Annual Report 2020
Connecting
people with
life’s essentials,
every day
brambles.com
Contents
Brambles at a Glance
Letter from the Chairman and CEO
Operating & Financial Review
Board & Executive Leadership Team
Directors’ Report – Remuneration Report
Directors’ Report – Additional Information
Shareholder Information
Consolidated Financial Report
Independent Auditor’s Report
Auditor’s Independence Declaration
Five-year Financial Performance Summary
Glossary
1
2
4
26
33
53
59
61
119
126
127
128
To view the Group’s online
annual review for 2020, go to:
brambles.com
Unless otherwise specified, page references are to pages in this report. All acronyms and terminology referred to in this report are
defined in the Glossary on pages 128 to 130.
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
release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or events occurring after the date of this
report, except as may be required by law or by any appropriate regulatory authority. Past performance cannot be relied on as a guide to future performance.
Brambles Limited
ABN 89 118 896 021
Brambles at a Glance
Brambles’ purpose is to connect people with
life’s essentials, every day.
Through its ‘share and reuse’ model, Brambles
moves more goods to more people in more
places than any other organisation.
What Brambles does:
As at 30 June 2020, Brambles:
As a pioneer of the sharing economy,
Brambles is one of the world’s most sustainable
logistics businesses.
Its circular business model facilitates the ‘share
and reuse’ of the world’s largest pool of reusable
pallets and containers.
This enables Brambles to serve its customers
while minimising the impact on the environment
and improving the efficiency and safety of supply
chains around the world.
Brambles’ platforms form the invisible
backbone of global supply chains, primarily
serving the fast-moving consumer goods,
fresh produce, beverage, retail and general
manufacturing industries.
The world’s largest brands trust Brambles to help
them transport life’s essentials more efficiently,
safely and sustainably.
Operated in…
~60
countries
Owned...
~330 million
pallets, crates and containers
Employed...
~12,000
people
Through a network of…
750+
service centres
Financial Highlights
US$4,733.6m
Sales Revenue
Up 6% at constant currency
US$795.0m
US$743.9m
Cash Flow from Operations1
Up US$312.1m
16.7%
Underlying Profit1
Up 4% at constant currency
Excluding the impact of AASB 16 Underlying Profit
increased 1 percentage point
Return on Capital Invested1
Down -2.5 percentage points at constant currency
Excluding the impact of AASB 16 ROCI decreased
0.9 percentage points
18.0 US cents per share
5.5
Total Dividends
Final dividend of 9.0 US cents per share
Brambles Injury Frequency Rate (BIFR)
Down from 5.9 in FY19
1 Continuing operations.
1
Letter from the Chairman & CEO
The past year has been particularly
challenging for Brambles, as it has
been for the whole world. Never has our
purpose as a company – “to connect
people with life’s essentials, every day”
– been so important.
Faced with a global pandemic, our people rose to the challenge
of delivering our essential services, enabling regional and global
supply chains to remain open and ensuring the continued flow
of life’s essentials to communities around the world.
During this time of increased volatility and uncertainty, our teams
overcame significant challenges to provide our customers with
uninterrupted service and supply of pallets, crates and containers
across our markets. Our success is testament to the strength
of our people, the agility of our network and resilience of our
‘share and reuse’ business model, all of which have been critical
in positioning Brambles as a trusted supply chain partner for
customers around the world.
Throughout this period and as we look ahead, our highest priority
is the health and safety of our employees and ensuring our
facilities are well protected and managed to best support the
needs of our customers and local communities.
We were swift in deploying additional hygiene and safety
procedures across our global service centre network, sharing
best practice and insights across more than 60 countries. For
our office-based staff we quickly transitioned to working from
home arrangements, providing our workforce with the necessary
tools and support to successfully adapt to completely new
ways of working.
While many countries are starting to ease out of lockdowns
and are showing signs of recovery, the global Covid-19 pandemic
continues to have a serious impact on people’s health and
livelihoods around the world. We therefore remain vigilant in our
approach and practices in relation to the health and safety of our
employees, customers and the communities in which we operate.
2 AASB 16 ‑ New leasing standard effective for Brambles from 1 July 2019.
2
Strategic Priorities
The Covid-19 pandemic has reinforced the importance of our
long-term strategic goals. We are committed to being the global
leader in platform pooling solutions and insight-based solutions
to fast-moving supply chains, delivered through our circular
‘share and reuse’ model.
We have refined our focus across four strategic themes to
ensure we are agile and responsive to changing needs driven
by increasing uncertainty and volatility. These strategic themes
guide decision making across the Group and are integral
to delivering superior and sustained value for customers,
shareholders and employees.
We are committed to delivering customer value that enhances
the sustainability and efficiency of end-to-end supply chains.
We continue to invest in digital transformation, including
through the Group’s in-house technology hub, BXB Digital,
to create distinctive new capabilities. We are constantly seeking
to improve asset and network productivity, with ongoing
programmes of automation and process standardisation to
enhance the efficiency and resilience of our operations. In
our quest for business excellence, we are re-inventing our
organisation, technology and processes to be simpler, more
effective and more efficient. We are confident that the heightened
focus on these strategic themes will deliver benefits to
shareholders over the long-term.
FY20 Results
Our FY20 result reflects the resilience of our pallet businesses
and our ability to effectively manage costs and capital
expenditure across our entire portfolio. At constant currency,
sales revenue increased 6% as strong volume growth and price
realisation in our global pallet businesses more than offset
declines in our Automotive container and Kegstar businesses,
which were particularly impacted by Covid-19-related lockdown
measures. Underlying Profit increased 4% at constant currency
(including the impact of AASB 162), reflecting a one percentage
point improvement in US margins and ongoing progress in
addressing cost pressures in Canada and Latin America.
Cash generation was strong during the Year, with Free Cash Flow
after ordinary dividends of US$171.5 million driven by disciplined
capital allocation and effective working capital management.
Capital Management Programme
At the time of the sale of its IFCO RPC business, Brambles
announced that it intended to return A$2.8 billion
(US$1.95 billion) of the sale proceeds to you, our shareholders,
through two mechanisms.
The first was an on-market share buy-back of up to A$2.4 billion
(US$1.65 billion). The share buy-back commenced on
4 June 2019 and has continued during FY20. At 30 June 2020,
a total of 91,697,878 ordinary shares had been bought back and
cancelled for a total consideration of A$1,049.7 million. The share
buy-back is outlined in more detail on page 9.
The second was a 29.0 AU cents per share pro-rata cash return
paid to shareholders on 22 October 2019. The cash return had
two components: a capital return of 12.0 AU cents per share and
a special unfranked dividend of 17.0 AU cents per share. The total
cash payment for the pro-rata return was A$453.8 million.
At 30 June 2020, Brambles had completed A$1.5 billion, that
is 53%, of the A$2.8 billion capital management programme.
Dividend Policy and Capital Structure
As previously communicated, during the Year Brambles moved
to a payout ratio-based dividend policy, targeting a payout ratio
of 45-60% of Underlying Profit after finance costs and tax, subject
to Brambles’ cash requirements, with the dividend per share
declared in US cents and converted and paid in Australian cents.
Following the introduction of the new lease accounting standard,
which means operating leases are now recorded as an asset and
a liability on the balance sheet, Brambles has revised its financial
policy to target a net debt to EBITDA ratio of less than 2.0 times.
This financial policy is consistent with Brambles’ intention to
retain its current investment grade credit rating of BBB+ from
Standard & Poor’s and Baa1 from Moody’s Investor Service.
Chairman Succession and Board Renewal
On 30 June 2020, Stephen Johns retired after six years as
Chairman and a sixteen-year association with the Board.
We wish to express our thanks to Stephen for his contribution
to Brambles both as a Non-Executive Director and Chairman.
In keeping with our ongoing Board renewal plan, changes to the
composition of the Board saw the retirement of David Gosnell
at the 2019 AGM after twelve years’ service, and the appointment
of Nora Scheinkestel in June 2020 and Ken McCall in July 2020.
Full Board biographies are on pages 26 to 29. Details of our
Board skills matrix are in the Corporate Governance Statement
on brambles.com
Safety
In last year’s Annual Report, we noted with great sadness the
loss of a colleague in July 2019 and our commitment to learn
from this tragedy.
In 2019, we launched and implemented our ‘Safety Differently’
philosophy which places greater emphasis on engaging with
our team members working in our service centres around the
world to understand the specifics of how they work. We also
enhanced our safety standards to incorporate new defence layers
to the engineering and administrative controls already in place.
Extensive reviews of similar operations across our network were
conducted to ensure they comply with our new enhanced safety
standards. During the Year we saw a 7% reduction in lost time,
modified duties and medical treatments.
Sustainability
At Brambles, sustainability is core to our values and central
to our operating model. By promoting the shared use of our
platforms among multiple supply chain participants under
our circular ‘share and reuse’ model, we connect people to
life’s essentials while making supply chains more sustainable.
This defines what we do and who we are.
Our sustainability leadership position has been reinforced by
our success in achieving many of our sustainability targets,
which are outlined in detail on page 11. In 2015, we set a series of
ambitious goals that were material to our business and extended
throughout our value chain to build a better business, a better
planet and better communities. Five years later, we are extremely
proud of what we have achieved, including 100% sustainable
sourcing of timber across our global operations and greater
gender representation with 30% of Board, Executive Leadership
Team and management-level roles being held by women.
Achieving our 2020 sustainability goals is just the start of our
sustainability journey. As we look forward, our vision is to
contribute to a more positive and regenerative future. This vision
will form the basis of our 2025 sustainability targets, which will be
launched as part of our 2020 Sustainability Review scheduled for
publication in September 2020. These targets will demonstrate
Brambles’ continued commitment to lead and respond to the great
environmental and social challenges of our time.
Annual General Meeting
Having regard to our health and safety priorities and associated
restrictions on public gatherings relating to the Covid-19
pandemic, the Board has decided to conduct this year’s Annual
General Meeting as a virtual meeting. We will be sending a
communication to shareholders in the near term, providing
details of the meeting, including how to participate, submit
questions and how to vote.
Outlook
Key assumptions and inputs for FY21 outlook include:
• No further widespread lockdowns due to Covid-19 in key
markets of operation;
• A U-shaped economic recovery with economic headwinds
to persist for the duration of FY21;
• A slow recovery in the Automotive and Kegstar
businesses; and
• The broad continuation of current trends in input costs.
Within this context, the FY21 outlook is:
• Sales revenue growth between flat to +4% at constant
currency, with improved Underlying Profit margins;
• Underlying Profit growth between flat to +5% at
constant currency;
• Free cash flow expected to fund dividends and core business
capex with investments to support new business opportunities
within the core business and to further develop digital and
efficiency objectives;
• Dividend payout ratio to be consistent with our dividend
payout policy of 45% to 60%; and
• Share buy-back programme to continue subject to the ongoing
assessment of the Group’s funding and liquidity requirements
in the context of increased volatility and economic uncertainty.
Given the unprecedented nature of the Covid-19 pandemic and
resulting volatility, it is difficult to forecast with accuracy the likely
impact on Brambles’ business in FY21. For this reason, Brambles
will update its internal FY21 forecast after the first three months
of trading and review guidance in this context. While July may
not be representative of the full-year, due to the phasing of
government economic stimuli and the timing of known changes
in customer contracts, Group revenues in July increased on a
like-for-like basis 4% on the prior corresponding period, with high
levels of volatility continuing across all regions.
As a company, we enter this period of uncertainty in a position
of strength. We have a strong sustainable business model, which
derives over 80% of its revenues from the consumer staples
sector. As proven by our response to the pandemic, we have a
team of exceptional people, a customer-focused strategy and
a disciplined approach to financial management. As a Board,
we remain committed to maintaining a conservative balance
sheet and a strong funding and liquidity profile. Collectively, we
believe these inherently defensive characteristics position us well
to continue delivering value for our customers, our employees
and for you, our shareholders, as we face the challenges which
lie ahead.
On behalf of the Board, we would like to thank you for your
continued support.
John Mullen
Chairman
Graham Chipchase
Chief Executive Officer
3
How Brambles Creates Value
Brambles uses the power of its
circular business model, network
advantage and expertise to leverage
the key capital inputs into its
business to generate significant
value for customers, shareholders
and employees.
For customers, Brambles’ end-to-end supply chain solutions
deliver operational, financial and environmental efficiencies
not otherwise available through one-way, single-use alternatives.
Further details are available on page 8.
For shareholders, Brambles delivers sustainable growth
at returns well in excess of the cost of capital and seeks
to generate sufficient cash flow through the cycle to fund
dividends and support reinvestment in growth, innovation
and the development of its people. Further details are
available on page 9.
For employees, Brambles provides development and exciting
career opportunities in approximately 60 countries. By fostering
a culture of innovation and agility, Brambles seeks to attract and
retain the talent which is integral to its success.
In a resource-constrained world, circular business models
like that operated by Brambles are recognised as a practical
business solution enabling the world to trade more responsibly.
By regenerating what it extracts and by providing its products
via a service, Brambles helps reduce both the constant pressure
on natural resources and the waste production typical of
conventional linear business models.
Brambles capitalises on its unique position in the supply chain
to enable customer collaboration and address sustainable
development challenges, such as optimising transport networks,
addressing food waste and promoting sustainable use of the
world’s forests.
In this way, Brambles strives to create a circular economy,
on a global scale.
Brambles has used the Integrated Reporting ‘capitals’
framework3 to illustrate the interaction and interdependencies
between its sources of value, business model and ability to
create value over time. This framework provides an appropriate
methodology to help entities understand both their sources
of value including resource dependencies as well as the
positive and negative impacts of their business model on
all stakeholders.
INPUTS
VALUE CREATION
OUTPUTS
Natural Capital
100% wood from certified sources
which regenerates stocks of raw
materials and drives demand for
sustainable forest products
Manufactured Capital
330 million assets shared and reused
throughout the world’s supply chains
Human and Intellectual Capital
Attracting talent, ideas and innovation
Financial Capital
Attracting long-term investment
Producer
Brambles’ platforms help
reduce food waste
Manufacturer
Transport and other
customer collaboration
Circular
‘Share and Reuse’
Model
By sharing and reusing Brambles’ products versus single-use alternatives,
value is created for its customers, the environment and society.
Natural Capital
Social and Relationship Capital
Customer-driven
environmental savings:
2m tonnes of CO2
2,500 megalitres of water
1.7m cubic metres of wood
1.8m trees
1.3m tonnes of waste
Customer value:
• Enhance operational efficiency
• Free up cash and resources
• Lower overall supply chain costs
• Sustainable packaging objectives
Building our social licence through
advocacy for a circular economy
4
Committed to zero product
waste to landfill
Human Capital
Intellectual Capital
Developing, engaging
and remunerating our people
Network advantage
and digital solutions
are creating the supply
chains of the future
Retailer
Financial Capital
Economic
Value5 Retained
US$1b
Economic
Value Generated
US$5b6
Economic
Value Distributed
US$4b
Social and Relationship Capital
Fostering positive stakeholder
relationships in communities
Service Centre
70% of electricity was from
renewable energy sources
Scale-related
operational efficiencies
Network scale density
and expertise
Growth, innovation
and people
3 The International Integrated Reporting Framework. Integrated Reporting highlights the key resources and relationships used and affected by an organisation.
4 Brambles’ circular business model aligns with the United Nations Sustainable Development Goal 12. For more information see brambles.com/sustainability.
5 Economic value is a measure of the broader financial benefit provided by an organisation.
6 For Additional Value Distributed as the result of the sale of IFCO please see page 10.
4
5
Operating & Financial ReviewOperating & Financial Review
Operating Model
Brambles manages the world’s largest pool of reusable pallets and containers.
As a pioneer of the sharing economy, Brambles promotes the shared use of its
platforms among multiple supply chain participants under a circular ‘share and
reuse’ model known as pooling.
Through its inherently sustainable operating model, superior network advantage
and industry expertise, Brambles leads the market in more efficient and
sustainable supply chains.
Inherently Sustainable Operating Model
Brambles’ ‘share and reuse’ model follows the principles of the
circular and sharing economies, creating more efficient supply
chains by reducing operating costs and demand on natural
resources. By promoting the ‘share and reuse’ of assets
among multiple parties in the supply chain, Brambles offers
customers a more efficient and sustainable alternative to the
use of disposable single-use alternatives or managing their
own proprietary platforms.
Network Advantage and Supply Chain Expertise
Brambles’ sustainable operating model is underpinned by
its superior network advantage and industry-leading supply
chain expertise, developed over 70 years of managing
customers’ supply chains around the world. With operations
in approximately 60 countries, Brambles’ network advantage
comprises the scale and density of its service centre network
and the strength of its customer relationships in every major
market in which it operates. This means Brambles can be
faster and more responsive to customers’ needs and in
times of uncertainty and increased volatility, more resilient
and more reliable.
Sustainability Strategy
Brambles’ sustainability strategy organises the Group’s
sustainability activities and goals under three broad
programmes: Better Business; Better Planet; and
Better Communities.
Brambles’ sustainability strategy is outlined in more
detail on page 11, including the performance against
the 2020 sustainability goals.
‘Share and reuse’: How it works
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.
1
2
3
Brambles provides standardised pallets, crates and
containers to customers from its service centres as
and when the customer requires.
Customers use this equipment and Brambles’ support
services to transport goods through the supply chain.
Customers either arrange for the equipment’s return
to Brambles or transfer it to another participant
for reuse.
Brambles retains ownership of its equipment at all
times, inspecting, cleaning and repairing them in order
to maintain appropriate quality levels.
Brambles generates sales revenue predominantly from
rental and other service fees that customers pay based
on their use of its platforms and services.
6
Operating & Financial Review Strategic Priorities
Brambles is committed to being the global leader in platform pooling and
insight-based solutions to fast-moving supply chains delivered through its circular
‘share and reuse’ model. Having introduced the platform pooling model around the
world, Brambles is re-invigorating it for the supply chains of tomorrow.
Brambles seeks to:
• Achieve and maintain the number one position in each region of operation;
• Lead the industry in customer service, innovation and sustainability; and
• Be an employer of choice through best-in-class safety, diversity and talent development programmes.
Brambles’ five strategic priorities guide decision making across the Group and
are integral to the delivery of superior value for customers, shareholders and
employees over the long-term.
Grow and
Strengthen
Network Advantage
Deliver Operational
and Organisational
Efficiencies
Disciplined
Allocation of Capital
and Improved Cash
Flow Generation
Innovate to
Create New Value
Develop World-
Class Talent
To deliver against these priorities, Brambles is focused on four key areas:
Customer Value
Brambles is committed to delivering unrivalled value and
exceptional service to its customers. Brambles works with its
manufacturing customers and supply chain partners to enhance
the sustainability and efficiency of end-to-end supply chains
though collaboration on new solutions and innovative ways of
working such as Zero Waste World (ZWW). Brambles is committed
to improving the customer experience further through simpler
processes, additional services and enhanced platform quality.
Digital Transformation
Brambles is investing to transform information and digital
insights into new sources of value for itself and for its
customers. Brambles sees data and technology as core
strengths and sources of future competitive advantage.
The Group’s in-house technology hub, BXB Digital, works closely
with the operating business units to translate technology into
business outcomes. Brambles’ goal is to combine physical
assets and supply chain expertise with data-driven insights to
create distinctive new capabilities as well as supporting the
delivery of the other strategic themes.
Asset Efficiency and Network Productivity
Brambles constantly seeks to improve the productivity and
sustainability of its assets and operations. Brambles works
with its customers and partners to align physical networks and
working practices in order to improve asset utilisation, reduce
equipment loss and lower equipment damage rates. Ongoing
programmes of automation and process standardisation
enhance the efficiency and resilience of Brambles’ operations,
allowing the Group to transfer best practices rapidly from one
market to another.
Business Excellence
Brambles is re-inventing its organisation, technology and
processes to be simpler, more effective and more efficient.
The Group is committed to fostering a culture of agility,
innovation and continuous improvement, underpinned by the
required tools and systems. Successfully attracting, retaining
and empowering high calibre people is integral to Brambles’
ongoing success and will become increasingly important as
new skills are required in areas such as digital services and
automated supply chains.
Impact of Covid-19
Brambles’ strategy is focused on delivering exceptional results over a sustained period. The Covid-19 pandemic has introduced
significant uncertainty, which is likely to last for an extended time and to create both threats and opportunities. The core elements of
Brambles’ strategy are robust against a wide range of outcomes and position the Group well to manage through near-term volatility.
Nonetheless, Brambles remains agile and ready to pivot where needed in response to economic conditions and changing customer
needs. Brambles is committed to supporting its customers and partners through this challenging period, to ensure the continued
delivery of goods through supply chains around the world.
7
Operating & Financial Review Customer Value Proposition
Brambles’ pallets and containers form the invisible backbone of the global
supply chain. This gives Brambles key insights that help customers meet
evolving consumer demands while minimising their environmental impact
and improving the safety and efficiency of their supply chains.
With a comprehensive suite of supply chain solutions, Brambles provides
its customers with operational, financial and environmental efficiencies not
otherwise available through the use of single-use disposable alternatives and
proprietary models.
Supply Chain Solutions
Brambles is integral to its customers’ supply chains, working
closely with all participants including manufacturers, producers,
growers and retailers. With end-to-end involvement, Brambles
has clear insights into what impacts the safe, efficient, reliable
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. This helps address
the challenges associated with the increasing complexity, rapid
evolution and, at times, uncertainty of modern supply chains.
Platform Solutions
Brambles offers customers the widest range of supply chain
platforms including: pallets (timber and plastic); Reusable
Plastic Crates (RPCs); bins; and specialised containers.
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 throughout their supply chains.
System-Wide Solutions
Brambles conducts in-depth studies of customers’ supply
chains to map the flow of goods, information and platforms 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 its customers to develop retail 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
improve safety, and 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 services to improve the performance of
automated facilities.
Sustainability Solutions
Brambles’ leadership in sustainable sourcing of materials and
strong governance controls reduce risk and provide customers
with confidence in their supply chain partnership.
Brambles creates value for customers by providing a sustainable
alternative to single-use disposable packaging, saving
customers money and significantly reducing the environmental
impact of their operations.
Brambles’ network resilience and its resource efficient,
low-carbon solutions means it has an important role in helping
customers manage through supply chain disruptions while
transitioning to a low-carbon economy.
Brambles’ Zero Waste World programme reinforces its commitment to collaborate with customers and create smarter and more
sustainable supply chains – creating more value by using less and regenerating more resources.
Through ZWW, Brambles seeks to use its unique position in the supply chain to help customers address three key industry challenges:
Eliminating waste
by using its circular economy
expertise to convert customers to
more sustainable ‘share and reuse’
solutions which save resources and
reduce costs;
Eradicating empty transport miles
by using its network scale and
visibility to facilitate collaborative
transport solutions, bringing
manufacturers and retailers together
to reduce the environmental impact of
their operations and save money; and
Reducing inefficiencies
by using its end-to-end supply chain
solutions and BXB Digital technology
to enhance customers’ visibility
of their supply chains so they can
make better decisions.
8
Operating & Financial Review Investor Value Proposition
Brambles generates value through
a ‘share and reuse’ model that
leverages its 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, the
development of its people and build a
more resilient business.
Scale-related
operational
efficiencies
First mover
advantage
Shareholders
Network scale, density
and expertise
Cash flow
generation
Reinvest in growth,
innovation and people
Long-Term Value Creation and Sustainable
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 approximately 60 countries,
Brambles offers shareholders exposure to geographically
diversified earnings streams, primarily from the global
consumer staples sector.
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;
exploring the digitisation of supply chains; and providing
a resilient foundation during supply chain uncertainties.
Within this context, Brambles is committed to striking the right
balance between growing its business and delivering sustainable
shareholder returns over the long-term. By focusing on its core
drivers of value, Brambles expects to deliver:
Sustainable growth at returns well in excess of the
cost of capital
• Sales revenue growth7 in the mid-single digits;
• Underlying Profit growth7 in excess of sales
revenue growth through the cycle; and
• Strong Return on Capital Invested.
Cash generation to fund growth, innovation and
shareholder returns
• Free Cash Flow sufficient to fully fund capital expenditure
and dividends.
Dividend Policy and Payment
During the Year, Brambles moved to a payout ratio-based dividend
policy, targeting a payout ratio of 45-60% of Underlying Profit after
finance costs and tax, subject to Brambles’ cash requirements,
with the dividend per share declared in US cents and converted
and paid in Australian cents.
This Year, the Board declared total dividends (excluding the special
dividend declared as part of the capital management programme)
of 18.0 US cents per share, with the Australian dollar payment
equivalent to 25.92 AU cents per share. This results in a payout
ratio for the Year of 53%, which is broadly in line with the prior year
payout ratio, including IFCO’s 2019 earnings contribution. FY19 total
dividends were 29.0 AU cents per share.
The final dividend for 2020 of 9.0 US cents per share, is in line
with the 2020 interim dividend and will be 30% franked. This
dividend is payable in Australian dollars 12.54 AU cents per
share on 8 October 2020 to shareholders on the Brambles
register at 5.00pm on 10 September 2020. The ex-dividend
date is 9 September 2020.
Capital Management Programme
At the time of the sale of its IFCO RPC business, Brambles
announced that it intended to use the US$2.4 billion net proceeds
to fund a A$2.8 billion (US$1.95 billion) capital management
programme, through an on-market share buy-back of up to
A$2.4 billion (US$1.65 billion) and a pro-rata return of cash of
29.0 AU cents per share, and to pay down debt.
The on-market share buy-back commenced on 4 June 2019 and
to date 91,697,878 ordinary shares have been bought back and
cancelled for a total consideration of A$1,049.7 million.
On 22 October 2019, Brambles paid a 29.0 AU cents per share
pro-rata cash return comprising two components: a capital return
of 12.0 AU cents per share and a special unfranked dividend of
17.0 AU cents per share. The total cash payment for the pro-rata
return was A$453.8 million.
At 30 June 2020, Brambles had completed A$1.5 billion, that is
53% of the A$2.8 billion capital management programme.
On 5 July 2019, Brambles repaid the US$500 million April 2020
144A bond issue using part of the IFCO sales proceeds.
Dividend Reinvestment Plan
Given the on-market share buy-back programme will continue into
FY21, the Board has decided to continue to suspend the Dividend
Reinvestment Plan.
7 At constant currency.
9
Operating & Financial Review The Broader Benefits of Brambles
Through its sustainable business model, its scale and industry advocacy,
Brambles creates positive outcomes for local and national economies
and communities.
Economic
Value Retained
US$1b
Economic
Value Generated
US$5b
Additional
Value Distributed
US$1b
$0.2b Special dividends paid
$0.1b Capital returns
$0.6b Share buy-back
Economic
Value Distributed
US$4b
$0.3b Dividends paid
to shareholders
$0.7b Employee costs
including taxes
$0.2b Income taxes paid
$0.1b Interest paid on loans
$2.7b Payments to suppliers
Preserving and Enhancing Capital on which
it Depends
Brambles constantly seeks to reduce the negative impacts of its
business, and where possible create a more positive outcome.
This section outlines the direct and indirect benefits of the
business which underpin Brambles’ social license to operate.
Generating and Redistributing Financial Capital
Strong financial performance enables social value for Brambles’
employees, their families, communities and economies. The
direct economic benefits from Brambles’ businesses include
employment opportunities and associated financial and
non-financial benefits for ~12,000 employees, payments to local
suppliers and the associated generation of indirect employment,
financial donations to community groups and taxes paid to
governments. More information on Brambles’ tax profile, how it
manages its tax obligations and the tax contributions it makes
to the countries in which it operates can be found in Brambles
2020 Tax Transparency Report, available in September 2020.
Market Transformation through Certified Sourcing
Brambles has achieved its 2020 sustainability goal to purchase
100% of its timber materials from certified sustainable forests.
This achievement is significant because when Brambles set this
goal in 2015, certification programmes for forest products were
not available in all regions of operation. Brambles has helped
transform these markets by driving demand for certified forest
management. Forestry certification directly supports those
regions and communities connected to forestry operations while
conserving the ecological processes of the forest. This supports
the objective of Sustainable Development Goal (SDG) 15,
Life on the Land, which aims for the sustainable use of the
world’s forests.
Creating Sustainable Supply Chains through
the Circular Economy
Advocating for widespread adoption of a circular economy
is central to Brambles’ purpose and is promoted by
non-government bodies, such as the World Economic Forum
(WEF) and the Ellen Macarthur Foundation (EMF). A circular
strategy addresses both economic inefficiencies and
environmental issues that have reached a critical junction
including waste and climate change. Circular strategies are
being increasingly adopted by the world’s leading brands as
they aim to remain ahead of pending circular regulations that
will require greater responsibility for their end-of-life products.
Brambles’ 70 years’ experience operating through a circular
business model positions it as a thought leader that sets a
benchmark for circularity at a global scale. This unique attribute
was recognised by the Ellen Macarthur Foundation in May 2020,
rating Brambles with an A in its Circulytics programme.
Building Community Capital through Social Impact
2020 has been a challenging year to date with Australia’s
bushfire crisis quickly followed by the global Covid-19 pandemic.
As a result, demand for food relief services has increased
dramatically with the added difficulty of social distancing
reducing the availability of volunteers to donate time safely.
Brambles and its food donation partners, many of whom are
customers, have needed to increase their support to food banks
to ensure food relief and essentials can flow to those in need.
Brambles is the backbone of food relief logistics operations
and is constantly supplying in-kind platforms to help redistribute
food and essentials. In early 2020, CHEP Australia provided
produce bins and pallets for emergency food relief during the
bushfire crisis.
10
Operating & Financial Review Our 2020 Sustainability Goal Achievements
Brambles’ global leadership position in sustainability is built on the foundation
of our comprehensive sustainability programme, which covers environmental,
economic and social aspects through its Better Business, Better Planet and
Better Communities structure.
In 2015 Brambles launched its ambitious 2020 sustainability goals. Five years later, Brambles is happy to
announce that it has achieved almost all the 2020 goals for a Better Business and Better Planet and successfully
increased its contributions to the communities in which it operates. This has been made possible thanks to the
whole Brambles Group and collaboration with customer and supplier communities.
Target
Zero Deforestation
100% wood from certified sources
Year-on-year improvement in Chain of Custody
Zero Emissions
20% CO2 reduction in emissions per unit delivered
2020 Result
Status
100%
63%
-33%
Achieved
Achieved
Achieved
Achieved
Better
Planet
Better
Business
Better
Communities
*Pending assurance
Year-on-year improvement in energy provided from renewable sources
70% electricity
Zero Waste
Zero Product Waste to Landfill (timber)
Zero Product Waste to Landfill (plastic)
Better Supply Chains
Yearly environmental improvements in Brambles’ customers’ supply chains
Better Collaboration
Yearly improvements in customer collaboration projects
Better Workplace
100%
94%
Achieved
Not achieved
2m tonnes of CO2
1.3m tonnes of waste
1.8m trees
Achieved
Achieved
Achieved
273 customers
75.8 million kms
86.2 kilotonnes of CO2
Achieved*
Achieved*
Achieved*
25% reduction in Brambles’ Injury Frequency Rate (BIFR) from 2015 baseline
5.5
Achieved
30% of leadership positions to be held by women, including 30% at Board level
and 30% at management level
> 30% in all areas
Achieved
Volunteering
One day per employee per year (provision of three days per employee per year)
1.42 hours achieved
per employee in FY20
Not achieved
Donations
Contribute 0.7% of pre-tax profits annually to our Better Communities programmes 0.8%
Achieved*
Our 2025 Targets - Building a Regenerative Supply Chain
In a world where environmental and social issues are becoming more critical every day, Brambles’ intention is to retain its position
as a global leader in sustainability. Within this context, an extensive stakeholder consultation was held during FY20 to create the next
phase of Brambles’ sustainability programme.
The key direction of our future sustainability strategy is to evolve the successful Brambles ‘Better’ model into a ‘Positive’ model.
This will help Brambles create a regenerative supply chain for its customers. As a pioneer in the circular economy, Brambles is well
positioned to succeed in this new context by making ‘positive’ contributions to society, the environment and its stakeholders.
In the past, companies’ sustainability programmes have been focused on reducing the businesses’ negative impacts. Now we must
go beyond that to eliminate the negative impacts and grow the positive impacts to become ‘net positive’. This ‘net positive’ concept
implies adopting a regenerative approach to our business, which means creating, restoring or replenishing more value or capital into
society and the environment than it takes out.
A new set of ambitious targets has been created around this vision. The details of both Brambles’ 2020 goals achievements and its
2025 sustainability targets will be featured in Brambles’ FY20 Sustainability Report, which will be published at the end of September.
11
Operating & Financial Review Brambles’ Response to Climate Change
Brambles’ sustainable ‘share and reuse’ model places the business
in a strong position in a decarbonising world.
Brambles accepts climate science and recognises that climate
change is influencing both short-term weather events and
longer-term climatic trends. Climate-related physical impacts are
also influencing society and economies, which is translating into
policy and investment decisions as well as shifts in consumer
behaviours. Within this context, Brambles sought to respond to
the recommendations of the 2017 Task Force on Climate-related
Financial Disclosures (TCFD), an initiative of the G20 Financial
Stability Board, to provide its stakeholders with a consistent
narrative on how these trends could positively or negatively
impact the financial circumstances of Brambles’ business
over different timescales.
Responding to the specific challenges of climate change is
intimately linked to Brambles’ focus on its circular ‘share and
reuse’ model. At their heart, circular business models design
out waste and pollution, keeping products and materials in
use rather than using them and seek to actively regenerate the
natural systems they depend on. Through its efforts to connect
people to life’s essentials, Brambles is focused on reducing
demands on natural resources, regenerating forests and
eliminating waste for customers.
These actions not only seek to preserve and enhance the natural
capital we depend on but inherently reduce carbon emissions
from the world’s supply chains. In their 2019 publication,
‘Completing the Picture: How the Circular Economy Tackles
Climate Change’ the Ellen MacArthur Foundation highlighted
how a circular economy is essential to global emissions
reductions. As a leader in the circular economy, Brambles is
well positioned to demonstrate its potential, helping to address
climate change and is committed to creating a business
environment more closely aligned to the Paris Agreement.
In response to the recommendations provided by the
TCFD, Brambles progressed its assessment of the risks
and opportunities from climate change using climate
scenario analysis.
