
Prepayments
Current tax receivable
Derivative financial instruments (Note 23)
Non-current
Prepayments
Derivative financial instruments (Note 23)
Other receivables1
45.1
11.4
14.1
70.6
5.3
8.2
189.5
203.0
49.6
6.0
22.0
77.6
4.4
16.7
1.8
22.9
Other receivables in 2017 primarily comprises the loan receivable and deferred consideration due from HFG joint venture.
1
78
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 14. Property, Plant and Equipment
A) Net Carrying Amounts and Movements During the Year
2017
US$m
2016
US$m
Land and
Plant and
Land and
Plant and
buildings
equipment
Total
buildings
equipment
Total
Opening net carrying amount
Additions1
Acquisition of subsidiaries
40.1
17.7
-
4,692.2
4,732.3
1,022.4
1,040.1
-
-
Divestment of subsidiaries
(11.5)
(186.1)
(197.6)
Assets transferred to held for sale
Disposals
Depreciation charge2
Impairment of plant and equipment
IPEP expense
Foreign exchange differences
Closing net carrying amount
(5.8)
(0.1)
(3.8)
-
-
2.0
38.6
(17.3)
(137.4)
(513.0)
-
(89.2)
50.9
(23.1)
(137.5)
(516.8)
-
(89.2)
52.9
4,822.5
4,861.1
40.8
6.8
-
-
-
(1.6)
(2.8)
-
-
(3.1)
40.1
4,383.9
1,088.4
24.9
(1.2)
-
(109.9)
(501.4)
(1.7)
(74.8)
4,424.7
1,095.2
24.9
(1.2)
-
(111.5)
(504.2)
(1.7)
(74.8)
(116.0)
(119.1)
4,692.2
4,732.3
At 30 June
Cost
86.5
7,366.6
7,453.1
Accumulated depreciation
(47.9)
(2,544.1)
(2,592.0)
Net carrying amount
38.6
4,822.5
4,861.1
68.4
(28.3)
40.1
7,508.5
7,576.9
(2,816.3)
(2,844.6)
4,692.2
4,732.3
1 Includes capital expenditure related to discontinued operations in 2017 of US$16.6 million.
2 Includes depreciation charge related to discontinued operations in 2017 of US$16.8 million.
The net carrying amounts above include plant and equipment held under finance lease of US$22.1 million (2016: US$38.3 million),
leasehold improvements of US$18.7 million (2016: US$19.0 million), and capital work in progress of US$37.9 million
(2016: US$22.9 million).
B) Recognition and Measurement
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 profit or loss in the period they are incurred.
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 profit or loss and presented within other
income/operating expenses in the period in which the asset is derecognised.
Leases are classified at their inception as either finance or operating leases based on the economic substance of the agreement
so as to reflect the risks and benefits incidental to ownership. 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 PPE held under lease. A lease
liability of equal value is also recognised (refer Note 18). Refer to Note 25B for operating leases.
79
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 14. Property, Plant and Equipment – continued
C) Depreciation of Property, Plant and Equipment
Depreciation is recognised on a straight-line or reducing balance basis on all PPE (excluding land) over their expected useful lives.
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 shorter.
Capitalised lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term.
D) Irrecoverable Pooling Equipment Provision
Loss is an inherent risk of pooling equipment operations. Brambles’ pooling equipment operations around the world differ in
terms of business models, 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. IPEP is presented within accumulated depreciation.
E) 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 goodwill is tested for impairment annually (refer to Note 15D). The recoverable amount of an
asset is the greater of its fair value less costs to sell and its value in use.
Value in use is determined as the estimated future cash flows discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
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 profit or loss in the reporting period in which the write-down
occurs.
80
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 15. Goodwill and Intangible Assets
A) Net Carrying Amounts and Movements During the Year
2017
US$m
2016
US$m
Goodwill
Software
Other1
Total
Goodwill
Software
Other1
Total
Opening carrying amount
1,453.6
Additions
Disposals
Acquisition of subsidiaries
-
-
-
36.4
16.1
-
-
4.2
-
-
20.3
-
-
145.2
1,635.2
1,530.5
Divestment of subsidiaries
(264.9)
(2.1)
(33.1)
(300.1)
Assets transferred to held
for sale
(33.7)
-
(11.4)
(45.1)
Amortisation charge2
-
(8.7)
(22.7)
(31.4)
-
-
49.2
(33.3)
-
-
42.7
10.8
(0.2)
0.2
(5.4)
177.8
1,751.0
1.7
-
4.5
12.5
(0.2)
53.9
(0.2)
(38.9)
-
-
-
Impairment loss3
Foreign exchange
differences
(243.8)
(3.7)
-
-
-
(243.8)
(38.0)
-
-
(11.1)
(30.5)
(41.6)
(38.0)
(3.3)
(7.0)
(54.8)
(0.6)
(8.1)
(63.5)
Closing carrying amount
907.5
41.7
78.9
1,028.1
1,453.6
36.4
145.2
1,635.2
At 30 June
Gross carrying amount
907.5
325.0
218.5
1,451.0
1,491.6
309.3
296.4
2,097.3
Accumulated impairment
Accumulated amortisation
-
-
-
-
-
(38.0)
-
-
(38.0)
(283.3)
(139.6)
(422.9)
-
(272.9)
(151.2)
(424.1)
Net carrying amount
907.5
41.7
78.9
1,028.1
1,453.6
36.4
145.2
1,635.2
1
2
3
Other intangible assets primarily comprise acquired customer relationships, customer lists and agreements.
Includes amortisation charge related to discontinued operations in 2017 of US$4.7 million.
Based on the fair value less costs to sell model used during impairment testing, a goodwill impairment loss of US$243.8 million
was recognised in 2017 in relation to CHEP Recycled and US$38.0 million was recognised in 2016 in relation to the Oil and Gas
CGU, reflecting the market conditions in the oil and gas sector.
81
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 15. Goodwill and Intangible Assets – continued
B) Summary of Carrying Value of Goodwill
As a result of the change in the management reporting structure, goodwill is now disclosed at the lowest CGU level at which
goodwill is assessed for impairment.
CHEP Recycled1
Pallecon EMEA (part of CHEP EMEA)
Pallecon Asia-Pacific (part of CHEP Asia-Pacific)
IFCO
Other2
Oil and Gas
Aerospace
Total goodwill
2017
US$m
-
100.6
33.7
2016
US$m
277.5
98.6
32.8
679.6
671.1
93.6
-
-
92.1
240.0
41.5
907.5
1,453.6
1
2
Goodwill in CHEP Recycled for 2017 has been included within assets held for sale.
Includes goodwill in a number of CGUs for which impairment reviews are performed. The goodwill within these CGUs is not
material for separate disclosure.
C) Recognition and Measurement
Goodwill
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 and joint ventures is
included in intangible assets and investments in joint ventures, respectively. Goodwill is carried at cost less accumulated
impairment losses and is not amortised.
Upon acquisition, any goodwill arising is allocated to each CGU expected to benefit from the acquisition. 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.
Other intangible assets
Intangible assets acquired are capitalised at cost, unless acquired as part of a business combination, in which case they are
capitalised at fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less
provisions for amortisation and impairment.
The costs of acquiring 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.
Useful lives have been established for all non-goodwill intangible assets. Amortisation charges are expensed in profit or loss 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; and
- 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 CGU 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 profit or loss when the asset is derecognised.
82
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 15. Goodwill and Intangible Assets – continued
D) Goodwill Recoverable Amount Testing – Continuing Operations
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. This review may be undertaken more frequently if events or changes
indicate that goodwill may be impaired.
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.
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 2.9% and
11.6% for these CGUs (rates: Pallecon EMEA 8.1%, Pallecon Asia-Pacific 5.2% and IFCO 8.5%). Sensitivity testing was performed on
these CGUs and a reasonably possible decline in these rates would not cause the carrying value of any of these CGUs to exceed its
recoverable amount. Growth rates for 2016 impairment reviews ranged between 2.3% and 13.5%.
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. The average terminal growth rate used in the
financial projections was 2.1% (2016: 2.4%), reflecting higher long-term inflation rates in 2017.
Discount rates (pre-tax)
Discount rates used are the pre-tax WACC and include a premium for market risks appropriate to each country in which the CGU
operates. Pre-tax WACCs averaged 8.1% (pre-tax rates: Pallecon EMEA 7.1%, Pallecon Asia-Pacific 9.8% and IFCO 8.0%). Average
pre-tax WACC rates used for 2016 impairment reviews were 8.4% for businesses remaining in 2017.
Sensitivity
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.
83
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 16. Trade and Other Payables
Current
Trade payables
GST/VAT, refundable deposits and other payables
Accruals and deferred income
Derivative financial instruments (Note 23)
Non-current
Other liabilities
2017
US$m
423.3
511.3
306.0
2.9
2016
US$m
396.5
533.9
335.9
2.1
1,243.5
1,268.4
1.2
1.2
4.0
4.0
Trade and other creditors represent liabilities for goods and services provided to Brambles prior to the end of the financial year
that remain unpaid at the reporting date. The amounts are unsecured, non-interest bearing and are paid within normal credit
terms of 30–90 days.
Non-current payables are discounted to present value using the effective interest method.
Refer to Note 23 for other financial instruments' disclosures.
Note 17. Provisions
Employee entitlements
Other
2017
US$m
2016
US$m
Current
Non-current
Current
Non-current
55.7
23.3
79.0
3.6
21.5
25.1
83.1
31.2
114.3
4.6
23.1
27.7
Provisions for liabilities are made on the basis that, due to a past event, the business has a constructive or legal obligation to
transfer economic benefits that are of uncertain timing or amount. Provisions are measured at the present value of
management’s best estimate at the balance sheet date of the expenditure required to settle the obligation. The discount rate
used is a pre-tax rate that reflects current market assessments of the time value of money and the risks appropriate to the
liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in profit or
loss.
Employee entitlements are provided by Brambles in accordance with the legal and social requirements of the country of
employment. Principal entitlements are for annual leave, sick leave, long service leave, bonuses and contract entitlements.
Annual leave and sick leave entitlements are presented within other payables.
84
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 17. Provisions – continued
Liabilities for annual leave, as well as those employee entitlements that are expected to be settled within one year, are measured
at the amounts expected to be paid when they are settled. All other employee entitlement liabilities are measured at the
estimated present value of the future cash outflows to be made in respect of services provided by employees up to the
reporting date.
Employee entitlements are classified as current liabilities unless Brambles has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Note 18. Borrowings
Unsecured
Bank overdrafts
Bank loans
Loan notes1
Finance lease liabilities
2017
US$m
2016
US$m
Current
Non-current
Current
Non-current
39.1
42.5
586.3
5.5
673.4
-
446.6
1,595.8
16.6
2,059.0
40.9
38.2
112.9
9.7
201.7
-
405.6
2,142.0
28.6
2,576.2
1
During 2017, the €500.0 million Euro Medium Term Note (EMTN) with a maturity date of April 2018 and a coupon rate of
4.625% was reclassified from non-current to current. Brambles has sufficient undrawn committed bank facilities to repay the
EMTN maturing in April 2018.
Borrowings are initially recognised at fair value, net of transaction costs incurred and are subsequently measured at amortised
cost. Any difference between the borrowing proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss 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.
Finance lease payments are allocated between finance charges and a reduction of the lease liability so as to achieve a constant
periodic rate of interest on the lease liability outstanding each period. The finance charge is recognised as a finance cost in profit
or loss.
Financial risks and risk management strategies associated with borrowings, including financial covenants, are disclosed in
Note 23F.
Note 19. 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. Payments to defined contribution retirement benefit plans are charged as an expense as they
fall due.
85
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 19. Retirement Benefit Obligations – continued
US$18.6 million (2016: US$17.0 million) has been recognised as an expense in the statement of comprehensive income
representing contributions paid and payable to these plans by Brambles at rates specified in the rules of the plans, of which
US$18.6 million relates to continuing operations (2016: US$15.0 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.
A liability in respect of defined benefit pension plans 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 plans' 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 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 2017 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 2017. The present value of the defined benefit obligation and the past service cost were measured
using the projected unit credit method. Past service cost is recognised immediately to the extent that the benefits are already
vested.
Actuarial gains and losses arising from differences between expected and actual returns, and the effect of changes in actuarial
assumptions are recognised in full through other comprehensive income in the period in which they arise.
A net expense of US$1.9 million has been recognised in profit in respect of defined benefit plans (2016: US$3.1 million), of which
US$1.3 million net expense relates to continuing operations (2016: US$2.4 million). Included within the total expense recognised
during the year is a net interest cost of US$0.8 million (2016: US$1.4 million).
The amounts recognised in the balance sheet are as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net liability recognised in the balance sheet
2017
US$m
299.4
(247.8)
51.6
2016
US$m
281.4
(233.9)
47.5
Currency variations and a reduction in the discount rate 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$9.6 million (2016: US$7.7 million).
The principal assumption used in the actuarial valuations of the defined benefit obligation was the discount rate of 2.5%
(2016: 2.8%) for the plans operating in the United Kingdom and 9.1% (2016: 7.9%) for the South African plan. A reasonably
possible change in discount rate or other key assumptions may 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 plans’ actuaries when
actuarial valuations are obtained. Additional annual contributions of US$6.5 million (2016: US$6.7 million) are being paid to
remove the identified deficits over a period of 6 years (2016: 6 years).
86
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 20. Contributed Equity
Total ordinary shares, of no par value, issued and fully paid:
At 1 July 2015
Issued during the year
At 30 June 2016
At 1 July 2016
Issued during the year
At 30 June 2017
Shares
US$m
1,566,965,534
19,026,169
1,585,991,703
6,027.4
145.9
6,173.3
1,585,991,703
6,173.3
3,430,091
27.8
1,589,421,794
6,201.1
Ordinary shares are classified as contributed equity. No gain or loss is recognised in profit or loss 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.
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.
87
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 21. Share-Based Payments
The Remuneration Report sets out details relating to the Brambles share plans (pages 33 to 34), together with details of
performance share rights and MyShare matching conditional rights issued to the Executive Directors and other Key Management
Personnel (pages 37 to 38). 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
Balance
at 1 July
Granted
during
the year
Exercised
Forfeited /
during
year
lapsed
Balance
during year
at 30 June
Grant date
Expiry date
2017
Performance share rights
Awards granted in prior periods
7,366,796
-
(2,567,948)
(659,779)
4,139,069
2,524,044
(50,152)
(290,413)
2,183,479
2 Sep 2016
1 April 2024
10 Oct 2016
2 Sep 2022
2 Feb 2017
16 Sep 2023
6 March 2017
2 Sep 2022
28 March 2017
28 Mar 2023
7 Jun 2017
31 Dec 2023
MyShare matching conditional rights
-
-
-
-
-
-
102,852
51,000
168,432
500
118,859
-
-
-
-
-
-
-
-
-
-
2015 Plan Year
31 Mar 2017
2016 Plan Year
31 Mar 2018
2017 Plan Year
31 Mar 2019
724,854
239,700
-
-
(684,939)
481,897
332,671
(59,452)
(2,617)
(39,915)
(60,784)
(7,071)
Total rights
8,331,350
3,780,255
(3,365,108)
(1,057,962)
7,688,535
2016 (summarised comparative)
Total rights
8,010,162
3,947,600
(2,698,511)
(927,901)
8,331,350
Of the above grants, 236,489 rights were exercisable at 30 June 2017.
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
2017
2016
A$
A$
years
10.01
11.39
4.5
8.56
10.57
4.0
The cost of equity-settled share rights 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).
88
102,852
51,000
168,432
500
118,859
-
601,361
322,983
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 21. Share-Based Payments – continued
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 cash-settled share rights is charged to profit or loss over the relevant vesting periods, with a corresponding increase
in provisions.
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 and exclude the impact of non-market vesting conditions. The values calculated do not take
into account the probability of rights being forfeited prior to vesting, as Brambles revises its estimate of the number of shares
and performance rights expected to vest at each reporting date.