Brambles engaged in cross-functional TCFD workshops across
all regions to identify climate-related risks and opportunities
covering its entire value chain. Brambles selected three
climate scenarios: a 1.5°C scenario to reflect government-led
‘Rapid Decarbonisation’; ‘Middle Of The Road’ (2°C) with
strong leadership from industry; and a ‘No Climate Action’
(4°C) scenario reflecting weak or poorly coordinated actions
in terms of global social, political and economic responses
to climate change.
In Brambles’ view, the outcomes associated with a 4°C
scenario are neither desirable nor beneficial for economies,
society or the natural environment and represent a scenario
associated with physical impact, risk and outcomes which
the world should aspire to avoid. Brambles is committed to
working collaboratively with all stakeholders to accelerate
progress towards a circular economy so it can play its part
in achieving the more positive outcomes of the decarbonising
climate scenarios.
Three key climate themes have emerged
for Brambles
Brambles’ Low-carbon Advantage
The immediate and ongoing opportunities related to
Brambles’ low-carbon, circular business model outweigh
short-term climate-related risks in the decarbonising
1.5°C and 2°C climate scenarios.
In decarbonising economies, efficient use of natural resources
will become more important and the inherent advantage within
Brambles’ circular business model presents clear and ongoing
opportunities. This is enhanced through Brambles’ Transport
Collaboration solutions and Zero Waste World programme.
Brambles’ forthcoming 2025 Sustainability targets will further
amplify market opportunities, help customers with their
decarbonisation and circularity commitments, while preparing
for future climate and waste regulation.
Brambles’ Network Resilience
The agility and scale of the Brambles network and asset pools
create an inherent resilience to supply chain shock, enabling
greater responsiveness to customers before and after severe
climate-related weather events.
Adaptability will be increasingly important as exposure to
supply chain shocks from physical climate-related weather
events increases in all three climate scenarios. Brambles’
network resilience is a market differentiator and a key mitigant,
enabling greater agility pre-weather event and reliability during
the recovery phase. Current efficiency workstreams will further
strengthen the resilience of Brambles’ networks.
Brambles’ response to the Covid-19 crisis has emphasised
the ability to maintain a resilient network during a widespread
supply chain crisis.
Raw Material Supply Security and Continuity
Longer-term climate-related risks relating to raw material supply
security and continuity have been identified including physical
impacts and carbon offsets. These risks are considered in the
current strategic planning processes, including mitigations
already underway as part of procurement and supply chain and
asset efficiency programmes.
The price and availability of lumber supply as well as the
potential impact of pests and disease were identified as
climate-related risks which are expected to evolve over a five
to ten-year timescale and manifest differently under the three
climate scenarios considered.
The next phase of Brambles’ TCFD response will look to embed
the TCFD outcomes and apply monitoring and measurement
processes to ensure the benefits are realised and risks
continually mitigated.
Further information on Brambles’ response to the TCFD
recommendations, including more detail on the risks and
opportunities of climate change, is available on brambles.com
12
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 FY20, 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.
On 31 May 2019, Brambles divested its IFCO RPC business, generating net cash proceeds of US$2.4 billion and implemented
an A$2.8 billion (US$1.95 billion) capital management programme. During the course of FY20, Brambles paid a special dividend
totalling A$266.0 million (US$183.2 million), returned A$187.8 million (US$129.3 million) of capital to shareholders and repurchased
85.7 million shares for a total consideration of A$972.5 million (US$645.4 million). The ‘Capital Management Programme’ section on
page 9 further outlines the progress of the capital management programme.
Treasury Policies
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 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 2025. Borrowings under the facilities are floating-rate, unsecured obligations
with covenants and undertakings typical for these types of arrangements. Borrowings are also 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 on issue totalled
US$1,637 million and had maturities out to October 2027.
As at 30 June 2020, Brambles held $0.8 billion in cash and cash equivalents and term deposits, being the balance of cash held from
the net proceeds from the sale of IFCO reduced by the capital management and debt reduction transactions over FY20.
Net Debt and Key Ratios
US$m
Current debt8
Non-current debt8
Gross debt
June 2020
June 2019
Change
149.1
556.8
(407.7)
2,368.6
1,643.4
725.2
2,517.7
2,200.2
317.5
Less: cash and cash equivalents
(737.3)
(1,691.3)
954.0
Less: term deposits
(68.6)
(411.2)
342.6
Net debt
Key ratios9,10
Net debt to EBITDA
EBITDA interest cover
1,711.8
97.7
1,614.1
FY20
1.10x
19.3x
FY19
0.08x
14.6x
With the adoption of lease accounting standard AASB 16 on
1 July 2019, Brambles’ revised its financial policy to target a net
debt to EBITDA ratio of less than 2.0 times, which was previously
less than 1.75 times.
The ratios remain well within the financial covenants included
in Brambles’ major financing agreements, which exclude the
impact of AASB 16.
Maturity Profile of Committed Borrowing Facilities and
Outstanding Bonds (% of total committed credit facilities)
US$b
1.25
1.0
0.75
0.5
0.25
0
3%
34%
21%
15%
13%
14%
< 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 2020, Brambles’ total committed credit facilities
were US$3.1 billion.
The average term to maturity of Brambles’ committed credit
facilities as at 30 June 2020 was 4.2 years (2019: 4.0 years).
In addition to these facilities, Brambles has entered into
leases for office and operational locations and certain
plant and equipment to achieve flexibility in the use of its
assets. As at 30 June 2020, Brambles’ total lease liabilities
were US$0.7 billion. The rental periods vary according to
business requirements.
8 FY20 current debt comprises current borrowings (US$36.3m) and current lease liabilities (US$112.8m). FY20 non‑current debt comprises non‑current borrowings (US$1,777.2m)
and non‑current lease liabilities (US$591.4m).
9 Brambles has redefined EBITDA as Underlying Profit adding back depreciation, amortisation and Irrecoverable Pooling Equipment Provision (IPEP) expense. FY19 comparative
metrics are as reported at the FY19 result.
10 FY20 ratios include the impact of lease liabilities and lease interest expense.
13
Operating & Financial Review Key Performance Drivers and Metrics – Continuing Operations
(Excludes IFCO in all years)
Brambles monitors its performance and value creation through
a number of financial and non-financial metrics. These include:
4,018
4,133
4,470
4,595
4,734
Sales Revenue Growth
Key Drivers
Sales revenue growth
• Like-for-like volume growth in line with economic/industry trend
• Expansion with new and existing customers
• Movements in pricing and changes in product/customer mix
• FY18 to FY20 reported financials include the impact of accounting standard AASB 15 Revenue from contracts with customers
Return on capital Invested (ROCI) and Brambles Value Add
5-Year Performance
Sales revenue of US$4,733.6 million in FY20 reflected a five-year compound annual growth rate (‘CAGR’) of 5% at fixed 30 June 2019
FX rates and excluding the impact of accounting policy changes. Growth reflects continued expansion with both new and existing
customers, new market entry, expansion of the core product offering and price realisation in both mature and emerging markets
in response to increased inflation and a higher cost-to-serve. FY20 growth includes the impact of Covid-19 on trading conditions,
including a surge in pallet volumes in the fourth quarter, the closure of the global automotive manufacturing industry and lockdown
restrictions impacting the Kegstar business. Refer to page 127 for the detailed five-year financial performance summary on a reported
basis at actual FX rates.
(US$m)
FY16
FY17
FY18
FY19
FY20
Underlying Profit
Key Drivers
804
• Transport, logistics and asset management costs (including external factors such as third-party logistics and fuel prices)
• Plant operating costs in relation to management of service centre networks and the inspection, cleaning and repair of assets
826
823
879
795
(including labour costs and raw material costs)
• Other operational expenses (primarily overheads such as selling, general and administrative expenses)
• Depreciation as well as provisioning for irrecoverable pooling equipment
• FY18 to FY20 reported financials include the impact of accounting standard AASB 15 Revenue from contracts with customers
• FY20 includes a US$24.2 million benefit from new accounting standard AASB 16 Leases
Underlying Profit
5-Year Performance
Underlying Profit of US$795.0 million in FY20 reflected a five-year CAGR of (1)% at fixed 30 June 2019 FX rates and excluding the
impact of accounting policy changes. While sales growth was a strong contributor to profit growth, Underlying Profit growth was
below the rate of sales growth due to continued direct cost pressures in the CHEP business including high inflationary pressures,
higher asset charges and increased investment across the business to support growth, network efficiencies and improved
commercial outcomes. These cost pressures are offset in part through pricing actions and benefits from efficiency programmes,
particularly the US Automation projects with benefits progressively delivered from FY20 to FY22. Refer to page 127 for the detailed
five-year financial performance summary on a reported basis at actual FX rates.
(US$m)
FY19
FY17
FY16
FY18
FY20
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.
5-Year Performance
Brambles gauges its safety performance through the Brambles Injury Frequency
Rate (BIFR), which measures work-related incidents resulting in fatalities, lost time,
modified duty or medical treatment per million hours worked.
10.3
7.1
In FY20, Brambles met its year-on-year improvement target, recording a
BIFR of 5.5, which represents a 61% decrease in BIFR for the five-year period
ending June 2020. Brambles remains committed to the updated strategy called
‘Safety Differently’, which seeks to address the residual risks across its operations.
Safety
Brambles’ Zero Harm Charter and safety targets align with SDG 3: Good Health
and Wellbeing.
5.0
5.9
5.5
FY16
FY17
FY18
FY19
FY20
14
24.6
20.3
20.1
19.5
16.7
FY16
FY17
FY18
FY19
FY20
(%)
725
744
484
520
432
FY16
FY17
FY18
FY19
FY20
(US$m)
97.3
99.1
99.4
99.7
100
67
62
63
56
48
FY16
FY17
FY18
FY19
FY20
% of certified sources
% of Chain of Custody
Cashflow from Operations
Sustainability - Material sourcing
Operating & Financial Review Sales revenue growth
Underlying Profit
879
823
826
804
795
FY16
FY17
FY18
FY19
FY20
(US$m)
10.3
7.1
Safety
5.0
5.9
5.5
FY16
FY17
FY18
FY19
FY20
4,470
4,595
4,734
4,018
4,133
Return on Capital Invested (ROCI)
Key Drivers
• Underlying Profit performance
• Capital expenditure on pooling equipment to support growth in the business, which is primarily dependent on the rate of sales
growth. Brambles’ main capital cost exposures are raw materials, primarily wood
• Asset control factors i.e. the amount of pooling equipment not recoverable or repairable each year (and therefore requiring replacement)
• Frequency with which customers return or exchange pooling equipment
• FY18 to FY20 reported financials include the impact of accounting standard AASB 15 Revenue from contracts with customers
• FY20 reported financials include the impact of new accounting standard AASB 16 Leases
19.5
20.3
24.6
20.1
16.7
FY16
FY17
FY18
FY19
FY20
(US$m)
5-Year Performance
The trend in Brambles’ ROCI metric over the five-year period reflects the Underlying Profit performance and increased Average Capital
Invested, largely to support growth and supply chain efficiency initiatives including the US accelerated automation and lumber
procurement programmes. Refer to page 127 for the detailed five-year financial performance summary on a reported basis at actual
FX rates.
Return on capital Invested (ROCI) and Brambles Value Add
Cash Flow from Operations
Key Drivers
• Profitability
• Capital expenditure
• Movements in working capital
• FY20 reported financials include the impact of new accounting standard AASB 16 Leases
FY16
FY17
FY18
FY19
FY20
(%)
725
744
5-Year Performance
The five years to FY20 were a period of solid overall EBITDA growth, supported by significant investment in capital expenditure
to support growth, as well as improved working capital management and increased collections of asset compensations.
520
484
FY16 performance was impacted by a one-time change to payment processes that increased working capital, as well as increased
capital expenditure to support high levels of growth in that year. The strong FY18 performance included strong working capital
management initiatives and US$150 million cash inflow related to the repayment of the HFG joint venture shareholder loan. FY19
included increased capital investment to support strong top line growth and to deliver on a number of efficiency programmes.
Cashflow from Operations
432
Excluding the benefits from AASB 16, FY20 Cash Flow from Operations was US$603 million and included benefits from asset efficiency
and procurement programmes, as well as favourable working capital movements. Refer to page 127 for the detailed five-year financial
performance summary on a reported basis at actual FX rates.
Material Sourcing
Ongoing secure supply of raw materials for the production and repair of pooling
equipment, in particular wood used for pallets, is critical to Brambles.
5-Year Performance
In 2015, Brambles committed to acquire 100% of its timber from certified sources by 2020.
Brambles has achieved this goal, closing the remaining gap of 0.3% from the previous year.
Brambles’ sustainable sourcing efforts have helped transform forest supply chains by
raising the profile of sustainable certifications and building capacity with suppliers in each
region. Brambles also seeks to increase the amount of timber purchased that is covered
by a full Chain of Custody (CoC) traceability, which is not currently available in all regions
of operation. In FY20, CoC performance improved from 62.3% to 62.7% on 2019 results.
Sustainability - Material sourcing
Looking ahead, Brambles is establishing relationships and strategic agreements with
suppliers in the Americas, which will result in full certification of their supply chains
by FY21. While Brambles is proud of achieving its 2020 goal, its 2025 sustainability
vision will look to regenerate more forests above and beyond the benefits of the
certification programmes.
This commitment will ensure the regeneration of Brambles’ most important raw material,
but at the same time, support global efforts to improve and sustain small communities’
livelihoods and economies, while increasing mitigations for the impacts of climate change.
Brambles’ sustainable sourcing objectives seek to preserve and enhance the Group’s key
resource dependency and are directly linked to SDG 15: Sustainable Use of the World’s
Forests and SDG 13: Climate Action.
FY16
FY17
FY18
FY19
FY20
(US$m)
97.3
99.1
99.4
99.7
100
67
62
63
56
48
FY16
FY17
FY18
FY19
FY20
% of certified sources
% of Chain of Custody
15
Operating & Financial Review Material Risks
Brambles’ risk management framework 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 strategic, financial and sustainability objectives
(in no order of significance), and respective mitigating actions, including
our response to the Covid-19 pandemic, are:
Risk
Implication
Mitigating Actions
Macro-
economic
conditions
including, for
FY20 and FY21,
economic
uncertainty
arising from
the Covid-19
pandemic
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. In addition, the impact
of the Covid-19 pandemic on global and regional
economic conditions could also affect the
operations of its customers or demand for their
products which, in turn, could affect the demand
for Brambles’ services
Industry trends
in the retail,
grocery and
consumer
goods supply
chains
Industry trends (e.g. fragmentation of the
retail supply chain, growth of e-commerce and
hard discounters, 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
• Responded to the Covid-19 pandemic through a range of
actions to enable Brambles to continue to operate through
the initial phases of the pandemic and to respond to potential
changes in the economic and business environment arising
from the pandemic. Details of specific actions are described
in various places in this table
• Continued focus on driving growth through investment
in expanded customer value proposition, targeted
diversification in opportunities with attractive long-term
characteristics and the adoption of plant automation project
in CHEP Americas
• Adoption of pricing and cost-recovery strategies to mitigate
the impact of cost inflation, with enhanced focus on
cash generation
• Scenario-based strategic planning covering different
recessionary scenarios, including identifying actions
to further de-risk and exploit opportunities
Ongoing programmes to:
• Drive customer intimacy throughout the supply chain and
uncover opportunities to leverage the Group’s unique global
scale and value proposition
• Create new products and service lines to meet customers’
requirements
• Drive innovation to identify and respond to emerging trends
in platforms, material science, new technologies and
sustainability practices
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
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
• Dedicated asset control teams across all business units and
the 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
• In response to Covid-19 pressures, instituted additional field
collection activities to reduce cycle times and meet volatile
demand, whilst complying with local social distancing and
travel restrictions
Maintaining
the quality
of pooled
equipment
in line with
customer needs
Maintaining
control of
pooling
equipment
16
Operating & Financial Review Implication
Mitigating Actions
Risk
Network
capacity
The scale and strength of Brambles’ network
of service centre locations are inherent to its
value proposition for customers and other
stakeholders. A lack of capacity within the
network in a major market could adversely
impact service delivery, competitive position
and financial performance
Customers and
competitors
Brambles operates in competitive markets.
Unmet customer expectations or increasing
intensity of competitor activity could affect
Brambles’ market penetration and financial
performance
Retailer
acceptance
of pooled
solutions
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
• As an essential service provider, Brambles continues to run
operations and support customers and their consumers
across all our markets despite economic uncertainty and
social restrictions arising from the Covid-19 pandemic
• Implemented a range of safety and contingency measures to
ensure service centres remained fully operational
• Due to the Covid-19 pandemic, an element of the plant
automation project in CHEP Americas has been deferred to
FY21 in order to maximise the level of capacity across the
US service centre network and avoid any potential disruption
during peaks in demand caused by the pandemic
• Leveraged Brambles’ unique global scale, network advantage
and sustainable business model to support customers to
meet the unprecedented volatility in consumer supply chains
created by the Covid-19 pandemic
• Collaborating with customers to understand and meet their
evolving needs and adopting digital and other technologies
to innovate products and services, enhance customer
experience and strengthen competitive advantage
• 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 and adopting the
value sharing concept to create win-win opportunities
• Implementation of programmes to facilitate manufacturer
advocacy of Brambles’ pooled solutions
Cyber security
The unauthorised access to or use of Brambles’
IT systems could adversely impact Brambles’
ability to serve its customers or compromise
customer or employee data, resulting in
reputational damage, financial loss and/
or adverse operational consequences. The
implications of this risk continue to increase
as Australian institutions have become a specific
focus of cyber-attacks from state actors, and
ransomware attacks have increased globally
• The ongoing security programme is delivering key
capabilities to protect systems and to detect and promptly
respond to unauthorised or inappropriate activity. Key
controls include, but are not limited to, email and internet
filtering, anti-virus software, multi-factor authentication,
enterprise security architecture, security awareness training,
as well as the use of penetration testing across its network
• In response to the Covid-19 pandemic, conducting additional
risk-based assessments of Brambles’ critical IT systems and
services to strengthen continuity processes
• Brambles continues to use the National Institute of
Standards and Technologies Cyber Security Framework and
the Australian Cyber Security Centre’s Essential 8 advice to
monitor, track and report progress to senior management
17
Operating & Financial Review Material Risks continued
Risk
Implication
Mitigating Actions
Brambles relies on its IT systems, and the data
stored on those systems, to operate its business.
The identification and classification of Brambles’
key data assets are key components of its
capacity to effectively carry on its businesses
and to its cyber security strategy. The proper
identification and classification of data
assets allows Brambles to prioritise security
technology implementations that offer targeted
and appropriate protection. Incomplete or
unsuitable identification and classification
of key data assets could result in the misuse,
loss of or unauthorised access to sensitive
data due to incorrect storage, processing or
disposal procedures. This, in turn, could result
in financial loss, operational disruption and/or
reputational damage
The United Kingdom (UK) left the European
Union (EU) on 31 January 2020 and entered
an 11-month transition period
The UK Government has publicly ruled out
any form of extension to the transition period,
and hence the risk remains that the UK exits
the transition period without a trade deal on
31 December 2020 (Hard Brexit)
A Hard Brexit could result in Brambles incurring
increased capital and operating expenses
relating to asset efficiency, heat treatment of
pallets, raw materials, transport and customers’
clearance costs as well as disruption to both
Brambles’ and its customers’ businesses
in Europe
Access to sustainably certified sources of
timber is essential for Brambles to carry on its
businesses. A concentration of timber suppliers
in any region, or a shortage of available certified
sources of timber, could adversely impact
Brambles’ ability to maintain its timber pallet
pool at levels that will enable it to meet customer
demand for those products. This could result
in loss of customers and/or market penetration
and adversely impact Brambles’ financial
performance. Climate-related risks for forests
and timber supply, including market, regulatory
and physical risks, will emerge over a five-to-ten-
year period
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
IT data
governance
Hard Brexit
Timber supply
Regulatory
compliance
18
• Data Classification and Handling Policy includes guidelines
on the types of data and protection protocols for each
data type
• During the Year, Brambles adopted an Acceptable Use Policy
which outlines the standards by which all users must use
information and technology assets and service
• Preventative controls are also in place to mitigate the risk of
loss or misuse of data. These controls include the encryption
of laptops, mobile devices. email data retention controls and
the ability to store data in secure drives
• Ongoing development of an Information Management
Strategy to define improved data governance and security
• Brambles has continued its preparations in the event of a
Hard Brexit. The risks associated with Brexit, identified by the
Brexit Taskforce, in FY18 and FY19 remain largely unchanged
• Mitigation plans are in place and, where necessary, budgeted
for, to manage those risks
• Adoption of regional and global dedicated timber
procurement teams to manage timber procurement and to
mitigate timber supply risks
• In line with Brambles’ sustainability goals, 100% of timber is
sourced from certified sources, and Brambles has continued
to meet year-on-year improvement targets of sourcing Chain
of Custody certified timber
• Dedicated Chief Compliance Officer responsible for
monitoring the implementation and ongoing application
of compliance management systems
• A Code of Conduct which provides a framework for detailed
policies addressing regulatory compliance
• A vendor due diligence programme to assess the compliance
of suppliers with various legal and regulatory requirements,
such as bribery and corruption, sanctions violations, modern
slavery and human rights practices
• Adoption of Group-wide online compliance training
programmes to supplement face-to-face training
Operating & Financial Review Risk
Implication
Mitigating Actions
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
• Adoption of development programmes for management,
Digital
disruption
The development of cost-effective digital supply
chain solutions has the potential to materially
change supply chain dynamics. If a third-party
was to develop such solutions before Brambles,
it could adversely impact Brambles’ business
models. This could result in loss of customers
and/or market penetration and adversely impact
Brambles’ financial performance
Safety
Brambles is subject to inherent operational
risks including industrial hazards, road traffic or
transportation accidents that could potentially
result in serious injury or fatality of employees,
contractors or members of the public
leadership and functional expertise through all
employment levels
• Formal mentoring programmes offered to all employees
• Implemented a range of activities to support office-based
personnel now working remotely due to the Covid-19
pandemic, including, but not limited to, provision of required
IT, connectivity services and mental and financial wellbeing
support programmes
• Brambles is innovating, developing, testing and refining
digital solutions which have the potential to provide
commercial digital services to its customers and to assist
its businesses to more effectively and efficiently manage
equipment losses and asset efficiency
• Through the establishment of BXB Digital, Brambles has
developed unique functional capabilities and robust technical
solutions to explore the role of technology in its businesses
and customer offering and to engage in innovation of
products and services in the digital space
• The 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
• Successfully executed a range of activities during Covid-19 to
keep people safe. Established a Covid-19 global task force in
February 2020 with Senior Health and Safety representation,
supported by regional taskforces to establish processes and
protocols in accordance with government advice in different
geographies
• Implemented a number of processes and protocols in service
centres, such as social distancing measures, more frequent
cleaning and disinfecting, thermal scanning and distribution
of personal protective equipment
• Continued to further enhance safety management systems,
including focusing on human and organisation behavioural
principles and implementing additional engineering and
technology-based controls
• Use of safety metrics which, measure work-related injuries,
lost time, modified duties and incidents requiring medical
treatment, with regular reporting and monitoring to the
Brambles Board
Inclusion and
diversity
Brambles has a diverse workforce and believes
that an inclusive work environment allows
employees to realise their full potential,
regardless of gender, race, religion, age, disability,
ethnicity, sexual orientation or any other factor
that makes an individual unique. Any activities
or practices within its operations or in its supply
chains that could undermine this intent violate
Brambles’ values and are detrimental to the
integrity and credibility of its brand
• Brambles fosters a diverse and inclusive environment to be
better able to relate to customers, suppliers, communities
and co-workers
• Established a global Inclusion and Diversity Council with
programmes and initiatives to encourage, celebrate and
support all forms of diversity to ensure promoting all forms of
diversity and inclusiveness are at the core of operations
• Continuing progress in improving gender diversity at all levels
within the organisation including Board, executive leadership
and management positions
19
Operating & Financial Review Material Risks continued
Risk
Implication
Mitigating Actions
Climate change There are opportunities and risks from
• In FY20, Brambles’ ‘share and reuse’ circular solutions
climate-related physical events and policy
(transitional) developments for Brambles’
businesses, including the organisation’s ability
to create value over the short, medium and
long term
reduced more than 2 million tonnes of CO2 emissions in our
customers’ supply chains
• Brambles is a sustainable business because of its circular
‘share and reuse’ model, which reduces demand on natural
resources, regenerates forests, eliminates waste for
customers and reduces carbon emissions from the world’s
supply chains
• As a leader in the circular economy, Brambles understands
its potential to address climate change by focusing on both
its impact on climate change and the impact of climate
change on Brambles
• Continued to reduce emissions impact, with 33% reduction
in CO2/unit since FY15 and 70% of electricity consumed
from clean renewable sources
• Brambles’ demand for sustainably sourced timber addresses
deforestation and its impact on climate change. Through
afforestation, our 2025 strategy will increase forest cover
• Brambles will adopt a Science Based Target covering its
direct emissions and those in our supply chain as part of
our 2025 commitments
• Brambles has adopted the Task Force on Climate-related
Financial Disclosures (TCFD) framework with a project
to assess the risks and opportunities for the business
using climate scenario analysis (further details on TCFD
are on page 12 with a supporting TCFD supplement on
Brambles’ website)
Managing climate-related risks at Brambles
Brambles recognises its external operating context is changing in response to climate-related issues.
During 2020, Brambles continued the process of assessing its exposure to climate-change risks by reference to the recommendations
of the Financial Stability Board’s TCFD. Subsequent to commencing this work, the 4th Edition of the ASX Corporate Governance
Principles and Recommendations was issued and included new commentary on Recommendation 7.4 suggesting that listed entities
should consider reporting their exposure to climate-change risk by reference to the TCFD.
As part of this process, climate-related risk has been identified as a stand-alone risk and will be reassessed using Brambles’ risk
management framework and approach. In addition, Brambles is evaluating existing strategic and operating risks in the context of
climate-related risk in its external operating environment. Further details on Brambles’ approach to climate-related risks are set out
on page 12 with a detailed TCFD disclosure on brambles.com
20
Operating & Financial Review Financial Review
1. Financial Review
1.1 Group Overview
1.1.1 Summary of 2020 Financial Results
US$m
(Continuing operations)
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Sales revenue
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate
Underlying Profit
Significant Items
Operating profit
Net finance costs
Tax expense
Profit after tax from continuing operations
(Loss) / profit 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)
FY20
2,469.0
1,827.8
436.8
4,733.6
342.5
407.1
118.0
(72.6)
795.0
(28.0)
767.0
(80.8)
(209.0)
477.2
(29.2)
448.0
4,773.6
16.7%
1,548.7
28.9
30.8
FY191
2,287.8
1,849.1
458.4
4,595.3
298.4
441.8
118.3
(54.8)
803.7
(62.8)
740.9
(88.5)
(198.3)
454.1
1,013.6
1,467.7
4,130.6
19.5%
1,593.4
92.1
28.5
Change
Actual FX
8%
Constant FX
10%
(1)%
(5)%
3%
15%
(8)%
-
(32)%
(1)%
4%
9%
(5)%
5%
(69)%
16%
(2.8)pp
(69)%
8%
3%
1%
6%
17%
(2)%
6%
(33)%
4%
9%
5%
(10)%
11%
(68)%
19%
(2.5)pp
(67)%
14%
Note on FX: The variance between actual and constant FX performance reflects the strengthening of Brambles' reporting currency, the
US dollar, relative to other operating currencies, particularly the Australian dollar, Euro, Latin American currencies and the South African rand.
FY20 Operating Environment
Between July 2019 and February 2020, Brambles’ operating
environment was characterised by moderating transport
inflation and increasing labour and property inflation in all
regions. The macro-economic environment was stable in most
regions of operation except for Europe, where deteriorating
economic conditions and Brexit-related uncertainty impacted
like-for-like volume growth.
Covid-19 started impacting Brambles’ largest businesses in
March 2020 as the pandemic spread across Europe and
North America, followed by Latin America and Africa. These
impacts varied across regions and Brambles’ portfolio of
businesses.
Approximately 80% of Brambles’ revenues are derived from
customers in the consumer-staples sectors, which are
primarily serviced by the CHEP pallets businesses. During
March and April 2020, the CHEP pallets businesses
experienced unprecedented levels of customer demand across
global grocery supply chains, with demand volatility
continuing throughout May and June 2020.
This demand was driven by lockdown measures introduced in
all major markets and subsequent changes in consumer
behaviour including pantry stockpiling in developed markets
and a shift to ‘at-home’ consumption across all regions.
While revenue growth increased in line with higher pallet
volumes, servicing the additional customer demand and
managing volatility and disruptions across Brambles’ network
led to higher supply chain costs during the period from
March to June 2020. These cost increases largely related to
additional transport, handling and repair costs required to
ensure continuity of pallet supply while minimising the level of
capital expenditure to service these temporary spikes in
customer demand.
Brambles’ Automotive container and Kegstar keg-pooling
businesses, which account for approximately 5% of Group
1 The comparative period does not include the impact of AASB 16 Leases. IFCO is presented in discontinued operations.
21
Operating & Financial Review
included a US$34.8 million decrease in Significant Items.
Current-year Significant Items included a US$28.0 million non-
cash impairment of the Kegstar business, reflecting
uncertainty over the ongoing performance of the craft beer
segment due to Covid-19. FY19 included US$62.8 million of
Significant Items reflecting IFCO-related restructuring costs
and asset write-offs in Latin America.
Profit after tax from continuing operations of
US$477.2 million increased 11% at constant currency,
reflecting operating profit growth and lower net finance costs.
Net finance costs decreased 5% at constant currency despite
US$27.8 million of lease interest expenses recognised
following the implementation of AASB 16. Excluding the
impact of AASB 16, finance costs decreased US$35.5 million,
reflecting interest income on Australian-dollar deposits and
reduced interest expense from the repayment of bank
borrowings and the US$500 million 144A bond funded by
proceeds from the sale of the IFCO business in FY19.
Tax expense was US$209.0 million, up 10% in constant
currency. The effective tax rate on Underlying Profit was 29.4%
compared to 29.0% in FY19, reflecting a change in mix of
global earnings.
Loss from discontinued operations of US$29.2 million,
decreased from a profit of US$1,013.6 million in the prior year,
which included the operating results and gain on sale of IFCO.
The current-year loss reflects a US$26.8 million post-tax
impairment of the deferred consideration receivable from
First Reserve, reflecting current market conditions in the oil
and gas industry. The receivable is due to be repaid by First
Reserve in 2026 and Brambles will continue to monitor this
with a view to full recovery of the balance and related interest.
Return on Capital Invested remained strong at 16.7%, down
2.5 percentage points at constant currency, largely due to the
impact of AASB 16. Excluding the impact of AASB 16, Return
on Capital Invested was down 0.9 percentage points at
constant currency, reflecting the Underlying Profit
performance and an increase in Average Capital Invested
driven by capital investment to support volume growth, US
supply chain efficiency programmes and prior-year
investments in the European Automotive business and Brexit-
related retailer stocking.
Financial Review – continued
revenue, were significantly impacted by Covid-19. Customer
demand in the Automotive business was impacted by the
closure of the global automotive manufacturing industry
while in Kegstar, lockdown laws significantly reduced ‘on-
premise’ consumption of beer in served markets from March
to June 2020.
Sales revenue from continuing operations of
US$4,733.6 million increased 6% at constant currency, driven
by growth in the global pallets businesses which offset Covid-
19 related declines in the Automotive and Kegstar businesses.
Volume expansion contributed 3% to revenue growth and
included the benefit of elevated pallet volumes in March and
April 2020. Net new business growth of 2% was largely driven
by new customer contract wins and lane expansion with
existing customers, particularly in the European and US pallets
businesses. Like-for-like volume growth was 1%. Pricing
contributed 3% to revenue growth and included strong price
realisation across the CHEP Americas segment, reflecting
increased cost-to-serve in the region.
Underlying Profit of US$795.0 million increased 4% at
constant currency and included a US$24.2 million benefit
relating to AASB 16: Leases (AASB 16). Excluding the benefit of
AASB 16, Underlying Profit increased 1% as the sales
contribution to profit from the global pallet businesses, US
supply chain programme efficiencies and lower transport and
lumber inflation offset direct and indirect cost increases across
the Group and Covid-19 related headwinds. These headwinds
included a US$23 million profit decline due to lower demand
in the Automotive and Kegstar businesses.
Net plant costs increased US$44 million, reflecting labour and
property cost inflation in all regions and higher pallet repair
and handling costs to support elevated pallet volumes due to
Covid-19. These increases were partially offset by cost
efficiency benefits from US supply chain programmes.
Net transport costs increased US$16 million driven by
additional transport miles associated with the Latin American
asset management programme and increased pallet
collections and relocations due to Covid-19.
Depreciation expense increased US$19 million in line with
pool growth and investments in US supply chain programmes
while Irrecoverable Pooling Equipment Provision (IPEP)
expense increased US$33 million despite an overall reduction
in loss rates and increased asset efficiency. The increase in
IPEP expense reflected higher First In First Out (FIFO) unit
pallet costs in all major markets.
Corporate costs increased US$18 million, reflecting
investments in technology and infrastructure of US$6 million,
costs relating to digital transformation of US$2 million, and
US$4 million relating to investments in customer experience
and other Group-wide efficiency projects.
Other overhead costs increased US$30 million, reflecting
investments to support growth, network efficiencies and
improved asset management and commercial outcomes
across the Group.
Operating profit from continuing operations of
US$767.0 million increased 9% at constant currency and
22
Operating & Financial Review
Financial Review – continued
Cash Flow Reconciliation
US$m
Underlying Profit
Depreciation and amortisation
IPEP expense
EBITDA
FY20
795.0
612.2
155.7
FY19 Change
(8.7)
803.7
484.3
127.1
127.9
28.6
1,562.9 1,415.1
147.8
Capital expenditure
(930.1)
(989.4)
59.3
Non-pooling capital expenditure increased US$29.8 million in
constant currency due to service centre maintenance and
plant upgrades in the US, Latin America and Australia.
Free Cash Flow after ordinary dividends was a surplus of
US$171.5 million and increased US$261.1 million on the prior
year driven by the improvement in Cash Flow from Operations
outlined above and a US$44.2 million reduction in cash
financing costs and tax payments.