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
2017
Grants
2016
Grants
A$11.67
A$10.10
20%
17%
2 – 3 years
2 – 3 years
1.44 –1.45%
1.86 – 1.91%
2.70%
2.90%
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$29.7 million (2016: US$23.6 million) relating to equity-settled share-based payments
and US$1.4 million (2016: US$1.9 million) relating to cash-settled share-based payments. Of these amounts, US$0.9 million
(2016: US$1.8 million) related to discontinued operations.
89
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 22. Reserves and Retained Earnings
A) Movements in Reserves and Retained Earnings
Reserves
Share-
based
Foreign
currency
payments
translation
Unification
US$m
US$m
US$m
Other
US$m
Total
US$m
Retained
earnings
US$m
73.6
(180.0)
(7,162.4)
167.0
(7,101.8)
3,715.5
-
-
23.6
(20.1)
2.2
-
-
-
-
(90.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5.2)
-
-
-
(90.2)
23.6
(20.1)
2.2
(5.2)
-
-
(2.8)
-
-
-
-
5.2
(332.3)
587.7
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 as at 30 June 2016
79.3
(270.2)
(7,162.4)
161.8
(7,191.5)
3,973.3
Year ended 30 June 2017
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
79.3
(270.2)
(7,162.4)
161.8
(7,191.5)
3,973.3
-
-
-
35.3
29.7
(26.2)
(0.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35.3
29.7
(26.2)
(0.1)
-
-
(9.7)
-
-
-
-
(348.1)
182.9
Closing balance as at 30 June 2017
82.7
(234.9)
(7,162.4)
161.8
(7,152.8)
3,798.4
B) Nature and Purpose of Reserves
Share-based payments reserve
This comprises the cumulative share-based payment expense recognised in the statement of comprehensive income in relation
to equity-settled options and share rights issued but not yet exercised. Refer to Note 21 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 profit or loss on disposal of a foreign
subsidiary.
90
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 22. Reserves and Retained Earnings – continued
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 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
statement of comprehensive income when the associated hedged transaction is recognised or the hedge or the forecast hedged
transaction is no longer highly probable.
91
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. 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. Financial risk management activities are carried out centrally by
Brambles’ Treasury department in accordance with Board policies and guidelines through standard operating procedures and
delegated authorities.
Brambles uses interest rate swaps and forward foreign exchange contracts to manage its market risk and does not trade in
financial instruments for speculative purposes.
A) Financial Assets and Liabilities
Financial assets are recognised when Brambles becomes a party to the contractual provisions of the instrument and are classified
in the following two categories: financial assets at fair value through profit or loss; and loans and receivables.
Derecognition occurs when rights to the asset have expired or when Brambles transfers its rights to receive cash flows from the
asset together with substantially all the risks and rewards of the asset.
Refer to Note 18 for the recognition of interest bearing financial liabilities.
The fair values of all financial assets and liabilities held on the balance sheet as at 30 June 2017 equal the carrying amount, with
the exception of loan notes, which have an estimated fair value of US$2,278.6 million (2016: US$2,300.0 million) compared to a
carrying value of US$2,182.1 million (2016: US$2,254.9 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 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.
B) Derivative and Hedging Activities
For the purposes of hedge accounting, hedges are classified as either fair value hedges, cash flow hedges or net investment
hedges.
For fair value hedges, any gain or loss from remeasuring the hedging instrument at fair value is adjusted against the carrying
amount of the hedged item and recognised in profit or loss.
For cash flow hedges, 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 and the ineffective portion is recognised in profit or loss.
Hedges for net investments in foreign operations are accounted for similarly to cash flow hedges.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting.
92
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
C) 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 assets (fixed rate)
Loan receivable from HFG joint venture
Deferred consideration from First Reserve
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
2017
US$m
152.4
7.3
159.7
1.0%
150.0
39.2
189.2
9.2%
39.1
468.5
572.0
1,079.6
1.8%
2016
US$m
150.7
5.4
156.1
0.1%
-
-
-
-
40.9
415.3
556.2
1,012.4
1.6%
2,182.1
2,254.9
20.6
22.1
(572.0)
1,652.8
4.8%
28.5
38.3
(556.2)
1,765.5
4.9%
93
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
C) Market Risk – continued
Interest rate swaps – fair value hedges
Brambles entered into interest rate swap transactions with various banks, swapping the €500.0 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
has been adjusted to increase debt by US$14.3 million (2016: US$22.6 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$14.3 million (2016: US$22.6 million).
The terms of the swaps match the terms of the fixed-rate bond issue for the amounts and durations being hedged.
The gain or loss from remeasuring the interest rate swaps at fair value is recorded in profit or loss together with any changes in
the fair value of the hedged asset or liability that is attributed to the hedged risk. For 2017, all interest rate swaps were effective
hedging instruments.
Sensitivity analysis
Given current economic conditions and Brambles’ approach to risk management, the Group’s sensitivity to changes in interest
rates is not material.
Foreign exchange risk
Exposure to foreign exchange risk generally arises in either the value of transactions translated back to the functional currency of
a subsidiary or the value of assets and liabilities of overseas subsidiaries when translated back to the Group’s reporting currency.
Foreign exchange hedging is used when a transaction exposure exceeds certain thresholds and as soon as a defined exposure
arises. Within Brambles, exposures may arise with external parties or, alternatively, by way of cross-border intercompany
transactions. Forward foreign exchange contracts are primarily used to manage exposures from normal commercial transactions
such as the purchase and sale of equipment and services, intercompany interest and royalties. Given that Brambles both
generates income and incurs expenses in its local currencies of operation, these exposures are not significant.
Brambles generally mitigates translation exposures by raising debt in currencies where there are matching assets.
Currency profile
The following table sets out the currency mix profile of Brambles’ financial instruments at reporting date. Financial assets include
cash, trade receivables and derivative assets. Financial liabilities includes trade payables, borrowings and derivative liabilities:
US
dollar
US$m
405.4
1,313.0
259.7
1,400.4
Aust.
dollar
US$m
59.6
14.9
62.8
17.0
Sterling
US$m
Euro
US$m
Other
US$m
Total
US$m
62.4
526.5
286.6
1,340.5
174.4
1,448.5
207.8
3,158.6
68.2
447.0
136.4
1,398.8
246.8
223.9
1,084.5
3,176.5
2017
Financial assets
Financial liabilities
2016
Financial assets
Financial liabilities
94
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
C) Market Risk – continued
Forward foreign exchange contracts – cash flow hedges
During 2017, Brambles entered into forward foreign exchange transactions with various banks in a variety of cross-currencies
for terms ranging up to three months.
For 2017 and 2016, all foreign exchange contracts were effective hedging instruments. The fair value of these contracts at
reporting date was nil (2016: 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 profit or loss. 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$5.3 million (2016: US$14.6 million).
Hedge of net investment in foreign entity
At 30 June 2017, €350.5 million (US$400.9 million) of the 2024 EMTN 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 2017 and 2016, 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 2017, if exchange rates were to weaken/strengthen against the USD 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$28.5 million lower/higher (2016: US$27.7 million lower/higher)
as a result of the incremental movement through the foreign currency translation reserve relating to the effective portion of a
net investment hedge.
D) Liquidity Risk
Brambles’ objective is to maintain adequate liquidity to meet its financial obligations as and when they fall due. Brambles
funds its operations through existing equity, retained cash flow and borrowings. Funding is generally sourced from
relationship banks and debt capital market investors on a medium to long-term basis.
Bank credit facilities are generally structured on a committed multi-currency revolving basis and at balance date had
maturities ranging out to December 2021. Borrowings under the bank credit facilities are floating-rate, unsecured obligations
with covenants and undertakings typical for these types of arrangements.
Borrowings are raised from debt capital markets by the issue of unsecured fixed interest notes, with interest payable semi-
annually or annually. At balance date, loan notes had maturities out to October 2025. Brambles has sufficient undrawn
committed bank facilities to repay the €500.0 million EMTN maturing in April 2018.
Brambles also has access to further funding through overdrafts, uncommitted and standby lines of credit, principally to
manage day-to-day liquidity.
The average term to maturity of the committed borrowing facilities and the loan notes is equivalent to 3.7 years
(2016: 4.3 years). These facilities are unsecured and are guaranteed as described in Note 32B.