US supply chain investment
Proceeds from sale of PP&E
Working capital movement
(72.7)
104.4
108.7
(73.0)
102.5
(13.2)
121.9
Other
(29.3)
(10.2)
(19.1)
Cash Flow from Operations
743.9
431.8
312.1
Significant Items
Discontinued operations
(3.4)
(4.6)
(10.8)
7.4
135.4
(140.0)
Financing costs and tax
(273.7)
(317.9)
44.2
Free Cash Flow
462.2
238.5
223.7
Dividends paid - ordinary
(290.7)
(328.1)
37.4
Free Cash Flow after
ordinary dividends
171.5
(89.6)
261.1
Dividends paid - special
(183.2)
-
(183.2)
Free Cash Flow after special
dividends
(11.7)
(89.6)
77.9
Cash Flow from Operations of US$743.9 million increased
US$312.1 million and included a US$140.6 million reported
cash flow benefit from AASB 16. Excluding AASB 16, Cash Flow
from Operations increased US$171.5 million on the prior year,
reflecting increased earnings, asset efficiency gains and
favourable working capital movements driven by improved
debtor collections.
On a cash basis, capital expenditure (excluding US supply
chain investments) of US$930.1 million decreased
US$59.3 million, reflecting improved asset efficiency and
disciplined capital allocation.
On an accruals basis, capital expenditure decreased
US$52.1 million at constant currency as lower pooling capital
expenditure was partly offset by increased investments in
non-pooling capital expenditure.
Pooling capital expenditure decreased US$81.9 million in
constant currency terms despite investments to support
growth. The Group’s primary measure of asset efficiency, the
pooling capex to sales ratio, decreased 2.9 percentage points
at constant currency to 17.6%. This reduction was driven by:
-
US$40 million of asset efficiency improvements across the
pallet businesses in North America, Latin America, Europe
and Turkey;
US$48 million of prior-year investments to support Brexit-
related retailer stockpiling and a large European
Automotive contract which did not recur in FY20; and
US$16 million of benefits relating to lower per-unit pallet
costs due to the US lumber procurement programme.
-
-
0.3
1.9
Cash financing costs increased US$8.1 million as the inclusion
of US$26.5 million in lease payments due to AASB 16 offset
financing cost savings of US$18.4 million.
Cash tax payment reduced US$52.3 million, largely reflecting a
lower Australian tax instalment rate and tax payments in the
prior year relating to IFCO.
These improvements partly offset the year-on-year cash flow
impact of the IFCO divestment in May 2019. Prior-year cash
flows included a US$137.7 million cash contribution from IFCO
which was recognised in discontinued operations.
Free Cash Flow after ordinary and special dividends
includes a US$183.2 million cash outflow relating to the
special dividend payment in October 2019, which was funded
by the IFCO sale proceeds received in the prior year.
Segment Analysis
1.1.2 CHEP Americas
US$m
Pallets
Containers
FY20
2,412.5
FY19
2,228.9
56.5
58.9
Sales revenue
2,469.0 2,287.8
Underlying Profit
342.5
298.4
2,369.6
1,942.6
Average Capital
Invested
Return on
Capital Invested
Change
Actual
FX
8%
Constant
FX
10%
(4)%
8%
15%
22%
(3)%
10%
17%
24%
14.5%
15.4%
(0.9)pp
(0.8)pp
Sales Revenue
Pallets sales revenue of US$2,412.5 million increased 10% at
constant currency, reflecting price realisation across the
region and strong volume growth which included the benefit
of elevated pallet demand levels in the fourth quarter
following the outbreak of Covid-19.
US pallets sales revenue of US$1,807.9 million increased 9%
reflecting:
-
Pricing growth of 4% driven by pricing actions to recover
higher costs-to-serve. Effective price, which includes
transport and lumber surcharges that are recognised as
an offset to costs, increased by 3%, reflecting the lower
contribution from surcharges in line with the moderation
in lumber and transport rates during the Year;
Like-for-like volume growth of 3% included the benefit of
a surge in pallet volumes in March and April 2020 related
to Covid-19; and
-
23
Operating & Financial Review
Financial Review – continued
- Net new business growth of 2% included the rollover
benefit of new customer contracts won in the second half
of FY19.
1.1.3 CHEP EMEA
US$m
Canada pallets sales revenue of US$279.2 million increased
7% at constant currency, reflecting strong price realisation and
volume expansion with new and existing customers.
Pallets
RPC
FY20
1,571.1
FY19
1,558.9
Change
Actual
FX
1%
Constant
FX
5%
27.3
30.6
(11)%
Containers
229.4
259.6
(12)%
Sales revenue
1,827.8 1,849.1
Underlying Profit
407.1
441.8
1,904.0
1,776.4
(1)%
(8)%
7%
Average Capital
Invested
Return on Capital
Invested
21.4%
24.9%
(3.5)pp
(3.0)pp
5%
(8)%
3%
(2)%
12%
Sales Revenue
Pallets sales revenue of US$1,571.1 million increased 5% at
constant currency, reflecting the contribution from current
and prior-year contract wins in the European pallets business
and solid price realisation across the region. Like-for-like
volume growth continued to be impacted by macroeconomic
conditions, notwithstanding a surge in pallet volumes during
March and April 2020 following the outbreak of Covid-19 in
the region.
European pallets sales revenue of US$1,372.4 million
increased 5% at constant currency, comprising:
- Net new business growth of 4%, reflecting strong
-
-
contributions of current and prior-year contract wins in
Southern Europe and Central and Eastern Europe;
Price growth of 1% driven by annual contract
indexation; and
Like-for-like volumes in line with prior year as
deteriorating economic conditions in the region offset
the surge in pallet volumes during March and April 2020.
India, Middle East, Turkey and Africa (IMETA) pallets sales
revenue of US$198.7 million increased 9% at constant
currency, driven by strong price growth and contributions
from net new business wins. This growth was partially offset
by like-for-like volume declines due to lockdown measures
and temporary restrictions of cross-border flows following the
Covid-19 outbreak during the fourth quarter.
RPC and Containers sales revenue of US$256.7 million
decreased 7% at constant currency, reflecting:
-
Automotive sales revenue of US$152.1 million, down 7%
on prior year due to the shutdown of the European
automotive manufacturing industry for the duration of
the fourth quarter following the outbreak of Covid-19;
Kegstar sales revenue of US$15.7 million, down 19% on
the prior year due to the introduction of lockdown
restrictions in all major markets in March 2020, which
impacted on-premise consumption of beer for the
duration of the fourth quarter;
IBCs sales revenue of US$61.6 million, down 9% on the
prior year reflecting lower volumes; and
RPC sales revenue of US$27.3 million, up 5% on the prior
year reflecting volume growth in the South African
business.
-
-
-
Latin America pallets sales revenue of US$325.4 million
increased 15% at constant currency, driven by pricing actions
initiated in the second half of FY19 and net new business wins.
Containers sales revenue was US$56.5 million, down 3%
at constant currency, reflecting lower volumes in the
North American IBC and Automotive businesses.
Profit
Underlying Profit of US$342.5 million improved 17% at
constant currency and included a US$14.1 million benefit
relating to AASB 16. Excluding this benefit, Underlying Profit
increased 13% at constant currency and included the benefit
of a one-percentage point improvement in US margins, in line
with guidance. The US$131 million sales contribution to profit
was partly offset by:
- Net plant cost increases of US$27 million, reflecting
higher pallet repair and handling costs due to labour and
property inflation, additional costs to service elevated
levels of pallet demand due to Covid-19 and damage rate
increases in Canada associated with the stringer-to-block
pallet transition in that market. These cost increases were
partly offset by savings from US supply chain
programmes;
- Net transport cost increases of US$9 million, reflecting
additional transport miles due to the Latin American asset
management programme and additional pallet
collections and relocations across the US network
incurred to service Covid-19 related increases in customer
demand while minimising capital expenditure. These
additional costs were partly offset by network
optimisation savings and lower third-party freight costs;
- Depreciation cost increases of US$9 million due to pool
-
growth and investments in US supply chain programmes;
IPEP expense increases of US$25 million driven by higher
FIFO unit pallet costs despite lower pallet losses in Latin
America; and
- Other cost increases of US$24 million, reflecting
investments in resources to support growth, asset and
network efficiencies and improved commercial outcomes.
Return on Capital Invested
Return on Capital Invested of 14.5% decreased
0.8 percentage points at constant currency due to a
1.7 percentage point adverse impact of AASB16. Excluding the
impact of AASB 16, Return on Capital Invested improved
0.9 percentage points at constant currency due to increased
profitability in the region and asset efficiency improvements in
Latin America.
24
Operating & Financial Review
Financial Review – continued
Profit
Underlying Profit of US$407.1 million decreased 2% at
constant currency and included a US$4.8 million benefit
relating to AASB 16. Excluding the impact of AASB 16,
Underlying Profit decreased 3% at constant currency as the
solid revenue contribution to profit of US$56 million was more
than offset by:
-
A US$23 million decline in the Automotive and Kegstar
businesses driven by lower customer demand following
the outbreak of Covid-19;
- Net transport cost increases of US$5 million, reflecting
additional transport miles incurred in the European pallet
businesses to ensure continuity of pallet supply and
manage demand volatility due to Covid-19;
- Net plant cost increases of US$20 million, reflecting
labour and property inflation across the region and
additional pallet repair and handling costs incurred to
support elevated levels of customer demand while
minimising capital expenditure due to Covid-19;
- Depreciation increases of US$9 million due to pallet pool
growth and prior-year automotive asset purchases to
support a large contract win in Europe; and
- Other indirect cost increases of US$12 million were driven
by IPEP expense increases, due to higher unit pallet costs,
and overhead investments to support business growth.
Return on Capital Invested
Return on Capital Invested of 21.4% decreased 3.0 percentage
points at constant currency. Excluding the impact of AASB16,
Return on Capital Invested decreased 2.0 percentage points at
constant currency driven by lower Underlying Profit in the
Automotive and Kegstar businesses due to Covid-19 and a
higher Average Capital Invested balance, reflecting
investments to support growth and prior-year investments in
the European Automotive business and Brexit-related retailer
stocking.
1.1.4 CHEP Asia-Pacific
US$m
Pallets
RPC
Containers
FY20
340.7
51.4
44.7
FY19
343.2
65.7
49.5
Change
Actual
FX
(1)%
Constant
FX
5%
(22)%
(17)%
(10)%
(5)%
Sales revenue
436.8
458.4
(5)%
Underlying Profit
118.0
118.3
-
1%
6%
Average Capital
Invested
Return on Capital
Invested
490.6
424.5
16%
22%
24.1% 27.9%
(3.8)pp
(3.7)pp
Sales Revenue
Pallets sales revenue was US$340.7 million, up 5% at constant
currency, reflecting moderate price realisation and like-for-like
volume growth in the Australian business and the ongoing
expansion of the timber pallet business in China.
RPC and Containers sales revenue was US$96.1 million, down
12% at constant currency due to the rollover impact of a
prior-year contract loss in the Australian RPC business.
Profit
Underlying Profit of US$118.0 million increased 6% at
constant currency and included a US$5.0 million benefit from
AASB16. Excluding this benefit, Underlying Profit increased
1% at constant currency, driven by the sales contribution to
profit and plant cost efficiencies in Australia which more than
offset other cost increases in the region.
Return on Capital Invested
Return on Capital Invested of 24.1% decreased 3.7 percentage
points at constant currency largely due to the 3.2 percentage
point adverse impact of AASB 16.
25
Operating & Financial Review
Board & Executive Leadership Team
Board of Directors
John Mullen Non-Executive Chairman (Independent)
Chairman of the Nominations Committee and member of the Remuneration Committee
Joined Brambles as a Non-Executive Director and Chairman elect in November 2019 and became
Chairman on 1 July 2020. He is currently a Non-Executive Director and Chairman of Telstra,
and Chairman of the unlisted entity, Toll Group. Previously, John was Chief Executive Officer of
Asciano, Australia’s largest ports and rail operator, from 2011 to 2016. Prior to that, John had a
distinguished career with the DHL Group from 1994 to 2009, ultimately becoming Chief Executive
Officer of DHL Express in 2006. He also served as a Director of Deutsche Post World Net, the parent
company of DHL Express. Before joining DHL, John spent 10 years with the TNT Group, culminating in
the role of Chief Executive Officer of TNT Express Worldwide, which he held from 1990 to 1994. He
was formerly a Non-Executive Director of Brambles (from 2009 to 2011), and has also served as a
director on the boards of Brookfield Infrastructure Partners LP, Macquarie Airports Corporation,
Embarq LLC (USA), Transportes Guipuzcoana (Spain) and Ducros Services Rapides (France). He was
also Chairman of the US National Foreign Trade Council in Washington from 2008 to 2010. John
holds a Bachelor of Science from the University of Surrey.
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 its Senior Independent
Director, and was chair of its Remuneration Committee from April 2015 to July 2020. He holds an MA
(Hons) Chemistry from Oriel College, Oxford, and is a Fellow of the Institute of Chartered Accountants
in England and Wales.
George El-Zoghbi Non-Executive Director (Independent)
Member of the Nominations and Remuneration Committees
Joined Brambles as a Non-Executive Director in January 2016. George has extensive international
consumer packaged goods and supply chain experience. He was recently appointed as the Chief
Executive Officer of Arnott’s Biscuits Limited. He is also a Special Advisor to and a Director of Kraft
Heinz Company and a Strategic Advisor to Altimetrik, a US-based digital and IT solutions company.
Previously, George was the Chief Operating Officer of US commercial businesses for Kraft Heinz
Company from the merger of Kraft Foods Group and H.J. Heinz in July 2015 until October 2017. Prior
to that merger, George held a number of key leadership roles at Kraft including Chief Operating
Officer. 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 Master of Enterprise from the University of Melbourne and has also completed
an Accelerated Development Programme at MC London Business School in the United Kingdom.
26
Board & Executive Leadership Team
Board & Executive Leadership Team – continued
Elizabeth Fagan CBE Non-Executive Director (Independent)
Member of the Audit and Nominations Committees
Joined Brambles as a Non-Executive Director in June 2018. Elizabeth has extensive experience in the
international retail sector. She is a Commander of the Order of the British Empire (CBE). Currently she
is Chair of the Board of D2N2 Local Enterprise Partnership. Previously, she was the Non-Executive
Chairman of Boots UK & Ireland, Senior Vice President and Managing Director of Boots, leading all
Boots businesses across the UK and the Republic of Ireland. Prior to that, she was Senior Vice
President, Managing Director, International Retail for Walgreens Boots Alliance, from the Company’s
creation in December 2014 to 2016, Marketing Director of Boots and Managing Director of Boots
Opticians, and previously worked for Boots as Group Buyer from 1983 to 1991. Before re-joining the
Boots business in 2006, Elizabeth worked for DSG International plc for 10 years, where she held a
number of senior positions, including Marketing Director, Group Marketing Director and Managing
Director of The Link. She holds a Bachelor of Science, Biochemistry, from Strathclyde University and
an Honorary Doctorate of Science from Nottingham Trent University.
Tony Froggatt Non-Executive Director (Independent)
Member of the Remuneration and Nominations Committees
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 H.J. Heinz, Diageo and Seagram. He holds a Bachelor of Law from Queen Mary
College, London, and a Master of Business Administration from Columbia Business School, New York.
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 Investments and was previously a Non-Executive Director of Recall Holdings.
She had a distinguished 26-year 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.
Brian Long Non-Executive Director (Independent)
Chairman of the Audit Committee
Joined Brambles as a Non-Executive Director in July 2014. Previously, Brian was a Non-Executive
Director of OneMarket Limited, Commonwealth Bank of Australia, at which he was Chairman of its
Audit Committee, and Ten Network Holdings Limited. 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.
27
Board & Executive Leadership Team
Board & Executive Leadership Team – continued
Ken McCall Non-Executive Director (Independent)
Joined Brambles as a Non-Executive Director in July 2020. Ken’s background is in global network
management, international logistics and supply chain, having held leadership positions including
Chief Executive, DHL Express UK & Ireland, from 2008-2010, and MD, Networks and Operations, DHL
Express Europe, which consolidated his extensive experience of continental Europe. He lived and
worked in China during his time with TNT NV, as CEO TNT China, 2004-2007, and CEO TNT Asia,
Middle East, Africa & Indian Subcontinent, 1996-2004. More recently, Ken served as Deputy Group
CEO at Europcar Mobility Group from 2016-2019, having previously held the roles of Group Chief
Operating Officer and Group Managing Director for the UK. Ken has more than 10 years’ experience
as a Non-Executive Director. He served on the board of global fashion retailer SuperDry plc from
2010-2016 and was a member of its Audit and Remuneration Committees. He is currently Senior
Independent Non-Executive Director for Post Office Limited; for which he chairs the Remuneration
Committee and is a member of the Nomination and Audit, Risk and Compliance Committees. Ken is a
member of the Chartered Institute of Transport and Logistics, Singapore.
Jim Miller Non-Executive Director (Independent)
Member of the Remuneration Committee
Joined Brambles as a Non-Executive Director in March 2019. Jim has extensive operational and cross
functional supply chain experience in digital technology. He is currently Chief Technical Officer with
Wayfair Inc. In addition, Jim is currently a Non-Executive Director of The RealReal, Inc., also a US e-
commerce company. Jim has held a number of senior executive roles including Vice President,
Worldwide Operations for Google Inc from 2010 to 2018, where he was responsible for global
operations, planning, supply chain and new product introduction for Google’s IT infrastructure and
Google Fiber. Previously, he was Executive Vice President, Industrial, Automotive and Multi-Media for
Sanmina Corporation from 2009 to 2010, where he was responsible for its industrial, clean tech, multi-
media and automotive businesses. Prior to that, he held various executive roles at Cisco Systems, and
was Vice President Global Supply Chain for Amazon where he was responsible for the inception of its
supply chain organisation. He has also held various executive roles at IBM and Intel. Jim holds a
Bachelor of Science, Aerospace Engineering, from Purdue University and a Master of Science and
Engineering and a Master of Science and Management from the Massachusetts Institute of
Technology.
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. She is also a Non-
Executive Director of Molson Coors Beverage Company. Nessa is a Fellow of the Institute of Chartered
Accountants in Ireland. She holds a Bachelor of Commerce from University College Dublin and is a
graduate of the Australian Institute of Company Directors.
28
Board & Executive Leadership Team
Board & Executive Leadership Team – continued
Scott Perkins Non-Executive Director (Independent)
Chairman of the Remuneration Committee and member of the Audit and Nominations Committees
Joined Brambles as a Non-Executive Director in June 2015. Scott is a Non-Executive Director of
Woolworths Group Limited and Origin Energy and was a Director of Meridian Energy from 1999 to
2002. 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 and New Zealand and as a member
of the Asia-Pacific management committee. Scott is also active in the charity and public policy sector
as the founder or director of a number of organisations. Scott holds a Bachelor of Commerce degree
and a Bachelor of Laws with Honours degree from the University of Auckland.
Nora Scheinkestel Non-Executive Director (Independent)
Member of the Audit Committee and Audit Committee Chair Elect
Joined Brambles as a Non-Executive Director and will take over the role of Audit Committee Chair on
20 August 2020. Nora is currently the Chair of Atlas Arteria Limited and a Non-Executive Director of
its stapled entity, Atlas Arteria International Ltd, a Non-Executive Director of Telstra and a Non-
Executive Director of AusNet Services Limited. She is also an Associate Professor at the Melbourne
Business School at Melbourne University and a Trustee of the Victorian Arts Centre Trust. Previously,
Nora was a director of a number of other major ASX listed companies, where in many cases she
chaired their audit committees, and was a member of the Takeovers Panel. In 2003, she was awarded
a centenary medal for services to Australian society in business leadership. Nora holds a Doctor of
Philosophy and a Bachelor of Law (Hons) from the University of Melbourne and is a Fellow of the
Australian Institute of Company Directors.
29
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 26.)
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
holds an Agro-industrial Engineering degree from the Universidad Politécnica of Madrid. He also
holds a Master of Business Administration from IE Business School, Madrid, and a Diploma of
Manufacturing and Production Management.
Phillip Austin President, CHEP 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 an Ambassador for the National Association for Women in Operations
(NAWO). He holds a Bachelor of Economics and a Master of Logistics Management, both from the
University of Sydney, and is a graduate of the Australian Institute of Company Directors.
Patrick Bradley Group Senior Vice President, Human Resources
Joined Brambles in 2018 as Group Senior Vice President, Human Resources. Before joining Brambles,
Patrick was the Human Resources Director at BT Group, the UK’s largest fixed communications
network, responsible globally for employee relations, reward, pensions, organisational design and
efficiency. Prior to that, he was the Chief Human Resources Officer at EE, the UK mobile
telecommunications operator, when it was acquired by BT. He has also held human resources
leadership roles at Lloyds Banking Group and Atos Origin. He has led multiple workforce and human
resources programmes to improve customer service capabilities, organisational culture and employee
engagement. He holds a Bachelor of Law from the University of Leeds.
David Cuenca President, CHEP Europe
Joined Brambles in 2000 and was appointed President, CHEP Europe in 2020. At Brambles, David has
held several leadership roles, ranging from Country General Manager of CHEP in Central Europe;
Vice President and Country General Manager in CHEP Spain and Portugal; Vice President of
CHEP Southern Europe; President, CHEP Latin America; and his current role in Europe. David holds a
Business Studies degree from the University of Barcelona. He has also completed a General
Management Programme at the IESE Business School.
30
Board & Executive Leadership Team
Board & Executive Leadership Team – continued
Paola Floris President, CHEP Latin America
Joined Brambles in 2001 and was appointed President, CHEP Latin America on 1 July 2020. During her
time at Brambles, Paola has held several leadership roles, ranging from Customer Service Director,
CHEP Italy and progressed to become Retail Director in 2009. Paola was appointed as Country
General Manager, CHEP Italy in 2013 and then was promoted to Vice President and Country General
Manager, CHEP Pallets Canada in 2016. Paola has a degree in Economics from the Universita’
Cattolica del Sacro Cuore, and a Master of Business Administration from SDA Bocconi.
Robert Gerrard Group Vice President, Legal and Secretariat
Joined Brambles in 2003 as Senior Counsel, Brambles Group, was appointed Group Company
Secretary in February 2008 and Group Vice President, Legal and Secretariat in February 2017. 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 a Bachelor of Science and a Bachelor of Law from the
University of New South Wales. He is a Solicitor of the Supreme Court of New South Wales.
Alasdair Hamblin Senior Vice President, Strategy and Innovation
Joined Brambles in March 2018 as Senior Vice President, Group Strategy and became Senior Vice
President, Strategy & Innovation in February 2019. Prior to Brambles, Alasdair held a number of
leadership roles at General Electric from 2011 to 2018, including Strategic Marketing Director for GE
Oil & Gas and led revenue synergies for its merger with Baker Hughes to form BHGE. He was
previously an Associate Partner at McKinsey & Company and began his career in systems engineering
with Accenture. He holds an MA in Modern History from Balliol College, Oxford, and a Master of
Business Administration from INSEAD.
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
Bachelor of Materials Engineering from Monash University, Australia, and a Master of Business
Administration from Warwick Business School in the UK.
Craig Jones President, CHEP India, Middle East, Turkey and Africa
Joined Brambles in December 2017 as Vice President, EMEA Emerging Markets and was appointed to
his current position of President CHEP IMETA (India, Middle East, Turkey and Africa) in February 2019.
Before joining Brambles, Craig worked for Rexam plc, a UK listed consumer packaging company.
Craig led the Africa, Middle East & Asia region for Rexam and also spent time leading their Russian
business. Craig joined Rexam in 2001 and held a number of senior finance roles across a variety of
geographies. Craig holds a BA (Hons) Business Studies from Cardiff University and is a Fellow (FCMA)
of the Chartered Institute of Management Accountants.
31
Board & Executive Leadership Team
Board & Executive Leadership Team – continued
Laura Nador President, CHEP North America
Joined Brambles in 2003. Laura became President, CHEP North America in January 2018, after holding
a number of leadership positions within Brambles across multiple geographies. Laura was successively
Director, Distributor Sales, CHEP Europe; Vice President, RPCs, Europe; Country General Manager,
CHEP Spain and Portugal; and Vice President, Supply Chain, CHEP Latin America. In July 2016, she was
appointed Senior Vice President of the CHEP USA Pooled Pallets business and then President, CHEP
USA in March 2017, when she took on additional responsibilities for all pallets and containers
businesses in the USA. CHEP Canada was added to her responsibilities in January 2018. Prior to
Brambles, Laura worked for a number of years at the Fortune 500 logistics company, Ryder. Laura
holds a Master of Engineering from the University of Buenos Aires and a Master of Business
Administration from the London Business School.
Nessa O'Sullivan Chief Financial Officer
(See biography on page 28.)
Sarah Pellegrini Vice President, Internal Communications
Joined Brambles in 2018 to lead Group-wide internal communications and was appointed to the
Executive Leadership Team in 2019. Before joining Brambles, Sarah oversaw employee
communications for Qantas’ global operations, and has held corporate communications roles in
international businesses including Arrium and Foster’s Group in Australia and Rexam plc, SABMiller
and BBC Worldwide in the UK. Sarah began her career as a journalist for News Limited after gaining a
Bachelor of Arts (Journalism) from RMIT University.
32
Board & Executive Leadership Team
Directors’ Report – Remuneration Report
Executive Summary
Business Performance
This report outlines the remuneration for Brambles’ Key Management Personnel (KMP) for the financial year ended 30 June 2020
(the Year). It should be read in conjunction with the information provided on Brambles' results and continued execution of
Brambles' business strategy, as detailed in the Operating & Financial Review on pages 4 to 25.
Annual Short-Term Incentive
Based on performance against the corporate and personal objectives set for the Year, the annual Short-Term Incentive (STI)
awards for Executive KMP (see Section 1) ranged from 31% to 112% of base salary. These STI outcomes were driven by
Brambles’ financial performance, each Executive KMP’s achievement of specific personal objectives and after consideration of
Executives’ adherence to the Brambles Code of Conduct, shared values and risk appetite.
Long-Term Incentive
The Long-Term Incentive (LTI) share awards granted during September 2017 (i.e. in FY18) had a three-year performance period
ending 30 June 2020. Performance against the conditions to which they were subject were:
-
-
Brambles’ total shareholder return (TSR) was ranked at 32 out of the ASX100 peer group, resulting in 87.4% vesting for
this component (25% of LTI grant); and ranked at 36 out of the MCSI peer group, resulting in 80.0% vesting for this
component (25% of LTI grant); and
Brambles' sales revenue compound annual growth rate (CAGR) was 6.4% and Return on Capital Invested (ROCI) was
17.1%, resulting in 95.0% vesting for this component (50% of LTI grant).
Accordingly, 89.3% of total LTI awards granted in FY18 vested. Details of LTI vesting are provided in Section 4.3.2.
Executive Leadership Team Base Salaries
The base salaries of the Executive KMPs and other members of the Executive Leadership Team (ELT) were determined in
accordance with the Company's Remuneration Policy described in Section 2. The average base salary increase for Executive
Directors was 2.5%. The average increase for current ELT members for the Year was 3.0%, ranging from 2.1% to 5.1%. All
increases were determined in October 2019 and effective 1 January 2020. The average increase across the broader employee
population was 3.0%. Executive KMP salaries are set out in Section 5. There will be no salary increases for ELT in FY21. The next
salary review, which was due to occur on 1 January 2021, has been deferred until 1 July 2021.
Non-Executive Directors' Fees
There has been no increase in Chairman and Non-Executive Director base fees since 1 July 2016. There will be no increase in
fees for the Chairman or Non-Executive Directors for FY21. Non-Executive Director fees are detailed in Section 7.1. The next
fee review will be carried out during FY21. Any fee increase arising from that review will take effect from 1 July 2021.
Remuneration Strategy
The Remuneration Committee carries out annual reviews of Brambles’ remuneration strategy, structure and policy, including
share-based incentive plans. These reviews are undertaken in order to determine whether the current approach continues to
strongly align Executives' interests with those of the Company and its shareholders. A key focus of the annual review is to
provide confirmation that the Company's remuneration structure and policy continue to provide alignment with the Company's
strategic and business objectives, as well as Brambles' Code of Conduct, shared values and risk appetite. In March 2020, the
Committee determined that no changes to the current structure or policy were required in FY21 but did recommend an
administrative change to the rules of the Brambles Performance Share Plan (see Section 2 for details).
Impact of Covid-19
The STI outcomes for the Year reflect business performance against targets set at the commencement of the Year. The Board has
not exercised any discretion in relation to STI outcomes, nor LTI vesting, as a result of the economic impact of Covid-19 on
Brambles.
Contents
1. Background
2. Remuneration Policy and Framework
3. Remuneration Structure
4. Performance of Brambles and Remuneration Outcomes
5. Executive Key Management Personnel (Executive KMP)
6. Employee Share Plan
7. Non-Executive Directors’ Disclosures
8. Remuneration Governance
9. Other Reporting Requirements
33
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Background
This Remuneration Report provides information on Brambles’ Remuneration Policy and the link between that policy and the
Group's business strategy, financial performance and conduct consistent with Brambles’ Code of Conduct, shared values and risk
appetite. This report also provides remuneration information about Brambles’ Key Management Personnel (KMP), who are its:
- Non-Executive Directors as set out in Section 7; and
-
Executive Directors and Group Executives who have authority and responsibility for planning, directing and controlling the
Group’s activities (Executive KMP). The executives who fall within this definition are those set out in Section 5.
In this report, references to the Executive Leadership Team (ELT) include Executive KMP.
This report includes all disclosures required by the Corporations Act 2001 (the Act), regulations made under the Act and the
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.
Remuneration Policy and Framework
Brambles’ Remuneration Policy, approved by the Board, is to adopt a remuneration structure and set remuneration levels which:
-
-
-
enables Brambles to attract, retain and motivate high-calibre executives and other talent throughout the company;
fairly and responsibly rewards executives having regard to Brambles’ performance, the performance of executives and the
general remuneration environment; and
aligns:
-
-
executive reward with the creation of sustainable shareholder value; and
executive behaviour with Brambles’ strategic objectives, Code of Conduct, shared values and risk appetite.
Table 3.3.1 sets out how Brambles’ Remuneration Policy is directly linked to the Company’s financial performance, the creation of
shareholder wealth, the delivery of strategic objectives and executive behaviour.
Corporate and personal short-term incentive objectives are agreed at the start of the financial year and approved by the Board
Remuneration Committee (Committee). The Committee reviews progress against the objectives during the financial year and
assesses performance at year end following a detailed review of Group, Business Unit and individual executive performance. Long-
term incentive performance conditions are set out in the rules of the Brambles Performance Share Plan (PSP).
The Group’s Remuneration Policy is to set target remuneration opportunity around the median level of the comparator group of
companies (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. For
ELT roles, comparative companies used to set pay ranges are major listed companies in the USA, Australia and UK 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, providing equal pay for equal work value, for all Group employees.
Each year, the Committee conducts a review of the Company's remuneration policy to determine that it delivers a remuneration
structure and levels which are consistent with the objectives outlined at the beginning of this Section 2. As a result of the review
carried out in FY20, it was determined that no changes to Brambles’ remuneration structure were required in FY21. As a result of
that review, however, the Board, pursuant to the power granted to it under the PSP rules, made an administrative amendment to
those rules. The effect of the amendment is to grant the Board discretion to determine that vested awards granted under the PSP
be settled in either cash or shares. The Board’s intention is to consider exercising that discretion to settle vested PSP awards in cash
for the small number of Australian-based employees who may, in the future, be categorised as “good leavers”.
34
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Remuneration Structure
Overview
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 corporate and personal objectives (At
Risk Remuneration). The diagram below summarises the remuneration structure for Executive KMP.
Year 1
Year 2
Year 3
Year 4
Fixed Remuneration
Base salary, superannuation and
other benefits
Cash
Paid through the Year
STI Award
(At Risk)
Maximum opportunity
150% to 180% of base salary
LTI Share Award
(At Risk)
Maximum opportunity
100% to 130% of base salary
Cash and Shares
1-year performance
period
80% Corporate
Objectives
20% Personal Objectives
50% Cash paid
50% Share Awards
Deferred 2 years from grant
Share Awards
50% Relative Total Shareholder Return
Holding lock
(Half based on Brambles’ TSR against the ASX 100 constituents and half based on
Brambles’ TSR against the MSCI World Industrials constituents, using 50 companies
either side of Brambles’ rolling 12-month average market capitalisation)
(for awards
FY20 onwards)
50% Sales Revenue CAGR/ROCI matrix
Legend: Cash awarded; Share Awards granted; and Share Awards vested/unrestricted.
Payments are made and awards are granted following the end of the financial year and finalisation of Brambles’ results.
An individual’s At Risk Remuneration is subject to the overarching discretion of the Board and the Committee. That discretion is
informed by how individuals achieve results and the extent to which they exemplify the behaviours expected of them as leaders of
the Company as set out in Brambles’ Code of Conduct, shared values and risk appetite.
The proportion of Executive KMP total remuneration comprising At Risk Remuneration is illustrated in Table 3.4.2.
STI and LTI share awards are governed by the PSP rules, which have been approved by shareholders. No Brambles shares were
purchased on-market during the Year to satisfy the entitlements of holders of STI share awards or LTI share awards.
The remuneration structure and the key features of Fixed and At Risk Remuneration are summarised in Table 3.3.1. The application
of the At Risk Remuneration is further described in Section 4.
Basis of Valuation of STI and LTI Share Awards
The number of share awards granted is based on the market value of Brambles' shares which, under the PSP rules, is the volume
weighted average share price during the five trading days up to and including the grant date. In this report, this is referred to as the
"face value approach".
Details of the approach are contained in Section 9.4.
35
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Remuneration Structure Details
Table 3.3.1: Remuneration Structure FY20
Remuneration
element
Description
Purpose
Link to strategy
Fixed Remuneration
Base salary, superannuation and
other fixed benefits.
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 referenced at the
market median.
Base salaries are designed
to be competitive to assist
Brambles in attracting and
retaining talented
executives.
At Risk Remuneration
STI Award
Executive KMP are eligible to receive annual STI Awards.