95
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
D) Liquidity Risk – continued
Borrowing facilities maturity profile
2017
Total facilities
Facilities used1
Facilities available
2016
Total facilities
Facilities used1
Facilities available
Year 1
US$m
Year 2
US$m
Year 3
US$m
Year 4
US$m
>4 years
US$m
Total
US$m
887.3
684.2
1,048.1
355.8
1,428.6
4,404.0
(659.1)
(137.7)
(657.4)
(107.1)
(1,153.8)
(2,715.1)
228.2
546.5
390.7
248.7
274.8
1,688.9
590.6
1,056.7
(184.8)
405.8
(644.9)
411.8
660.2
(38.7)
621.5
756.9
1,529.1
4,593.5
(609.0)
(1,274.8)
(2,752.2)
147.9
254.3
1,841.3
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$17.3 million (2016: US$25.7 million) from loan notes
and borrowings as shown in the balance sheet, which are measured on the basis of amortised cost as determined under
the effective interest method and include accrued interest, transaction costs and fair value adjustments on certain hedging
instruments.
96
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
D) Liquidity Risk – continued
Maturities of financial liabilities
The maturities of Brambles’ contractual cash flows on non-derivative financial liabilities (for principal and interest) and
contractual cash flows on net and gross settled derivative financial instruments, based on the remaining period to contractual
maturity date, are presented below. Cash flows on interest rate swaps and forward foreign exchange contracts are valued
based on forward interest and exchange rates applicable at reporting date.
Year 1
US$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
2017
Non-derivative financial liabilities
Trade payables
Bank overdrafts
Bank loans
Loan notes
Finance lease
liabilities
423.3
39.1
52.8
670.8
-
-
121.3
80.6
-
-
157.9
554.6
-
-
-
-
106.2
76.8
423.3
39.1
515.0
423.3
39.1
489.1
32.7
1,211.2
2,549.9
2,182.1
5.9
4.6
4.1
3.4
5.8
23.8
22.1
1,191.9
206.5
716.6
142.3
1,293.8
3,551.1
3,155.7
Financial guarantees1
46.7
-
-
-
-
46.7
-
1,238.6
206.5
716.6
142.3
1,293.8
3,597.8
3,155.7
Derivative financial (assets)/liabilities
Net settled interest rate swaps
- fair value hedges
(5.9)
(2.8)
(2.2)
(1.8)
(1.9)
(14.6)
(14.1)
Gross settled forward foreign exchange contracts
- (inflow)
- outflow
(999.8)
994.5
(11.2)
-
-
-
-
-
-
-
-
(2.8)
(2.2)
(1.8)
(1.9)
(999.8)
994.5
(19.9)
(5.3)
-
(19.4)
97
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
D) Liquidity Risk – continued
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
396.5
40.9
47.6
201.2
-
-
87.3
636.8
10.9
9.1
-
-
17.9
79.7
7.1
-
-
108.2
554.4
-
-
211.7
396.5
40.9
472.7
396.5
40.9
443.8
1,235.0
2,707.1
2,254.9
5.9
9.3
42.3
38.3
Financial guarantees1
697.1
54.9
752.0
733.2
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
- 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
(932.5)
917.9
(20.3)
-
-
(6.6)
-
-
(2.8)
-
-
(2.7)
-
-
(7.8)
(932.5)
917.9
(40.2)
(14.6)
-
(36.6)
1 Refer to Note 26A 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.
98
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 23. Financial Risk Management – continued
E) 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. Other than the non-current receivables due from HFG joint venture and First Reserve totalling US$189.2 million,
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.
Brambles transacts derivatives with prominent financial institutions and has credit limits in place to limit exposure to any
potential non-performance by its counterparties.
F) 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 2017, 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 debt1
Total equity
Total capital
2017
US$m
2016
US$m
2,732.4
2,777.9
(159.7)
(156.1)
2,572.7
2,621.8
2,846.7
2,955.1
5,419.4
5,576.9
1
Excludes amounts which are classified as held for sale at 30 June 2017. If the assets and liabilities relating to held for sale
balances were included, the adjusted net debt would be US$2,580.7 million.
Under the terms of its major borrowing facilities, Brambles is required to comply with the following financial covenants:
-
-
the ratio of net debt to EBITDA is to be no more than 3.5 to 1; and
the ratio of EBITDA to net finance costs is to be no less than 3.5 to 1.
Brambles has complied with these financial covenants for 2017 and prior years.
99
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 24. Cash Flow Statement – Additional Information
A) Reconciliation of Cash
For the purpose of the cash flow statement, cash comprises:
Cash at bank and in hand1
Short-term deposits
Bank overdraft (Note 18)2
2017
US$m
152.8
7.3
160.1
(47.4)
112.7
2016
US$m
150.7
5.4
156.1
(40.9)
115.2
1
2
Includes cash at bank and in hand (US$0.4 million) relating to held for sale operations in 2017.
Includes a bank overdraft (US$8.3 million) relating to held for sale operations in 2017.
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. Bank overdrafts are presented within
borrowings in the balance sheet.
Cash and cash equivalents include balances of US$1.4 million (2016: US$1.5 million) used as security for various contingent
liabilities and are not readily accessible. Short-term deposits have initial maturities varying between seven days and three
months.
Brambles has various master netting and set-off arrangements covering cash pooling. An amount of US$28.4 million has been
reduced from cash at bank and overdraft at 30 June 2017 (2016: US$26.9 million).
100
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 24. Cash Flow Statement – Additional Information – continued
B) Reconciliation of Profit After Tax to Net Cash Flows from Operating Activities
Profit after tax
Adjustments for:
- depreciation and amortisation
- irrecoverable pooling equipment provision expense
- loss/(profit) on divestments
- net losses on disposals of property, plant and equipment
- impairment of goodwill and plant and equipment
- impairment of investment
- other valuation adjustments
- joint ventures and associates
- equity-settled share-based payments
- finance revenues and costs
2017
US$m
182.9
548.2
89.2
5.4
5.9
243.8
120.0
0.3
12.5
29.7
(0.2)
2016
US$m
587.7
548.2
74.8
(52.7)
0.3
39.7
-
(6.2)
-
23.6
(2.6)
Movements in operating assets and liabilities, net of acquisitions and disposals:
- increase in trade and other receivables
(80.3)
(139.5)
- increase in prepayments
- decrease/(increase) in inventories
- increase in deferred taxes
- increase in trade and other payables
- (decrease)/increase in tax payables
- (decrease)/increase in provisions
- other
(2.4)
6.6
24.7
73.1
(7.4)
(32.1)
(8.7)
(5.8)
(7.1)
62.7
6.2
15.1
12.4
10.1
Net cash inflow from operating activities
1,211.2
1,166.9
101
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 24. Cash Flow Statement – Additional Information – continued
C) Reconciliation of Movement in Net Debt
Net debt at beginning of the year
Net cash inflow from operating activities
Net cash outflow from investing activities
Net (inflow)/outflow from hedge instruments
Proceeds from issue of ordinary shares
Dividends paid
Increase on business acquisitions
Interest accruals, finance leases and other
Foreign exchange differences
Net debt at end of the year
Being:
Current borrowings
Non-current borrowings
Cash and cash equivalents
Net debt at end of the year
2017
US$m
2,621.8
(1,211.2)
826.9
(23.7)
(1.6)
348.0
-
(6.7)
19.2
2016
US$m
2,688.9
(1,166.9)
922.6
8.2
(1.0)
205.1
15.3
(10.4)
(40.0)
2,572.7
2,621.8
673.4
2,059.0
(159.7)
2,572.7
201.7
2,576.2
(156.1)
2,621.8
D) Non-Cash Financing or Investing Activities
Apart from the Dividend Reinvestment Plan, there were no financing or investing transactions during the year which had a
material effect on the assets and liabilities of Brambles that did not involve cash flows.
Note 25. Commitments
A) Capital Expenditure Commitments
Capital expenditure, principally relating to property, plant and equipment, contracted for but not recognised as liabilities at
reporting date was as follows:
Within one year
Between one and five years
After five years
102
2017
US$m
119.6
156.7
7.4
283.7
2016
US$m
113.6
151.5
38.1
303.2
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 25. Commitments – continued
B) Operating Lease Commitments
Brambles has taken out operating leases for offices, operational locations and plant and equipment. The leases have varying
terms, escalation clauses and renewal rights. Escalation clauses are rare and any impact is considered immaterial.