The Committee approves annual STI corporate and personal objectives for Executive KMP. At the end of each year, the Committee
assesses Executive KMPs’ performance against those objectives. The amount of an STI Award will depend on whether and, if so, to what
extent those objectives are achieved.
Half of the STI Award is delivered in cash following the end of the year to which the award relates. The other half is delivered in deferred
STI Share Awards which vest two years from the date they are granted, subject to the relevant Executive KMP remaining employed by
the Group at the end of that period. Eligibility for STI Awards is also subject to the non-financial risk assessment referred to in this table
below, both at the time of the grant of the awards and, in the case of STI Share Awards, during the two-year deferral period.
The achievement of objectives by Executive KMP for FY20 are set out in Section 4.2.
Corporate
Objectives
(comprising 80%
of the STI award)
Corporate objectives are set at a
“Threshold” (the minimum necessary
to qualify for the awards) and
“target” (when the performance
target is met). For some objectives
(Underlying Profit and Asset
Efficiency), there is also a “maximum”
(when targets have been significantly
exceeded and the award has reached
its upper limit) level. For Underlying
Profit, “Threshold" levels are set at or
above the prior year's outcome for
the relevant objective, except where
extenuating circumstances exist.
Corporate objectives are set to align an
executive’s At Risk Remuneration to
Brambles’ financial and strategic objectives.
For FY20, these included: Underlying Profit
growth in excess of sales revenue growth
through the cycle; Free Cash Flow sufficient
to fully fund capital expenditure; and
dividends and operational efficiency.
Financial objectives are chosen to link
Executives KMPs’ rewards with the financial
performance of the Group, the pursuit of
profitable growth, the efficient use of
capital and generation of cash.
Personal
Objectives
(comprising 20%
of the STI award)
Personal objectives relate to non-
financial operating and strategic
objectives.
Personal objectives provide the
opportunity to tailor individual Executive
KMP performance expectations, having
regard to their role and function, to specific
non-financial operating and strategic goals.
36
-
-
FY20 corporate objectives
were:
-
Underlying Profit
provides a focus on
profitable growth;
Cash Flow from
Operations is used as a
measure to provide a
strong focus on the
generation of cash; and
Asset efficiency is a key
driver of business
profitability and assists
in maximising
revenue from existing
assets and reducing
capital costs.
Personal objectives are
linked to the delivery of
Brambles’ strategic and
operating priorities such as
safety, customer retention,
product innovation,
succession planning and
talent development and
specific business unit or
functional projects.
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Remuneration
element
Description
Purpose
Link to strategy
LTI Share Award
Executive KMP are also eligible to receive an annual grant of LTI share awards vesting three years from the date the award is granted,
subject to satisfaction of service and performance conditions. A one-year holding lock post-vesting applies to awards granted from
FY20 onwards, during which executives cannot sell vested LTI awards other than to pay any tax obligations. The number of LTI share
awards to which an Executive KMP is entitled is an amount, calculated using the face value approach, equal to a specified proportion of
his or her base salary as shown in Section 4.3.
Relative TSR
(comprising
half of the LTI
award)
Sales revenue
CAGR and ROCI
(comprising half
of the LTI share
award)
Minimum
shareholding
requirements
Brambles
requires ELT
members to hold
a meaningful
stake in the
Company to
assist in aligning
their interests
with those of its
shareholders.
TSR provides a direct
alignment of executive
rewards to the creation of
shareholder value through
linking executive reward
with the long-term
generation of returns to
Brambles’ shareholders.
Relative TSR rewards the 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
means that value is only delivered to
participants if the investment return
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.
This portion of the LTI share award
incentivises both long-term sales revenue
growth and ROCI. 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 ROCI hurdles.
This is designed to drive profitable
business growth, to maintain quality of
earnings and to deliver a strong return on
capital invested. Sales revenue CAGR is
measured in constant currency.
Profitable growth is
emphasised by the use of
sales revenue CAGR targets
with ROCI hurdles as the
performance conditions
that must be satisfied for
half of all LTI share awards
to vest.
This supports the delivery of
sustainable returns to
shareholders.
Performance is measured over a 3-
year performance period
(Performance Period) against
constituents of both the ASX100 and
the MSCI World Industrials indices,
with each component measured
separately and comprising 25% of
the total LTI award.
The vesting schedule for the portion
of the LTI subject to TSR is outlined
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
100%
above
Each year, a sales revenue
CAGR/ROCI matrix is set by the
Committee for each LTI share award,
based on targets approved by the
Board. This allows the Committee to
set targets for each LTI share award
that reward strong performance in
light of the prevailing and forecast
economic and trading conditions.
The FY21-23 sales revenue
CAGR/ROCI matrix, pertaining to
the LTI share awards to be granted
in October 2020, is set out in
Section 4.3.
Description
The minimum shareholding requirement for the CEO is 150% of base salary and for the other ELT members is 100%
of their respective base salaries, to be built up over five years. Each year, the Committee receives a report on the
progress towards the attainment of the required minimum shareholding requirement.
Whilst building their minimum shareholding requirement, ELT members are not permitted to sell Brambles shares,
other than to pay tax obligations they incur by reason of STI or LTI share awards vesting, until they have achieved
100% of their shareholding requirements.
Where Executive Directors step down from their Executive Director position but continue to be employed by the
Company, they will, under the Company's Securities Trading Policy, need the Chairman’s approval to sell or
otherwise deal in Brambles' shares.
Executive Directors who cease to be employees of the Company are required to retain at least 50% of their
minimum shareholding for the 12 months following their cessation of employment.
37
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Clawback of
awards
Description
Clawback
provisions
operate in
relation to
STI and LTI share
awards
Under the PSP rules, the Board has discretion to reduce, cancel or lapse unvested or vested STI or LTI share awards
in the circumstances set out in the PSP rules (a copy of the rules is on the Brambles website). These circumstances
include to protect the financial soundness of the Group, an exceptional event which has a material impact on the
value of the Group, a material inaccuracy in the assessment of the performance of a participant in the PSP
(including an Executive KMP) or any subsequent or adverse development regarding the personal performance of
such a participant.
Remuneration
Committee
discretion
Remuneration
Committee
discretion
regarding At Risk
Remuneration
Description
The Committee has discretion to adjust the level of At Risk Remuneration (both STI and LTI awards) based on the
financial or share price performance of the Company and the behaviours exhibited by individual ELT members,
including their adherence to the Company’s Code of Conduct, shared values and risk appetite.
The Committee may, at its discretion, reduce the amount of an ELT member’s STI award (regardless of the
achievement of corporate or personal objectives) where his or her performance or behaviour during the year has
been assessed as not warranting all or part of an incentive payment to which he or she may otherwise be entitled.
The Committee determines the level of LTI share award vesting following the receipt of independent TSR analysis
and audited management reports on the outcome of the Sales CAGR/ROCI performance over the applicable
Performance Period. The Committee’s discretion can be used to increase or decrease vesting outcomes, which
includes reducing vesting to zero.
In April 2020, the Remuneration Committee adopted a principles-based approach to non-financial risk, with a
framework which provides guidelines as to the types of events that may warrant an adjustment and guidance on
what should be considered by the Committee. Advice is provided to the Committee by the Chairman of the Audit
Committee, the Group Senior Vice President, Human Resources, the Group Vice President, Legal and Secretariat
and Group Vice President, Risk & Internal Audit on any major or severe incidents to be considered by the
Committee when deciding whether to exercise its discretion to adjust any year-end remuneration outcomes.
Remuneration Mix for Executive KMP
Brambles’ Executive KMP remuneration mix is linked to performance. At Risk Remuneration represents 71% to 76% of Executive
KMP maximum remuneration package.
The table below illustrates the remuneration potential for the Executive KMP, including Threshold, Target and Maximum potential.
Table 3.4.1: Remuneration Potential
Remuneration
potential
STI Awards*
LTI Awards
CEO/CFO potential
as % of base salary
President North America/Europe
potential as % of base salary
Threshold
70%
46%
Target
120%
88%
Maximum
Threshold
180%
130%
60%
35%
Target
100%
68%
Maximum
150%
100%
* Half of the STI Award is delivered in deferred STI Share Awards which vest two years from the date they are granted subject to the relevant Executive KMP remaining
employed by the Group at the end of that period.
The following table illustrates the level of actual remuneration received by Executive KMP compared with their respective total
remuneration potential.
The respective columns labelled “Actual” comprise:
-
-
-
Base salary: base salary for FY20;
STI Awards: the STI award received in respect of FY20 performance, half of which was delivered as deferred STI share awards
which vest in FY22 (see Section 4.2); and
LTI shares: the proportion of the FY18-FY20 LTI share awards that vested at the end of the Year (see Section 4.3.2).
The Remuneration Mix represents the maximum potential value of each element of the respective Executive KMP’s remuneration
package mix that could be received in each case by the individual Executive KMP.
38
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Table 3.4.2: Remuneration Mix
Remuneration mix
Base salary
STI Award
LTI Award
Total
CEO/CFO
maximum
potential
24%
44%
32%
100%
CEO Actual
CFO Actual
24%
23%
29%
76%
24%
24%
29%
77%
President
North America/
Europe maximum
potential
President
North America
Actual
President Europe
Actual
29%
42%
29%
100%
29%
31%
26%
86%
29%
9%
0%
38%
Brambles’ Five-Year Performance and Remuneration Outcomes
The table below sets out the dividends paid, Brambles' share price at the beginning and the end of the financial year, the financial
performance conditions for the STI and LTI share awards and the Company’s performance for continuing operations for the period
FY16 to FY20 and the STI and LTI award outcomes for those years. In the following table:
-
-
-
-
-
financial measures relating to IFCO are included in FY16 and FY17 but, due to its divestment, not in FY18 to FY20;
the periods prior to FY20 have not been restated for the impact of new accounting standard AASB 16 Leases;
the periods prior to FY18 have not been restated for the impact of the new accounting standards AASB 9 Financial Instruments
and AASB 15 Revenue from Contracts with Customers;
the Underlying Profit and Cash Flow targets and outcomes for STI purposes are adjusted figures based on budgeted FX rates
at the commencement of the respective financial year; and
financial measures related to the CHEP Recycled, Oil & Gas, Aerospace and LeanLogistics businesses have not been included in
any period due to the divestment of these businesses.
Definitions for the financial metrics are provided in the Glossary on pages 128 to 130.
The numbers shown below reflect Brambles’ financial statements. STI outcomes are based on adjusted outcomes.
Dividends (cents per share)1
Share price (A$): 1 July
30 June
STI and LTI Financial Measure (US$)
BVA2
STI financial measures (US$)
Underlying Profit3
Cash Flow from Operations4
Group Free Cash Flow5
Profit after tax6
STI cash outcome range for Executive KMP
(% base salary)7
LTI measures
Sales Revenue (US$)
ROCI8
TSR
LTI outcome (% of grant)9
FY20
US$0.18
12.75
10.87
FY19
A$0.29
8.88
12.88
FY18
A$0.29
9.73
8.88
FY17
A$0.29
12.32
9.73
FY16
A$0.285
10.73
12.39
-
-
-
235.1
332.9
795.0
743.9
462.2
477.2
803.7
431.8
238.5
454.1
826.1
724.8
554.4
553.5
957.1
591.5
224.2
444.9
984.5
518.8
171.7
592.3
31% - 112%
24% - 60%
20% - 61%
21% - 58%
55% - 78%
4,733.6
17%
21.41%
89%
4,595.3
19%
6.94%
0%
4,470.3
20%
-7.53%
25%
5,104.3
17%
16.81%
20%
4,900.1
19%
64.02%
75%
1 Effective from 2020, Brambles changed to a payout ratio-based dividend policy, with the dividend per share declared in US cents and converted and paid in Australian
cents. Prior to 2020, dividends were declared and paid in Australian cents.
2 LTI and STI measure in FY16 and FY17 only, calculated at fixed 30 June 2016 exchange rates.
3 STI measure used during plan years FY18 to FY20.
4 STI measure used during plan years FY17 to FY20.
5 STI measure used during plan year FY18. Free Cash Flow includes cash flows from divested businesses.
6 STI measure used during plan years FY16 and FY17. Periods prior to 2018 include IFCO and are consistent with previously published data. Refer to Five-Year Financial
Performance Summary on page 127.
7 The range of outcomes for Executive KMP are provided, as some Executive KMP had business unit financial performance conditions as well as Group conditions.
Financial measures comprised 70% of total STI outcome in FY16 and FY17 and 80% of total STI outcome in FY18 to FY20. The balance comprised personal objectives.
8 LTI measure used during plan years FY18 to FY20.
9 LTI outcome is for the Performance Period ending in the relevant year. For example, the FY16 LTI outcome relates to the FY14 to FY16 Performance Period.
39
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Performance of Brambles and Remuneration Outcomes
FY20 STI Awards
The following table summarises the components and weighting of objectives for the FY20 STI awards for Executive KMP:
Executive KMP
Corporate objectives
Group
Underlying Profit
Segment
Underlying Profit
Group
Cash Flow
Segment Cash
Flow
Asset
Efficiency
50%
20%
-
30%
20%
10%
-
10%
10%
10%
Personal
Objectives
20%
20%
CEO, CFO
Presidents
North America/Europe
Executive KMP personal objectives for FY20 are shown in the table below. Recommended targets for global metrics relating to
safety and business strategy and growth objectives are set at the Group level and reviewed and approved by the Committee.
Metric
Safety
Measurement
The CEO and Executive KMP with operational responsibility have a personal objective safety measure.
The objectives are zero fatalities and a specified percentage improvement in the Group or applicable
region’s Brambles Injury Frequency Rate (BIFR) from FY20 BIFR.
Business strategy
and growth objectives
Objectives are set for each Executive KMP which support and are aligned with the achievement of
Brambles' overall business strategy and business unit objectives.
FY20 objectives included: succession planning and talent development; asset protection and efficiency;
capital efficiency; retention of key customer accounts; and roll out of new product lines.
Quantitative metrics for achievement of each of these objectives are set, which allows the Committee to
determine objectively whether they have been met.
STI Plan Structure and Performance
As detailed in Table 3.3.1, the STI Plan comprises Corporate Objectives and Personal Objectives, all components of which are
assessed against their respective performance targets to provide an overall assessment.
The STI metrics comprise the following:
Metric
Weighting at Target
Payment schedule
Underlying Profit
50%
A sliding scale between the Threshold and Target, with a separate sliding scale
between Target and Maximum.
Cash Flow
20%
Two Targets to be achieved:
- Half-year target representing one-third of this component; and
-
Full-year target representing two-thirds of this component. The targets are
all-or-nothing; there is no sliding scale.
Asset Efficiency
10%
-
-
-
5% at Threshold
10% at Target
15% at Maximum
Personal Objectives
20%
The targets are all-or-nothing; there is no sliding scale between Threshold, Target
and Maximum.
Personal Objectives are individually assessed by the Board Chairman, reviewed by
the Committee and approved by the Board in relation to the CEO’s STI. Personal
Objectives of the other Executive KMP (and all ELT members) are assessed by the
Committee. There is no over-achievement above the 20%.
40
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
The following table outlines performance against Brambles' Group Financial STI metrics against the targets shown.
Brambles' Group Financial STI metrics
Metric
Underlying Profit
Cash Flow from Operations
Asset Efficiency
Performance
Outcome
Between Threshold and Target
Exceeded both First Half and Year-
end targets
Achieved Maximum results
Result reflects strong sales and effective
management of operational costs despite the
impact of Covid-19 driving higher supply chain
costs in the core pallets business and loss of
earnings in the Automotive and Kegstar
businesses following customer shutdowns during
the fourth quarter of FY20.
Strong cash flow performance, with a successful
year of working capital improvements driven by
process changes improving cash collections and
further progress on asset efficiency outcomes
across the business with initiatives supported by
improved use of data analytics.
Significant improvement in asset efficiency,
reflecting changes to the business model in
Mexico and Turkey and overall improvements in
efficiency of the existing asset pool driven by
improved data analytics and a range of collection
and other commercial initiatives driving shorter
cycle times.
The STI outcomes for the CEO and CFO are shown below based on performance against their STI objectives. As indicated earlier in
this report, half of the STI award is delivered in deferred STI share awards which vest two years from the date of grant, subject to
the applicable Executive remaining employed by the Group at the end of that period.
CEO and CFO FY20 STI performance
Performance category
Underlying Profit
Weighting
at Target
STI as % of
base salary
at Target
Threshold
50%
60%
809.8
Achievement
Target
852.4
827.4
Outcome
(% of base
salary)
34.2%
Maximum
Outcome
895.0
Between
Threshold and
Target
Cash Flow
from
Operations
Full-year
Cash
Flow
20%
24%
567.2
783.6
Asset Efficiency
10%
12%
20.5%
19.6%
18.6%
17.6%
CEO Personal Objectives
20%
24%
CEO Total
100%
120%
CFO Personal Objectives
20%
24%
CFO Total
100%
120%
Exceeded
both
Half and Full-
year Targets
Achieved
Maximum
Achieved
72.5% of
Personals
Achieved
87.5% of
Personals
24.0%
18.0%
17.4%
93.6%
21.0%
97.2%
41
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
In addition to the Brambles STI metrics shown above relating to Underlying Profit and Cash Flow from Operations, the Business
Unit targets and their respective personal objective outcomes, for the Presidents of North America and Europe, were as follows.
Business Unit metrics
Business Unit
Outcome
Achievement
President, North America
CHEP North America Underlying Profit
Between Target and Maximum
104%
CHEP North America Cash Flow
Achieved both half and full-year Cash Flow measures
149% of full-year target
CHEP North America Asset Efficiency
Achieved Maximum
Personal Objectives
President, Europe
-
CHEP Europe Underlying Profit
Below Threshold
16%
71.25%
90%
CHEP Europe Cash Flow
Achieved both half and full-year Cash Flow measures
122% of full-year target
CHEP Europe Asset Efficiency
Achieved Maximum
Personal Objectives
-
19%
73.75%
Actual STI Payable and Forfeited for FY20
Details of the STI award payable to Executive KMP and the STI award forfeited, as a percentage of the maximum potential STI award
in respect of performance during the Year, are shown in the following table.
Name
G Chipchase
N O’Sullivan
L Nador
M Pooley10
Actual STI payable
as % of base salary
Maximum STI as % of
base salary
Total STI achieved
(US$)
% of maximum
STI payable
% of maximum
STI forfeited
94%
97%
112%
31%
180%
180%
150%
150%
1,403,196
814,168
510,084
154,830
52%
54%
74%
21%
48%
46%
26%
79%
Executive KMP LTI Share Awards
Executive KMP are eligible to receive an annual grant of LTI share awards. The awards are made in October each year. The
performance conditions to which LTI share awards are subject are set out in Table 3.3.1. The number of LTI share awards to which
an Executive KMP is entitled is an amount calculated as follows:
[Base Salary in A$ at 30 June] x [LTI % in the table below] Divided By [Share Price calculated using the face value
approach] = number of LTI Share Awards
Role
CEO/CFO
President North America/Europe
LTI grant as % of base salary
130%
100%
Sales Revenue CAGR/ROCI LTI Performance Matrix for FY21-FY2311
The sales revenue CAGR/ROCI matrix for LTI share awards that will be made in October 2020 for the period FY21-FY23 is set out
below. The sales revenue and ROCI components of the matrix are calculated on a Group basis. The prospective vesting date is in
October 2023. ROCI is defined as Underlying Profit divided by Average Capital Invested.
FY21-23 Sales Revenue CAGR/ROCI LTI Performance Matrix Vesting Schedule
Sales Revenue CAGR1122
2%
3%
4%
5%
6%
15%
-
20%
40%
60%
80%
ROCI %
16.5%
20%
40%
60%
80%
100%
18%
60%
80%
100%
100%
100%
10 M Pooley resigned from the business with his last day being 30th June 2020. He was eligible for his FY20 STI cash award, but he was not eligible for the STI share
award component.
11 Financial targets set for LTI share awards do 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 STI awards.
12 Three-year CAGR over base year is used.
42
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
As a policy principle, the Committee takes into account major acquisitions, divestments, impairments and Significant Items during
the applicable Performance Period in determining the final outcome of the sales revenue CAGR/ROCI matrix for that period.
Acquisitions or divestments that are not material to the overall outcome are excluded from any performance assessment.
The ROCI outcome is the average ROCI over the Performance Period and is calculated by adding each year's ROCI result and
dividing that sum by three.
The sales revenue CAGR and ROCI targets and vesting schedules in the FY21-FY23 LTI Matrix were set by the Committee, having
regard to the Company's Remuneration Policy outlined in Section 2 (and, particularly, aligning executive rewards with the creation
of shareholder value and setting challenging performance targets), as well as Brambles' three-year plan for its strategic priorities
and financial objectives. (The unprecedented nature of the Covid-19 pandemic and the economic volatility it has created has added
considerable uncertainty to the forecasting of the sales CAGR and ROCI metrics for the FY21-FY23 matrix. In these circumstances,
the Board may consider adjusting the matrix metrics up or down to reflect more appropriate forecast economic assumptions once
the impact of Covid-19 on global and regional economies is better understood.) LTI vesting schedules are not intended to be, and
should not be, relied on by current or potential Brambles' shareholders as a forecast of the Group’s future performance.
The matrix continues to provide an appropriate balance between growth and returns well in excess of the cost of capital.
Performance Testing of LTI Share Awards Under the Performance Share Plan
The Performance Period for LTI awards granted in October 2017 expired on 30 June 2020. The TSR component of these awards was
tested against the TSR performance of Brambles over the Performance Period as determined by an independent consultant. The
sales revenue CAGR and ROCI components of these awards were audited by Brambles’ external auditors and then tested against
the FY18-FY20 Matrix by the Committee. The Committee also undertook the non-financial risk assessment outlined in Table 3.3.1
and, based on that assessment, determined that no adjustment to the vesting levels for any Executive KMP was required. Based on
those assessments, these awards vested as follows:
Performance condition
Performance Period
Performance condition
Relative TSR (ASX100)
1 July 2017 to 30 June 2020
Brambles’ TSR performance against the ASX 100 TSR
Vesting
level
87.4%
Relative TSR (MSCI)
1 July 2017 to 30 June 2020
Brambles’ TSR performance against the MCSI Industrials
80.0%
Sales Revenue CAGR/ROCI
1 July 2017 to 30 June 2020
CAGR: 6.3%
ROCI 17.1%
Total LTI vesting
1 July 2017 to 30 June 2020
95.0%
89.3%
43
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Total Remuneration & Benefits for the Year
The purpose of the table below is to enable shareholders to understand the actual remuneration received by Executive KMP. The
table provides a summary of the actual remuneration, before equity, received or receivable by the Executive KMP for the Year,
together with prior-year comparatives. Income derived from the vesting of STI and LTI share awards 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 share awards were granted in prior financial years and vested in October 2019.
Theoretical accounting values for unvested share awards are shown in Section 9.1. 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.
There were no loans or other transactions with any Executive Directors or Executive KMP during the Year.
US$'000
Short-term employee benefits
Post-
employment
benefits
Name
Executive Directors
G Chipchase16
N O'Sullivan16
Other Executive KMP
L Nador16
M Pooley16,17
Totals18
Cash /
salary /
fees1133
Non-
monetary
benefits1144
Cash
bonus
Year
Super-
annuation
FY20 1,726
FY19
1,732
FY20
FY19
FY20
FY19
FY20
FY19
975
980
467
448
501
482
702
817
407
501
255
104
155
126
FY20 3,669 1,519
FY19
3,642
1,548
2
12
10
4
3
8
-
17
15
41
-
-
-
-
58
57
28
66
86
123
Other
Termination
/ sign-on
payments
/ retirement
benefits Other1155
Actual
share income
Total
before
equity
STI / LTI /
MyShare
awards
Total
-
-
-
-
-
-
-
-
-
-
10 2,440
232
2,672
10
2,571
1 1,393
1
1,486
19
18
2
2
802
635
686
693
32 5,321
31
5,385
5
2,576
194
1,587
1
1,487
33
109
97
120
556
235
835
744
783
813
5,877
5,620
13 Cash/Salary/Fees includes base salary and allowances.
14 Non-monetary benefits includes annual medical assessment and tax support.
15 Other includes health and salary continuance insurance.
16 The year-on-year comparison of remuneration is affected by the movement of 30 June 2020 rates from A$1=US$0.7145, €1=US$1.1404 and £1=US$1.2943 for FY19
and A$1=US$0.6692, €1=US$1.1064 and £1=US$1.2582 for FY20.
17 M Pooley resigned from the business with his last day being 30 June 2020. He was eligible for the FY20 STI cash award, but was not eligible for the STI share award
component.
18 The comparative period does not include W Orgeldinger who was a KMP Executive during the period 1 July 2018 to 31 May 2019 when he left Brambles due to the
sale of the IFCO RPC business.
44
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Executive Key Management Personnel (Executive KMP)
Executive Key Management Personnel Changes
There were no changes to Executive Directors during the Year, namely Graham Chipchase (Chief Executive Officer) and Nessa
O’Sullivan (Chief Financial Officer).
In addition to Brambles’ Executive Directors, the following executives comprise the Year’s Executive Key Management Personnel:
Laura Nador, President, North America; and
-
- Michael Pooley, President, Europe.
Mr Pooley resigned from Brambles on 30 June 2020 to take up an opportunity elsewhere. Any unvested share awards granted to
Mr Pooley lapsed on his resignation date.
Mr David Cuenca was appointed to the role of President, Europe effective from 1 July 2020 following the departure of Mr Pooley.
Service Contracts
Graham Chipchase and Nessa O’Sullivan 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.
Michael Pooley was, and Laura Nador is, on continuing contracts, which may be terminated without cause by the employer giving
six 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 and are subject to limits imposed under Australian law.
Details of Executive KMP salaries are shown in Table 5.2.1.
Contract Terms for Executive KMP
Name and role(s)
G Chipchase, Chief Executive Officer
N O'Sullivan, Chief Financial Officer
L Nador, President, North America
M Pooley, President, Europe
Base salary at 30 June 2019
Base salary at 30 June 2020
£1,163,000
£650,000
US$435,000
£360,000
£1,192,000
£666,000
US$457,000
£400,000
Mr Chipchase and Ms O’Sullivan received increases reflective of market movement in the UK.
Ms Nador’s increase reflected both market movement in the USA and her additional experience in the role.
Mr Pooley's increase included an adjustment to his salary due to additional responsibilities, including leadership for the
BXB Digital group.
All increases were determined in October 2019 and effective 1 January 2020, except for Mr Pooley whose increase was effective
1 November 2019.
Employee Share Plan
Brambles' 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$6,000 of shares each year (Acquired Shares), which the
Company matches (Matching Shares) on a one-for-one basis after a two-year qualifying period. The vesting and automatic exercise
of Matching Shares occurs on the second anniversary of the first acquisition.
In 2020, MyShare was offered in an additional 19 countries. Together with the previous 41 countries where it operated, MyShare is
now a global all-employee share plan. For the 2020 MyShare plan onwards, all permanent employees of Brambles, in any country of
the world, will be eligible to join the plan.
As of 1 March 2020, 3.66 million Brambles shares were held by 4,720 MyShare participants.
Executive KMP are eligible to participate in MyShare. Shares obtained by Executive KMP through MyShare are included in
Section 9.6. Matching Shares allocated but not yet vested are shown in Sections 9.5 and 9.7.
During the Year, 916,680 Brambles shares were purchased on-market under the MyShare plan, being the Acquired Shares
purchased by participants in that plan, at an average price of A$11.73 per share. The accounting share value at grant ranged from
A$10.45 to A$12.44 (up to 30 June 2020) based on the monthly share price value. For further details of the share grant values, refer
to Section 9.8 of the Remuneration Report and Note 20 of the Financial Report.
45
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Non-Executive Directors’ Disclosures
Non-Executive Directors’ Remuneration Policy
The Chairman’s fees are determined by the Remuneration Committee, with the Chairman exempting himself from the decision. 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 Non-Executive
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 Australian companies with
market capitalisation between 50% and 200% of Brambles’ 12-month average at year end, which is consistent with Brambles’ policy
on executive pay.
There has been no increase in Chairman and Non-Executive Director base fees since 1 July 2016. There will not be any increase in
fees for the Chairman or Non-Executive Directors for FY21.
The base fees for the Chairman and Non-Executive Directors are as follows:
Chairman: A$627,000; and
-
- Non-Executive Directors: A$209,000.
The following travel allowances and Committee member fees were also not increased during the Year:
-
-
-
-
Supplement for members of the Audit and Remuneration Committees: A$25,000. The Board Chairman does not receive the
supplement if he or she is a member of either of these Committees;
Supplement for Chair of the Audit Committee: A$50,000;
Supplement for Chair of the Remuneration Committee: A$40,000; and
Travel allowance of A$5,000 where a meeting involved a long-haul international trip.
The next fee review will take effect from 1 July 2021.
Non-Executive Directors’ Appointment Letters
Non-Executive Directors are appointed for an unspecified term but are subject to election by shareholders at the first Annual
General Meeting after their initial appointment by the Board. 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 served.
Non-Executive Directors do not participate in the PSP or MyShare plans.
Mr Johns retired from his role as a Non-Executive Director and Chairman of the Board on 30 June 2020. Mr Mullen was appointed
to the Board on 1 November 2019 and took over as Chairman of the Board from 1 July 2020.
Dr Scheinkestel was appointed to the Board on 1 June 2020. Dr Scheinkestel is a member of the Audit Committee and will assume
the role of Audit Committee Chair on 20 August 2020 (Mr Long will retire from the Board upon the conclusion of the Brambles’
Annual General Meeting on 8 October 2020).
Mr McCall was appointed to the Board on 6 July 2020.
46
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Non-Executive Directors’ Shareholdings
Non-Executive Directors are required to hold shares in Brambles, equal to their annual fees after tax, within three years of their
appointment.
The following table contains details of Brambles Limited ordinary shares in which Non-Executive Directors held relevant interests,
being issued shares held by them and their related parties:19
Ordinary shares
Non-Executive Directors as at 30 June 2020
Balance at the start of the Year
Changes during the Year
Balance at the end of the Year
G El-Zoghbi
E Fagan
A G Froggatt
T Hassan
S P Johns20
B Long
J Miller
J Mullen
S Perkins
N Scheinkestel
Former Non-Executive Director
D P Gosnell
35,000
20,000
14,890
15,000
61,049
24,000
-
-
20,000
7,134
22,910
-
-
-
-
-
-
5,150
-
-
-
-
35,000
20,000
14,890
15,000
61,049
24,000
5,150
-
20,000
7,134
22,910
19 G El-Zoghbi: Held by The George El-Zoghbi Trust Agreement on behalf of George El-Zoghbi.
E Fagan: Held by LG Vestra, Bank of New York Mellon on behalf of Elizabeth Fagan.
A G Froggatt: Of which 7,000 shares are held by Christine Joanne Froggatt and 7,890 shares are held by Anthony Grant Froggatt.
T Hassan: Held by RBC Dexia Custodian on behalf of Tahira Hassan.
S P Johns: Of which 38,713 ordinary shares held by Canzak Pty Ltd and 22,336 ordinary shares held by Caran Pty Limited.
B Long: Held by BJ Long Investments Pty Limited.
J Miller: Held by The Miller Family Revocable Trust on behalf of James Miller.
S Perkins: Held by Perkins Family Super Pty Ltd ATF Perkins Family S/F A/C.
N Scheinkestel: Held by Nora Scheinkestel. The "Balance at the start of the Year" is as at 1 June 2020 when she was appointed as a Brambles director.
D P Gosnell: Held by Charles Stanley & Co Australia in the name of Susan Gosnell.
20 S P Johns retired from the Board on 30 June 2020.
47
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Non-Executive Directors’ Remuneration for the Year
Fees and other benefits provided to Non-Executive Directors during the Year and the prior year are set out in Table 7.4.1 below in
US dollars. The full names of the Non-Executive Directors and the dates of any changes in Non-Executive Directors during the Year
are shown in the Directors’ Report – Additional Information on page 53. Non-Executive Directors do not receive any share-based
payments.
Any contributions to personal superannuation or pension funds on behalf of the Non-Executive Directors are deducted from their
overall fee entitlements.
Table: Non-Executive Directors’ Remuneration for the Year
US$'000
Name
Short-term employee benefits
Year
Directors’ fees
Post-employment benefits
Other2211
Superannuation
Total
Non-Executive Directors as at 30 June 2020
G El-Zoghbi
E Fagan
A G Froggatt
T Hassan
S P Johns22
B J Long
J Miller
J Mullen23
S Perkins
N Scheinkestel24
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
Former Non-Executive Director
D Gosnell25
FY20
Totals26
FY19
FY20
FY19
Remuneration Governance
Remuneration Committee
162
163
167
159
150
172
156
156
395
419
161
185
155
45
95
-
165
156
12
-
53
156
1,671
1,611
8
8
8
8
13
16
7
7
28
40
15
18
7
2
9
-
7
15
1
-
3
7
106
121
2
2
2
-
-
-
1
2
10
10
-
-
2
-
-
-
-
-
-
-
4
2
21
16
172
173
177
167
163
188
164
165
433
469
176
203
164
47
104
-
172
171
13
-
60
165
1,798
1,748
The Committee operates under delegated authority from Brambles’ Board. The Committee’s responsibilities include:
Recommending overall Remuneration Policy to the Board;
-
- Determining and implementing a process to enable the Committee to satisfy itself that the conduct of members of the ELT is
consistent with Brambles’ Code of Conduct, shared values and risk appetite and reviewing and, if necessary, amending that
process from time to time;
Recommending to the Board the overall remuneration for the CEO;
-
21 The Other column includes tax support services, car parking and Fringe Benefits Tax.
22 S P Johns retired from the Board on 30 June 2020.
23 J Mullen was appointed to the Board on 1 November 2019.
24 N Scheinkestel was appointed to the Board on 1 June 2020.
25 D Gosnell retired from the Board on 10 October 2019.
26 The year-on-year comparison of remuneration is affected by the movement of exchange rates from A$1=US$0.7145, €1=US$1.1404 and £1=US$1.2943 for FY19 and
A$1=US$0.6692, €1=US$1.1064 and £1=US$1.2582 for FY20.
48
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
-
-
Approving the remuneration arrangements for the other Executive KMP; and
Reviewing the Remuneration Policy and individual remuneration arrangements for other senior executives.