The minimum lease payments under operating leases, where the lessor effectively retains substantially all of the risks and
benefits of ownership of the leased item, are recognised as an expense on a straight-line basis over the term of the lease. The
future minimum lease payments under such non-cancellable operating leases are as follows:
Within one year
Between one and five years
After five years
Minimum lease payments
Plant
Occupancy
2016
US$m
23.4
56.4
10.2
90.0
2017
US$m
105.0
257.0
107.8
469.8
2016
US$m
107.9
260.8
100.1
468.8
2017
US$m
27.2
54.7
7.1
89.0
During the year, operating lease expense of US$161.4 million (2016: US$157.6 million) was recognised in profit or loss.
Note 26. Contingencies
a)
Subsidiaries have contingent unsecured liabilities in respect of guarantees given relating to performance under contracts
entered into totalling US$46.7 million (2016: US$54.9 million), of which US$35.2 million (2016: US$37.9 million) is also
guaranteed by Brambles Limited. US$11.3 million (2016: US$16.9 million) is also guaranteed by Brambles Limited and certain
of its subsidiaries under a deed of cross-guarantee and is included in Note 32B.
b)
Brambles guarantees certain Iron Mountain (formerly Recall) lease obligations. To the extent any claims or liabilities arise
under those guarantees and are caused by an Iron Mountain Group company, Iron Mountain has indemnified Brambles
under the Demerger Deed relating to the demerger of Brambles' former Recall business.
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.
103
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 27. 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:
- 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:
- tax advisory services
- other
Total remuneration of related practices of PwC (Australia)
Total auditor’s remuneration
2017
US$’000
2016
US$’000
2,178
60
2,238
-
26
26
2,264
3,093
37
3,130
12
35
47
3,177
5,441
1,694
300
1,994
27
79
106
2,100
3,682
4
3,686
53
68
121
3,807
5,907
From time to time, Brambles employs PwC on assignments additional to its statutory audit duties where PwC, through its detailed
knowledge of the Group, is best placed to perform the services from an efficiency, effectiveness and cost perspective. The
performance of such non-audit related services is always balanced with the fundamental objective of ensuring PwC’s objectivity
and independence as auditors. To ensure this balance, Brambles’ Charter of Audit Independence requires that the
Audit Committee approves any management recommendation that PwC undertakes non-audit work (with approval being
delegated to the Chief Financial Officer within specified monetary limits).
Non-audit assignments during the year primarily related to compliance projects and agreed upon procedures in relation to
financial metrics and disclosures.
104
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 28. Key Management Personnel
A) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payment expense
2017
US$’000
7,106
76
753
7,270
15,205
2016
US$’000
10,162
276
95
7,422
17,955
B) Other Transactions with Key Management Personnel
Other transactions with Key Management Personnel are set out in Note 29A.
Further remuneration disclosures are set out in the Directors’ Report on pages 22 to 42 of the Annual Report.
Note 29. 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 2017 of US$1,097,063 (2016: US$1,054,000) 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.
Per Note 9, Brambles contributed Ferguson and CCC to HFG with a US$150.0 million shareholder loan, with a cash interest rate of
10.0% per annum, payable quarterly.
105
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 29. Related Party Information – continued
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 Deutschland GmbH
Place of incorporation
USA
Canada
UK
Belgium
Germany
CHEP South Africa (Proprietary) Limited
South Africa
CHEP Australia Limited
CHEP Recycled Pallet Solutions LLC
CHEP Mexico SA de CV
IFCO Systems North America LLC
IFCO Systems GmbH
Brambles USA Inc.
Brambles Finance plc
Brambles Finance Limited
Australia
USA
Mexico
USA
Germany
USA
UK
Australia
% interest held at
reporting date
2017
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2016
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. Shares in subsidiaries are recorded at cost, less
provision for impairment.
Material subsidiaries which prepare financial statements report a 30 June balance date.
Note 30. Events After Balance Sheet Date
Other than those outlined in the Directors’ Report or elsewhere in these financial statements, no other events have occurred
subsequent to 30 June 2017 and up to the date of this report that have had a material impact on Brambles’ financial performance
or position.
Note 31. Net Assets Per Share
Based on 1,589.4 million shares (2016: 1,586.0 million shares):
- Net tangible assets per share
- Net assets per share
2017
US cents
2016
US cents
111.6
179.1
83.2
186.3
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.
106
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 32. Parent Entity Financial Information
A) Summarised Financial Data of Brambles Limited
Profit for the year
Other comprehensive income/(loss) for the year
Total comprehensive income
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
2017
US$m
376.0
174.8
550.8
2.6
7,810.3
7,812.9
33.0
1,578.5
1,611.5
6,201.4
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
6,201.1
6,173.3
57.4
(223.3)
166.2
47.6
(398.1)
138.3
6,201.4
5,961.1
Dividends received from investments in subsidiaries are recognised as revenue even if they are paid out of pre-acquisition
profits.
107
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2017
Note 32. 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$1,827.3 million (2016: US$1,875.5 million), of
which US$392.5 million (2016: US$346.9 million) has been drawn.
Brambles Limited and certain of its subsidiaries are parties to guarantees which supports US Private Placement borrowings of
US$20.0 million (2016: US$116.5 million) by a subsidiary.
Brambles Limited and certain of its subsidiaries are parties to a guarantee which supports notes of US$1,000.0 million
(2016: US$1,000.0 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 supports notes of €1,000.0 million
(2016: €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$558.6 million (2016: US$539.4 million), of
which US$129.1 million (2016: US$147.6 million) has been drawn.
Other than these guarantees, the parent entity did not have any contingent liabilities at 30 June 2017 or 30 June 2016.
C) Contractual Commitments
Brambles Limited did not have any contractual commitments for the acquisition of property, plant and equipment at 30 June
2017 or 30 June 2016.
Note 33. New Accounting Standards and Interpretations Not Yet Adopted
At 30 June 2017, certain new accounting standards and interpretations have been published that will become mandatory in
future reporting periods as detailed below.
Brambles has not early-adopted these new or amended accounting standards and interpretations in 2017 and is continuing to
assess the impact on Brambles’ financial results and financial statements presentation. A project team has been implemented to
assess the impact of the new accounting standards relevant to Brambles' operations. This assessment process also includes
identifying changes to internal and external reporting requirements, IT systems, business processes and associated internal
controls with the aim of quantifying the expected impact of the new standards as well as supporting ongoing compliance with
new accounting requirements. New and amended accounting standards include:
-
-
-
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. Whilst the impact of this standard is still being assessed, it is not
expected to have a material impact for Brambles.
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. Whilst the impact of this standard is still being assessed, it will result in a higher deferred
revenue balance being recognised on the balance sheet; however, due to the retained earnings adjustment on transition, it
is not expected to have a material impact on revenue.
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. Whilst the impact of this standard is still being assessed, it is expected to have a material
impact for Brambles.
Brambles is not expecting to early-adopt any of these standards in future reporting periods.
108
Consolidated Financial Report Directors’ Declaration
In the opinion of the Directors of Brambles Limited:
(a)
the financial statements and notes set out on pages 51 to 108 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 2017 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
G A Chipchase
Chief Executive Officer
21 August 2017
109
Consolidated Financial Report Independent Auditor’s Report
to the Members of Brambles Limited
Independent auditor’s report
To the shareholders of Brambles Limited
Independent auditor’s report
Report on the audit of the financial report
To the shareholders of Brambles Limited
Our opinion
Report on the audit of the financial report
In our opinion:
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
Our opinion
(together, the Group) is in accordance with the Corporations Act 2001, including:
In our opinion:
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
(together, the Group) is in accordance with the Corporations Act 2001, including:
performance for the year then ended
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended
What we have audited
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
The Group’s financial report comprises:
● the consolidated balance sheet as at 30 June 2017
What we have audited
The Group’s financial report comprises:
● the consolidated statement of comprehensive income for the year ended 30 June 2017
● the consolidated balance sheet as at 30 June 2017
● the consolidated cash flow statement for the year ended 30 June 2017
● the consolidated statement of comprehensive income for the year ended 30 June 2017
● the consolidated statement of changes in equity for the year ended 30 June 2017
● the consolidated cash flow statement for the year ended 30 June 2017
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
● the consolidated statement of changes in equity for the year ended 30 June 2017
include a summary of significant accounting policies
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
● the directors’ declaration.
include a summary of significant accounting policies
Basis for opinion
● the directors’ declaration.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
report section of our report.