During the Year, the Committee adopted the principles-based approach to non-financial risks, described in Table 3.3.1, to assist
it in assessing the behaviours of executives and their remuneration outcomes. The Committee also works closely with the
Audit Committee for assurance on the integrity of the financial performance outcomes underlying remuneration determination.
More broadly, the Committee considers the Group’s overall performance, both financial and non-financial, in its remuneration
determinations.
During the Year, members of the Committee were Mr Froggatt (Committee Chairman from July to October), Mr El-Zoghbi
(Committee Chairman from November to February, when he resigned as Committee Chairman due to taking up his role as
CEO of Arnott’s Biscuits Limited), Mr Perkins (Committee Chairman from March onwards), Mr Johns, Mr Mullen, Ms Hassan and
Mr Miller. 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, Human Resources; Group Vice President, Legal and
Secretariat; and Senior Vice President, Reward, as well as Brambles’ external remuneration advisor, Ernst & Young (EY).
During the Year, the Committee held six meetings.
Details of the Committee’s Charter and the rules of Brambles’ executive and employee share plans can be found under Charters
and Related Documents in the Corporate Governance section of Brambles’ website.
Securities Trading Policy and Incentive Awards
Brambles' Securities Trading Policy applies to share awards granted under the incentive arrangements described in this report. That
policy prohibits designated persons (including all Executive KMP) 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.
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, were provided by EY.
Other Reporting requirements
Share-based Payments – Future Potential
The table below provides annual accounting values for share awards granted during years FY18 to FY20, which have been
amortised over two to three years. These share awards are subject to conditions set out in Section 4. Remuneration will normally
not be received as a result of the underlying share awards vesting until the conditions have been met.
US$'000
Name
Executive Directors
G Chipchase
N O'Sullivan
Other Executive KMP
L Nador
M Pooley
Totals
Year
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
Total before
equity
2,440
2,571
1,393
1,486
802
635
686
693
5,321
5,385
Share-based payment
Percentage of
total remuneration
40%
34%
45%
32%
29%
26%
N/A
29%
Awards
1,625
1,310
1,121
710
329
219
(237)27
284
2,839
2,523
27 M Pooley’s share-based payment amount for FY20 is negative as a result of the forfeiture of his unvested awards upon his departure on 30 June 2020.
Total
4,065
3,881
2,514
2,196
1,131
854
449
977
8,160
7,908
49
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
LTI Share Awards Yet to be Tested
The following table provides details of the level of vesting for the TSR component of LTI share awards granted in FY19 and FY20 if
the current TSR performance was to be maintained until the end of the applicable Performance Period:
Awards
made
during
FY19
FY19
FY20
FY20
Performance condition
Start of
Performance
Period
End of
Performance
Period
Out-performance
of median company’s
TSR (%)2288
Period to 30 June 2020:
vesting if current performance is maintained
until testing date (% of original award)
Relative TSR (ASX 100)
1 July 2018
30 June 2021 N/A
Relative TSR (MSCI)
1 July 2018
30 June 2021 N/A
100% LTI TSR awards
100% LTI TSR awards
Relative TSR (ASX 100)
1 July 2019
30 June 2022 N/A
75.25% LTI TSR awards
Relative TSR (MSCI)
1 July 2019
30 June 2022 N/A
56.0% LTI TSR awards
The following table provides details of the level of vesting for the sales revenue CAGR/ROCI component of LTI share awards
granted in FY19 and FY20 if the current sales revenue CAGR/ROCI performance were to be maintained until the end of the
applicable Performance Period:
Awards
made
during
FY19
FY20
Performance condition
Start of
Performance Period
End of
Performance Period
Period to 30 June 2020: vesting if
current performance is maintained until
testing date (% of original award)
Sales Revenue CAGR/ROCI
1 July 2018
30 June 2021
50.0% LTI Sales Revenue ROCI awards
Sales Revenue CAGR/ROCI
1 July 2019
30 June 2022
50.0% LTI Sales Revenue ROCI awards
Summary of STI and LTI Share Awards
The table below contains details of the STI and LTI awards granted in which former or current Executive KMP have unvested and/or
unexercised awards that could affect remuneration in this or future reporting periods. STI and LTI share awards do not have an
exercise price and carry no dividend or voting rights. The LTI share awards described as LTI TSR awards vest on the third anniversary
of their grant date, subject to continued employment and meeting the relevant TSR performance condition set out in Section 4.3.
The LTI share awards described as LTI ROCI vest on the third anniversary of their grant date, subject to continued employment and
meeting a sales revenue CAGR/ROCI performance condition set out in Section 4.3.1.
Details pertaining to Brambles' employee share plan, MyShare, are in Section 6.
Performance Share Plan awards
Vesting condition
STI awards
LTI TSR awards
100% vesting based on continuous employment
50% vesting if TSR is equal to the median ranked company
100% vesting if at 75th percentile
FY18-FY20 LTI ROCI award
30% vesting occurs if CAGR is 4% and ROCI is 15% over three-year period
100% vesting occurs if CAGR is 6% and ROCI is 18% over three-year period
FY19-FY21 LTI ROCI award
20% vesting occurs if CAGR is 4% and ROCI is 16% over three-year period
100% vesting occurs if CAGR is 6% and ROCI is 19% over three-year period
FY20-FY22 LTI ROCI award
20% vesting occurs if CAGR is 3% and ROCI is 16.5% over three-year period
100% vesting occurs if CAGR is 4% and ROCI is 19.5% over three-year period
The terms and conditions of each grant of STI and LTI share awards affecting remuneration of Executive KMP in this or future
reporting periods are outlined in the table below. Awards 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.
Performance Share
Plan Awards
STI/LTI TSR/
FY18-FY20 LTI ROCI
STI/LTI TSR/
FY19-FY21 LTI ROCI
STI/LTI TSR/
FY20-FY22 LTI ROCI
Grant date
Expiry date
Value at grant
Status/vesting date
23 October 2017
23 October 2023
A$8.77 (STI) / A$8.51 (ROCI) /
STI - 23 October 2019
A$3.44 (TSR-ASX) / A$3.50 (TSR - MSCI)
LTI - 23 October 2020
2 September 2018
2 September 2024 A$10.33 (STI) / A$10.02 (ROCI) /
STI - 2 September 2020
A$6.74 (TSR-ASX) / A$7.32 (TSR-MSCI)
LTI - 2 September 2021
15 October 2019
15 October 2025
A$11.53 (STI) / A$10.54 (ROCI) /
STI – 15 October 2021
A$4.75 (TSR-ASX) / A$5.14 (TSR-MSCI)
LTI – 15 October 2022
28 Performance against both the ASX 100 and MSCI World Industrials indices will be based on the standard TSR ranking approach, with threshold vesting commencing at
the 50th percentile and progressively vesting to full vesting at the 75th percentile.
50
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Basis of Valuation of STI and LTI Share Awards
Unless otherwise specified, the fair values of the STI and LTI share awards included in the tables in this report have been estimated
by EY Transaction Advisory Services in accordance with the requirements of AASB 2: Share-based Payments, using a Monte Carlo
Simulation model and a Binomial model. Assumptions used in the evaluations are outlined in Note 20 on pages 97 and 98 of the
financial statements.
This fair value is not used to calculate the number of STI and LTI share awards granted to executives. The number of share awards
granted is based on the market value of Brambles' shares calculated on a five-day volume weighted average share price prior to the
grant date. This is termed a "face value approach".
Equity-Based Awards
The following table shows details of equity-based awards made to Executive KMP during the Year. STI and LTI share awards were
made under the PSP, the terms and conditions of which are set out in Section 3. MyShare Matching Shares were made under
MyShare, the terms and conditions of which are set out in Section 6. Approval for the STI and LTI share awards and MyShare
Matching Awards issued to Mr Chipchase and Ms O'Sullivan was obtained under ASX Listing Rule 10.14.
Name
Executive Directors
G Chipchase
N O'Sullivan
Other Executive KMP
L Nador
M Pooley
Shareholdings
Type of award
Number
Value at grant US$'0002299
STI
LTI
MyShare Matching Shares
Totals
STI
LTI
MyShare Matching Shares
Totals
STI
LTI
MyShare Matching Shares
Totals
STI
LTI
MyShare Matching Shares
Totals
104,605
250,521
431
355,557
64,150
140,016
432
204,598
13,436
56,372
453
70,261
16,158
59,652
463
76,273
807
1,933
3
2,743
495
1,080
3
1,578
104
435
4
543
125
460
4
589
The following table shows details of Brambles Limited ordinary shares in which the Executive KMP held relevant interests, being
issued shares held by them and their related parties.30,31
Ordinary shares
Executive Directors
G Chipchase
N O'Sullivan
Other Executive KMP
L Nador
M Pooley
Balance at the start of the Year
Changes during the Year
Balance at the end of the Year
32,722
880
14,615
2,092
15,490
21,911
3,390
(2,048)
48,212
22,791
18,005
44
29 The total value of the relevant equity award(s) is valued as at the date of grant using the methodology set out in Section 3.2. 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.
30 On 31 July 2020, the following Executive KMP acquired ordinary shares under MyShare, which are held by Sargon CT Pty Ltd: G Chipchase (38); N O'Sullivan (37);
and L Nador (36).
On 31 July 2020, the following Executive KMP received Matching Awards under MyShare: G Chipchase (38); N O'Sullivan (37); and L Nador (36).
31 G Chipchase: of which 17,200 shares are held by Rathbones Nominees Ltd, 14,000 shares are held by Rathbones Investment Management Ltd and 17,012 shares are
held by Sargon CT Pty Ltd.
N O'Sullivan: of which 9,000 shares are held in her own name and 13,791 shares are held by Sargon CT Pty Ltd.
L Nador: of which 3,773 shares are held in her own name and 14,232 are held by Sargon CT Pty Ltd.
M Pooley: all of his shares are held by Sargon CT Pty Ltd.
51
Directors’ Report – Remuneration Report
Directors’ Report – Remuneration Report – continued
Interests in Share Rights32
The following table shows details of rights over Brambles Limited ordinary shares in which the Executive KMP held relevant
interests: being STI and LTI share awards made on 23 September 2013, 2 November 2015, 2 September 2016, 10 October 2016,
6 March 2017, 23 October 2017, 2 September 2018 and 15 October 2019 under the PSP; and Matching Shares, being conditional
rights awarded during the Year under MyShare.33,34,35
Balance at the
start of the Year
Number
Granted
during
the Year
Number
Exercised
during
the Year
Number
Lapsed
during
the Year
Number
Balance at
the end of
the Year
Number
Vested and exercisable
at the end of the Year
Value at
exercise
Number
US$'000
783,754
459,768
134,274
180,581
355,557
(28,257)
(168,432)
942,622
204,598
(23,603)
(102,852)
537,911
70,261
(7,288)
(11,398)
185,849
76,273
(33,767)
(223,087)
-
-
-
-
-
232
194
57
280
Name
Executive Directors
G Chipchase
N O'Sullivan
Other Executive KMP
L Nador
M Pooley
Employee Share Plan
The terms and conditions of each grant of Matching Shares 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
MyShare 201836
MyShare 201937
MyShare 202038
Each month from
31 March 2018 to
28 February 2019
Each month from
31 March 2019 to
28 February 2020
Each month from
31 March 2020 to
31 July 2020
1 April 2020
Values range per month from
A$8.47 to A$11.18
Matching Shares /
vesting date
31 March 2020
1 April 2021
Values range per month from
A$10.75 to A$12.44
31 March 2021
1 April 2022
Values range per month from
A$10.26 to A$10.93
31 March 2022
32 Of the awards detailed in Section 9.3 and Section 6, the following plans' items are relevant to Executive KMP: G Chipchase, N O'Sullivan, L Nador, M Pooley (STI,
LTI TSR, LTI FY18 to FY20 ROCI, LTI FY19 to FY21 ROCI, LTI FY20 to FY22 ROCI, MyShare 2018, 2019 and 2020) and M Pooley (STI sign-on awards).
Lapses occurred for: G Chipchase, N O'Sullivan, L Nador, M Pooley (LTI FY17 to FY19 TSR) and M Pooley (LTI TSR, LTI FY18 to FY20 ROCI, LTI FY19 to FY21 ROCI,
LTI FY20 to FY22 ROCI, MyShare 2019 and 2020).
Exercises occurred for: G Chipchase, N O'Sullivan, L Nador, M Pooley (STI, MyShare 2018).
33 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.
34 During the Year, 2,694,715 equity-settled performance share rights were granted under the PSP, of which 355,126 were granted to G Chipchase and 204,166 were
granted to N O’Sullivan. 916,680 Matching Shares were granted under MyShare during the Year, of which 431 were granted to G Chipchase and 432 were granted
to N O’Sullivan.
35 "Lapse" in this context means that the awards were forfeited due to either the applicable service or performance conditions not being met.
36 The Matching Shares granted under the MyShare 2018 Plan vested on 31 March 2020, subject to continuing employment and the retention of the associated Acquired
Shares. On vesting they are automatically exercised.
37 The Matching Shares granted under the MyShare 2019 Plan vest on 31 March 2021, subject to continuing employment and the retention of the associated Acquired
Shares. On vesting they are automatically exercised.
38 The final grant under the MyShare 2020 Plan will occur on 26 February 2021. For FY20 reporting purposes, data is only available up to 31 July 2020. The remaining
information will be reported in the 2021 Annual Report. The Matching Shares granted under MyShare will vest on 31 March 2022, subject to continuing employment
and the retention of the associated Acquired Shares. On vesting they are automatically exercised.
52
Directors’ Report – Remuneration Report
Directors’ Report – Additional 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 2020 (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 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 pages 4 to 25.
There were no significant changes in the nature of the Group’s
principal activities during the Year.
Review of Operations and Results
A review of the Group’s operations and of the results of
those operations are given in the Letter from the Chairman &
CEO and the Operating & Financial Review from pages 2 to
25.
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 127.
Significant Changes in State of Affairs
There were no significant changes to the state of affairs of the
Group for the Year.
Matters Since the End of the Financial Year
The Directors are not aware of any matter or circumstance
that has arisen since 30 June 2020 up to the date of this report
that has significantly affected or may significantly affect the
operations of the Group, the results of those operations or the
state of affairs of the Group in future financial years.
Business Strategies and Prospects for Future
Financial Years
The business strategies and prospects for future financial
years, together with likely developments in the operations of
the Group in future financial years and the expected results of
those operations known at the date of this report, are set out
in the Letter from the Chairman & CEO and in the Operating
& Financial Review on pages 2 to 25.
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 and Special Distributions
The Directors have declared a final dividend for the Year of
9.0 US cents per share, to be paid in Australian dollars and will
be 12.54 Australian cents per share, and which will be 30%
franked. The dividend will be paid on 8 October 2020 to
shareholders on the register on 10 September 2020.
On 9 April 2020, an interim dividend for the Year was paid,
which was 9.0 US cents per share and 30% franked.
On 10 October 2019, a final dividend for the year ended
30 June 2019 was paid, which was 14.5 Australian cents per
share and 30% franked.
In addition, on 22 October 2019:
-
-
a special dividend was paid, which was 17 Australian
cents per share and 0% franked; and
a capital return of 12 Australian cents per share was paid.
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 they served as a Director during the Year, is set out
below.
The qualifications, experience and special responsibilities of
Directors are set out on pages 26 to 29.
Graham Andrew Chipchase 1 July 2019 to date
George El-Zoghbi
1 July 2019 to date
Elizabeth Fagan
1 July 2019 to date
Anthony Grant Froggatt
1 July 2019 to date
David Peter Gosnell
1 July 2019 to 10 October 2019
Tahira Hassan
1 July 2019 to date
Stephen Paul Johns
1 July 2019 to 30 June 2020
Brian James Long
1 July 2019 to date
Kenneth Stanley McCall
6 July 2020 to date
James Richard Miller
1 July 2019 to date
John Patrick Mullen
1 November 2019 to date
Nessa O'Sullivan
1 July 2019 to date
Scott Redvers Perkins
1 July 2019 to date
Nora Lia Scheinkestel
1 June 2020 to date
Secretary
Details of the qualifications and the experience of
Robert Nies Gerrard, Group Vice President, Legal & Secretariat
and Company Secretary of Brambles Limited, are set out on
page 31.
Details of the qualifications and experience of Carina Thuaux,
Deputy Company Secretary of Brambles Limited, are as
follows: Carina joined Brambles in January 2014 as
Assistant Company Secretary, and was appointed Deputy
Company Secretary and Legal Counsel in April 2018. Prior to
joining Brambles, she was a solicitor with King & Wood
Mallesons. She holds a Bachelor of Commerce and a Bachelor
of Law from the University of New South Wales. She is a
Solicitor of the Supreme Court of New South Wales.
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
53
Directors’ Report – Additional Information Directors’ Report – Additional Information – continued
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:
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.
-
-
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 Corporations Act 2001 (Cth) (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
the Australian Securities & Investment Commission
(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;
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
-
-
-
-
-
-
54
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.
Employees
The 2020 Sustainability Review, which will be available on
Brambles’ website in September 2020, will contain details of
Brambles’ performance as an employer.
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’ 2020
Sustainability Review, which will be available on the Brambles
website in September 2020. A copy of the complete
Environmental Policy is set out in Brambles’ Code of Conduct,
which is available at 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 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
Financial Review on page 14, sets out the performance of the
Group against its principal performance indicator, the
Brambles Injury Frequency Rate. More detailed reporting on
health and safety performance will be shown in the 2020
Sustainability Review, which will be available on Brambles’
website in September 2020.
Directors’ Report – Additional Information Directors’ Report – Additional Information – continued
Directors’ Meetings
Details of Board Committee memberships are given in the Directors' biographies on pages 26 to 29. The following table
shows the actual Board and Committee meetings held during the Year and the number attended by each Director or
Committee member.
Board meetings
Regular
Special
Committees
Audit Committee
meetings
Remuneration
Committee
meetings
Nominations
Committee
meetings
Nominations
Committee Chair
Sub-Committee
meetings
Directors
G A Chipchase
G El-Zoghbi
E Fagan
A G Froggatt
T Hassan
B J Long
J R Miller
J P Mullen
N O'Sullivan
S R Perkins
(a)
12
12
12
12
12
12
12
7
12
12
N L Scheinkestel 1
Former Directors
D P Gosnell
S P Johns
4
12
(b)
12
12
12
12
12
12
12
8
12
12
1
5
12
(a)
3
-
-
-
-
2
-
-
2
1
-
-
3
(b)
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
3
-
-
-
-
2
-
-
2
1
-
-
3
-
-
6
-
-
6
-
-
-
6
1
2
-
-
-
6
-
-
6
-
-
-
6
1
2
-
-
6
-
6
6
6
-
3
-
2
-
-
6
-
6
-
6
6
6
-
3
-
2
-
-
6
-
6
4
6
-
-
-
4
-
3
-
2
6
-
6
4
6
-
-
-
4
-
4
-
2
6
-
2
1
2
-
-
-
-
-
-
-
1
2
-
2
1
2
-
-
-
-
-
-
-
1
2
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.
55
Directors’ Report – Additional Information
Directors’ Report – Additional 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 2017.
Director
G A Chipchase
G El-Zoghbi
E Fagan
A G Froggatt
T Hassan
B J Long
K S McCall
J R Miller
J P Mullen
N O'Sullivan
S R Perkins
Listed company
AstraZeneca plc
The Kraft Heinz Company
None
None
None
Commonwealth Bank of Australia
OneMarket Limited
Post Office Limited
The RealReal, Inc.
Wayfair, Inc.
Telstra Corporation Limited
Period directorship held
2012 to current
2018 to current
-
-
-
2010 to December 2018
2018 to December 2019
2016 to current
2019 to current
2016 to May 2020
2008 to current
Brookfield Infrastructure Partners L.P.
2017 to February 2020
Molson Coors Beverage Company
May 2020 to current
Woolworths Limited
Origin Energy Limited
2014 to current
2015 to current
2014 to current
2015 to current
2016 to current
2010 to current
N L Scheinkestel
Atlas Arteria:
- Atlas Arteria Limited1
- Atlas Arteria International Limited1
AusNet Services Ltd
Telstra Corporation Limited
1 Stapled entities.
56
Directors’ Report – Additional Information
Directors’ Report – Additional 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.
The Australian Securities Exchange Corporate Governance
Council Corporate Governance Principles and
Recommendations (CGPR), Fourth Edition (Fourth Edition)
took effect, for Brambles, from 1 July 2020. During the Year,
Brambles carried out a structured process of reviewing, and
where necessary amending, its corporate governance policies
and practices having regard to the changes affected by the
Fourth Edition, although in many cases the Fourth Edition
changes were already a part of Brambles' existing corporate
governance framework. The amendments adopted by the
Board took effect at various stages during the Year or on
1 July 2020.
During the Year, the Board believes Brambles met or exceeded
all the requirements of the Third Edition of the CGPR, those
parts of the Fourth Edition of the CGPR which were part of its
existing corporate governance framework, and those parts of
the Fourth Edition of the CGPR which Brambles adopted prior
to 30 June 2020. Brambles' 2020 Corporate Governance
Statement is on Brambles' website at
brambles.com/corporate-governance-overview
Interests in Securities
Pages 47 and 51 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.
outstanding over Brambles Limited ordinary shares at the
Year-end are given in Notes 19 and 20 of the Financial Report
on pages 96 to 98.
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:
-
-
-
88,571 grants under the 2020 MyShare plan offer;
11,247 exercises resulting in the issue of fully paid
ordinary shares: 2,098 under the 2019 MyShare plan;
802 under the 2020 MyShare plan; 8,347 under the
PSP STI awards; and
247,557 lapses: 6,093 under the 2019 MyShare plan;
7,173 under the 2020 MyShare plan; 50,283 under
PSP STI awards; 92,006 under the PSP LTI ROCI award;
46,001 under the PSP LTI MSCI award; 46,001 under the
PSP LTI ASX award.
Share Buy-Backs
On 25 February 2019, Brambles announced that it would be
selling its IFCO RPC business for US$2.5 billion (A$2.4 billion)
to conduct an on-market buy-back of its ordinary shares. The
sale of IFCO RPC completed on 31 May 2019 and Brambles
commenced the on-market buy-back on 4 June 2019.
Between that date and 10 October 2019, 29,542,722 ordinary
shares were bought-back and cancelled for a total
consideration of A$341,996,920.26.
At the 2019 Annual General Meeting, shareholders approved
the on-market buy-back of up to 240,000,000 fully paid
ordinary shares, being 15% of the Company's issued shares as
at 16 August 2019, in the 12-month period following that
resolution. Between that date and 22 June 2020, 62,155,156
ordinary shares were bought back and cancelled for a total
consideration of A$707,730,919.54.
The on-market buy-back was paused on 22 June 2020 as
Brambles entered into a blackout period, and it will
recommence on 21 August 2020.
Risk Management
A discussion of Brambles’ risk profile and management and
mitigation of risks can be found on pages 16 to 20 in the
Operating & Financial Review and in Principle 7 of Brambles'
2020 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 13 in the
Operating & Financial Review.
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
Non-Audit Services and Auditor Independence
The amount of US$21,000 was paid or is payable to PwC, the
Group’s auditors, for non-audit services provided during the
57
Directors’ Report – Additional Information Directors’ Report – Additional Information – continued
Year by them (or another person or firm on their behalf).
These services primarily related to compliance projects and
tax consulting advice.
The Audit Committee has reviewed the provision of non-audit
services by PwC 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 PwC and its related practices did not compromise the
auditor independence requirements of the Act for the
following reasons: the nature of the non-audit services
provided during the Year; the quantum of non-audit fees
compared to overall audit fees; and the pre-approval,
monitoring and ongoing review requirements under the Audit
Committee Charter and the Charter of Audit Independence in
relation to non-audit work.
The auditors have also provided the Audit Committee with a
letter confirming that, in their professional judgement, as at
7 August 2020 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
with the applicable provisions of the Act. On the same basis,
they also confirmed that the objectivity of the audit
engagement partners and the audit staff is not impaired.
Auditor's Independence Declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Act is set out on page 126.
Annual General Meeting
Due to ongoing public health concerns relating to the Covid-
19 pandemic and having regard to the safety and wellbeing of
its shareholders, the Board has determined that Brambles'
2020 Annual General Meeting (AGM) will be a virtual meeting.
The AGM will be held at 4.00pm (AEDT) on 8 October 2020.
Full details of how to participate in the virtual AGM will be
in a separate communication to shareholders and in the
Notice of Meeting, which will be posted on brambles.com on
1 September 2020.
This Directors’ Report is made in accordance with a resolution
of the Board.
John Mullen
Graham Chipchase
Chairman
Chief Executive Officer
19 August 2020
58
Directors’ Report – Additional 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; and
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.
Dividend
Shareholders may elect to receive dividend payments in
Australian dollars or pounds sterling by contacting Boardroom
at the address set out in Contact Information on the inside
back cover of this Annual Report.
Annual General Meeting
The Brambles Limited 2020 AGM will be virtual meeting held
at 4.00pm (AEDT) on 8 October 2020. Full details of how to
participate in the virtual AGM will be
in a separate communication to shareholders and in the
Notice of Meeting, which will be posted on brambles.com on
1 September 2020.
Financial Calendar
Final Dividend 2020
Ex-dividend date – Wednesday, 9 September 2020
Record date – Thursday, 10 September 2020
Payment date – Thursday, 8 October 2020
2021 (Provisional)
Announcement of interim results – mid-February 2021
Interim dividend – mid-April 2021
Announcement of final results – mid-August 2021
Final dividend – mid-October 2021
AGM – October 2021
Company Secretaries
R N Gerrard
C Thuaux
Analysis of Holders of Equity Securities as at 31 July 2020
Substantial Shareholders
Brambles has been notified of the following substantial shareholdings:
Holder
Blackrock Group
The Vanguard Group, Inc.
Number of ordinary shares
108,920,943
103,785,640
% of issued ordinary share
capital1
7.15
6.51
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
The number of members holding less than a marketable parcel of 38 ordinary shares (based on a market price of A$10.78 on
31 July 2020) is 1,864 and they hold a total of 26,850 ordinary shares. The voting rights of ordinary shares are described on page
60.
Holders
33,491
29,358
4,742
2,754
Shares
15,244,127
67,436,492
33,318,566
56,878,389
103 1,332,164,942
1,505,042,516
70,448
1 Percentages are as disclosed in substantial holding notices given to Brambles Limited.
59
Shareholder Information
Shareholder Information – continued
Number of Share Rights on Issue and Distribution of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holders
3,292
49
485
79
12
3,480
Share rights
1,088 974
137,089
332,603
2,362,621
3,031,426
6,952,713
The voting rights of performance share rights and MyShare Matching Awards are described below.
Twenty Largest Ordinary Shareholders
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
SARGON CT PTY LTD
CUSTODIAL SERVICES LIMITED
HSBC CUSTODY NOMINEES
NETWEALTH INVESTMENTS LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
AMP LIFE LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
Number of
ordinary shares
652,647,454
288,296,278
119,516,267
86,842,131
40,271,694
28,601,992
24,150,143
12,138,658
9,644,595
6,001,109
4,124,030
3,091,672
2,782,224
2,669,418
2,640,273
2,575,477
2,524,502
2,359,212
2,349,341
2,052,660
% of
issued ordinary
share capital
43.36
19.16
7.94
5.77
2.68
1.90
1.61
0.81
0.64
0.40
0.27
0.21
0.19
0.18
0.18
0.17
0.17
0.16
0.16
0.14
Total holdings of 20 largest holders
1,295,279,130
86.06
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 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 on a resolution will be excluded on a vote on that resolution by a show of hands or on a poll. 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.
60
Shareholder Information
Consolidated Financial Report
for the year ended 30 June 2020
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 – Continuing Operations
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 Discontinued Operations
10 Trade and Other Receivables
11 Inventories
12 Other Assets
13 Property, Plant and Equipment
14 Goodwill and Intangible Assets
15 Trade and Other Payables
16 Provisions
17 Borrowings
18 Retirement Benefit Obligations
19 Contributed Equity
20 Share-Based Payments
21 Reserves and Retained Earnings
22 Financial Risk Management
23 Cash Flow Statement – Additional Information
24 Commitments
25 Contingencies
26 Auditor’s Remuneration
27 Key Management Personnel
28 Related Party Information
29 Events After Balance Sheet Date
30 Net Assets Per Share
31 Parent Entity Financial Information
Directors' Declaration
Independent Auditor's Report
Auditor's Independence Declaration
62
63
64
65
66
71
75
76
77
78
82
84
85
86
87
87
88
90
93
93
94
94
96
97
99
101
109
111
112
113
114
114
115
116
116
118
119
126
61
Consolidated Financial Report
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2020
Continuing operations
Sales revenue
Other income
Operating expenses
Operating profit
Finance revenue
Finance costs
Net finance costs
Profit before tax
Tax expense
Profit from continuing operations
(Loss)/profit 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
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 subsidiaries2
Exchange differences released to profit on divestment of IFCO
Other comprehensive expense for the year
Total comprehensive income for the year attributable to members of the
parent entity
Earnings per share (EPS) - US cents
Continuing operations
- basic
- diluted
Total
- basic
- diluted
Note
2
3
5
6A
9
6A
21
21
7
2020
US$m
4,733.6
132.1
(4,098.7)
767.0
25.0
(105.8)
(80.8)
686.2
(209.0)
477.2
(29.2)
448.0
(6.0)
1.9
(4.1)
(143.9)
-
(143.9)
(148.0)
20191
US$m
4,595.3
128.7
(3,983.1)
740.9
23.9
(112.4)
(88.5)
652.4
(198.3)
454.1
1,013.6
1,467.7
(10.8)
2.7
(8.1)
(85.0)
32.2
(52.8)
(60.9)
300.0
1,406.8
30.8
30.7
28.9
28.8
28.5
28.4
92.1
91.8
1
2
The comparative period does not include the impact of AASB 16 Leases and IFCO is presented in discontinued operations.
Exchange differences on translation of foreign subsidiaries have been significantly impacted by the devaluation of the
Australian dollar, Latin American currencies and the South African rand net assets translated into US dollars. The June 2020 spot
rate relative to the US dollar weakened 2% for the Australian dollar, 21% for the Latin American currencies and 22% for the
South African rand.
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
62
Consolidated Financial Report Consolidated Balance Sheet
as at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Other receivables
Property, plant and equipment
Right-of-use leased assets2
Goodwill and intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities2
Borrowings
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities2
Borrowings
Provisions
Retirement benefit obligations
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Note
23
2
10
11
12
10
13
1G
14
6C
12
15
23C
17
16
23C
17
16
18
6C
15
19
21
21
1
The comparative period does not include the impact of AASB 16 Leases.
2 Refer to Note 1G for the AASB 16 impact.
The consolidated balance sheet should be read in conjunction with the accompanying notes.
2020
US$m
737.3
68.6
717.2
67.5
95.6
20191
US$m
1,691.3
411.2
768.9
59.8
61.5
1,686.2
2,992.7
23.3
4,409.3
598.8
259.6
96.3
9.7
5,397.0
7,083.2
1,226.5
112.8
36.3
45.8
84.9
52.8
4,313.2
-
286.2
73.6
11.8
4,737.6
7,730.3
1,208.5
-
556.8
31.7
75.5
1,506.3
1,872.5
591.4
1,777.2
76.1
37.7
338.1
-
2,820.5
4,326.8
2,756.4
5,427.2
(7,464.3)
4,793.5
2,756.4
-
1,643.4
14.8
37.3
353.1
1.0
2,049.6
3,922.1
3,808.2
6,187.4
(7,322.5)
4,943.3
3,808.2
63
Consolidated Financial Report
Consolidated Cash Flow Statement
for the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees2
Cash generated from operations
Interest received
Interest paid2,3
Income taxes paid on operating activities
Note
2020
US$m
5,446.8
(3,786.2)
1,660.6
17.2
(112.7)
(178.2)
Net cash inflow from operating activities
23B
1,386.9
20191
US$m
6,332.2
(4,675.9)
1,656.3
5.3
(92.7)
(230.5)
1,338.4
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment4
Payments for intangible assets
(Payments)/net proceeds from disposal of businesses5
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from/(transfer to) term deposits
Payment of principal component of lease liabilities2
Net inflow/(outflow) from derivative financial instruments
Proceeds from issues of ordinary shares
Payments for share buy-back
Repayment of capital to shareholders
Dividends paid - ordinary6
Dividends paid - special
2
19
19
8
8
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, net of overdrafts, at beginning of the year
Effect of exchange rate changes
Cash and cash equivalents, net of overdrafts, at end of the year
23A
(1,002.8)
(1,208.4)
104.4
(26.3)
(16.0)
(940.7)
554.9
(903.9)
342.6
(114.1)
26.5
-
(645.4)
(129.3)
(290.7)
(183.2)
(1,342.6)
(896.4)
1,690.4
(56.7)
737.3
130.0
(21.6)
2,366.2
1,266.2
1,060.9
(1,316.4)
(411.2)
-
(34.8)
0.2
(54.1)
-
(328.1)
-
(1,083.5)
1,521.1
171.3
(2.0)
1,690.4
1
2
3
4
5
6
The comparative period includes cash flows from IFCO up to its divestment in 2019 (refer Note 9).
Under AASB 16, lease payments of US$(140.6) million in 2020 have been reclassed from Payments to suppliers and employees, to
Interest paid (within operating activities) and Payment of principal component of lease liabilities (within financing activities)
(refer Note 1G). The comparative period does not include the impact of AASB 16.
Interest paid includes early debt repayment costs of US$(11.6) million for the US$500.0 million 144A bond, which was repaid on
5 July 2019 using the IFCO sale proceeds (refer Note 4).
Includes compensation for lost pooling equipment of US$103.2 million in 2020 (2019: US$102.0 million, excluding US$25.0 million
for IFCO).
Net proceeds from disposal of businesses in 2019 includes US$2,480.4 million from the sale of IFCO, with cash received on
31 May 2019.
IFCO earnings up to its divestment date were included in the determination of the 2019 final ordinary dividend paid out in 2020.
The consolidated cash flow statement should be read in conjunction with the accompanying notes.
64
Consolidated Financial Report
Consolidated Statement of Changes in Equity
for the year ended 30 June 2020
Year ended 30 June 2019
Opening balance at 1 July 2018
Profit for the year
Other comprehensive expense
FCTR released to profit on divestment of IFCO
Total comprehensive (expense)/income
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
- transfer to retained earnings on divestment of IFCO
- other
Transactions with owners in their capacity as owners:
- dividends declared
- issue of ordinary shares, net of transaction costs
- share buy-back
Contributed
Retained
equity
Reserves
earnings
Note
US$m
US$m
US$m
Total
US$m
6,218.5
(7,253.7)
3,813.6
2,778.4
-
-
-
-
-
-
-
-
-
-
23.0
(54.1)
20
8
19
19
-
1,467.7
1,467.7
(85.0)
32.2
(52.8)
17.1
(23.0)
1.6
(0.1)
(11.6)
-
-
-
(8.1)
-
(93.1)
32.2
1,459.6
1,406.8
-
-
-
0.1
-
17.1
(23.0)
1.6
-
(11.6)
(330.0)
(330.0)
-
-
23.0
(54.1)
Closing balance as at 30 June 2019
6,187.4
(7,322.5)
4,943.3
3,808.2
Year ended 30 June 2020
Closing balance as at 30 June 2019 as previously reported
6,187.4
(7,322.5)
4,943.3
3,808.2
Opening balance adjustment on adoption of AASB 16
1G
-
-
(121.8)
(121.8)
Revised opening balance as at 1 July 2019
6,187.4
(7,322.5)
4,821.5
3,686.4
Profit for the year
Other comprehensive expense
Total comprehensive (expense)/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
- share buy-back
- shareholder capital return
-
-
-
-
-
-
-
14.5
(645.4)
(129.3)
20
8
19
19
19
-
448.0
448.0
(143.9)
(143.9)
(4.1)
(148.0)
443.9
300.0
18.4
(14.5)
(1.8)
-
-
-
-
-
-
-
18.4
(14.5)
(1.8)
(471.9)
(471.9)
-
-
-
14.5
(645.4)
(129.3)
Closing balance as at 30 June 2020
5,427.2
(7,464.3)
4,793.5
2,756.4
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
65
Consolidated Financial Report Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2020
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 2020. These financial statements have been authorised for
issue in accordance with a resolution of the Directors on 19 August 2020.
References to 2020 and 2019 are to the financial years ended 30 June 2020 and 30 June 2019, respectively. 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 except for leases which have been impacted by the application of
the new accounting standard AASB 16 Leases (refer Note 1G).
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.
On 25 February 2019, Brambles entered into an agreement to sell its IFCO reusable plastic containers (RPC) business, with
completion of the sale occurring on 31 May 2019. Consequently, the 2019 results of IFCO have been presented in discontinued
operations. The comparative period in the consolidated cash flow statement contains cash flows from IFCO up to divestment
date. Comparative information has been reclassified, where appropriate, to enhance comparability.
The Covid-19 outbreak occurred in the second half of 2020 and continues beyond year end with ongoing outbreaks around
the globe. Where there is a known impact in the year, the impact has been reflected in the 2020 financial statements and are
disclosed in Significant Items (Note 4), Property, Plant and Equipment (Note 13) and Goodwill and Intangible Assets (Note 14).
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. Changes for new accounting
standards (refer Note 1G) are incorporated in the financial statements of subsidiaries.
The results of subsidiaries acquired or disposed during the year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
The trading results for business operations disposed during the year are disclosed separately as discontinued operations in the
consolidated statement of comprehensive income. The amount disclosed includes 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 where they are attributable to part of the net investment in foreign subsidiaries.
The results and cash flows of Brambles Limited and its subsidiaries 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 and its
subsidiaries 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.
66
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 1. About This Report – continued
D) Foreign Currency –– continued
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
2020
0.6692
1.1064
1.2582
2019
0.7145
1.1404
1.2943
Year end
30 June 2020
0.6860
1.1242
1.2305
30 June 2019
0.7005
1.1372
1.2673
E) 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 asset has passed to the buyer. Amounts arising from compensation for irrecoverable pooling
equipment are recognised only when it is highly probable that they will be received.
F) 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, including the impact of Covid-19, are found in the following notes:
-
-
-
-
Income Tax (Note 6F)
Property, Plant and Equipment (Note 13E)
Irrecoverable Pooling Equipment Provision (IPEP) (Note 13D)
Goodwill and Intangible Assets (Note 14D)
G) Changes to Accounting Standards
IFRIC 23 Uncertainty over Income Tax Treatments, issued by the IFRS Interpretations Committee on 7 June 2017, clarifies
how the recognition and measurement requirements of IAS 12 Income Taxes are applied where there is uncertainty over
income tax treatments. Brambles has adopted the principles of IFRIC 23 effective from 1 July 2019, with no material impact
noted.
AASB 16 Leases was adopted by Brambles from 1 July 2019. AASB 16 requires a lessee to recognise all qualifying leases on
the balance sheet in the form of a lease liability and right-of-use leased asset, adjusted for deferred tax. The new standard
mainly impacts property and equipment leases located at offices and service centres where Brambles is the lessee. The
straight-lined operating lease expense recognised under AASB 117 Leases has been replaced by depreciation of the right-of-
use leased asset and finance costs on the lease liability. Further details of the impact of AASB 16 are set out on pages 68 to 70.
The Group adopted the following approach and practical expedients:
-
-
-
-
-
-
-
the modified retrospective approach was used on transition to AASB 16;
in accordance with AASB 16 the comparative period was not restated and continues to reflect accounting policies under
AASB 117;
on transition, land and buildings right-of-use leased assets were valued as if AASB 16 had always been applied, but using
the incremental borrowing rate as at the date of application; for all other assets the right-of-use leased asset equals the
lease liability, adjusted for any prepaid or accrued lease payments recognised immediately before the date of initial
application;
the opening right-of-use leased assets excluded initial direct costs and were reduced by any existing onerous lease
provisions;
the use of hindsight was applied when reviewing lease terms;
optional exemptions for short-term and low-value assets were applied; and
a country-specific discount rate was applied to a portfolio of leases with reasonably similar characteristics.
New software was implemented to calculate the AASB 16 adjustments. The opening adjustments at 1 July 2019 are disclosed
in Note 1G(i).
During 2019, Brambles entered into amendments with lenders of its major borrowing facilities to continue to apply AASB 117
for the calculation of the financial covenants post 30 June 2019. Brambles has amended its treasury policy to align with the
new financial reporting requirements under AASB 16.
67
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 1. About This Report – continued
G) Changes to Accounting Standards – continued
(i) Adjustments Recognised on Adoption of AASB 16
On adoption of AASB 16, Brambles recognised lease liabilities in relation to leases which had previously been classified as
operating leases under AASB 117. These liabilities were measured at the present value of the remaining lease payments,
discounted using the incremental borrowing rate at 1 July 2019. The weighted average incremental borrowing rate, calculated
by geographic region, applied to the lease liabilities on 1 July 2019 was 4.3%.
Reconciliation of operating lease commitment as at 30 June 2019 to opening lease liability as at 1 July 2019
Operating lease commitment disclosed as at 30 June 2019
Impact of discounting
Exempt leases and other1
Embedded lease liability2
Uncommitted extension options3
Leases committed to at 30 June 2019, not yet commenced
Non-lease components included in operating lease commitment but excluded from lease liability
Lease liability recognised at 1 July 2019
US$m
626.0
(136.8)
(10.7)
26.8
271.4
(16.5)
(18.6)
741.6
1
2
3
Exempt leases consist of short-term leases (12 months or less) and leases of low-value assets which are recognised on a
straight-line basis as an expense in the consolidated statement of comprehensive income. Low-value assets primarily
comprise IT and small items of office furniture and operating equipment.
AASB 16 requires service agreements that contain a right to use specified assets to be treated as embedded leases where
Brambles controls the asset. The Group has numerous service centres which are outsourced to third parties and Brambles
has a contractual right to use specific sites and assets as part of the overall service agreement. The estimated charge for
the use of the assets is recognised as a lease liability.
Extension options are included in a number of leases across the Group.
Balance sheet impact on application as at 1 July 2019
Right-of-use leased assets
Deferred tax assets4
Total assets impact
Provisions5
Lease liabilities
Deferred tax liabilities4
Total liabilities impact
Net liabilities impact
Retained earnings
Total equity impact
As reported
AASB 16
Adjusted
30 June 2019
Adjustments
1 July 2019
US$m
-
73.6
90.3
-
353.1
4,943.3
US$m
632.0
210.5
842.5
56.3
741.6
166.4
964.3
(121.8)
(121.8)
(121.8)
US$m
632.0
284.1
146.6
741.6
519.5
4,821.5
AASB 16 adjustments are subject to tax-effect accounting. The gross adjustment is disclosed.
Relates to adjustments made to dilapidation provisions, with a corresponding adjustment to right-of-use leased assets,
offset by the release of lease straight-line provisions previously recognised under AASB 117.
4
5
68
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 1. About This Report – continued
G) Changes to Accounting Standards – continued
(ii) Net Carrying Amount and Movements during the Year
Opening balance - recognised on 1 July 2019
Additions
Remeasurement of existing leases
Depreciation
Foreign exchange differences
Closing net carrying amount
At 30 June
Cost
Accumulated depreciation
Net carrying amount
Land and
buildings
594.5
51.8
27.7
(101.2)
(11.7)
561.1
662.3
(101.2)
561.1
2020
US$m
Plant and
equipment
37.5
18.8
(0.7)
(15.2)
(2.7)
37.7
52.9
(15.2)
37.7
(iii) Leases Exempt from AASB 16 in Accordance with the Standard
Short-term lease expense
Low-value assets lease expense
Exempt lease expense
The profile of short-term lease commitments is consistent with 2020.
(iv) Impact of AASB 16 on Key Financial Measures
Total
632.0
70.6
27.0
(116.4)
(14.4)
598.8
715.2
(116.4)
598.8
2020
US$m
7.2
0.4
7.6
The adoption of AASB 16 resulted in a change to the amount and presentation of lease expense. In accordance with AASB 117,
operating lease expense was presented within operating expenses in 2019. Under AASB 16, the lease expense is split between
depreciation of the right-of-use leased assets and finance costs on lease liabilities. This has resulted in a decrease in the
operating lease expense, and an increase in depreciation and finance costs in 2020.
The change in accounting policy affected the following key financial measures:
Underlying Profit
Depreciation
EBITDA6
Interest expense7
Cash Flow from Operations
Free Cash Flow
Average Capital Invested (ACI)
Return on Capital Invested (ROCI)
Net Debt
Total EPS - basic (US cents)
2020
US$m
Pre AASB 16
AASB 16 impact
Post AASB 16
770.8
(477.5)
1,422.3
(78.0)
603.3
348.1
4,233.1
18.2%
(1,007.6)
29.1
24.2
(116.4)
140.6
(27.8)
140.6
114.1
540.5
(1.5%)
(704.2)
(0.2)
795.0
(593.9)
1,562.9
(105.8)
743.9
462.2
4,773.6
16.7%
(1,711.8)
28.9
6
7
EBITDA is defined as earnings before interest, tax, depreciation, depreciation-like items (irrecoverable pooling equipment
provision expense) and amortisation.
Interest expense is inclusive of lease interest of US$26.5 million and interest on dilapidation provisions of US$1.3 million.
69
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 1. About This Report – continued
G) Changes to Accounting Standards – continued
(v) Measurement of the Right-of-use Leased Asset and Lease Liability
The Group primarily leases offices, service centres, equipment and vehicles. Rental contracts are typically made for fixed
periods, but may have extension or termination options. The average contract term for 2020 is 5 years. Lease terms are
negotiated on an individual basis and contain a range of different terms and conditions.
From 1 July 2019, leases are recognised as a right-of-use leased asset and a corresponding lease liability at the date at which
the leased asset is available for use by the Group. Principal and interest payments are reflected in the consolidated cash flow
statement as financing and operating activities respectively.
Assets and liabilities arising from a lease are initially measured at present value. Lease liabilities include the present value of:
- fixed lease payments less any incentives receivable;
- variable payments based on a rate or index; and
-
amounts expected to be payable relating to residual value guarantees, early termination penalties, and purchase options if
reasonably certain of taking place.
Lease payments are discounted using the incremental borrowing rate calculated by geographic region. The incremental
borrowing rate is the rate the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions.
The Group is required to remeasure the lease liability and make an adjustment to the right-of-use leased asset if the lease
terms and conditions are modified, in which case the lease liability is remeasured by discounting the revised lease payments.
The remeasurement of the lease liability is also applied against the right-of-use leased asset.
Right-of-use leased assets are measured at cost comprising the following:
- the amount of the initial measurement of the lease liability;
- any lease payments made at or before the commencement date, less any lease incentives received;
- any initial direct costs; and
- dilapidation costs.
The right-of-use leased asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line
basis.
70
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 2. Segment Information – Continuing Operations
Brambles' segment information is provided on the same basis as internal management reporting to the CEO.
Brambles has four reportable segments:
- CHEP North America and Latin America (CHEP Americas);
- CHEP Europe, Middle East, Africa and India (CHEP EMEA) - including the Kegstar global business;
-
-
CHEP Australia, New Zealand and Asia, excluding India (CHEP Asia-Pacific); and
Corporate – corporate centre including BXB Digital (Corporate).
Segment performance is measured on sales revenue, Underlying Profit, Cash Flow from Operations 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 72.
The comparative period does not include the impact of AASB 16. Refer to Note 1G(iv) for the impact of AASB 16 on key
financial measures.
Segment sales revenue is measured on the same basis as the consolidated statement of comprehensive income. Brambles has
one revenue stream, which is the provision of pooling equipment to customers for a period of time. Several fees are charged to
customers including issue, transfer, transport and daily hire. The predominant billing structure for these fees is either a bundled
upfront fee upon issue of pooling equipment to customers, or a daily hire fee based on the number of days the pooling
equipment is used in the field by a customer. Other fees, such as transport and transfer fees, are billed when the activity occurs.
The services provided by Brambles are deemed a single performance obligation relating to the provision of an end-to-end
pooling solution and the performance obligation is satisfied over time. The issue and daily hire activities are not considered
distinct services. Revenue from issue activities is deferred and recognised over the estimated period that the pooling
equipment is utilised by customers, referred to as the cycle time, which is an output method. Revenue based on the daily hire
model is also recognised over time. Consideration that is fixed or highly probable is included in the transaction price allocated
to the performance obligation. This includes issue fees, daily hire fees and bundled upfront fees. Consideration that is variable
or uncertain is recognised when the activity occurs.
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 consolidated balance sheet. Assets and
liabilities are allocated to segments based on segment use and physical location. Cash, term deposits, borrowings and tax
balances are managed centrally and are not allocated to segments.
71
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 2. Segment Information – Continuing Operations – continued
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate
Sales
revenue
2020
US$m
2019
US$m
2,469.0
1,827.8
436.8
-
2,287.8
1,849.1
458.4
-
Continuing operations
4,733.6
4,595.3
By geographic origin
Americas
Europe
Australia
Other
Total
2,469.0
1,595.8
324.7
344.1
2,287.8
1,599.7
350.8
357.0
4,733.6
4,595.3
Cash Flow from
Operations1
2020
US$m
258.3
414.1
132.8
(61.3)
743.9
20192
US$m
170.4
228.0
101.1
(67.7)
431.8
1
2
Cash Flow from Operations is cash flow generated after net capital expenditure but excluding Significant Items that are
outside the ordinary course of business.
The comparative period was prior to the adoption of AASB 16.
Operating
profit3
Significant Items
before tax4
Underlying
Profit4
2020
US$m
342.5
379.1
118.0
(72.6)
767.0
20192
US$m
261.3
431.1
118.3
(69.8)
740.9
2020
US$m
-
(28.0)
-
-
(28.0)
2019
US$m
(37.1)
(10.7)
-
(15.0)
(62.8)
2020
US$m
342.5
407.1
118.0
(72.6)
795.0
20192
US$m
298.4
441.8
118.3
(54.8)
803.7
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate5
Continuing operations
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 Notes 3 and 4). It is presented to assist users of the financial statements to better understand
Brambles' business results.
Underlying Profit for the Corporate segment includes US$16.4 million of BXB Digital costs (2019: US$14.8 million) and
US$12.4 million of Shaping Our Future costs (2019: nil), representing US$6.0 million for investment in sales tools and new
infrastructure; US$2.0 million for incremental investment in digital agenda; and US$4.4 million relating to investment in
customer experience as well as overhead and supply chain efficiency projects.
3
4
5
72
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 2. Segment Information – Continuing Operations – continued
Return on
Capital Invested6
2020
20192
US$m
Average Capital
Invested7
2020
US$m
20192
US$m
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate8
US$m
14.5%
21.4%
24.1%
15.4%
24.9%
27.9%
2,369.6
1,904.0
490.6
9.4
1,942.6
1,776.4
424.5
(12.9)
Continuing operations
16.7%
19.5%
4,773.6
4,130.6
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.
Excluding the impact of AASB 16, ROCI for 2020 is 18.2% (refer Note 1G(iv)).
Average Capital Invested (ACI) is a 12-month average of capital invested. Capital invested is calculated as net assets before
tax balances, cash, term deposits, lease liabilities and borrowings but after adjustment for pension plan actuarial gains and
losses and net equity-settled share-based payments.
ACI for the Corporate segment includes US$47.4 million deferred consideration receivable from First Reserve
(2019: US$44.5 million). An impairment charge of US$33.0 million on the receivable has been recognised in discontinued
operations in 2020, reflecting the current market conditions in the oil and gas industry (refer Note 9). ACI in 2020 includes
the impact of AASB 16 (refer Note 1G(iv)).
Capital
expenditure9
Depreciation
and amortisation
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate
2020
US$m
544.9
358.9
77.4
-
2019
US$m
551.1
443.5
65.1
0.7
202010
US$m
324.2
222.7
61.0
4.3
Continuing operations
981.2
1,060.4
612.2
20192
US$m
257.2
176.0
48.7
2.4
484.3
9
10
Capital expenditure on property, plant and equipment is on an accruals basis.
Due to the impact of AASB 16, depreciation expense relating to right-of-use leased assets increased by US$116.4 million
(refer Note 1G(iv)).
73
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 2. Segment Information – Continuing Operations – continued
By operating segment
CHEP Americas
CHEP EMEA
CHEP Asia-Pacific
Corporate
Continuing operations
Discontinued operations
Segment assets
Segment liabilities
2020
US$m
20192
US$m
2020
US$m
3,205.8
2,690.6
1,289.1
2,310.0
2,257.4
590.1
66.0
513.2
84.3
589.1
204.6
46.6
20192
US$m
737.1
466.1
79.3
37.7
6,171.9
5,545.5
2,129.4
1,320.2
-
-
-
16.9
1,337.1
2,200.2
-
31.7
353.1
Total segment assets and liabilities
6,171.9
5,545.5
2,129.4
Cash and borrowings
Term deposits11
Current tax balances
Deferred tax balances
737.3
1,691.3
1,813.5
68.6
9.1
96.3
411.2
8.7
73.6
-
45.8
338.1
Total assets and liabilities
7,083.2
7,730.3
4,326.8
3,922.1
Non-current assets by geographic origin12
Americas
Europe
Australia
Other
Total
2,798.6
1,716.1
361.3
415.0
2,322.3
1,614.4
309.6
405.9
5,291.0
4,652.2
Term deposits relate to cash deposits held with financial institutions comprising the proceeds from the divestment of IFCO.
US$342.6 million was drawn down in 2020. The cash deposits cannot be used for short-term liquidity purposes, have terms
less than 12 months and are measured at amortised cost.
Non-current assets exclude financial instruments of US$9.7 million (2019: US$11.8 million) and deferred tax assets of
US$96.3 million (2019: US$73.6 million).
11
12
74
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 3. Operating Expenses – Continuing Operations
Employment costs
Service suppliers:
- transport
- repairs and maintenance1
- subcontractors and other service suppliers1
Raw materials and consumables2
Occupancy1
Depreciation of property, plant and equipment1
Impairment charge - Kegstar3
Irrecoverable pooling equipment provision expense4
Amortisation of intangible assets
Net foreign exchange gains
Early debt repayment costs5
Other6
Note
2020
US$m
735.8
2019
US$m
683.3
1,138.7
1,118.1
786.4
284.8
206.9
40.0
593.9
28.0
155.7
18.3
(1.5)
-
757.2
309.0
213.1
137.1
467.8
-
127.1
16.5
(1.1)
11.6
111.7
143.4
4,098.7
3,983.1
4
4
1
2
3
4
5
6
Due to the impact of AASB 16 Leases (refer Note 1G) repairs and maintenance expense reduced by US$(4.7) million,
subcontractors expense reduced by US$(30.1) million, occupancy expense reduced by US$(105.8) million and depreciation
expense relating to right-of-use leased assets increased by US$116.4 million. The comparative period does not include the
impact of AASB 16.
Used primarily for the repair of pooling equipment.
Impairment charge of US$28.0 million recognised in the Kegstar keg-pooling business in relation to goodwill
US$23.0 million, plant and equipment US$3.0 million and intangible assets US$2.0 million, reflecting the impact of Covid-19
and uncertainties over on-premise consumption and performance of the craft beer segment (refer Note 4).
Loss rates reduced year-on-year whilst the overall IPEP expense increased, reflecting the higher unit cost of pallets being
expensed. Asset efficiency improvements were delivered in 2020, resulting in lower capital expenditure and improved cash
flows.
Early debt repayment costs of US$11.6 million in 2019 relate to the US$500.0 million 144A bond, which was repaid on
5 July 2019 using the IFCO sale proceeds (refer Note 4).
In 2019, other expenses included net losses on disposal of assets of US$21.0 million relating to asset write-offs in
Latin America and US$22.0 million of asset write-offs following the divestment of IFCO. These items were recognised within
Significant Items (refer Note 4).
75
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 4. Significant Items – Continuing Operations
Significant Items are items of income or expense which are, either individually or in aggregate, material to Brambles or to the
relevant business segment and:
- outside the ordinary course of business (e.g. gains or losses on the sale or termination of operations, the cost of significant
reorganisations or restructuring); or
- part of the ordinary activities of the business but unusual due to their size and nature.
Significant Items are disclosed to assist users of the financial statements to better understand Brambles’ business results.
2020
US$m
2019
US$m
Before tax
Tax
After tax
Before tax
Tax
After tax
Items outside the ordinary course of business:
-
impairment charge1
- restructuring costs2
- early debt repayment costs3
- risk assessment related to asset
losses in Latin America4
Significant Items from continuing
operations
(28.0)
1.2
(26.8)
-
-
-
-
-
-
-
-
-
-
(30.2)
(11.6)
(21.0)
-
6.5
-
2.5
-
(23.7)
(11.6)
(18.5)
(28.0)
1.2
(26.8)
(62.8)
9.0
(53.8)
Impairment charge of US$28.0 million recognised in the Kegstar keg-pooling business in relation to goodwill
US$23.0 million, plant and equipment US$3.0 million and intangible assets US$2.0 million, reflecting the impact of Covid-19
and uncertainties over on-premise consumption and performance of the craft beer segment (refer Note 13 and 14).
Restructuring costs in 2019 related to organisational changes of US$8.2 million and asset write-offs of US$22.0 million
following and as a result of the IFCO divestment.
Early debt repayment costs of US$11.6 million in 2019 related to the US$500.0 million 144A bond which was repaid on
5 July 2019 using the IFCO sale proceeds, with associated interest savings realised in 2020.
In 2019, a detailed review of people, processes and pricing was undertaken in Latin America. Following this review,
customer pricing was increased and asset recovery and asset control processes were improved. The improvements made
provided additional market insight into the challenges of asset recovery in higher risk supply chains and a charge of
US$21.0 million was recognised in Significant Items in 2019 to provide for assets transferred to these supply chains in prior
years which were recognised to be at risk of being irrecoverable.
1
2
3
4
76
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 5. Net Finance Costs – Continuing Operations
Finance revenue
Bank accounts and short-term deposits
Derivative financial instruments
Other
Finance costs
Interest expense on bank loans and borrowings1
Derivative financial instruments
Lease interest expense2
Other
Net finance costs
2020
US$m
15.7
6.4
2.9
25.0
(55.7)
(20.2)
(27.8)
(2.1)
(105.8)
(80.8)
2019
US$m
6.1
15.1
2.7
23.9
(95.3)
(15.6)
-
(1.5)
(112.4)
(88.5)
1
2
The reduction in interest expense on bank loans and borrowings is due to the repayment of debt using IFCO sale proceeds.
Interest recognised on lease liabilities and dilapidation provisions (refer Note 1G(iv)).
Finance revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the
financial asset.
Finance costs are recognised as expenses in the year in which they are incurred.
77
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 6. Income Tax
A) Components of Tax Expense
Amounts recognised in the statement of comprehensive income
Current income tax – continuing operations:
- income tax charge
- prior year adjustments
Deferred tax – continuing operations:
- origination and reversal of temporary differences
- previously unrecognised tax losses
- tax rate change
- prior year adjustments
Note
2020
US$m
2019
US$m
197.8
1.3
199.1
29.6
(10.5)
(1.2)
(8.0)
9.9
209.0
(6.7)
202.3
(1.9)
(1.9)
270.6
(1.6)
269.0
(60.2)
(6.4)
1.0
(5.1)
(70.7)
198.3
58.0
256.3
(2.7)
(2.7)
Tax expense – continuing operations
Tax (benefit)/expense – discontinued operations
9
Tax expense recognised in profit or loss
Amounts recognised in other comprehensive income
- on actuarial losses on defined benefit pension plans
Tax benefit recognised directly in other comprehensive income
The income tax expense or benefit for the year is the tax payable or receivable on the current year’s taxable income based on
the national income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Current and deferred tax attributable to other comprehensive income is recognised in equity.
78
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 6. Income Tax – continued
B) Reconciliation Between Tax Expense and Accounting Profit Before Tax
Profit before tax – continuing operations
Tax at standard Australian rate of 30% (2019: 30%)
Note
Effect of tax rates in other jurisdictions
Prior year adjustments
Prior year tax losses written-off
Current year tax losses not recognised
Foreign withholding tax unrecoverable
Change in tax rates
Non-deductible expenses
Other taxable items1
Prior year tax losses recouped/recognised
Other
Tax expense – continuing operations
Tax (benefit)/expense – discontinued operations
9
Total income tax expense
2020
US$m
686.2
205.9
(30.8)
(6.7)
0.1
4.5
10.3
(1.2)
14.8
24.3
(10.5)
(1.7)
209.0
(6.7)
202.3
2019
US$m
652.4
195.7
(28.8)
(7.8)
1.1
4.1
9.2
1.0
12.6
18.9
(6.4)
(1.3)
198.3
58.0
256.3
1
Includes the impact of Base Erosion and Anti-abuse Tax (BEAT) in the US, relating to foreign payments effective 1 July 2018.
2020
US$m
2019
US$m
Assets
Liabilities
Assets
Liabilities
C) Components of Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities in the balance sheet are represented by cumulative temporary differences attributable to:
Items recognised through the statement of comprehensive income
Employee benefits
Provisions and accruals
Losses available against future taxable income
21.6
38.2
134.3
-
-
-
Accelerated depreciation for tax purposes
-
(569.0)
Deferred revenue
Leases
Other
Items recognised in other comprehensive income
Actuarial losses/(gains) on defined benefit pension plans
Share-based payments
100.1
202.0
79.8
576.0
7.2
5.9
13.1
-
(155.9)
(105.8)
(830.7)
(0.2)
-
(0.2)
Set-off against deferred tax (liabilities)/assets
(492.8)
492.8
Net deferred tax assets/(liabilities)
96.3
(338.1)
18.7
37.4
122.1
-
98.6
-
73.5
350.3
7.9
7.2
15.1
(291.8)
73.6
-
-
-
(531.2)
-
-
(113.4)
(644.6)
(0.3)
-
(0.3)
291.8
(353.1)
79
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 6. Income Tax – continued
2020
US$m
2019
US$m
Assets
Liabilities
Assets
Liabilities
D) Movements in Deferred Tax Assets and Liabilities
At 1 July
73.6
(353.1)
(Charged)/credited to profit or loss
(Charged)/credited directly to equity
Divestment of subsidiaries
Adoption of new accounting standards
Offset against deferred tax (liabilities)/assets
Foreign exchange differences
At 30 June
(105.5)
(0.2)
-
210.5
(79.1)
(3.0)
96.3
95.6
(0.1)
-
(166.4)
79.1
6.8
(338.1)
38.2
22.9
2.9
28.2
-
(17.7)
(0.9)
73.6
(434.9)
28.3
0.7
29.3
-
17.7
5.8
(353.1)
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 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 entity has sufficient taxable temporary
differences or there is convincing evidence that sufficient taxable profit will be available against which the unused tax losses
can be utilised. 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$671.6 million (2019: US$652.5 million) available for offset against
future profits. A deferred tax asset has been recognised in respect of US$536.5 million (2019: US$492.4 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$135.1 million
(2019: US$160.1 million) due to the unpredictability of future profit streams in the relevant jurisdictions. Tax losses of
US$431.1 million (2019: US$434.2 million), which have been recognised in the balance sheet, have an expiry date between
2031 and 2038 (2019: between 2022 and 2038), however it is expected that these losses will be recouped prior to expiry. The
remaining tax losses of US$105.4 million (2019: US$58.2 million), which have been recognised in the balance sheet, can be
carried forward indefinitely.
80
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
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$961.3 million (2019: US$944.4 million). No deferred tax liability has been recognised
for these amounts because Brambles controls the distributions from its subsidiaries and is satisfied that the temporary
difference will not reverse in the foreseeable future.
The majority of the deferred tax assets and liabilities are expected to be recovered/realised beyond 12 months after 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 Group 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 uncertain tax positions in accordance with IFRS interpretation IFRIC 23. 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 Transparency Report, prepared in
accordance with the Australian Taxation Office's Voluntary Tax Transparency Code, which comprises, amongst other matters,
details such as the corporate income tax paid by, and effective tax rates of, Brambles' Australian and global operations. The
2020 Tax Transparency Report is scheduled for publication in the second half of calendar year 2020 and will be posted on
Brambles’ website.
81
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 7. Earnings Per Share
From continuing operations
- basic
- diluted
- basic, on Underlying Profit after finance costs and tax
From discontinued operations1
- basic
- diluted
Total Earnings Per Share (EPS)1
- basic
- diluted
2020
US cents
2019
US cents
30.8
30.7
32.5
(1.9)
(1.9)
28.9
28.8
28.5
28.4
31.9
63.6
63.4
92.1
91.8
1
2019 includes earnings from IFCO operations (refer Note 9).
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 revenue 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
considered to be 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.
82
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 7. Earnings Per Share – continued
A) Weighted Average Number of Shares during the Year
Used in the calculation of basic EPS
Adjustment for share rights
Used in the calculation of diluted EPS
B) Reconciliations of Profit used in EPS Calculations
Statutory profit
Profit from continuing operations
(Loss)/profit 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 after finance costs 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
2020
Million
1,548.7
4.7
1,553.4
2020
US$m
477.2
(29.2)
448.0
795.0
(80.8)
714.2
(210.2)
504.0
504.0
(26.8)
477.2
2019
Million
1,593.4
5.1
1,598.5
2019
US$m
454.1
1,013.6
1,467.7
803.7
(88.5)
715.2
(207.3)
507.9
507.9
(53.8)
454.1
83
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 8. Dividends
A) Dividends Paid during the Year
Dividend per share
Cost (in US$ million)
Payment date
Interim1
2020
Special2
2020
Final
2019
US cents
Australian cents
Australian cents
9.0
133.4
17.0
183.2
14.5
157.3
9 April 2020
22 October 2019
10 October 2019
1
2
Effective from 1 July 2019, Brambles changed to a US dollar payout ratio based dividend policy, targeting a payout ratio of
45-60% of Underlying Profit after finance costs and tax, subject to Brambles' cash requirements, with the dividend per
share declared in US cents and converted and paid in Australian cents based on an average exchange rate just prior to the
dividend declaration.
A special dividend of 17.0 Australian cents per share was approved at the 2019 Annual General Meeting (AGM) and paid
on 22 October 2019. The special dividend was funded using proceeds from the IFCO divestment.
Total dividends paid during the year of US$473.9 million (2019: US$328.1 million) per the consolidated cash flow statement
differ from the amount recognised in the consolidated statement of changes in equity of US$471.9 million
(2019: US$330.0 million) due to the impact of foreign exchange movements between the dividend record and payment dates.
The Dividend Reinvestment Plan (DRP) remained suspended in 2020.
B) Dividend Declared after 30 June 2020
Dividend per share (in US cents)
Cost (in US$ million)
Payment date
Dividend record date
Final
2020
9.0
135.5
8 October 2020
10 September 2020
As this dividend had not been declared at 30 June 2020, 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.
Total ordinary dividends declared for 2020 were 18.0 US cents per share, representing a payout ratio of 53% which is broadly
in line with the prior year payout ratio, including IFCO's 2019 earnings contribution. The 2019 total ordinary dividends were
29.0 Australian cents per share.
C) Franking Credits
Franking credits available for subsequent financial years based on an Australian tax
rate of 30%
2020
US$m
33.2
2019
US$m
30.7
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 2020 dividend will be franked at 30%.
84
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 9. Discontinued Operations
The deferred consideration receivable from First Reserve, relating to the former Hoover Ferguson Group (HFG) investment
divested in 2018, has been impaired by US$33.0 million in 2020 reflecting the current market conditions in the oil and gas industry
(refer Note 10).
On 25 February 2019, Brambles entered into an agreement to sell its IFCO RPC business, with completion of the sale occurring on
31 May 2019. As a consequence, the 2019 results of IFCO have been presented in discontinued operations.
Financial information for discontinued operations is summarised below:
Sales revenue
Other income
Operating expenses1
Operating (loss)/profit (excluding profit or loss on divestments)
Operating results (excluding profit or loss on divestments) relate to:
- Impairment of receivable2
- IFCO
- other discontinued operations
Gain on divestment of IFCO before tax
Total operating (loss)/profit for the year
Finance costs
(Loss)/profit before tax
Tax benefit/(expense)3
(Loss)/profit for the year from discontinued operations
Net cash (outflow)/inflow from operating activities
Net cash outflow from investing activities4
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Note
2020
US$m
-
-
(35.9)
(35.9)
(33.0)
(1.0)
(1.9)
(35.9)
-
2019
US$m
1,010.7
1.2
(898.8)
113.1
-
115.2
(2.1)
113.1
959.3
(35.9)
1,072.4
-
(0.8)
(35.9)
1,071.6
6.7
(58.0)
(29.2)
1,013.6
(7.2)
(16.0)
-
(23.2)
241.1
(191.4)
(10.4)
39.3
1
2
3
4
Depreciation and amortisation within operating expenses in 2020 is nil (2019: US$105.7 million related to IFCO operations).