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Independence
our opinion.
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Independence
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
in accordance with the Code.
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
Liability limited by a scheme approved under Professional Standards Legislation.
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
110
Liability limited by a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
Independent auditor’s report
users taken on the basis of the financial report.
To the shareholders of Brambles Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
(together, the Group) is in accordance with the Corporations Act 2001, including:
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
● the consolidated balance sheet as at 30 June 2017
Materiality
● the consolidated statement of comprehensive income for the year ended 30 June 2017
● For the purpose of our audit we used overall Group materiality of $39.5 million, which represents
● the consolidated cash flow statement for the year ended 30 June 2017
approximately 5% of the Group’s profit before tax adjusted for significant impairment charges as
they are unusual or infrequently occurring items.
● the consolidated statement of changes in equity for the year ended 30 June 2017
● We applied this threshold, together with qualitative considerations, to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
misstatements on the financial report as a whole.
include a summary of significant accounting policies
● We chose profit before tax because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured by users and it is a generally accepted benchmark. We
● the directors’ declaration.
selected 5% based on our professional judgement noting it is within the range of commonly
acceptable thresholds.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Audit scope
those standards are further described in the Auditor’s responsibilities for the audit of the financial
● The Group’s financial results comprise the consolidation of a network of pooled pallet, crate and
report section of our report.
container businesses which are geographically widespread. We tailored the scope of our audit so
that we performed sufficient work to be able to give an opinion on the financial report as a whole,
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
taking into account the structure of the Group, the significance and risk profile of each business,
our opinion.
the accounting processes and controls, and the industry in which the Group operates.
estimates involving assumptions and inherently uncertain future events.
● Our audit also focused on areas of subjective judgement, for example, significant accounting
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
111
Independent Auditor’s Report
Independent Auditor’s Report – continued
to the Members of Brambles Limited
Audit of significant locations, transactions and balances
● Local PwC audit firms performed an audit of the financial information prepared for consolidation
Independent auditor’s report
To the shareholders of Brambles Limited
purposes for eighteen components of the Group. The components were selected due to their
significance to the Group, either by individual size or by risk. Certain components in the Group are
selected every year due to their size or nature, while others are included on a rotational basis.
and balances for a further seven components.
Report on the audit of the financial report
● In addition, local PwC audit firms performed risk focused audit procedures on selected transactions
Our opinion
In our opinion:
● The remaining components were financially insignificant, and comprise more than one hundred
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
and fifty entities. Those entities are considered in our Group analytical procedures and our
(together, the Group) is in accordance with the Corporations Act 2001, including:
understanding of these entities.
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
Audit of shared service functions
performance for the year then ended
● Our audit of IT, tax and certain finance processes was performed centrally by PwC teams based in
various territories, reflecting the location of the Group’s shared services functions. This included
some audit procedures performed at the Group’s finance process outsourced services provider. The
PwC Australia Group audit team (the Group audit team) performed audit procedures over centrally
managed areas such as share based payments, treasury, equity investment impairment review and
the consolidation process.
What we have audited
The Group’s financial report comprises:
● the consolidated cash flow statement for the year ended 30 June 2017
● the consolidated balance sheet as at 30 June 2017
Direction and supervision by the Group audit team
● The audit procedures were performed by PwC Australia and local PwC audit firms operating under
● the consolidated statement of comprehensive income for the year ended 30 June 2017
the Group audit team’s instructions. The Group audit team determined the level of involvement
needed in the audit work by local audit firms to be satisfied that sufficient audit evidence had been
obtained for the purpose of the opinion. The Group audit team kept in regular communication with
the local audit firms throughout the year through phone calls, discussions and written instructions.
Senior members of the Group audit team visited certain businesses and met with management and
local audit teams including significant locations (which are visited twice every year); significant
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
shared service centres (which are visited every year); and certain other locations (which are visited
include a summary of significant accounting policies
on a rotational basis).
● the consolidated statement of changes in equity for the year ended 30 June 2017
● the directors’ declaration.
● The audit team both at Group and at local component levels were appropriately skilled and
competent to perform an audit of a complex global business. This included specialists and experts
such as IT auditors, actuarial, tax, treasury and valuation specialists.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Key audit matters
report section of our report.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were communicated to
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
the Audit Committee. The key audit matters were addressed in the context of our audit of the financial
our opinion.
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. Further, any commentary on the outcomes of a particular audit procedure is made in
Independence
that context.
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
112
Liability limited by a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
Key audit matter
How our audit addressed the key
audit matter
Pooled pallets
Accounting for pooling equipment assets
Independent auditor’s report
(Refer to note 14)
To the shareholders of Brambles Limited
Brambles’ pooling equipment is accounted for as
depreciable fixed assets, classified within plant &
Report on the audit of the financial report
equipment. The accounting for pooling
equipment was a key audit matter due to the
Our opinion
assets’ financial size and judgement involved. As
In our opinion:
disclosed in Note 14 of the financial report, there
is inherent risk in accounting for pooling
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
equipment due to the high volume of asset
(together, the Group) is in accordance with the Corporations Act 2001, including:
movements through a complex network, and a
limitation on the Group’s ability to physically
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
● assessed key assumptions and judgements,
verify the quantity of the pallets and containers
due to access and cost prohibitions.
Evaluated the design effectiveness and tested a
selection of key asset management controls
including attending pallet audits and assessing
the results of the Group’s counts.
Tested key reconciliations between the numbers
of pallets in the accounting records compared to
the operations system.
To challenge the provision calculation
methodology and assumptions we:
performance for the year then ended
with a particular focus on distributors who are
not customers of CHEP, as losses from such
distributors are historically higher;
● assessed provision estimates for significant
customers where CHEP has no access to
physically count the pallets;
The two largest categories of pooling equipment
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
are pallets and reusable plastic crates (RPCs).
What we have audited
Pooled pallets
The Group’s financial report comprises:
Key areas of judgement in relation to pooled
● the consolidated balance sheet as at 30 June 2017
pallets included estimated useful life (and
therefore the pattern of depreciation) and
● the consolidated statement of comprehensive income for the year ended 30 June 2017
accounting for lost pallets. The estimation of the
provision for lost pallets (called the irrecoverable
● the consolidated cash flow statement for the year ended 30 June 2017
pooling equipment provision, or “IPEP”) involves
Obtained an understanding of useful lives and
significant estimates and the Group’s judgement.
assessed continued appropriateness based on an
● the consolidated statement of changes in equity for the year ended 30 June 2017
The provision is calculated by considering the
understanding of the business.
results of the Group’s site audits, historical
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
experience of pallet loss and flows analysis as
reported through the asset management system.
● evaluated how historical pallet loss rates and
flows analysis are used to estimate future
losses; and
include a summary of significant accounting policies
● tested the calculations and extrapolations of
provision estimates across pallets.
Reusable plastic crates (RPCs)
● the directors’ declaration.
Reusable plastic crates (RPCs)
Tested a selection of the Group’s controls over
accounting for RPCs including monthly pool
reconciliations, crate sample counts and the
deposit matching process.
Accounting for RPCs is complex and involves
Basis for opinion
uncertainty in estimating the number of crates
Tested key reconciliations between the numbers
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
lost per trip, the useful life of crates and crate
of crates in the accounting records compared to
those standards are further described in the Auditor’s responsibilities for the audit of the financial
residual value. There is further complexity in
the operations system.
report section of our report.
accounting for deposits and matching them
Inspected historical flows analyses prepared by
against lost crates when they are written off.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
the Group to test the reasonableness of estimates
our opinion.
such as crates lost per trip.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Considered and challenged the Group’s key
assumptions and other drivers of the number and
value of recorded crates by agreeing the cost and
residual value of a sample of crates to external
evidence, taking part in stock observation, and
receiving confirmations from crate producers.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
113
Independent Auditor’s Report
Independent Auditor’s Report – continued
to the Members of Brambles Limited
Key audit matter
Independent auditor’s report
To the shareholders of Brambles Limited
How our audit addressed the key
audit matter
Tested a sample of the outstanding crate deposits
and performed procedures in regards to the
deposit matching process.