The impairment charge on the deferred consideration receivable from First Reserve of US$33.0 million, is recognised as a
Significant Item outside the ordinary course of business (2019: US$959.3 million related to the gain on sale of IFCO and other
IFCO divestment costs).
Tax expense in 2019 included US$13.6 million tax expense in relation to the gain on divestment of IFCO and a US$44.3 million
tax expense on IFCO's operating activities.
Net cash outflow from investing activities for 2020 include costs paid on disposal of IFCO.
85
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 10. Trade and Other Receivables
Current
Trade receivables
Allowance for doubtful receivables
Net trade receivables
Other debtors
Unbilled revenue
Total trade and other receivables
Non-current
Other receivables1
2020
US$m
548.1
(17.2)
530.9
74.5
111.8
717.2
23.3
23.3
2019
US$m
604.2
(14.7)
589.5
77.1
102.3
768.9
52.8
52.8
1 Other receivables in 2020 includes deferred consideration of US$47.4 million due from First Reserve (2019: US$44.5 million).
An impairment charge of US$33.0 million on the receivable has been recognised in 2020 reflecting the current market
conditions in the oil and gas industry (refer Note 9).
Trade receivables with no significant financing component 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.
Other receivables are initially recognised at fair value plus any directly attributable transaction costs and subsequently
measured at amortised cost.
The allowance for doubtful receivables has been established based on AASB 9 Financial Instruments. For all eligible trade and
other receivables, Brambles applies the simplified approach to measuring expected credit losses, which uses a lifetime expected
loss allowance. To measure the expected credit losses, trade and other receivables are grouped based on region and aging.
Customers with heightened credit risk are provided for specifically based on historical default rates and forward-looking
information. Customers with normal credit risk are provided for in line with a provision matrix based on aging and their
associated risk. A lifecycle allowance is calculated on the remaining trade and other receivables balance based on historical bad
debt levels. Where there is no reasonable expectation of recovery, balances are written off. Subsequent recovery of amounts
previously written off are credited against other expenses in the consolidated statement of comprehensive income. An
allowance of US$7.3 million (2019: US$2.0 million) has been recognised as an expense in the current year for trade and other
receivables in line with the Group accounting policy.
Other debtors primarily comprise GST/VAT recoverable and loss compensation receivables.
86
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 10. Trade and Other Receivables – continued
At 30 June, the ageing analysis of trade receivables and other debtors by reference to due dates was as follows:
Trade receivables
Other debtors
2020
US$m
2019
US$m
2020
US$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
489.2
26.0
7.6
2.6
5.5
17.2
548.1
516.7
60.6
40.4
13.6
6.6
12.2
14.7
2.3
1.3
1.3
9.0
-
604.2
74.5
Refer to Note 22 for other financial instruments' disclosures.
Note 11. Inventories
Raw materials and consumables
Finished goods
59.2
8.3
67.5
2019
US$m
50.0
6.8
4.9
1.8
13.6
-
77.1
50.0
9.8
59.8
Inventories on hand are valued at the lower of cost and net realisable value and, where appropriate, a provision is made for
possible obsolescence.
Cost is determined on a first-in, first-out basis and, where relevant, includes an appropriate portion of overhead expenditure.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
costs to make the sale.
Note 12. Other Assets
Current
Prepayments
Current tax receivable
Derivative financial instruments
Non-current
Derivative financial instruments
Refer to Note 22 for other financial instruments' disclosures.
74.4
9.1
12.1
95.6
9.7
9.7
46.8
8.7
6.0
61.5
11.8
11.8
87
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 13. Property, Plant and Equipment
A) Net Carrying Amounts and Movements during the Year
2020
US$m
2019
US$m
Land and
Plant and
Land and
Plant and
buildings
equipment
Total
buildings
equipment
Total
Opening carrying amount
Additions1
Divestment of subsidiaries
Disposals
Depreciation charge2
Impairment charge3
IPEP expense4
Foreign exchange differences
Closing carrying amount
At 30 June
Cost
Accumulated depreciation5
Accumulated impairment3
43.3
10.4
-
(0.1)
(4.5)
-
-
(2.3)
46.8
4,269.9
4,313.2
970.8
981.2
-
(107.0)
(473.0)
(3.0)
(155.7)
(139.5)
-
(107.1)
(477.5)
(3.0)
(155.7)
(141.8)
4,362.5
4,409.3
92.1
6,530.6
6,622.7
(45.3)
(2,165.1)
(2,210.4)
-
(3.0)
(3.0)
Net carrying amount
46.8
4,362.5
4,409.3
48.9
8.2
(7.4)
-
(5.1)
-
-
(1.3)
43.3
85.8
(42.5)
-
43.3
5,090.8
1,208.2
5,139.7
1,216.4
(1,075.7)
(1,083.1)
(182.7)
(555.2)
-
(141.2)
(74.3)
(182.7)
(560.3)
-
(141.2)
(75.6)
4,269.9
4,313.2
6,371.1
6,456.9
(2,101.2)
(2,143.7)
-
4,269.9
4,313.2
1
2
3
4
In 2020 capital expenditure related to discontinued operations is nil (2019: US$156.0 million).
In 2020 depreciation charge related to discontinued operations is nil (2019: US$92.5 million).
Impairment charge of US$3.0 million recognised in the Kegstar keg-pooling business in relation to plant and equipment,
reflecting the impact of Covid-19 and uncertainties over on-premise consumption and performance of the craft beer segment
(refer Note 13E and 14D).
In 2020 IPEP expense related to discontinued operations is nil (2019: US$14.1 million).
5 Includes the IPEP provision of US$105.7 million (2019: US$83.0 million).
The net carrying amounts above include capital work in progress of US$129.0 million (2019: US$85.9 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 the consolidated statement of comprehensive income 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.
88
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 13. 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: up to 50 years;
- pooling equipment: 5–10 years; and
- other plant and equipment: 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 improvements to Brambles, whichever is shorter.
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 subject to a number of judgements and estimates, which are informed by
historical statistical data in each market, including the outcome of audits and relevant KPIs. The impact of Covid-19 has been
considered in estimating the IPEP provision including updating the key assumptions for the latest estimated and actual loss rates.
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 CGU 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 Note 14D). 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 the consolidated statement of comprehensive income in the
reporting period in which the write-down occurs.
Kegstar global has been adversely impacted by Covid-19 and uncertainties over on-premise consumption and performance of
the craft beer segment. As a result the keg-pooling equipment has been written down to the recoverable amount and an
impairment charge of US$3.0 million recognised in the statement of comprehensive income (refer Note 4).
89
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 14. Goodwill and Intangible Assets
A) Net Carrying Amounts and Movements during the Year
2020
US$m
2019
US$m
Goodwill
Software
Other1
Total
Goodwill
Software
Other1
Total
Opening carrying amount
220.8
Additions
Disposals
Divestment of subsidiaries
Amortisation charge2
Impairment charge3
Foreign exchange
differences
36.0
15.1
-
-
(10.1)
(0.6)
29.4
7.5
(0.1)
-
(8.2)
(1.4)
286.2
911.7
22.6
(0.1)
-
-
-
(667.1)
(18.3)
(25.0)
-
-
38.1
14.1
(1.8)
(3.4)
(10.7)
-
73.0
1,022.8
7.5
-
(30.0)
(19.0)
-
21.6
(1.8)
(700.5)
(29.7)
-
-
-
-
-
(23.0)
(5.3)
(0.1)
(0.4)
(5.8)
(23.8)
(0.3)
(2.1)
(26.2)
Closing carrying amount
192.5
40.3
26.8
259.6
220.8
36.0
29.4
286.2
At 30 June
Gross carrying amount
215.5
176.9
72.9
465.3
220.8
165.1
Accumulated amortisation
-
(136.0)
(44.7)
(180.7)
Accumulated impairment3
Net carrying amount
(23.0)
192.5
(0.6)
40.3
(1.4)
26.8
(25.0)
259.6
-
-
220.8
(129.1)
-
36.0
68.2
(38.8)
-
29.4
454.1
(167.9)
-
286.2
Other intangible assets primarily comprise acquired customer relationships, customer lists and agreements, and BXB Digital
capitalised costs.
In 2020 amortisation charge related to discontinued operations is nil (2019: US$13.2 million).
Based on a fair value less costs to sell model used for impairment testing, goodwill and intangibles of US$25.0 million in the
Kegstar keg-pooling business have been impaired, reflecting the impact of Covid-19 and uncertainties over on-premise
consumption and performance of the craft beer segment (refer Note 14D).
1
2
3
90
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 14. Goodwill and Intangible Assets – continued
B) Summary of Carrying Value of Goodwill by CGU
CHEP Europe
CHEP Asia-Pacific
Kegstar Australia and New Zealand (ANZ)
CHEP Americas
Total goodwill
C) Recognition and Measurement
2020
US$m
129.4
53.0
-
10.1
2019
US$m
131.4
54.7
23.5
11.2
192.5
220.8
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 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 the consolidated
statement of comprehensive income 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 the consolidated statement of comprehensive income when
the asset is derecognised.
91
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 14. Goodwill and Intangible Assets – continued
D) Goodwill Recoverable Amount Testing
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
three-year period, including the impact of Covid-19, with an appropriate terminal value at the end of that period.
Based on the review performed, an impairment loss of US$25.0 million has been recognised in the consolidated statement of
comprehensive income (refer Note 4) in relation to Kegstar, an Australian keg-pooling business acquired in 2014. Goodwill of
US$23.0 million and intangible assets of US$2.0 million have been fully impaired. The recoverable amount of the Kegstar ANZ
CGU is based on fair value less costs to sell, using a discounted cash flow. The business has been materially impacted by Covid-19
due to severe restrictions on the industry in 2020, and uncertainties over on-premise consumption and performance of the craft
beer segment.
The carrying amount of goodwill in the other CGUs at reporting date is 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 three 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 three-year plan. Three-year growth rates for CHEP Europe and
CHEP Asia-Pacific CGUs were 1.4% and 7.7% respectively. Sensitivity testing was performed on these CGUs and a reasonably
possible decline in these rates would not cause the carrying value of the CGUs to exceed their recoverable amount.
Terminal value
The terminal value calculated 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 terminal growth rate used in the financial projections was 1.9%
for CHEP Europe and 2.2% for CHEP Asia-Pacific.
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. Weighted average pre-tax WACC used was 9.8% (pre-tax rates: CHEP Europe 9.0% and CHEP Asia-Pacific 12.3%).
Weighted average pre-tax WACC rates used for 2019 impairment reviews were 8.7%.
Sensitivity
The Brambles pooling equipment business, excluding Kegstar, has not been materially impacted by Covid-19 in 2020 as it
operates in an essential services market. Downside scenarios were prepared to sensitise the models. Reasonable changes to key
assumptions in the Kegstar model do not materially impact the impairment loss recognised. For the remaining CGUs, any
reasonable change to the above key assumptions would not cause the carrying value to materially exceed the recoverable
amount. Consideration has also been given to climate change risk.
92
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 15. Trade and Other Payables
Current
Trade payables
GST/VAT and other payables
Deferred revenue
Accruals
Derivative financial instruments
Total trade and other payables
Non-current
Other liabilities
2020
US$m
438.4
134.4
422.1
227.3
4.3
2019
US$m
420.7
147.4
410.8
228.1
1.5
1,226.5
1,208.5
-
-
1.0
1.0
Trade payables represent liabilities for goods and services provided to Brambles prior to the end of the financial year that
remain unpaid at the reporting date. The amounts are unsecured, non-interest bearing and are paid within normal credit terms
of 30–120 days.
Other payables (excluding derivatives) are initially measured at fair value, net of transaction costs incurred, and subsequently
measured at amortised cost.
Deferred revenue primarily relates to revenue that is billed on issue of pooling equipment to customers. It is recognised in the
consolidated statement of comprehensive income over the cycle time (refer Note 2). As the cycle time is less than one year, all
deferred revenue from 2019 was recognised in 2020. Deferred revenue in 2020 relates to the transaction price allocated to
performance obligations that remain unsatisfied and will be satisfied in 2021.
Refer to Note 22 for other financial instruments' disclosures.
Note 16. Provisions
Employee entitlements
Other2
2020
US$m
20191
US$m
Current
Non-current
Current
Non-current
72.4
12.5
84.9
5.4
70.7
76.1
61.3
14.2
75.5
3.5
11.3
14.8
1
2
The comparative period does not include the impact of AASB 16 Leases.
Other includes US$70.9 million relating to dilapidation provisions on leases as well as other provisions relating to litigation
and other known exposures.
Provisions for liabilities are made on the basis that, due to a past event, the business has a constructive or legal obligation to
transfer economic benefits that are of uncertain timing or amount. Provisions are measured at the present value of
management’s best estimate at the balance sheet date of the expenditure required to settle the obligation. The discount rate
used is a pre-tax rate that reflects current market assessments of the time value of money and the risks appropriate to the
liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in the
consolidated statement of comprehensive income.
93
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 16. Provisions – continued
Employee entitlements are provided by Brambles in accordance with the legal and social requirements of the country of
employment. Principal entitlements are for annual leave, sick leave, long service leave, bonuses and contract entitlements.
Annual leave and sick leave entitlements are presented within other payables.
Liabilities for annual leave, as well as those employee entitlements that are expected to be settled within one year, are measured
at the amounts expected to be paid when they are settled. All other employee entitlement liabilities are measured at the
estimated present value of the future cash outflows to be made in respect of services provided by employees up to the
reporting date.
Employee entitlements are classified as current liabilities unless Brambles has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Note 17. Borrowings
Unsecured
Bank overdrafts
Bank loans
Loan notes1
1
2020
US$m
2019
US$m
Current
Non-current
Current
Non-current
-
27.5
8.8
36.3
-
149.3
1,627.9
1,777.2
0.9
28.8
527.1
556.8
-
2.6
1,640.8
1,643.4
On 5 July 2019, Brambles repaid the US$500.0 million April 2020 144A bond using the IFCO proceeds.
Borrowings are primarily 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 the consolidated statement of comprehensive income 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.
Financial risks and risk management strategies associated with borrowings, including financial covenants, are disclosed in
Note 22.
Note 18. 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.
94
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 18. Retirement Benefit Obligations – continued
A) Defined Contribution Plans – continued
US$18.0 million (2019: US$20.5 million) has been recognised as an expense in the consolidated statement of comprehensive
income, representing contributions paid and payable to these plans by Brambles at rates specified in the rules of the plans, all of
which relate to continuing operations.
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
mostly 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 obligations recognised in Brambles’ balance sheet are based upon
the most recent formal actuarial valuations, which have been updated to 30 June 2020 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 2020. There has been no material change in assumptions, assets and cash flows between 31 May
and 30 June. The present value of the defined benefit obligations and past service costs 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$2.2 million has been recognised in the consolidated statement of comprehensive income in respect of
defined benefit plans (2019: US$6.2 million), of which US$1.6 million net expense relates to continuing operations
(2019: US$5.6 million). Included within the total expense recognised during the year is net interest cost of US$0.5 million
(2019: a one-off Guaranteed Minimum Pension (GMP) equalisation adjustment of US$3.8 million and US$0.3 million net interest
cost).
The amounts recognised in the balance sheet are as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net liability recognised in the balance sheet
2020
US$m
299.6
(261.9)
37.7
2019
US$m
286.7
(249.4)
37.3
Currency variations and a significant decrease in the discount rate, largely offset by an increase in the market value of plan
assets, 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$6.8 million (2019: US$7.7 million). There are a number of principal assumptions used in
the actuarial valuations of the defined benefit obligations. These principal assumptions are the discount rate of 1.6%
(2019: 2.4%) for the plans operating in the United Kingdom and 9.2% (2019: 9.3%) for the South African plan; the pension
increase rate of 2.80% - 3.45% (2019: 3.30% - 3.65%) in the United Kingdom plans and the inflation rate for the South African
plan of 4.75% (2019: 5.88%). A change of 25 basis points in the 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$6.2 million (2019: US$6.3 million) are being paid to
remove the identified deficits over a period of up to eight years (2019: nine years).
95
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 19. Contributed Equity
Total ordinary shares, of no par value, issued and fully paid:
At 1 July 2018
Issued during the year1
Share buy-back2
At 30 June 2019
At 1 July 2019
Issued during the year1
Share buy-back2
Shareholder capital return3
At 30 June 2020
Shares
US$m
1,591,901,323
6,218.5
2,900,351
(6,039,299)
23.0
(54.1)
1,588,762,375
6,187.4
1,588,762,375
6,187.4
1,928,769
(85,658,579)
-
14.5
(645.4)
(129.3)
1,505,032,565
5,427.2
1
2
3
Includes shares issued on exercise of share plans and shares issued as part of the MyShare Dividend Reinvestment Plan.
As announced on 25 February 2019, Brambles will perform an on-market share buy-back of up to US$1.65 billion using the
proceeds from the IFCO divestment. The cumulative total of shares repurchased and cancelled to 30 June 2020 is
US$699.5 million, of which US$645.4 million occurred in 2020.
A capital return of 12.0 Australian cents was approved at the 2019 AGM and paid on 22 October 2019. The capital return was
funded using the proceeds from the IFCO divestment.
Ordinary shares are classified as contributed equity. No gain or loss is recognised in the consolidated statement of
comprehensive income 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.
96
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 20. Share-Based Payments
The Remuneration Report sets out details relating to the Brambles share plans (pages 50 and 52), together with details of
performance share rights and MyShare matching conditional rights issued to the Executive Directors and other Key Management
Personnel (pages 51 to 52). 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
year
Exercised
Forfeited /
during
year
lapsed
during year
Balance
at 30 June
Grant date
Expiry date
2020
Performance share rights
Awards granted in prior periods
5,263,284
(1,046,326)
(1,013,546)
3,203,412
15 July 2019
15 July 2025
15 Oct 2019
15 Oct 2025
4 Nov 2019
4 Nov 2025
14 Nov 2019
14 Nov 2025
MyShare matching conditional rights
-
-
-
-
11,602
-
-
11,602
2,607,326
(19,453)
(104,074)
2,483,799
1,606
112,225
-
-
2018 Plan Year
31 Mar 2020
1,026,459
-
(968,256)
2019 Plan Year
31 Mar 2021
339,268
2020 Plan Year
31 Mar 2022
-
717,127
463,101
(15,915)
(489)
-
-
(58,203)
(79,558)
(7,233)
1,606
112,225
-
960,922
455,379
Total rights
6,629,011
3,912,987
(2,050,439)
(1,262,614)
7,228,945
2019 (summarised comparative)
Total rights
7,457,199
3,543,412
(3,048,036)
(1,323,564)
6,629,011
Of the above grants, 160,807 were exercisable at 30 June 2020.
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
2020
2019
A$
A$
years
10.26
11.37
3.8
9.71
11.29
4.0
The cost of equity-settled share rights is recognised, together with a corresponding increase in equity, 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).
97
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 20. Share-Based Payments – continued
A) Grants Over Brambles Limited Shares – 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 date and at each
subsequent reporting date.
The cost of cash-settled share rights is charged to the consolidated statement of comprehensive income 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
Monte Carlo Simulation and 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 rate1
Expected dividend yield
2020
A$11.59
20%
2019
A$11.01
20%
2 – 3 years
2 – 3 years
0.68%
1.94 – 2.00%
3.00%
3.00%
1 The decline in the annual risk-free interest rate is reflective of the movement in the yield on Australian government bonds.
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$18.4 million (2019: US$17.1 million) relating to equity-settled share-based payments
and US$1.7 million (2019: US$1.6 million) relating to cash-settled share-based payments. Of these amounts, nil
(2019: US$2.1 million) related to discontinued operations.
98
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 21. Reserves and Retained Earnings
A) Movements in Reserves and Retained Earnings
Reserves
Share-
based
Foreign
currency
payments
translation
Unification
US$m
US$m
US$m
Other
US$m
Total
US$m
Retained
earnings
US$m
80.3
(333.4)
(7,162.4)
161.8
(7,253.7)
3,813.6
-
-
-
17.1
(23.0)
1.6
(0.1)
(11.6)
-
-
-
(85.0)
32.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(85.0)
32.2
17.1
(23.0)
1.6
(0.1)
(11.6)
-
-
(8.1)
-
-
-
-
-
0.1
-
(330.0)
1,467.7
Year ended 30 June 2019
Opening balance
Actuarial loss on defined benefit plans
Foreign exchange differences
FCTR released to profit on divestment of
IFCO
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
- transfer to retained earnings on
divestment of IFCO
- other
Dividends declared
Profit for the year
Closing balance as at 30 June 2019
64.3
(386.2)
(7,162.4)
161.8
(7,322.5)
4,943.3
Year ended 30 June 2020
Opening balance as previously reported
64.3
(386.2)
(7,162.4)
161.8
(7,322.5)
4,943.3
Opening balance adjustment on adoption of
AASB 16
-
-
-
-
-
(121.8)
Revised opening balance
64.3
(386.2)
(7,162.4)
161.8
(7,322.5)
4,821.5
Actuarial loss on defined benefit plans
Foreign exchange differences1
-
-
-
(143.9)
Share-based payments:
- expense recognised
- shares issued
- equity component of related tax
Dividends declared
Profit for the year
18.4
(14.5)
(1.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(143.9)
18.4
(14.5)
(1.8)
-
-
(4.1)
-
-
-
-
(471.9)
448.0
Closing balance as at 30 June 2020
66.4
(530.1)
(7,162.4)
161.8
(7,464.3)
4,793.5
1
Exchange differences on translation of foreign subsidiaries have been significantly impacted by the devaluation of the
Australian dollar, Latin American currencies and the South African rand net assets translated into US dollars. The June 2020
spot rate relative to the US dollar weakened 2% for the Australian dollar, 21% for the Latin American currencies and 22% for
the South African rand.
99
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 21. Reserves and Retained Earnings – continued
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 20 for further details.
Foreign currency translation reserve
This comprises cumulative exchange differences arising from the translation of the financial statements of foreign subsidiaries,
net of qualifying net investment hedges. The relevant accumulated balance is recognised in the consolidated statement of
comprehensive income on disposal of a foreign subsidiary.
Unification reserve
On Unification, Brambles Limited issued shares on a one-for-one basis to those Brambles Industries Limited (BIL) and Brambles
Industries plc (BIP) shareholders who did not elect to participate in the Cash Alternative. The Unification reserve of
US$15,385.8 million was established on 4 December 2006, representing the difference between the Brambles Limited share
capital measured at fair value and the carrying value of the share capital of BIL and BIP at that date. In the consolidated financial
statements, the reduction in share capital of US$8,223.4 million on 9 September 2011 by Brambles Limited 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.
100
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. 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 programme 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 function 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 amortised cost, as disclosed in the
respective notes.
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 17 for the recognition of interest bearing financial liabilities. Refer to Note 1G for the recognition of lease liabilities.
The fair values of all financial assets and liabilities held on the balance sheet as at 30 June 2020 equal the carrying amount, with
the exception of loan notes, which have an estimated fair value of US$1,708.9 million (2019: US$2,264.7 million) compared to a
carrying value of US$1,636.7 million (2019: US$2,167.9 million). Financial assets and liabilities held at fair value (other than loan
notes) 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 using Level 1 valuation
techniques, which uses directly observable unadjusted quoted prices in active markets for identical assets or liabilities.
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.
101
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. 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, is predominantly in euros and US dollars on borrowings. This is
managed by maintaining a mix of fixed and floating-rate instruments within select target bands over defined periods. In some
cases, interest rate derivatives are used to achieve these targets synthetically. As at 30 June 2020, Brambles also has exposure to
variability in finance revenue through its holdings of cash and term deposits in Australian dollars.
The following table sets out the financial instruments exposed to interest rate risk at reporting date:
Note
2
10
2020
US$m
204.7
463.9
668.6
0.6%
68.7
68.6
23.3
160.6
1.5%
-
161.6
168.6
330.2
1.1%
2019
US$m
357.7
836.5
1,194.2
1.7%
497.1
411.2
52.8
961.1
2.3%
0.9
28.8
170.6
200.3
2.2%
1,636.7
2,167.9
15.2
704.2
(168.6)
2,187.5
3.0%
2.6
-
(170.6)
1,999.9
3.3%
Financial assets (floating rate)
Cash at bank
Short-term deposits
Weighted average effective interest rate at 30 June
Financial assets (fixed rate)
Short-term deposits
Term deposit
Other receivables
Weighted average effective interest rate at 30 June
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 at 30 June
Financial liabilities (fixed rate)
Loan notes
Bank loans
Lease liabilities
Interest rate swaps (notional value) – fair value hedges
Net exposure to fair value interest rate risk
Weighted average effective interest rate at 30 June
102
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. 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 €150.0 million of the €500.0 million 2024
Euro medium-term fixed-rate notes (EMTN) to variable rates. The interest rate swaps and debt have been designated in a
hedging relationship at a hedge ratio of 1:1. The fair value of the interest rate swaps are adjusted for credit risk, measured by
reference to credit default swaps for the interest rate swap counterparties, which is a source of ineffectiveness. Movement in
credit risk does not dominate the hedge relationship. The credit valuation adjustment to the swaps at 30 June 2020 is
US$0.1 million (2019: US$0.1 million).
In accordance with AASB 9, the carrying value of the loan notes has been adjusted to increase debt by US$12.9 million
(2019: US$15.1 million) in relation to changes in fair value attributable to the hedged risk. The fair value of interest rate swaps at
reporting date was US$12.6 million (2019: US$14.8 million).
The terms of the swaps match the terms of the fixed-rate bond issue for the amounts and durations being hedged.
Fair value hedge
Description
Nominal amount (US$m)
Carrying amount (US$m)
Change in fair value (US$m)
Hedge ineffectiveness (US$m)
Balance sheet account impacted
Hedged item
Hedging instrument
€150m of the €500m EMTN
€150m interest rate swaps
168.6
171.6
12.9
Nil
168.6
12.6
12.9
Nil
Non-current borrowings
Other assets
Statement of comprehensive income account impacted
Finance revenue/finance costs
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 2020, all interest rate swaps were effective
hedging instruments.
Sensitivity analysis
Based on the Australian dollar floating rate financial assets and floating rate financial liabilities outstanding at 30 June 2020, if
Australian interest rates were to increase or decrease by 50 basis points with all other variables held constant, profit after tax for
the year would have been US$2.2 million higher/lower (2019: US$5.3 million higher/lower).
Foreign exchange risk
Exposure to foreign exchange risk generally arises in either the value of transactions translated back to the functional currency of
a subsidiary or the value of assets and liabilities of overseas subsidiaries when translated back to the Group’s reporting currency.
Foreign exchange hedging is used when a transaction exposure exceeds certain thresholds and as soon as a defined exposure
arises. Within Brambles, exposures may arise with external parties or, alternatively, by way of cross-border intercompany
transactions. Forward foreign exchange contracts are primarily used to manage exposures from normal commercial transactions
such as the purchase and sale of equipment and services, intercompany interest and royalties. Given that Brambles both
generates income and incurs expenses in its local currencies of operation, these exposures are not significant.
Brambles generally mitigates translation exposures by raising debt in currencies where there are matching assets.
103
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. Financial Risk Management – continued
C) Market Risk – continued
Foreign exchange risk – continued
Currency profile
The following table sets out the currency mix profile of Brambles’ financial instruments at reporting date. Financial assets
include cash, term deposits, trade receivables and derivative assets. Financial liabilities include trade payables, lease liabilities,
borrowings and derivative liabilities:
2020
Financial assets
Financial liabilities
2019
Financial assets
Financial liabilities
US
dollar
US$m
301.8
1,234.9
Aust.
dollar
US$m
643.8
105.8
712.3
1,538.8
1,159.5
14.0
Sterling
US$m
Euro
US$m
Other
US$m
Total
US$m
14.5
76.4
43.9
31.6
155.3
1,280.2
266.5
263.1
1,381.9
2,960.4
201.8
1,256.2
265.8
161.1
2,762.6
2,622.4
Forward foreign exchange contracts – cash flow hedges
During 2020, Brambles entered into forward foreign exchange transactions with various banks in a variety of cross-currencies
for terms ranging up to eight months.
For 2020 and 2019, all foreign exchange contracts were effective hedging instruments. The fair value of these contracts at
reporting date was nil (2019: 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 contracts provide an economic hedge
against exchange fluctuations on foreign currency loan balances. The face value and terms of the foreign exchange contracts
match the intercompany loan balances. Gains and losses on realignment of the intercompany loans and foreign exchange
contracts to spot rates are offset in the consolidated statement of comprehensive income. 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 a net asset of US$4.9 million (2019: net liability of US$1.5 million).
Hedge of net investment in foreign entity
At 30 June 2020, €350.5 million (US$394.0 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 2020 and 2019, 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 2020, if exchange rates were to weaken/strengthen against the US dollar
by 10% with all other variables held constant, the transaction exposure within profit after tax for the year would not have
been material. However, the impact on equity would have been US$27.8 million lower/higher (2019: US$28.3 million
lower/higher) as a result of the incremental movement through the foreign currency translation reserve relating to the
effective portion of a net investment hedge.
104
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. Financial Risk Management – continued
D) Liquidity Risk
Brambles’ objective is to maintain adequate liquidity to meet its financial obligations as and when they fall due. Brambles
funds its operations through existing equity, retained cash flow and borrowings. Funding is generally sourced from
relationship banks and debt capital market investors on a medium-to-long-term basis.
Bank credit facilities are generally structured on a committed multi-currency revolving basis and at balance date had
maturities ranging out to January 2025. Borrowings under the bank credit facilities are floating-rate, unsecured obligations
with covenants and undertakings typical for these types of arrangements.
Borrowings are raised from debt capital markets by the issue of unsecured fixed-interest notes, with interest payable
semi-annually or annually. At balance date, loan notes had maturities out to October 2027.
Brambles also has access to further funding through overdrafts, uncommitted and standby lines of credit, principally to
manage day-to-day liquidity.
The average term to maturity of the committed borrowing facilities and the loan notes is equivalent to 4.2 years
(2019: 4.0 years). These facilities are unsecured and are guaranteed as described in Note 31B.
Borrowing facilities maturity profile
2020
Total facilities
Facilities used1
Facilities available
2019
Total facilities
Facilities used1
Facilities available
1
Year 1
US$m
376.9
(27.8)
349.1
765.0
(530.7)
234.3
Year 2
US$m
471.3
(1.5)
469.8
637.6
(5.6)
632.0
Year 3
US$m
Year 4
US$m
>4 years
US$m
Total
US$m
404.4
663.3
1,500.6
3,416.5
-
(562.1)
(1,216.5)
(1,807.9)
404.4
101.2
284.1
1,608.6
475.7
183.7
1,983.5
4,045.5
-
(2.1)
(1,638.4)
(2,176.8)
475.7
181.6
345.1
1,868.7
Facilities used represent the principal value of loan notes and borrowings of US$1,802.3 million and letters of credit of
US$5.6 million drawn against the relevant facilities to reflect the correct amount of funding headroom. The loan note and
borrowings amount differs by US$11.2 million (2019: US$29.0 million) from loan notes and borrowings as shown in the
balance sheet, which are measured on the basis of amortised cost as determined under the effective interest method and
include accrued interest, transaction costs and fair value adjustments on certain hedging instruments.
105
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. Financial Risk Management – continued
D) Liquidity Risk – continued
Maturities of financial liabilities
The maturities of Brambles’ contractual cash flows on non-derivative financial liabilities (for principal and interest) and
contractual cash flows on net and gross settled derivative financial instruments, based on the remaining period to contractual
maturity date, are presented below. Cash flows on interest rate swaps and forward foreign exchange contracts are valued
based on forward interest and exchange rates applicable at reporting date.
Year 1
US$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
2020
Non-derivative financial liabilities
Trade payables
Bank loans
Loan notes
Lease liabilities
Financial guarantees2
438.4
30.1
42.4
135.0
645.9
27.4
673.3
Derivative financial (assets)/liabilities
Net settled interest rate swaps
-
3.5
42.4
118.5
164.4
-
-
1.9
42.4
107.5
151.8
-
-
1.9
-
151.1
438.4
188.5
438.4
176.8
604.5
1,126.8
1,858.5
1,636.7
98.0
365.4
824.4
704.2
704.4
1,643.3
3,309.8
2,956.1
-
-
27.4
-
164.4
151.8
704.4
1,643.3
3,337.2
2,956.1
- fair value hedges
(2.9)
(3.5)
(3.3)
(3.1)
Gross settled forward foreign exchange contracts
- (inflow)
- outflow
(462.3)
457.4
(7.8)
-
-
-
-
-
-
(3.5)
(3.3)
(3.1)
-
-
-
-
(12.8)
(12.6)
(462.3)
457.4
(17.7)
(4.9)
-
(17.5)
106
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. 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
2019
Non-derivative financial liabilities
Trade payables
Bank overdrafts
Bank loans
Loan notes
420.7
0.9
30.6
560.9
1,013.1
Financial guarantees2
28.9
1,042.0
Derivative financial (assets)/liabilities
Net settled interest rate swaps
-
-
0.3
42.7
43.0
-
43.0
-
-
0.3
42.7
43.0
-
43.0
-
-
2.3
42.7
45.0
-
45.0
-
-
1.4
420.7
420.7
0.9
34.9
0.9
31.4
1,744.9
2,433.9
2,167.9
1,746.3
2,890.4
2,620.9
-
28.9
-
1,746.3
2,919.3
2,620.9
- fair value hedges
(3.0)
(3.5)
(3.1)
(3.0)
(2.6)
(15.2)
(14.8)
Gross settled forward foreign exchange contracts
- (inflow)
- outflow
2
(673.2)
671.7
(4.5)
-
-
(3.5)
-
-
(3.1)
-
-
(3.0)
-
-
(2.6)
(673.2)
671.7
(16.7)
(1.5)
-
(16.3)
Refer to Note 25 a) 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.