Report on the audit of the financial report
Obtained an understanding of useful lives and
assessed continued appropriateness based on an
understanding of the business.
Our opinion
In our opinion:
Recoverability of equity investments
We evaluated HFG’s cash flow forecasts in the
model and the process by which they were
developed.
(Refer to note 9)
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
(together, the Group) is in accordance with the Corporations Act 2001, including:
An impairment of $120m was recognised during
the year in relation to the Group’s equity
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
investment in Hoover Ferguson Group (HFG).
performance for the year then ended
Prior to the impairment assessment, the
Our testing of the Group’s model was assisted by
investment had a carrying value of $148.6m.
PwC valuation experts who assessed the
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
The recoverability of the HFG equity investment
reasonableness of assumptions in the model by:
was a key audit matter because of its financial size
What we have audited
and the impact of the impairment charge.
The Group’s financial report comprises:
In preparing the Fair Value less costs to sell
● the consolidated balance sheet as at 30 June 2017
model (the model) used to assess the
recoverability of this equity investment, the
Group made a number of assumptions that were
● the consolidated statement of comprehensive income for the year ended 30 June 2017
subjective and judgemental.
● the consolidated cash flow statement for the year ended 30 June 2017
The key assumptions and related disclosures can
be found in Note 9 of the financial report which
● the consolidated statement of changes in equity for the year ended 30 June 2017
indicates that the impairment assessment
remains sensitive to a range of assumptions, in
changes in key assumptions by applying other
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
particular to changes in discount rates and
values within range that we independently
achievement of forecast revenue.
assessed as being reasonably possible.
● assessing components of the discount rate,
through the creation of an independent
‘shadow’ calculation; and
● comparing long term market growth
assumptions to external market data;
● comparing the discount rate against a
performance of the business and the
assessment of HFG’s future prospects;
include a summary of significant accounting policies
● comparing revenue forecasts to the historical
● considering the sensitivity of the model to
selection of similar companies;
● the directors’ declaration.
We examined the report obtained by the Group
from a valuation expert, which was used to assist
Basis for opinion
the Group in their evaluation of fair value. We
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
considered the outcomes of the report for
those standards are further described in the Auditor’s responsibilities for the audit of the financial
evidence on the carrying amount of the equity
report section of our report.
investment. We assessed the competency of the
valuation expert which included considering their
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
experience and qualifications.
our opinion.
Carrying amount of Held for Sale assets
Independence
(Refer to note 10)
We are independent of the Group in accordance with the auditor independence requirements of the
At 30 June 2017, the Group has deemed a portion
Evaluated the Group’s assessment as to whether
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
of its North American recycled whitewood pallet
the criteria under Australian Accounting
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
business as being held for sale.
Standards to recognise the assets as held for sale
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
were met.
The determination of the fair value of the specific
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
114
Liability limited by a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
Key audit matter
How our audit addressed the key
audit matter
Our testing of the Group’s FVLCTS model
included the assessment of the reasonableness of
key assumptions, with assistance from our PwC
valuations experts, by:
assets which have been classified as held for sale,
Independent auditor’s report
was a key audit matter because of the judgement
related to the valuation and the financial size of
To the shareholders of Brambles Limited
the impairment charge incurred to record the
assets at fair value.
Report on the audit of the financial report
In preparing the Fair Value less costs to sell
model (the FVLCTS model) used to assess the
Our opinion
value of the held for sale assets, the Group made a
In our opinion:
number of assumptions that were subjective and
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
judgemental, including forecast cashflows and the
(together, the Group) is in accordance with the Corporations Act 2001, including:
discount rate.
● comparing long term market growth
assumptions to external market data;
● comparing the discount rate against a
performance of the business and the
assessment of the business’s future prospects;
● comparing revenue forecasts to the historical
selection of similar companies;
As at 30 June 2016 these assets were grouped
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
with the North American pallets cash generating
unit for the purposes of impairment assessment.
● assessing components of the discount rate,
through the creation of an independent
‘shadow’ calculation;
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
● the consolidated balance sheet as at 30 June 2017
● considering the sensitivity of the FVLCTS
model to changes in key assumptions by
applying other values within range that we
independently assessed as being reasonably
possible; and
● considering the valuation in the context of the
current status of the sale process.
Calculation of current and deferred taxation
● the consolidated statement of comprehensive income for the year ended 30 June 2017
balances
include a summary of significant accounting policies
Assessed the rationale on which current tax was
calculated and deferred tax assets and liabilities
were recognised.
(Refer to note 6)
● the consolidated cash flow statement for the year ended 30 June 2017
The calculation of taxation balances was a key
● the consolidated statement of changes in equity for the year ended 30 June 2017
audit matter because the Group operates in a
large number of jurisdictions with different laws,
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
regulations and authorities resulting in complex
tax calculations. Judgement is involved in a
number of aspects of the tax calculations,
● the directors’ declaration.
including the assessment of recorded tax losses
We challenged the Group’s tax forecasts for
for recoverability. The calculation of income taxes
jurisdictions where there are material recorded
is disclosed in Note 6 of the financial report
Basis for opinion
tax losses by comparing these tax forecasts to 5
including the key judgements made in the
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
year business plans, testing key tax assumptions
assessment of the taxation provision.
those standards are further described in the Auditor’s responsibilities for the audit of the financial
and comparing underlying business results to the
report section of our report.
Group’s five year plans. We also assessed the
rationale for and calculation of unrecognised
deferred tax assets which are disclosed.
We tested the Group tax analysis prepared by the
Group and were assisted in our understanding by
PwC tax specialists.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We also considered and challenged the
assumptions made by the Group in making
Independence
judgemental tax provisions. We utilised the
We are independent of the Group in accordance with the auditor independence requirements of the
expertise of a PwC tax specialist who liaised
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
directly with local PwC tax specialists in the
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
relevant territories.
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
115
Independent Auditor’s Report
Independent Auditor’s Report – continued
to the Members of Brambles Limited
Other information
The directors are responsible for the other information in the annual report. The other information
comprises the Letter from the Chairman, Letter from the CEO, Operating & Financial Review, Board &
Executive Leadership Team, Director’s Report – Other Information, Shareholder Information, Five-
Independent auditor’s report
year Financial Performance Summary and Glossary but does not include the financial report and our
To the shareholders of Brambles Limited
auditor’s report thereon.
Report on the audit of the financial report
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
Our opinion
In connection with our audit of the financial report, our responsibility is to read the other information
In our opinion:
identified above and, in doing so, consider whether the other information is materially inconsistent
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
with the financial report or our knowledge obtained in the audit, or otherwise appears to be
(together, the Group) is in accordance with the Corporations Act 2001, including:
materially misstated.
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
What we have audited
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
The Group’s financial report comprises:
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
● the consolidated balance sheet as at 30 June 2017
fraud or error.
● the consolidated statement of comprehensive income for the year ended 30 June 2017
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
● the consolidated cash flow statement for the year ended 30 June 2017
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
● the consolidated statement of changes in equity for the year ended 30 June 2017
include a summary of significant accounting policies
Auditor’s responsibilities for the audit of the financial report
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
● the directors’ declaration.
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
Basis for opinion
if, individually or in the aggregate, they could reasonably be expected to influence the economic
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
decisions of users taken on the basis of the financial report.
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
This description forms part of our auditor’s report.
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
116
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Independent Auditor’s Report
Report on the remuneration report
Our opinion on the remuneration report
Independent auditor’s report
We have audited the remuneration report included in pages 22 to 42 of the directors’ report for the
year ended 30 June 2017.
To the shareholders of Brambles Limited
In our opinion, the remuneration report of Brambles Limited for the year ended 30 June 2017
Report on the audit of the financial report
complies with section 300A of the Corporations Act 2001.