107
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 22. Financial Risk Management – continued
E) Credit Risk Exposure
Brambles is exposed to credit risk on its financial assets, which comprise cash and cash equivalents, term deposits, 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, including the mark-to-market of hedging instruments where they represent an asset in the balance
sheet. Brambles has short-term deposits with maturities between one to four months totalling US$377.4 million. A total of
US$308.8 million is deposited with banks rated AA- by Standard & Poor's and US$68.6 million is deposited with banks rated
A+ by Standard & Poor's. All remaining short-term deposits are at-call. Other than the term deposits described above and
non-current receivables due from First Reserve totalling US$47.4 million (refer Note 10), there is no 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 rating. At 30 June 2020,
Brambles held investment-grade credit ratings of BBB+ from Standard & Poor’s and Baa1 from Moody’s Investors Service.
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
Total lease liabilities
Less: cash and cash equivalents
Less: term deposits
Net debt
Total equity
Total capital
2020
US$m
2019
US$m
1,813.5
2,200.2
704.2
-
(737.3)
(1,691.3)
(68.6)
1,711.8
2,756.4
4,468.2
(411.2)
97.7
3,808.2
3,905.9
Under the terms of its major borrowing facilities, Brambles is required to comply with the following financial covenants:
-
-
the ratio of net debt (excluding term deposits) to EBITDA is to be no more than 3.5 to 1; and
the ratio of EBITDA to net finance costs is to be no less than 3.5 to 1.
Loan covenant ratios are calculated excluding the impact of AASB 16 Leases and on a 12-month rolling basis. EBITDA for the
purpose of loan covenant calculations is Underlying Profit before interest, tax, depreciation and amortisation.
Brambles has complied with these financial covenants for 2020 and prior years.
108
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 23. Cash Flow Statement – Additional Information
A) Reconciliation of Cash
For the purpose of the consolidated cash flow statement, cash comprises:
Cash at bank and in hand
Short-term deposits1
Cash and cash equivalents
Bank overdraft (Note 17)
2020
US$m
204.7
532.6
737.3
-
737.3
2019
US$m
357.7
1,333.6
1,691.3
(0.9)
1,690.4
1
Short-term deposits recognised within cash and cash equivalents have maturities of three months or less and are measured
at amortised cost.
Cash and cash equivalents include deposits 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$0.2 million (2019: US$0.2 million) used as security for various contingent
liabilities and are not readily accessible.
Brambles has various master netting and set-off arrangements covering cash pooling. An amount of US$2.3 million has been
reduced from cash at bank and overdraft at 30 June 2020 (2019: US$1.2 million).
109
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 23. Cash Flow Statement – Additional Information – continued
B) Reconciliation of Profit After Tax to Net Cash Flow from Operating Activities
Profit after tax
Adjustments for:
- depreciation and amortisation
- IPEP expense
- net gain on divestments
- net (gain)/loss on disposal of property, plant and equipment
- impairment of goodwill, intangibles and plant and equipment
- other valuation adjustments
- equity-settled share-based payments
- finance revenues and costs
Movements in operating assets and liabilities, net of acquisitions and disposals:
- decrease/(increase) in trade and other receivables
- increase in prepayments
- increase in inventories
- increase/(decrease) in deferred taxes
- increase in trade and other payables
- increase in tax payables
- increase in provisions
- other
2020
US$m
448.0
612.2
155.7
-
(2.3)
28.0
(7.0)
18.4
(14.7)
43.9
(33.0)
(9.6)
15.1
107.3
9.3
12.8
2.8
2019
US$m
1,467.7
590.0
141.2
(959.3)
56.3
-
(4.1)
17.1
1.9
(132.6)
(8.6)
(1.0)
(36.1)
122.7
61.9
18.8
2.5
Net cash inflow from operating activities
1,386.9
1,338.4
110
Consolidated Financial Report
Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 23. Cash Flow Statement – Additional Information – continued
C) Reconciliation of Movement in Net Debt
Net debt at beginning of the year
Adjust for AASB 16 opening lease liabilities
Net cash inflow from operating activities
Net cash outflow from investing activities
Net payments/(proceeds) from disposal of businesses, net of cash disposed
Payments for share buy-back less proceeds from share issues
Return of capital to shareholders
Dividends paid - ordinary
Dividends paid - special
Net (inflow)/outflow from derivative financial instruments
Interest accruals, lease capitalisation and other
Foreign exchange differences
Net debt at end of the year
Being:
Current borrowings
Current lease liabilities
Non-current borrowings
Non-current lease liabilities
Cash and cash equivalents
Term deposits
Net debt at end of the year
2020
US$m
97.7
741.6
(1,386.9)
924.7
16.0
645.4
129.3
290.7
183.2
(26.5)
58.9
37.7
1,711.8
36.3
112.8
2019
US$m
2,308.1
-
(1,338.4)
1,100.0
(2,366.2)
53.9
-
328.1
-
34.8
13.5
(36.1)
97.7
556.8
-
1,777.2
1,643.4
591.4
(737.3)
(68.6)
1,711.8
-
(1,691.3)
(411.2)
97.7
D) Non-cash Financing or Investing Activities
Apart from the MyShare Dividend Reinvestment Plan and the adoption of AASB 16 Leases, there were no financing or investing
transactions during the year which had a material effect on the assets and liabilities of Brambles that did not involve cash flows.
Note 24. Commitments
Capital Expenditure Commitments
Capital expenditure, principally relating to property, plant and equipment, contracted for but not recognised as liabilities at
reporting date was as follows:
Within one year
Between one and five years
2020
US$m
74.0
-
74.0
2019
US$m
106.8
-
106.8
111
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 25. Contingencies
a)
Subsidiaries have contingent unsecured liabilities in respect of guarantees given relating to leases, workers compensation
insurance and other obligations totalling US$27.4 million (2019: US$28.9 million), of which US$21.1 million
(2019: US$22.5 million) is also guaranteed by Brambles Limited and US$5.6 million (2019: US$5.6 million) is also guaranteed
by Brambles Limited and certain of its subsidiaries under a deed of cross-guarantee and is included in Note 31B.
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)
Brambles continues to defend a consolidated class action raised on behalf of certain shareholders who acquired shares
during the period between 18 August 2016 and 20 February 2017. Brambles has filed its defence in the consolidated action.
It is not possible to determine the ultimate impact, if any, of the action upon Brambles, and it continues to vigorously defend
the proceedings.
In the ordinary course of business, Brambles becomes involved in litigation. Provisions have 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 any potential amounts payable.
112
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 26. Auditor’s Remuneration
Audit and review services:
- PwC Australia
- Other PwC network firms
Total audit and review services1
Other assurance services (which could be performed by other firms):
- PwC Australia
- Other PwC network firms
Total other assurance services
2020
US$’000
2019
US$’000
1,987
2,528
4,515
83
9
92
2,521
3,773
6,294
-
9
9
Total remuneration for audit, review and other assurance services
4,607
6,303
Other services:
- IFCO divestment related - PwC Australia
- IFCO divestment related - other PwC network firms
- Tax advisory services - other PwC network firms
- Other - PwC Australia
- Other - other PwC network firms
Total other services2
Total auditor’s remuneration
-
-
4
11
6
21
4,628
188
2,099
37
9
36
2,369
8,672
1
2
During 2019, US$961,000 was spent on the audit and review of IFCO financial statements relating to the divestment process, of
which US$244,000 was paid to PwC Australia and US$717,000 was paid to other PwC network firms.
Other services during 2020 primarily related to compliance projects and tax consulting advice. Other services during 2019
primarily related to due diligence and other financial reporting procedures associated with the dual-track separation of IFCO
through a demerger or sale of the business.
From time to time, Brambles employs PwC on assignments additional to its statutory audit duties where PwC, through its detailed
knowledge of the Group, is best placed to perform the services from an efficiency, effectiveness and cost perspective. The
performance of such non-audit related services is always balanced with the fundamental objective of ensuring PwC’s objectivity
and independence as auditors. To ensure this balance, Brambles’ Charter of Audit Independence outlines the services that can be
undertaken by the auditors and requires that the Audit Committee approves any management recommendation that PwC
undertakes non-audit work (with approval being delegated to the Chief Financial Officer within specified monetary limits).
113
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 27. Key Management Personnel
A) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payment expense1
2020
US$’000
5,203
86
32
2,839
8,160
2019
US$’000
6,491
130
35
3,523
10,179
1
2019 includes US$1.0 million related to Key Management Personnel who were designated good leaver status following the
divestment of IFCO.
B) Other Transactions with Key Management Personnel
Other transactions with Key Management Personnel are set out in Note 28A.
Further remuneration disclosures are set out in the Directors’ Report on pages 33 to 52 of the Annual Report.
Note 28. 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, service agreements with Non-Executive Directors and reimbursement of
expenses. Any other transactions were trivial in nature.
B) Other Related Parties
A subsidiary has a non-interest bearing advance outstanding as at 30 June 2020 of US$979,164 (2019 US$999,860) to Brambles
Custodians Pty Limited, the trustee under Brambles' employee loan scheme. This scheme enabled employees to acquire shares in
Brambles Industries Limited (BIL) and has been closed to new entrants since August 2002.
114
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 28. Related Party Information – continued
C) Material Subsidiaries
The principal subsidiaries of Brambles during the year were:
Name
CHEP USA
CHEP Canada Corp
CHEP UK Limited
CHEP Equipment Pooling NV
CHEP España SA
CHEP Deutschland GmbH
Place of incorporation
USA
Canada
UK
Belgium
Spain
Germany
CHEP South Africa (Proprietary) Limited
South Africa
CHEP Australia Limited
CHEP Mexico SRL
Brambles USA Inc.
Brambles Finance plc
Brambles Finance Limited
Australia
Mexico
USA
UK
Australia
% interest held at
reporting date
2020
100
100
100
100
100
100
100
100
100
100
100
100
2019
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 statutory financial statements report a 30 June balance date, with the exception of CHEP
Mexico SRL, which reports a 31 December balance date.
Note 29. 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 2020 and up to the date of this report that have had a material impact on Brambles’ financial performance
or position.
115
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 30. Net Assets Per Share
Based on 1,505.0 million shares (2019: 1,588.8 million shares):
- Net tangible assets per share1
- Net assets per share1
2020
2019
US cents
US cents
165.9
183.1
221.7
239.7
1
The movement primarily reflects reduced cash and term deposit balances used to fund the capital management
programme.
Net tangible assets per share is calculated by dividing total equity attributable to the members of the parent entity, less
goodwill and intangible assets, by the number of shares on issue at year end.
Net assets per share is calculated by dividing total equity attributable to the members of the parent entity by the number of
shares on issue at year end.
Note 31. Parent Entity Financial Information
A) Summarised Financial Data of Brambles Limited
(Loss)/profit for the year
Other comprehensive expense for the year1
Total comprehensive (expense)/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
1
Comprises foreign currency translation movements.
116
Parent entity
2020
US$m
(18.0)
(167.7)
(185.7)
1.6
5,338.1
5,339.7
6.0
-
6.0
2019
US$m
1,428.8
(281.7)
1,147.1
3.0
7,662.3
7,665.3
-
921.9
921.9
5,333.7
6,743.4
5,427.2
54.4
(952.9)
805.0
5,333.7
6,187.4
46.3
(785.2)
1,294.9
6,743.4
Consolidated Financial Report Notes to and Forming Part of the Financial Statements – continued
for the year ended 30 June 2020
Note 31. Parent Entity Financial Information – continued
A) Summarised Financial Data of Brambles Limited – continued
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements
except for investments and receivables from subsidiaries. In the parent entity financial information, investments in subsidiaries
are accounted for at cost and receivables from subsidiaries are held at amortised cost. Where appropriate, receivables from
subsidiaries have been adjusted for expected credit losses. Dividends received from investments in subsidiaries are recognised
as revenue.
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$1,500.2 million (2019: US$1,613.7 million), of
which US$140.6 million (2019: US$5.6 million) has been drawn.
Brambles Limited and certain of its subsidiaries are parties to a guarantee which supports notes of US$500.0 million
(2019: 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
(2019: €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$449.6 million (2019: US$464.8 million), of
which US$64.9 million (2019: US$57.1 million) has been drawn.
Brambles Limited was served with class action proceedings in 2018 which has been disclosed as a contingent liability
(refer Note 25d).
C) Contractual Commitments
Brambles Limited did not have any contractual commitments for the acquisition of property, plant and equipment at
30 June 2020 or 30 June 2019.
117
Consolidated Financial Report Directors’ Declaration
In the opinion of the Directors of Brambles Limited:
(a)
the financial statements and notes set out on pages 61 to 117 are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
Report on the audit of the financial report
requirements; and
(ii)
giving a true and fair view of the financial position of Brambles Limited as at 30 June 2020 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.
What we have audited
The Group financial report comprises:
This declaration is made in accordance with a resolution of the Directors.
J P Mullen
Chairman
G A Chipchase
Chief Executive Officer
19 August 2020
118
Independent auditor’s report
To the members of Brambles Limited
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 2020 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated cash flow statement for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
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 report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Basis for opinion
section of our 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, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Directors’ Declaration
Independent Auditor’s Report
to the Members of Brambles Limited
Independent auditor’s report
To the members 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 2020 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 financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated cash flow statement for the year then ended
the notes to the consolidated financial statements, 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
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
119
Independent Auditor’s Report
Independent Auditor’s Report - continued
to the Members of Brambles Limited
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
users taken on the basis of the financial report.
Materiality
•
For the purpose of our audit we used overall Group materiality of $33 million, which represents approximately
5% of the Group’s profit before tax from continuing operations.
• 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 misstatements on the
financial report as a whole.
• We chose Group profit before tax from continuing operations because, in our view, it is the benchmark against
which the performance of the Group is most commonly measured and it is a generally accepted benchmark.
• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
Key audit matter
How our audit addressed the key audit matter
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
•
The Group’s financial results comprise the consolidation of a network of pooled pallet, crate and container
businesses which are geographically widespread. We tailored the scope of our audit so that we performed
sufficient work to be able to provide an opinion on the financial report as a whole, taking into account the
structure of the Group, the significance and risk profile of each business, the accounting processes and
controls, and the industry in which the Group operates.
Audit of locations, transactions and balances
Separate PwC firms in the relevant locations (“local PwC audit firms”) performed an audit of the financial
information prepared for consolidation purposes for eleven 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, whilst others are included on a rotational basis.
In addition, local PwC audit firms performed risk focused targeted audit or specified procedures on selected
transactions and balances for a further fourteen components.
The remaining components were financially insignificant and comprise more than one hundred and fifty
entities. Those entities are considered as part of Group analytical procedures and other specified procedures.
•
•
•
120
Audit of shared services functions
• Our procedures on IT, tax and certain finance processes were performed by local PwC audit firms 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 the
impairment assessment of goodwill, share based payments, retirement benefit obligations, treasury and the
consolidation process.
Direction and supervision by the Group audit team
•
The audit procedures were performed by PwC Australia and local PwC audit firms operating under the Group
audit team’s instructions. The Group audit team determined the level of involvement needed in the audit work
of local PwC 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 PwC 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 PwC audit teams including the two largest
locations during the year.
•
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 in areas such as IT,
actuarial, tax and valuations.
Key audit matters
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 addressed in the context of
our audit of the financial 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 that context. We communicated the key audit matters to the Audit Committee.
Accounting for pooling equipment assets
We performed the following procedures:
(Refer to Note 13)
pooling equipment due to the high volume of asset
•
To challenge the IPEP provision calculation
methodology and assumptions we:
Brambles’ pooling equipment is accounted for as
depreciable fixed assets, classified within plant and
equipment. The accounting for pooling equipment was
a key audit matter due to the assets’ financial size and
judgement involved. As disclosed in Note 13 of the
financial report, there is inherent risk in accounting for
movements through a complex network, and a
limitation on the Group’s ability to physically verify the
quantity of the pallets, crates and containers due to
access and cost prohibitions. The largest category of
pooling equipment is pallets.
The key area of judgement in relation to pooled pallets
is the quantity of lost pallets.
The estimation of the provision for lost pallets (called
the irrecoverable pooling equipment provision, or
• 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.
−−
−−
assessed key assumptions and judgements,
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;
Independent Auditor’s Report
Independent Auditor’s Report - continued
to the Members of Brambles Limited
Audit of shared services functions
• Our procedures on IT, tax and certain finance processes were performed by local PwC audit firms 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 the
impairment assessment of goodwill, share based payments, retirement benefit obligations, treasury and the
consolidation process.
Direction and supervision by the Group audit team
•
•
The audit procedures were performed by PwC Australia and local PwC audit firms operating under the Group
audit team’s instructions. The Group audit team determined the level of involvement needed in the audit work
of local PwC 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 PwC 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 PwC audit teams including the two largest
locations during the year.
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 in areas such as IT,
actuarial, tax and valuations.
Key audit matters
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 addressed in the context of
our audit of the financial 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 that context. We communicated the key audit matters to the Audit Committee.
Key audit matter
How our audit addressed the key audit matter
Accounting for pooling equipment assets
(Refer to Note 13)
We performed the following procedures:
Brambles’ pooling equipment is accounted for as
depreciable fixed assets, classified within plant and
equipment. The accounting for pooling equipment was
a key audit matter due to the assets’ financial size and
judgement involved. As disclosed in Note 13 of the
financial report, there is inherent risk in accounting for
pooling equipment due to the high volume of asset
movements through a complex network, and a
limitation on the Group’s ability to physically verify the
quantity of the pallets, crates and containers due to
access and cost prohibitions. The largest category of
pooling equipment is pallets.
The key area of judgement in relation to pooled pallets
is the quantity of lost pallets.
The estimation of the provision for lost pallets (called
the irrecoverable pooling equipment provision, or
• 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 IPEP provision calculation
methodology and assumptions we:
−−
−−
assessed key assumptions and judgements,
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;
121
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Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
“IPEP”) involves significant estimates and the Group’s
judgement. The provision is calculated by considering
the results of the Group’s pallet audits, historical
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
tested the calculations and extrapolations of
provision estimates across pallet locations.
Impairment assessment of goodwill
(Refer to Note 14)
We performed the following procedures:
The Group recognised goodwill of $192.5m as at 30
June 2020. Australian Accounting Standards require an
annual impairment assessment.
In order to assess the recoverability of goodwill, the
Group prepared financial models at 3o June 2020 for
cash generating units to which the goodwill is ascribed
to determine if the carrying value of goodwill was
supported by forecast future cash flows, discounted to
present value (“the models”).
The assessment of impairment was a key audit matter
due to the financial size of the goodwill balance and the
impairment charge recognised of $23m as well as the
judgements and assumptions applied in estimating
forecasted cash flows, growth rates and discount rates.
• Assessed whether the division of the Group’s
goodwill and other assets and liabilities into Cash
Generating Units (CGUs) to assess impairment,
was consistent with our knowledge of the Group’s
operations and internal Group reporting.
• Considered if the impairment models used to
estimate the recoverable amount of the assets were
consistent with the requirements of Australian
Accounting Standards.
• Considered if estimating ‘value in use’ or ‘fair value
less costs to sell’ was the best basis upon which to
infer value of the CGUs.
• Considered whether the forecast cash flows used in
the impairment models were reasonable and based
on supportable assumptions by comparing to
economic and industry forecasts and actual cash
flows for previous years.
• Assessed the Group’s ability to forecast future cash
flows for the business by comparing previous
forecasts with reported actual results from recent
history.
•
Tested the mathematical accuracy of the
impairment models’ calculations.
• Assessed the reasonableness of the discount rate
assumptions by comparing to market data,
comparable companies and industry research, with
the assistance of our valuation experts.
• Considered the Group’s sensitivity analysis on the
key assumptions used in the impairment model to
assess which changes in assumptions would cause
122
an impairment to occur and whether these were
reasonably possible.
• Evaluated the adequacy of the disclosures made in
Note 14, including those regarding the key
assumptions and sensitivities to changes in such
assumptions, in light of the requirements of
Australian Accounting Standards.
Calculation of current and deferred taxation
We performed the following procedures:
balances
(Refer to Note 6)
• Assessed the rationale on which current tax was
calculated and deferred tax assets and liabilities
The calculation of taxation balances was a key audit
were recognised.
matter because the Group operates in a large number of
jurisdictions with different laws, regulations and
•
Tested the Group tax analysis prepared by
authorities resulting in complex tax calculations.
management, with the assistance of PwC tax
Judgement is involved in a number of aspects of the tax
experts and specialists in other territories where
specialists, who liaised directly with local PwC tax
calculations, including the assessment of recorded tax
required.
losses for recoverability.
The calculation of income taxes is disclosed in Note 6 of
year, we assessed whether the supporting tax
the financial report including the key judgements made
analysis was in accordance with the tax legislation
in the assessment of the taxation provision.
in the relevant jurisdiction and the related impact
•
For significant transactions undertaken during the
on the tax calculation.
• Challenged whether the Group had sufficient
taxable temporary differences to recognise tax
losses by considering when these temporary
differences will become taxable income compared
to the expiry of the losses. We also assessed the
rationale for and calculation of unrecognised
deferred tax assets which are disclosed.
• Considered and challenged the assumptions made
by the Group in making judgemental tax
provisions.
Impairment assessment of deferred
We performed the following procedures:
consideration receivable
(Refer to Note 9)
The Group has recognised a provision for impairment
developed and mathematical accuracy of the
loss of $33m against the deferred consideration of
calculation.
$47.4m due from First Reserve in connection with the
• Evaluated the Group’s ECL methodology by
assessing the reasonableness of the scenarios
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to the Members of Brambles Limited
Key audit matter
How our audit addressed the key audit matter
Calculation of current and deferred taxation
balances
(Refer to Note 6)
The calculation of taxation balances was a key audit
matter because the Group operates in a large number of
jurisdictions with different laws, regulations and
authorities resulting in complex tax calculations.
Judgement is involved in a number of aspects of the tax
calculations, including the assessment of recorded tax
losses for recoverability.
The calculation of income taxes is disclosed in Note 6 of
the financial report including the key judgements made
in the assessment of the taxation provision.
an impairment to occur and whether these were
reasonably possible.
• Evaluated the adequacy of the disclosures made in
Note 14, including those regarding the key
assumptions and sensitivities to changes in such
assumptions, in light of the requirements of
Australian Accounting Standards.
We performed the following procedures:
• Assessed the rationale on which current tax was
calculated and deferred tax assets and liabilities
were recognised.
•
•
Tested the Group tax analysis prepared by
management, with the assistance of PwC tax
specialists, who liaised directly with local PwC tax
experts and specialists in other territories where
required.
For significant transactions undertaken during the
year, we assessed whether the supporting tax
analysis was in accordance with the tax legislation
in the relevant jurisdiction and the related impact
on the tax calculation.
• Challenged whether the Group had sufficient
taxable temporary differences to recognise tax
losses by considering when these temporary
differences will become taxable income compared
to the expiry of the losses. We also assessed the
rationale for and calculation of unrecognised
deferred tax assets which are disclosed.
• Considered and challenged the assumptions made
by the Group in making judgemental tax
provisions.
Impairment assessment of deferred
consideration receivable
(Refer to Note 9)
The Group has recognised a provision for impairment
loss of $33m against the deferred consideration of
$47.4m due from First Reserve in connection with the
We performed the following procedures:
• Evaluated the Group’s ECL methodology by
assessing the reasonableness of the scenarios
developed and mathematical accuracy of the
calculation.
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Key audit matter
How our audit addressed the key audit matter
Auditor’s responsibilities for the audit of the financial report
sale of the Group’s interest in Hoover Ferguson Group
in April 2018.
• Challenged the Group’s key assumptions applied in
determining the expected credit loss on the deferred
consideration.
Due to the decline in oil and gas prices caused by the
Covid-19 pandemic and other market factors, the Group
has recognised an expected credit loss (ECL) against the
deferred consideration receivable during the year.
• Considered selected available financial information
in assessing the recoverability of the deferred
consideration.
This was a key audit matter because the determination
of the provision for impairment loss on the deferred
consideration was driven by subjective judgments made
by the Group in estimating the expected credit loss.
• Evaluated selected external industry data specific to
the oil and gas industry as a key input to the ECL
assessment.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2020, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, 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.
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 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 if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 33 to 52 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the remuneration report of Brambles Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
Auditing Standards.
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Responsibilities of the directors for the financial report
PricewaterhouseCoopers
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
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
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.
Susan Horlin
Partner
Eliza Penny
Partner
Sydney
19 August 2020
Sydney
19 August 2020
124
Independent Auditor’s Report
Independent Auditor’s Report - continued
to the Members of Brambles Limited
Auditor’s responsibilities for the audit of the financial report
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 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 if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 33 to 52 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the remuneration report of Brambles Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
PricewaterhouseCoopers
Susan Horlin
Partner
Eliza Penny
Partner
Sydney
19 August 2020
Sydney
19 August 2020
125
Independent Auditor’s Report
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2020, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Auditor’s Independence Declaration
(b)
This declaration is in respect of Brambles Limited and the entities it controlled during the period.
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2020, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Brambles Limited and the entities it controlled during the period.
Susan Horlin
Partner
PricewaterhouseCoopers
Sydney
19 August 2020
Susan Horlin
Partner
PricewaterhouseCoopers
Sydney
19 August 2020
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
126
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2020, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
Auditor’s Independence Declaration
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.
As lead auditor for the audit of Brambles Limited for the year ended 30 June 2020, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Brambles Limited and the entities it controlled during the period.
Susan Horlin
Partner
PricewaterhouseCoopers
Susan Horlin
Partner
PricewaterhouseCoopers
Sydney
19 August 2020
Sydney
19 August 2020
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Five-Year Financial Performance Summary
US$m
Continuing operations
Sales revenue - CHEP
Sales revenue - IFCO1
Total sales revenue1
EBITDA1,2,3
Depreciation and amortisation1,2
IPEP expense1,3
Underlying Profit - CHEP2
Underlying Profit - IFCO1
Total Underlying Profit1,2
Significant Items1
Operating profit1,2
Net finance costs1,2
Profit before tax1,2
Tax expense1,2
Profit from continuing operations1,2
(Loss)/profit from discontinued operations1,2,4
Profit for the year1,2,4
Weighted average number of shares (millions)
Earnings per share (US cents)
Basic
From continuing operations1,2,4
On Underlying Profit after finance costs and tax1,2,4
ROCI1,2,4
Capex on property, plant and equipment1,4
Balance sheet
Capital employed
Net debt2
Equity
Average Capital Invested1,2,4
Cash flow
Cash Flow from Operations1,2,4
Free Cash Flow2
Ordinary dividends paid, net of Dividend Reinvestment
Free Cash Flow after ordinary dividends
Net debt ratios
Net debt to EBITDA (times)1,2,3
EBITDA interest cover (times)1,2,3
Average employees
2020
2019
2018
2017
2016
4,733.6
4,595.3
4,470.3
4,133.5
4,018.4
-
4,733.6
1,562.9
(612.2)
(155.7)
795.0
-
795.0
(28.0)
767.0
(80.8)
686.2
(209.0)
477.2
(29.2)
448.0
1,548.7
28.9
30.8
32.5
17%
-
4,595.3
1,415.1
(484.3)
(127.1)
803.7
-
803.7
(62.8)
740.9
(88.5)
652.4
(198.3)
454.1
1,013.6
1,467.7
1,593.4
92.1
28.5
31.9
19%
-
4,470.3
1,392.3
(464.3)
(101.9)
826.1
-
826.1
(47.4)
778.7
(103.4)
675.3
(121.8)
553.5
139.2
692.7
970.8
5,104.3
1,573.4
(526.7)
(89.2)
823.1
134.4
957.5
(186.1)
771.4
(98.7)
672.7
(227.8)
444.9
(262.0)
182.9
881.7
4,900.1
1,561.3
(502.1)
(74.7)
879.1
105.4
984.5
(39.2)
945.3
(112.9)
832.4
(240.1)
592.3
(4.6)
587.7
1,591.2
1,588.3
1,577.6
43.5
34.8
33.0
20%
11.5
28.0
38.5
17%
37.3
37.5
39.2
19%
981.2
1,060.4
1,012.5
1,023.5
1,060.8
4,468.2
1,711.8
2,756.4
4,773.6
3,905.9
97.7
3,808.2
4,130.6
5,086.5
2,308.1
2,778.4
4,115.4
743.9
462.2
290.7
171.5
1.1
19.3
431.8
238.5
328.1
(89.6)
0.1
14.6
724.8
554.4
352.0
202.4
1.5
15.0
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
11,647
10,896
10,441
13,882
13,816
Dividend declared5 (cents per share)
18.0 US
29.0 AU
29.0 AU
29.0 AU
29.0 AU
1 IFCO is presented within discontinued operations in 2019 and 2018. Periods prior to 2018 include IFCO within continuing operations and are consistent with
previously published data.
2 Periods prior to 2020 have not been restated for the impact of new accounting standard AASB 16 Leases. Periods prior to 2018 have not been restated for the
impact of the new accounting standards AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers.
3 Effective from 2020, EBITDA has been redefined as Underlying Profit from continuing operations after adding back depreciation, amortisation and IPEP expense.
Prior periods have been restated to align with the revised definition. The net debt ratios for periods prior to 2020 have not been restated to align with the revised
EBITDA definition and are consistent with previously published data.
4 Discontinued operations include the CHEP Recycled business in 2018 to 2016; Oil & Gas and Aerospace businesses in 2017 and 2016; and LeanLogistics business
in 2016.
5 Effective from 2020, Brambles changed to a payout ratio-based dividend policy, with the dividend per share declared in US cents and converted and paid in
Australian cents. Prior to 2020, dividends were declared and paid in Australian cents.
127
Five-Year Financial Performance Summary
Glossary
Acquired Shares
Brambles Limited shares purchased by Brambles' employees under MyShare
Actual currency/actual FX
Results translated into US dollars at the applicable actual monthly exchange rates
ruling in each period
AGM
Annual General Meeting
ACI (Average Capital Invested)
A 12-month average of capital invested; capital invested is calculated as net assets
before tax balances, cash, term deposits, borrowings and lease liabilities, but after
adjustment for pension plan actuarial gains or losses and net equity adjustments for
equity-settled share-based payments
AU cents
Australian cents
BIFR (Brambles Injury Frequency Rate) Safety performance indicator that measures the combined number of fatalities, lost-
BIL
BIP
Board
BVA (Brambles Value Added)
CAGR (Compound Annual
Growth Rate)
Cash Flow from Operations
Circular economy
CGPR
Company
Constant currency/constant FX
Continuing operations
time injuries, modified duties and medical treatments per million hours worked
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, details of which are on pages 26 to 29
The value generated over and above the cost of the capital used to generate that
value. It is calculated using fixed June 2019 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%
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 generated after net capital expenditure but excluding Significant Items that
are outside the ordinary course of business
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
Brambles Limited (ACN 118 896 021)
Current period results translated into US dollars at the actual monthly exchange rates
applicable in the comparable period, so as to show relative performance between the
two periods
Continuing operations refers to CHEP Americas, CHEP EMEA and CHEP Asia-Pacific
(each primarily comprising pallet and container pooling businesses in those regions
operating under the CHEP brand), and Corporate (corporate centre including BXB
Digital)
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 Limited instead of receiving cash
Economic value
A measure of the broader financial benefit provided by an organisation
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
EBITDA (Earnings before Interest, Tax,
Depreciation and Amortisation)
Underlying Profit from continuing operations after adding back depreciation,
amortisation and IPEP expense
ELT
Free Cash Flow
Brambles’ Executive Leadership Team, details of which are on pages 30 to 32
Cash flow generated after net capital expenditure, finance costs and tax, but excluding
the net cost of acquisitions and proceeds from business disposals
128
Glossary Glossary continued
FY (Financial Year)
Brambles’ financial year is 1 July to 30 June; FY20 indicates the financial year ended
30 June 2020
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, pharmaceutical 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
Performance Share Plan or PSP
The Brambles Limited Performance Share Plan (as amended)
Profit after tax
RPCs
Profit after finance costs, tax, minority interests and Significant Items
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)
Underlying EPS
Measures the returns that a company has provided for its shareholders, reflecting
share price movements and reinvestment of dividends over a specified performance
period
Profit after finance costs, tax and minority interests but before Significant Items,
divided by the weighted average number of shares on issue during the period
ULP (Underlying Profit)
Profit from continuing operations before finance costs, tax and Significant Items
129
Glossary Glossary continued
Unification
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
Year
Brambles’ 2020 financial year
130
Glossary
Notes
Notes
Contact Information
Registered Office
Level 10 Angel Place, 123 Pitt Street
Sydney NSW 2000
Australia
ACN 118 896 021
Telephone: +61 (0) 2 9256 5222
Email:
investorrelations@brambles.com
Website:
www.brambles.com
London Office
Nova South
160 Victoria Street
London SW1E 5LB
United Kingdom
Telephone: +44 (0) 20 38809400
CHEP Americas
7501 Greenbriar Parkway
Orlando FL 32819 USA
Telephone: +1 (407) 370 2437
5897 Windward Parkway
Alpharetta GA 30005 USA
Telephone: +1 (770) 668 8100
CHEP Europe, Middle East, India & Africa
400 Dashwood Lang Road
Bourne Business Park
Addlestone, Surrey KT15 2HJ
United Kingdom
Telephone: +44 (0)1932 850085
Facsimile: +44 (0)1932 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
Investor & Analyst Queries
Telephone: +61 (0) 2 9256 5238
Email:
investorrelations@brambles.com
Share Registry
Access to shareholding information is available to investors
through Boardroom Pty Limited
Boardroom Pty Limited
GPO Box 3993, Sydney NSW 2001, Australia
Telephone: 1300 883 073 (within Australia)
+61 (0) 2 9290 9600 (from outside Australia)
Facsimile:
+61 (0) 2 9279 0664
Email:
bramblesesp@boardroomlimited.com.au
Website:
www.boardroomlimited.com.au
Share Rights Registry
Employees or former employees of Brambles who have queries
about the following interests:
Performance share rights under the performance share plans;
Matching share rights under MyShare; or
Shares acquired under MyShare or other share interests held
through Sargon CT Pty Ltd, may contact Boardroom Pty Limited,
whose contact details are set out above.
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
ESG Recognitions
Rated #1 most sustainable international company
96th percentile in industry category
Rated A in Circular Economy Assessment
by Ellen MacArthur Foundation
Maximum AAA rating
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