Our opinion
Responsibilities
In our opinion:
The directors of the Company are responsible for the preparation and presentation of the
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
remuneration report in accordance with section 300A of the Corporations Act 2001. Our
(together, the Group) is in accordance with the Corporations Act 2001, including:
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
● the consolidated balance sheet as at 30 June 2017
PricewaterhouseCoopers
● the consolidated statement of comprehensive income for the year ended 30 June 2017
● the consolidated cash flow statement for the year ended 30 June 2017
● the consolidated statement of changes in equity for the year ended 30 June 2017
include a summary of significant accounting policies
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
Susan Horlin
Partner
● the directors’ declaration.
Sydney
21 August 2017
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Eliza Penny
Partner
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Sydney
21 August 2017
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
117
Independent Auditor’s Report
Auditor’s Independence Declaration
Independent auditor’s report
Auditor’s Independence Declaration
To the shareholders of Brambles Limited
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2017, I declare that to the
best of my knowledge and belief, there have been:
Report on the audit of the financial report
Our opinion
(a)
In our opinion:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
The accompanying financial report of Brambles Limited (the Company) and its controlled entities
(b)
(together, the Group) is in accordance with the Corporations Act 2001, including:
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.
a. giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
● the consolidated balance sheet as at 30 June 2017
Susan Horlin
Sydney
● the consolidated statement of comprehensive income for the year ended 30 June 2017
Partner
21 August 2017
PricewaterhouseCoopers
● the consolidated cash flow statement for the year ended 30 June 2017
● the consolidated statement of changes in equity for the year ended 30 June 2017
● the notes to and forming part of the financial statements for the year ended 30 June 2017, which
include a summary of significant accounting policies
● the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
GPO BOX 2650 Sydney NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
118
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
Five-Year Financial Performance Summary
Continuing operations1,2,3
Sales revenue1,2,3
EBITDA1,2,3
Depreciation and amortisation1,2,3
Operating profit1,2,3
Net finance costs1,2,3
Profit before tax1,2,3
Tax expense1,2,3
Profit from continuing operations1,2,3
Profit from discontinued operations1,2,3
Profit for the year1,2,3
Underlying Profit1,2,3
Significant Items1,2,3
Operating profit1,2,3
2017
US$m
2016
US$m
2015
US$m
2014
US$m
2013
US$m
5,104.3
1,298.1
(526.7)
771.4
(98.7)
672.7
(227.8)
444.9
(262.0)
182.9
957.5
(186.1)
771.4
4,900.1
1,447.4
(502.1)
945.3
(112.9)
832.4
(240.1)
592.3
(4.6)
587.7
984.5
(39.2)
945.3
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
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
5,082.9
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
Weighted average number of shares (millions)
1,588.3
1,577.6
1,566.0
1,560.7
1,555.7
Earnings per share (US cents)
Basic
From continuing operations1,2,3
On Underlying Profit after finance costs and tax1,2,3
ROCI1,2,3
BVA1,2,3
11.5
28.0
38.5
17%
37.3
37.5
39.2
19%
37.3
37.5
39.7
16%
235.1
332.9
233.5
Capex on property, plant and equipment1,2,3
1,023.5
1,060.8
1,035.4
Balance sheet
Capital employed
Net debt
Equity
Average Capital Invested1,2,3,4
Cash Flow
Cash Flow from Operations1,2,3
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 employees1,2,3
5,419.4
2,572.7
2,846.7
5,646.4
591.5
224.2
348.0
(123.8)
1.7
15.2
5,576.9
2,621.8
2,955.1
5,096.4
518.8
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
13,882
13,816
13,854
14,086
13,166
Dividend declared per share (Australian cents)
29.0
29.0
28.0
27.0
27.0
1 CHEP Recycled, Oil and Gas and Aerospace businesses are presented within discontinued operations in 2017 and 2016. Periods prior to 2016 include CHEP
Recycled, Oil and Gas and Aerospace businesses within continuing operations and are consistent with previously published data.
2 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.
3 Recall is presented within discontinued operations in 2014 and 2013.
4 Average Capital Invested (ACI) prior to 2016 is based on the previous ACI definition which reflects adjustments for accumulated pre-tax Significant Items and is
consistent with previously published data. The ACI definition was amended in December 2016 to exclude adjustments for accumulated pre-tax Significant Items
(refer Glossary).
Five-Year Financial Performance Summary
119
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
Glossary
2006 Share Plan or PSP
The Brambles Limited 2006 Performance Share Plan (as amended)
Acquired Shares
actual currency/FX
Brambles Limited shares purchased by Brambles' employees under MyShare
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 actuarial gains or losses and
net equity adjustments for equity-settled share-based payments
BIFR (Brambles Injury 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 2016 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 outside the ordinary course of
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
Circular economy
CGPR
A circular economy regenerates and circulates key resources ensuring products,
components and materials are at their highest utility and value, at all times
The Australian Securities Exchange Corporate Governance Council Corporate Governance
Principles & Recommendations, Third Edition
Company
Brambles Limited (ACN 118 896 021)
Constant currency/constant FX Current period results translated into US dollars at the actual monthly exchange rates
Continuing operations
Disclosable Executives
applicable in the comparable period, so as to show relative performance between the two
periods
Continuing operations refers to CHEP Americas, CHEP EMEA, CHEP Asia-Pacific (each
primarily comprising pallet and container pooling businesses in that region operating
under the CHEP brand), IFCO (RPCs pooling businesses operating under the IFCO brand)
and Corporate (corporate centre including HFG joint venture and BXB Digital)
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
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)
Operating profit from continuing operations after adding back depreciation
120 Glossary
Glossary continued
EBITDA (Earnings before Interest,
Tax, Depreciation and
Amortisation)
Operating profit from continuing operations after adding back depreciation and
amortisation
ELT
Free Cash Flow
FY (Financial Year)
Brambles’ Executive Leadership Team, details of which are on pages 20 and 21
Cash flow generated after net capital expenditure, finance costs and tax, but excluding the
net cost of acquisitions and proceeds from business disposals
Brambles’ financial year is 1 July to 30 June; FY17 indicates the financial year ended 30 June
2017
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
Matching Awards
Matching Shares
MyShare
Operating profit
Performance Period
Key Performance Indicator(s)
Long-Term Incentive
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
ROCI (Return on Capital Invested) Underlying Profit divided by Average Capital Invested
Sharing economy
Significant Items
An economic system in which assets or services are shared between different agents, either
free or for a fee
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
Profit finance costs, tax and minority interests but before Significant Items, divided by the
weighted average number of shares on issue during the period
Underlying Profit
Profit from continuing operations before finance costs, tax and Significant Items
Glossary
121
Glossary continued
Unification
Unit-load equipment
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’ 2017 financial year
122 Glossary
Notes
Notes
123
Notes
124 Notes
Contact Information
Registered Office
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
London Office
Nova South
160 Victoria Street
London SW1E 5LB
United Kingdom
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:
Website: www.linkmarketservices.com.au
registrars@linkmarketservices.com.au
Telephone: +44 (0)20 38809400
Share Rights Registry
CHEP Americas
8517 South Park Circle
Orlando FL 32819
USA
Telephone: +1 (407) 370 2437
5897 Windward Parkway
Alpharetta GA 30005
USA
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
Telephone: +1 (770) 668 8100
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
American Depository Receipts Registry
Deutsche Bank Shareholder Services
American Stock Transfer & Trust Company
Operations Centre
6201 15th Avenue
Brooklyn NY 11219
USA
Telephone: +1 866 706 0509 (toll free)
+1 718 921 8124
CHEP Europe, Middle East & Africa
Weybridge Business Park
Addlestone Road
Weybridge, Surrey KT15 2UP
United Kingdom
Telephone: +44 (01932) 850085
Facsimile: +44 (01932) 850144
CHEP Asia Pacific
Level 6, Building C
11 Talavera Road
North Ryde NSW 2113
Australia
Telephone: +61 13 CHEP(2437)
Facsimile: +61 (0) 2 9856 2404
IFCO
Zugspitzstraße 7
82049 Pullach
Germany
Telephone: +49 (089) 744 91 0
Facsimile: +49 (089) 744 91 290
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